Sitting of 23 June 1949

Preamble
The House met at Half-past Two o'Clock
PRAYERS
[Mr. Speaker in the Chair]
PRIVATE BUSINESS
Read the Third time, and passed.
PRIVATE BUSINESS
BARNSLEY CORPORATION BILL
As amended, considered; to be read the Third time.

URMSTON URBAN DISTRICT COUNCIL BILL
As amended, considered.
Standing Order 205 (Notice of Third Reading) suspended; Bill to be read the Third time forthwith.—(Chairman of Ways and Means.)
Bill accordingly read the Third time, and passed.

ALEXANDER SCOTT'S HOSPITAL ORDER CONFIRMATION BILL
  ROYAL BANK OF SCOTLAND OFFICERS' WIDOWS' FUND ORDER CONFIRMA TION BILL
  Read the Third time, and passed.
ORAL ANSWERS TO QUESTIONS
  EMPLOYMENT

    Agricultural Workers
    Mr. J. Langford-Holtasked the Minister of Labour how many agricultural workers have sought to leave the industry in the last 12 months; and how many applications have been refused under the Control of Engagement Order.
    The Minister of Labour (Mr. Isaacs): I regret that this information is not available.
    Mr. Langford-Holt: Would the right hon. Gentleman agree that more men are being kept out of this industry through fear of this Order than, in point of fact, are being kept in the industry by the Control of Engagement Order?
    Mr. Isaacs: No, Sir. I do not think there is any real evidence which proves that. I can assure the hon. Gentleman that this matter is still under consideration.
    Mr. Awbery: Is it not a fact that there was a general exodus of men from this industry for many years before the present regulations were made?
    Mr. Emrys Roberts: Does not the hon. Gentleman think the time is now approaching when this Order should be rescinded altogether?
    Mr. Isaacs: I have just indicated that the matter is under active consideration.
    Mr. Osborne: If the Minister has not the information at present could he get it and give it to the House later on?
    Mr. Isaacs: I am afraid not. If men go to an employment exchange and ask for permission to leave and permission is not given, no record is kept of that. Record is kept only where the men do leave.

    Industrial Hostels (Charges)
    Mr. Daggarasked the Minister of Labour whether he will make a statement regarding the charges to residents in Government industrial hostels.
    Mr. Isaacs: Yes, Sir. In the light of the prevailing charges for comparable private lodgings and the increasing costs of providing hostel accommodation, it has been decided to increase the charges in the Government industrial hostels run by the National Service Hostels Corporation as from 11th July next, by 5s. per week at the standard industrial hostels, and by 4s. per week at certain hostels where the accommodation provided is below the normal standard of industrial hostels. The new charges will be 35s. per week for men and 30s. per week for women at the standard hostels, and 30s. per week for men and 25s. per week for women at the other hostels.
    Mr. David Renton: Will these charges apply to E.V.W's?
    Mr. Isaacs: They will apply to all the Corporation's industrial hostels. They do not apply, under this Order, to the Agricultural Executive Committees' Hostels, as they come under the direction of the committees. This Order applies to the Hostels Corporation.
    Mr. Renton: Could the Minister say what is the reason for this differentiation?
    Mr. Isaacs: The differentiation is because in what we call sub-standard hostels accommodation is very poor by comparison with standard hostels. In many standard hostels there are one or two people in a cubicle, but in the others there are 15, 16, or 18 in a dormitory.

  EDUCATION

    Schools (Electrical Installations)
    Mr. Skinnardasked the Minister of Education whether, in view of the danger to children, he will discourage the installation of metal tumbler switches with easily removable unearthed metal covers in concrete-floored wash-rooms and corridors of new school buildings.
    The Minister of Education (Mr. Tomlinson): Those responsible for providing new school buildings are expected to pay due regard to the British Standards Code of Practice on Electrical Installations, which deals with the matter referred to in my hon. Friend's Question. I have no reason to believe that children are exposed to avoidable risks in their schools. Children may cause injury to themselves by tampering with electrical installations of any kind, but this is a matter which must be left to the care and discipline exercised by teachers.
    Mr. Skinnard: If I can show my right hon. Friend cases where I think the regulations have not been adhered to, and where there is danger, particularly to children of infant school age and primary school age, owing to unearthed metal switches, would he ask His Majesty's inspectors to look into the matter?
    Mr. Tomlinson: Yes, certainly.

    School-building Programme
    Mr. Piratinasked the Minister of Education what was his target, in value, for school-building for 1948 and 1949, respectively; how much of the 1948 target was completed and in process of construction by 31st December, 1948; and how much he anticipates will be completed and in process of construction by 31st December, 1949, of the 1949 target.
    Mr. Tomlinson: The target adopted by my Department in the planning of educational building is the programme of
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    work to be started in each year. In 1948 a programme of £26 million was carried out in full. For 1949 the target is £50–£55 million, and there is a good prospect that a programme of this size will be carried out. These figures relate to all educational building work sponsored by my Department. Projects for primary and secondary schools account for about 70 per cent. of the 1949 programme and for about 60 per cent. of the 1948 programme.
    Mr. Piratin: Can the Minister say, first, concerning 1948 and the £26 million worth of work carried out, what was the target for 1948 and what percentage was the achievement of the target? Can he say, in the second place, on what grounds he hopes confidently that the target for this year for £52 million worth of work will be carried out in the year?
    Mr. Tomlinson: The target refers to the amount of building work started, not to that which is completed. That is the only basis upon which we can work. When I say the target was completed I mean that £26 million worth was actually started.
    Mr. Piratin: But was it not the case that before 1948 the Minister announced that the target for 1948 to be begun was £52 million worth? If he gives us a figure of £26 million worth of work having been begun, obviously only half of the target of beginnings was achieved. Does he, therefore, express the same confidence in the results this year?
    Mr. Tomlinson: I should like to look at that. I do not know where I said a target of £52 million would be started.
    Mr. Piratin: I have the facts.
    Mr. Piratinasked the Minister of Education what is the target he has set for replacing the 644 schools which are on the 1925 blacklist; and what is planned for 1949.
    Mr. Tomlinson: The development plans submitted by local education authorities provide for the replacement, or improvement, of all primary and secondary school buildings which fall short of the prescribed standards. This work will be carried out as rapidly as the resources available for school-building permit. For the time being, I am bound to ask local education authorities to devote the major part of their resources to the provision of the large amount of

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    additional school accommodation required to meet the needs of new housing, or to cater for the additional children coming into the schools as a result of the rise in the birth rate. These new schools will incidentally relieve the situation in many older schools. In addition, minor improvements are being made to many existing schools.
    Mr. Piratin: Is the Minister satisfied that in those particular areas where these black listed schools exist sufficiently vigorous steps are being taken to provide new schools, and thus to do away with the old ones?
    Mr. Tomlinson: Yes. In the circumstances I think there are.
    Mrs. Florence Paton: Is my right hon. Friend aware that the difficulty of local authorities in providing schools is the shortage of school architects? Has he any plan for remedying this shortage?
    Mr. Tomlinson: That shortage has been known for some time by the local authorities, and I personally have been impressing upon them the necessity of organising and reorganising their appropriate departments to meet the requirements.
    Mr. Clement Davies: What pressure does the right hon. Gentleman's Department bring to bear upon the local authorities, and what is the nature of it? We all realise that a number of these schools has been on the black list now for something over 25 years, and nothing has been done.
    Mr. Tomlinson: The only form of pressure that can be put upon the local authorities is to point out the necessity of overcoming the problem. I have given them authority to get on with it, to the extent that materials and labour are available, and now that the limitation of having to get approval for work costing less than £5,000 has been taken off, the local authorities are at liberty to go ahead with the job.

    Size of Classes, Shropshire
    Mr. Langford-Holtasked the Minister of Education what is the average size of classes in elementary schools in Shropshire today as compared to 1939.
    Mr. Tomlinson: The term "elementary school" became obsolete with the coming
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    into operation of the Education Act, 1944. The average size of class in maintained and assisted primary and secondary schools in Shropshire was 28.8 in January, 1949. The comparable figure for 1939 was 31.0.
    Mr. Langford-Holt: Is the right hon. Gentleman aware, and can he tell me, of the steps actually being taken now to reduce the size of classes? That is one of the factors adversely affecting the operation of the Education Act.
    Mr. Tomlinson: Steps are being taken by training more teachers than ever before, and that is the only way to reduce the numbers in classes.
    Mr. George Thomas: Is my right hon. Friend aware that if he can attain that figure in all the country he will receive the heart-felt congratulations of this House.

    War-Damaged Schools, Cardiff
    Mr. George Thomasasked the Minister of Education whether he is aware of the serious interference caused to secondary education in Cardiff by the present inadequate accommodation, especially in the Howard Gardens and the Canton High Schools, respectively; and what action he is taking with regard to the Cardiff Education Committee's estimates for these schools and for their 1949–50 building programme as a whole.
    Mr. Tomlinson: I am aware of the difficulties under which the Howard Gardens and Canton High Schools have been working, owing to war damage. The girls at Howard Gardens have now been moved into new premises. No progress has so far been made with the provision of new premises for the boys of Howard Gardens, or for the Canton Schools, owing partly to the more urgent need of new primary schools for housing estates, and partly to the slow rate at which plans have been forthcoming. The 1949 and 1950 building programmes have recently been discussed with representatives of the authority, with a view to securing more rapid progress, but I am not yet in a position to announce any definite decisions on the 1950 programme.
    Mr. Thomas: Is my right hon. Friend aware that the Howard Gardens School is a disgrace to the conditions in which, under a Socialist Government, education

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    should be carried on, and that almost equal difficulties exist in the county area? Will he give an assurance that he has not told the Cardiff authority that they must not spend extra money for the provision of proper secondary education?
    Mr. Tomlinson: The problem so far as Cardiff and every other authority is concerned at the moment, in consideration of the 1950 programme, is the amount of work that has to be done to make provision for the children who will be going into the schools. That work has priority.
    Mr. Thomas: But is my right hon. Friend aware that the children who are already in the schools must not be allowed to remain in conditions that are a detriment to education? Will he take the necessary action to have the conditions improved?
    Mr. Tomlinson: I thought that the fact that I stated in my answer that the authority had been to see me in order that I could impress upon them this necessity was a sufficient answer to my hon. Friend.
    Mr. John McKay: Can my right hon. Friend say what the cost of building these schools or similar schools was in 1944, and what is the increase in the cost of schools at the present time?
    Mr. Tomlinson: Not without notice.

    INDIA (DISABLED EX-SERVICE MEN)
    Mr. Manningham-Bullerasked the Secretary of State for Commonwealth Relations when he first raised the question of the issue of free motor cars to disabled British ex-Service men with the Government of India; and when he expects to get their decision thereon.
    The Secretary of State for Commonwealth Relations (Mr. Philip Noel-Baker): I first called the attention of the Government of India to the question of free motor cars for disabled British ex-Service men on 8th December, 1948. I have continued since then to impress on them our view of the urgency and importance of a favourable reply.
    Mr. Manningham-Buller: Can the right hon. Gentleman give any indication at all when that reply is likely to be forthcoming?
    Mr. Noel-Baker: I am hoping for it very soon, and I am going to press for it; and I hope a special opportunity of getting the answer will arise in the near future.
    Air-Commodore Harvey: In the meantime will the right hon. Gentleman represent to the Government that funds should be made available so that cars can be issued to these men while he is awaiting a decision?
    Mr. Noel-Baker: I should have to consult my right hon. and learned Friend the Chancellor of the Exchequer on that.
    Mr. Manningham-Bullerasked the Secretary of State for Commonwealth Relations the number of disabled British ex-Service men whose pensions and other benefits are the responsibility of the Government of India.
    Mr. P. Noel-Baker: The administration of pensions for British members of the Indian Forces is, by agreement, divided between the Government of India and His Majesty's Government in the United Kingdom. The Government of India deals with pensioners who reside in India or Pakistan: we deal with the rest. I am afraid we do not know the number of disabled British ex-Service men in India and Pakistan who have been granted pensions. I am advised, however, that it must be small.
    The numbers dealt with by my office are as follow: Officers and men, 2,437; widows and other dependants, 970. These figures include all those who have been disabled since the beginning of the first world war.
    Mr. Manningham-Buller: Does that mean that those in relation to whom the right hon. Gentleman has given figures have to wait for any increased benefits, such as the issue of free motor cars, until the Government of India consent?
    Mr. Noel-Baker: Yes, certainly it is only on the original terms that we administer the pensions.

  TRADE AND COMMERCE

    Eastern Europe
    Mr. Platts-Millsasked the President of the Board of Trade what special measures, comparable with those taken to develop exports to America, are proposed in respect of trade with the countries of Eastern Europe.
    The President of the Board of Trade (Mr. Harold Wilson): No comparable measures are proposed because the same considerations do not apply.
    Mr. Platts-Mills: As it is now generally recognised that in our country we are facing an economic disaster unparalled in our history—[Laughter.] Let us remember that laughter from the Opposition—and as it is obvious that nothing can save us but a vast expansion of Eastern European—
    Mr. Speaker: This supplementary question is not asking for information but is merely arguing, and that is not in Order at Question Time.
    Mr. Platts-Mills: May I complete my question, Sir? Will the right hon. Gentleman not recognise that nothing can save us but some departure from the normal routine he follows in Eastern Europe, and some real attempt to get some trade going?
    Mr. Wilson: We have no difficulty in providing sufficient exports to pay for all the goods we are able to import from Eastern Europe. That is not the position in the dollar area, and we therefore need special efforts to increase dollar exports.

    British Industries Fair (Home Buyers)
    Mr. Errollasked the President of the Board of Trade why the number of home buyers attending the British Industries Fair in 1948 is given in the Board of Trade Journal of 21st May, 1949, as 107,000 whereas in the Board of Trade Journal of 22nd May, 1948, the numbers attending in 1948 were given as 220,000.
    Mr. H. Wilson: Turnstile readings of home trade and public attendance were issued in 1948 to satisfy demands for immediate information. As experience has shown that these figures involve duplication, later statements, including those issued in connection with the 1949 Fair, have as far as possible been based on the number of badges sold.
    Mr. Erroll: Are these figures to be taken as typical of the accuracy of the Government's figures?
    Mr. Wilson: No, Sir. The figures that were given were in answer to a particular Question and were accurate, based on turnstile readings. If, however, figures
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    on comparable bases over the two years are taken they show a considerable increase in home buyers this year.

    Footwear (Profit Margins)
    Lieut.-Colonel Liptonasked the President of the Board of Trade what further reductions in the profit margins allowed to footwear manufacturers he proposes to make, in view of the excessive profits earned by footwear manufacturers.
    Mr. H. Wilson: I would refer my hon. and gallant Friend to the answer given to the hon. Member for Mile End (Mr. Piratin) on this subject on 24th May.
    Lieut.-Colonel Lipton: Can the President of the Board of Trade give an assurance that the present margins will not continue to yield excessive profits and impose unnecessary burdens upon parents with families of young children?
    Mr. Wilson: I can certainly give an assurance that we are watching these margins all the time. As my hon. Friend knows, not very long ago we reduced the margins on the distribution of footwear.
    Mr. Beswick: Are any steps being taken to recover from these firms some of the public subsidies which were used to inflate their own private profits?
    Mr. Wilson: Those subsidies refer, of course, to utility leather, and are a different consideration.
    Mr. Osborne: To what extent are these large profits due to the continued rise in the price of raw materials; and if they are due to that, is there not likely to be a general rise in world prices?
    Mr. Wilson: I could not give that information without notice.
    Mr. Attewell: Will my right hon. Friend make it quite clear that the profits of boot manufacturers are due entirely to profits on the distributive side, which are in a different category?
    Mr. Wilson: Yes, Sir.

    Newsprint (Price)
    Mr. Lipsonasked the President of the Board of Trade if he will substantially reduce the price of newsprint to enable an increase in the size of newspapers to be financially possible in the near future.
    Mr. H. Wilson: The maximum price at which newsprint may be sold is at present under review and I hope to be able to issue a new Control Order in the near future.
    Mr. Lipson: While welcoming that reply, may I ask the right hon. Gentleman if he is aware that, unless there is a substantial reduction in the price it will not be possible for newspapers to take advantage of the increased supply; and will he bear that in mind in fixing the revised allocation?
    Mr. Wilson: I hope the hon. Gentleman will await the new order which I hope to issue as soon as possible.

    Paper Supplies (Football Pools)
    Mr. William Teelingasked the President of the Board of Trade whether he will now take steps to annul Section 2 of the Paper (Use in Betting Schemes) Order, 1947.
    Mr. H. Wilson: No, Sir.
    Mr. Teeling: As the order referred to in the previous Question, which helps magazines and papers, does not affect this position, will he look into the matter again?
    Mr. Wilson: No, Sir. The new order relates to newsprint and will not affect the supply of paper for football pools. If we were to annul this section I am quite satisfied that there would be an increase in the amount of canvassing by football pools, which I am sure none of us wants to encourage.
    Mr. Skeffington-Lodgeasked the President of the Board of Trade what paper allocation is made to each of the chief pool promoters; for what purposes this allocation is made; and whether, in view of a substantial part of it having recently been used for political propaganda, he will revise the quota in the case of each firm which has used its allowed tonnage for this purpose.
    Mr. H. Wilson: The football pool promoters are at present allowed to use paper for the purpose of operating their businesses to the extent of 1.25 per cent. of their pre-war consumption. There is no restriction on the amount of paper which they may acquire and use for the purposes referred to by my hon. Friend
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    and I could not therefore reduce, on this account, the quantity licensed to each firm.
    Mr. Skeffington-Lodge: Speaking generally, can my right hon. Friend give the House an assurance that these football pool promoting firms have been keeping within their proper quota of paper; and if he is not satisfied that they have been doing that, will he call for a report from them?
    Mr. Wilson: So far as the quota of paper for their business purposes is concerned, we are watching that very carefully, and if I receive any evidence that they are not keeping within their quota I shall, of course, take immediate action. The paper referred to by my hon. Friend was for another purpose, over which we have no control.
    Earl Winterton: Could the right hon. Gentleman say, for the information of the House and his hon. Friend, when political propaganda first became unpopular with the Socialist Party?
    Mr. Bramall: Has my right hon. Friend yet got any information from local authorities as to the degree to which the paper salvage drive has profited by this campaign?

    Hosiery Controller
    Mr. Errollasked the President of the Board of Trade the present functions of the Controller of Hosiery; what is his present salary; and what personal expenses did he incur during 1948.
    Mr. H. Wilson: The functions of the Hosiery Controller are, in general, to advise the Board of Trade and assist manufacturers in all matters relating to the hosiery industry, and in particular to allocate yarns, ensure the maximum production of hosiery practicable for export, and secure a proper balance among the various types of hosiery goods produced for the home market. The Controller is unpaid and received no personal expenses during 1948.
    Mr. Erroll: Can the President of the Board of Trade say for how long we are to have this volunteer controller?
    Mr. Wilson: For as long as necessary and not a moment longer.
    Mr. Jennings: Can the right hon. Gentleman say how many staff this official employs on a pay basis; or are they all voluntary?
    Mr. Osborne: Is the right hon. Gentleman aware, and will he state publicly, that this controller is one of the shrewdest businessmen who serve the country, that he has done a magnificent job, that the people in the industry welcome his work, and that his Department is one of the most efficiently run?
    Mr. Wilson: Yes, Sir. I am fully aware of that, and so are the trade. I hope the hon. Gentleman will have a little tête-à-tête with his hon. Friend the Member for Altrincham and Sale (Mr. Erroll) on this matter.
    Mr. Erroll: Does the Minister realise that perhaps my hon. Friend the Member for Louth (Mr. Osborne) is a candidate for this particular office?
    Mr. Wilson: No, Sir.

    Mission, Argentina (Cost)
    Mr. Errollasked the President of the Board of Trade the cost so far in Argentina of the present trade mission to the Argentine Government; and whether their local expenses have been paid in non-convertible or convertible sterling.
    Mr. H. Wilson: The cost so far in Argentina of the present trade mission is about £8,600, all paid in pesos purchased from non-convertible sterling.

    Cotton Purchase, U.S.A.
    Mr. Walter Fletcherasked the President of the Board of Trade the total expenditure made, and to be made, in dollars for cotton purchased from the United States of America during the six months ended 31st May, 1949.
    Mr. H. Wilson: As I informed the hon. Member on 17th June, 1948, I cannot give information about purchases made of particular growths by the Raw Cotton Commission.
    Mr. Fletcher: Is not the right hon. Gentleman aware that there is great anxiety as to the amount in dollars that is going out for this, against the amount of dollars that may be coming in; and will he not realise that it is in the public interest occasionally to give these figures,
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    as has been done in the case of other commodities?
    Mr. Wilson: No, Sir. I think that to publish figures for the currency available for the purchase of any particular type of cotton would greatly hamper our buying policy. That would apply equally whether we were buying on public or private account.

    Standardisation (Committee)
    Mr. Albuasked the President of the Board of Trade whether he has considered what contribution standardisation can make to economy of production and to the well-being of the country; and what action he proposes to take in the matter.
    Mr. H. Wilson: Yes, Sir. We are fully alive to the economic contribution which standardisation can make, both by savings in production costs and by guarantees to the consumer. We have given much consideration to the question and are convinced that our policy should be to encourage the progress of standardisation by every means in our power and to look to industry, working with and through the British Standards Institution, to do the work. We are fully conscious of the great progress industry and the B.S.I. are making, but we have felt that we should do everything within our power to help and stimulate it. It was for this reason that, for example, my right hon. Friend the Minister of Supply, as announced by him in the House on 22nd November last, in reply to a Question by my hon. Friend, set up a committee of representatives of industry under Sir Ernest Lemon to investigate how reduction in the variety of engineering products and components could be carried further and faster.
    It is clear, however, that further advances in standardisation, whether in the engineering field or elsewhere, will not be obtained without a good deal of hard work and careful technical examination, and without the fullest co-operation of industry in the drafting and adoption of Standards. This will mean that the B.S.I. will have more work to do and will assume an even more important place in the economy of the country than it does at present, and it will create problems of organisation and finance. The

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    question of an increased grant from the Government will have to be considered, but it seems necessary first that the constitution and functions of the Institution should be reviewed in the light of the policy I have announced, and I have, therefore, appointed a Committee, the terms of reference and the membership of which I am circulating in the OFFICIAL REPORT.
    Mr. Berry: Is my right hon. Friend aware that a campaign was run on these lines at least 40 years ago, and can he say why no further progress has been made since then?
    Mr. Wilson: I am not responsible for 36 of those years, but I think more progress has been made with standardisation, particularly in the field of those goods and building materials controlled by my right hon. Friends the Minister of Health and the Minister of Works, in the last four years than during the whole of the previous 36 years.
    Mr. Renton: Will the President of the Board of Trade bear in mind that standardisation has some disadvantages, that we should be cautious before becoming too enthusiastic about it, and that one of the disadvantages is that when a standard becomes firmly set, it sometimes becomes an obstacle to changes?
    Mr. Wilson: I am fully aware of that and for the need of having some degree of consumer choice, but far too many of the existing types are very much set in their ways, allowing an unreasonable degree of consumer choice in matters of size and specification which no one now considers necessary.
    Following are the terms of reference:
    "To consider the organisation and constitution of the British Standards Institution, including its finance, in the light of the increasing importance of standardisation and the extended size and volume of work likely to fall on the B.S.I. in future and to make recommendations."
    Mr. Geoffrey Cunliffe has agreed to act as Chairman of this Committee, and the B.S.I. have promised their warm co-operation in its work. The other members of the Committee are:
    Sir William Palmer, K. B.E., C.B., British Rayon Federation.
    A. V. Nicolle, Esq., The Automotive Engineering Co., Ltd.
    Roger Duncalfe, Esq., British Glues & Chemicals, Ltd.
    E. P. Harries, Esq., Trades Union Congress.
    O. W. Humphreys, Esq., General Electric Co., Ltd.
    Sir Ernest Lemon, Chairman of the Ministry of Supply Committee on Engineering Standardisation.

  POLICE FORCE

    Oaksey Report (Findings)
    Mr. Lipsonasked the Secretary of State for the Home Department (1) what representations he has received from the Superintendent's Central Committee and the Police Federation on the findings of the Oaksey Report; and what action he proposes to take on them;
    (2) if he is aware that dissatisfaction exists among police officers with certain aspects of the Oaksey Report; and if he will give further consideration to the matter so as to meet the objections that have been raised.
    The Under-Secretary of State for the Home Department (Mr. Younger): At the recent meeting of the Police Council the representatives of the superintendents and Police Federation raised a number of matters on the Report; but they accepted the position that it would not be practicable to pick and choose among the recommendations made by the Committee and that effect should be given to the Report as a whole. Provision has however been made in the draft Police Pensions Regulations now before the House to meet the special position of members of the forces who were serving on 28th August, 1921, and who are compelled to retire by the operation of the age limit. My right hon. Friend is also taking steps after consultation with the Superintendents' Central Committee and the local authority Associations to overcome hardships which may arise in individual cases consequent on the introduction of the new grading system for superintendents.
    Mr. Lipson: Can we have an assurance that no police officer of any grade will be worse off in any way under the terms of this award, and is the Under-Secretary satisfied that the decisions arrived at will have the desired effect of encouraging

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    recruitment and will satisfy existing members of the forces, because there is a good deal of evidence that there is still dissatisfaction at present?
    Mr. Younger: Dealing with the last part of the supplementary question first, I think it is clear that a number of people in the Police Force would have liked higher awards than are suggested under the Oaksey Report, but that was to be expected. Their representative bodies have, however, accepted the position as indicated in my answer.
    Mr. W. J. Brown: Can the Under-Secretary tell us the effect of the report upon resignations from the Police Force and recruitment to the force since the new Oaksey concessions were announced?
    Mr. Younger: I certainly could not do that without notice, but I think it is a little early to be giving figures.
    Mr. Mellish: Is my hon. Friend aware that one of the anomalies arising was the question of pensions of those about to retire, and that what he has said on behalf of his right hon. Friend will cause a great deal of satisfaction among those concerned?
    Mr. Younger: I apologise to the hon. Member for Cheltenham (Mr. Lipson) for not having answered the first part of his supplementary question. I think it is substantially the case that under this report no police officer will be worse off, but we have to take one recommendation with another and look at the matter as a whole.
    Mr. Rankin: Can my hon. Friend say if the terms of his answer cover the objections which have come from various grades in the Scottish Police Service?
    Mr. Younger: I cannot undertake to deal with every objection that has been raised from every quarter.
    Mr. Shurmer: Will my hon. Friend pass on to his right hon. Friend the fact that in Birmingham there is great dissatisfaction, and that among the many complaints is the fact that there is no question of back-dating the award as has been done with the awards in other walks of life?
    Mr. Speaker: We shall be debating this matter later on, I think.

    Assault Case, Dalston (Inquiries)
    Mr. Piratinasked the Secretary of State for the Home Department whether he has any report to make of progress by the police in tracing the assailants of the two Dalston boys on 30th April; and if he will make a statement.
    Mr. Younger: My right hon. Friend is informed that every possible inquiry is being made by the police, but so far it has not been possible to identify the assailants.
    Mr. Piratin: In view of the anxiety in the neighbourhood about this matter, is the Under-Secretary in a position to give some details to the House about the steps the police have taken, without of course divulging anything which may be of value to the suspects, and can he say whether a certain public house, of which I think he has been informed, is under scrutiny by the police?
    Mr. Younger: I think it would be very undesirable for me to go into details of what the police are or are not doing in a matter of this kind. I can only repeat that my right hon. Friend is satisfied that every possible step is being taken by the police.
    Mr. H. Hynd: Can my hon. Friend say whether the car used by the assailants, the number of which was supplied to the police, has been traced, and if not why not?
    Mr. Younger: I do not think it is advisable I should go into details of what the police have or have not so far managed to elucidate.

    Pensions Regulations
    Mr. Bechervaiseasked the Secretary of State for the Home Department whether, in view of the fact that serving policemen are to be required to express an option as to whether they accept or refuse averaging of pay for the purposes of pension, he will give an assurance that those members of the service who joined before 5th July, 1948, who opt to accept averaging will retain their safeguard under Section 2 of the Police Pensions Act, 1948.
    Mr. Younger: Yes, Sir. My right hon. Friend is advised that officers who are

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    members of police forces on 1st July, 1949, and who elect, under Regulation 87 of the draft Police Pensions Regulations now before Parliament, to have their pensions based on the average of their pay for the three years preceding retirement retain the safeguard contained in Section 2 of the Police Pensions Act, 1948, in relation to any future amendments of the Police Pensions Regulations.
    Mr. Bechervaise: Does that mean that the officers opting for averaging, who were in the force prior to 5th July, 1948, and have been promoted late in their careers, will receive pensions appropriate to their rank?
    Mr. Younger: This provision for opting has been introduced to ensure that on this occasion when the pensions regulations are altered, there should be no possible question of infringement of the safeguard introduced last year.
    Earl Winterton: In view of the great interest taken in this question, quite apart from any political point of view, will the Under-Secretary look into the terms of the order which his right hon. Friend is moving on Tuesday next, to see whether words cannot be added, to bring into Order discussion of the sort of points which have been raised on this question, and which show that the House has considerable doubt as to what is to be effected?
    Mr. Younger: I appreciate the point, but what would or would not be in Order in that Debate is a mater on which I cannot answer.

  HOUSING

    Empty Houses, London
    Mr. Platts-Millsasked the Minister of Health if he will now publish a list showing the number of empty houses in each Metropolitan borough, disclosed by the recent survey undertaken at his recent request.
    The Minister of Health (Mr. Aneurin Bevan): I will, with permission arrange for the figures to be published in the OFFICIAL REPORT.
    Mr. Platts-Mills: Does that mean that the figures have already been obtained?
    Mr. Bevan: It means that they will be published in today's OFFICIAL REPORT.
    Following are the figures:

    Numbers of empty houses in each Metropolitan Borough, as listed by the local authorities.

    Battersea

    160

    Bermondsey

    33

    Bethnal Green (also an unstated number of semi-obsolete properties)

    4

    Camberwell

    373

    Chelsea

    41

    Deptford

    39

    Finsbury

    153

    Fulham

    132

    Greenwich

    260

    Hackney

    249

    Hammersmith

    Nil

    Hampstead

    833

    Holborn

    81

    Islington

    665

    Kensington

    235

    Lambeth

    864

    Lewisham

    296

    Paddington

    518

    Poplar

    563

    St. Marylebone

    364

    St. Pancras

    334

    Shoreditch

    205

    Southwark

    86

    Stepney

    300

    Stoke Newington

    40

    Wandsworth

    206

    Westminster

    341

    Woolwich

    140

    Total

    7,515

    (1) The majority of the houses included in the lists are fit only for demolition.
    (2) The Borough Councils are continuing to requisition and adapt those empty houses which are suitable and can be dealt with at reasonable cost.
    (3) A number of houses, mainly in Westminster, Kensington and Paddington, are being prepared as half-way houses for over 400 families. This accommodation will be used for families from all parts of London.
    (4) I am considering what further use can be made of these empty houses, but it is unlikely that much additional housing accommodation can be obtained.

    Private Building Licences
    Mr. John E. Haireasked the Minister of Health if he will instruct local authorities not to include private building licences granted for agricultural purposes in the normal ratio of licences for private building.
    Mr. Bevan: The discretion given to local authorities to issue licences up to one-fifth of their allocation is the utmost concession that can be made at this time consistently with the housing policy of

    439
    the Government that houses should be available at reasonable rents to those in the greatest need.
    Mr. Haire: Is my right hon. Friend aware than in certain rural areas agricultural priorities absorb all the available licences, to the great vexation of nonagricultural people? Could there not be a fairer apportionment?
    Mr. Bevan: Priority has been given to agriculture and to mining. To give further houses would be at the expense of other people's needs in other parts of the country.
    Mr. Baldwin: Is the Minister aware that it is not only private houses, but houses for agricultural workers that are held up, in the submission of schemes by councils, before they can get past the various authorities?
    Mr. Bevan: The fact that the housing schemes now in operation are the utmost that our physical resources admit is the complete answer to the hon. Gentleman's statement.

    SUNDAY OBSERVANCE ACTS
    Mr. William Shepherdasked the Secretary of State for the Home Department whether it is his intention to introduce legislation to deal with the anomalies arising out of the Sunday Observance Acts.
    Mr. Younger: I would refer the hon. Member to the answer given by my right hon. Friend on 17th February last to my hon. Friend the Member for Dagenham (Mr. Parker).
    Mr. Shepherd: Does that mean the Government intend to continue condoning the practices under these Acts which are regarded by many people as being highly undesirable?
    Mr. Younger: I do not think that is the way to put it. I was asked whether legislation was contemplated, and the reply to which I referred the hon. Member was to the effect that my right hon. Friend can hold out no prospect of early legislation.
    Mr. Benn Levy: Will my hon. Friend bear in mind that it is highly desirable to
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    prevent ill-disposed busybodies utilising ancient laws for the purpose of interfering with individual liberties in the manner of the Lord's Day Observance Society.

  NATIONAL HEALTH SERVICE

    Treatment (Information)
    Mr. Collinsasked the Minister of Health whether, in view of the uncertainty among a considerable section of the community about their rights to hospital and specialist treatment under the Health Service, he will issue, on a national scale, a leaflet indicating the main types of treatment available and the methods to be followed in securing them.
    Mr. Bevan: A leaflet on these lines was distributed to every household in the Spring of 1948, and information is also available at local information bureaux.
    Mr. Collins: Is my right hon. Friend aware that patients, having been informed by the doctor that they are urgently in need of specialist treatment, are often told that they can obtain it only if they pay privately?
    Mr. Bevan: I should like to have information of any case of that sort, because f that is done, it is, of course, extremely improper.

    Dentures (Quality)
    Mr. Collinsasked the Minister of Health if he is aware that some dentists, by alleging that dentures of a satisfactory standard of quality and workmanship cannot be supplied under the Health Service, are inducing patients to pay high prices for private treatment; and what steps he proposes to take to end this practice and to inform the public of the true position.
    Mr. Bevan: A dentist who disparages the quality of treatment or appliances available under the National Health Service in order to induce a patient to pay privately, may well be committing a breach of his terms of service and any such case should be referred to the Executive Council for investigation under the regulations.

    Hospital Patients
    Mr. Collinsasked the Minister of Health if he will draw the attention of

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    regional hospital boards to the importance of ensuring that priority in the allocation of private wards is given to non-paying patients who are in need of privacy on medical grounds.
    Mr. Bevan: My information is that boards already follow this practice, but I shall be glad to look into any case if my hon. Friend will give me particulars.
    Mr. Collins: Is my right hon. Friend aware that the difficulty usually arises when the private beds are filled with paying patients and a non-paying patient needs a bed on medical grounds and none is available? Will he draw the attention of the regional hospitals boards to this point?
    Mr. Bevan: I have made an audit as to what extent this is happening, and I have taken the return in 69 hospitals having 847 private pay-beds. Of those, 342 were at the time of the inquiry occupied by non-paying patients on medical grounds.
    Mr. Platts-Millsasked the Minister of Health if the review has been completed of the waiting lists of hospitals in respect of each of the London regional

    WAITING LISTS OF THE LONDON REGIONAL HOSPITAL BOARDS

    Medical

    Surgical

    Ear Nose and Throat

    Tuberculosis

    Others

    Total

    N.W. Metropolitan

    …

    1,150

    14,386

    7,000

    1,438

    483

    24,457

    N.E. Metropolitan

    …

    453

    9,344

    6,259

    1,058

    4,172

    21,286

    S.E. Metropolitan

    …

    617

    5,719

    10,129

    1,128

    5,700

    23,293

    S.W. Metropolitan

    …

    853

    7,934

    8,082

    1,098

    3,066

    21,033

    90,069

    It will be noted that a very large proportion of the waiting lists consist of Ear, Nose and Throat cases, the majority of them are awaiting tonsillectomy.

    Spectacles
    Sir Waldron Smithersasked the Minister of Health why William Barnes, of 10, Faraday Avenue, Sidcup, who had his eyes tested on 26th November, 1948, is still without glasses after six months and five days.
    Mr. Wyattasked the Minister of Health why Mr. W. R. Hands, 164, Fenton Road, Handsworth, Birmingham, who is 83 years old, has not yet received glasses under the National Health Scheme which he urgently needs, and for which he has been waiting since November, 1948.
    hospital boards; and if he will now publish a list showing the numbers of patients on each list as at the last convenient date.
    Mr. Bevan: Yes, Sir, but as the answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Platts-Mills: Is the Minister aware of the deep anxiety amongst the public and amongst doctors at the length of waiting lists, and will he take some steps to grapple with that situation?
    Mr. Bevan: I have already asked the Central Health Services Council to inquire into what urgently can be done in this matter, but it would be quite a mistake to say that the lists are unusually or abnormally long.
    Mr. Lipson: Can my right hon. Friend say how these lists compare with the lists before the National Health Service came into operation?
    Mr. Bevan: The answer to that is that the information was never accurate and we could not make a comparison, but we know they were very long lists.
    Following is the answer:
    Mr. Bevan: I refer the hon. Members to my reply to my hon. Friend the Member for East Islington (Mr. E. Fletcher) on 19th May.
    Sir W. Smithers: Is not that answer evidence of the inability of this Government to fulfil their promises?
    Mr. Bevan: All arrangements are being made for the production of spectacle lenses at the present time, and more than 50 per cent. more are being produced than was the case before 5th July. Most of the lenses are provided by private enterprise.
    Mr. W. Griffiths: Is my right hon. Friend aware that these typical delays are due to shortages of spectacle lenses, and is he doing anything to bring in supplies from abroad and particularly from the soft currency areas, to meet this demand?
    Mr. Bevan: Yes, we have purchased lenses from abroad in order to meet the unusual demand, and we are using all the resources at our disposal.
    Mr. Shurmer: Is the Minister aware that there are some people, who, realising the shortage of lenses, attend their opticians as private patients and so get their glasses in five or six weeks by paying for them, while others have to wait six or seven months?
    Mr. Bevan: If my hon. Friend will give me particulars I will have the cases examined.
    Mr. Bramall: Is it not a fact that my right hon. Friend has been in correspondence with my hon. Friend the Member for Chislehurst (Mr. G. Wallace) on the subject of Mr. Barnes' case in view of the fact that Mr. Barnes is a constituent of my hon. Friend?
    Mr. Bevan: Certainly.

    Dental Treatment
    Mr. George Jegerasked the Minister of Health whether he is aware that dentists in Winchester are refusing to accept patients under the National Health Service; and whether he will take immediate action to deal with this unofficial strike.
    Mr. G. Thomasasked the Minister of Health whether he has considered correspondence from the Cardiff dentists indicating a refusal to undertake any more dental work under the Health Act; and what action he proposes to take.
    Mr. Bevan: I am aware that in several parts of the country some dentists have announced that they propose to accept no more patients under the National Health Service for the present, but I hope that on further reflection wiser counsels will prevail.
    Mr. Jeger: Would my right hon. Friend consider using the armed Forces of the Crown to break this strike, as they
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    have been used in other cases? Would he consider asking his right hon. Friend the Secretary of State for War to get the Army Dental Corps to open up surgeries?
    Mr. Bevan: Probably the Services dental organisation is already fully occupied. If I can find out that there are idle dentists in the Services, I will have a talk to my right hon. Friend about it.
    Mr. Thomas: Can my right hon. Friend tell us when he expects to be able to say that this difficulty has been cleared up? Dentists in Cardiff are rushing to fill their lists to be paid under the old system, and they can afford to go on for a time.
    Mr. Bevan: That is why I would not take too much notice of these threats at the present time. We have had the threats before and they have not always been fulfilled.
    Mr. Renton: Would it not be fair to add that a large number of dentists have been overworking ever since the Health Service began, that many of them have worked themselves to a standstill, and that this is one of the few things that are left to them to do?
    Mr. Bevan: It is true that many dentists have been working very hard since the scheme began. The whole country is grateful to them. It is also clear that they have been excellently rewarded.

    Surgery Accommodation, Grangetown
    Mr. G. Thomasasked the Minister of Health what further steps he has taken to ensure that the four Grangetown doctors who share one surgery, having closed their other surgery when the new Health Act came into force, are fulfilling their obligation to provide adequate surgery accommodation for their patients, in view of the daily queues caused by the present inadequate facilities.
    Mr. Bevan: This is primarily a matter for the Cardiff Executive Council but I understand that one of the doctors is proposing to apply for a licence to build a residence near Cardiff and would then be able to vacate the accommodation which he and his partner occupy at the premises at 150, Clare Road, Grangetown.
    Mr. Thomas: While thanking my right hon. Friend for that reply, may I ask him to convey to the local executive council a deep sense of urgency in this matter, as there is considerable public inconvenience?
    Mr. Bevan: I am sure that the executive council will be aware both of the Question and of the answer.

    WATER SUPPLIES (HORNCASTLE AND SPILSBY)
    Commander Maitlandasked the Minister of Health on how many occasions the Horncastle and Spilsby Rural District Councils have been informed of the amount of grant which the water schemes which they have proposed will attract.
    Mr. Bevan: The Horncastle Rural District Council have been informed that a grant of £1,100 will be made towards one small water supply scheme. No grant has yet been promised to the Spilsby Rural District Council.
    Commander Maitland: Does not the right hon. Gentleman think that it would be of great assistance to local authorities in getting on with the work of supplying water in these outlying rural areas if the local authorities were informed what the grant will be, and will he not see that this is done?
    Mr. Bevan: I cannot inform local authorities what the grants will be until we know what the cost will be.

    OFFICIAL HISTORIES OF THE WAR
    Mr. R. A. Butlerasked the Prime Minister when the publication of the Official Histories of the War is likely to begin.
    The Prime Minister (Mr. Attlee): As the House is aware, the Official Histories of the War are being prepared in two series, a military series and a series dealing with the civilian war effort. The first volume in the civil series is being published today. It is "British War Economy" by Professor W. K. Hancock, Chichele Professor of Economic History at the University of Oxford, who is the editor of the series, and Mrs. M. M. Gowing. This is in the nature of an introductory volume to the series, and
    446
    gives a general survey of the central direction and development of economic policy during the war.
    Mr. Butler: Could the Prime Minister say how soon we may expect further volumes on the war effort apart from the civil front, and how soon we may expect further volumes on the civil front?
    The Prime Minister: I am afraid I could not give the information with regard to the volumes on the civil war effort without notice, but the military history will take some time.
    Mr. Osborne: Could the Prime Minister tell us what the price of the volumes will be?
    The Prime Minister: I am afraid I have not got that information

    ROYAL COMMISSION ON POPULATION (REPORT)
    Mr. Swinglerasked the Prime Minister if he will make a statement on the report of the Royal Commission on Population.
    The Prime Minister: The report is receiving the consideration of the Government. In view of the range of the recommendations it will not be possible to make a statement in the immediate future.
    Mr. Swingler: Will the Prime Minister express to the members of this Commission what is, I am sure, the feeling of all intelligent citizens, our indebtedness for the valuable work done; and is he further aware that apparently less intelligent parents like myself, who enjoy having bigger-than-average families, eagerly await the Government's decision?
    Mr. Wilson Harris: Is the Prime Minister aware that a message in an evening paper today, emanating from Wimbledon or some such place, bears the heading "Britain's Only Survivor"? Will he undertake to grasp the situation firmly before it comes to that?

  AGRICULTURE

    Land (Nationalisation)
    Major Tufton Beamishasked the Minister of Agriculture what demands he has received from bodies representative of agricultural interests that the land

    447
    should be nationalised in accordance with long-standing promises; and what detailed consideration he has given to this question.
    The Minister of Agriculture (Mr. Thomas Williams): I have received no such demands.
    Major Beamish: Is the Minister aware that his recent statement that in the unlikely event of the Socialist Party winning the next Election they will not proceed with the nationalisation of land, has given great satisfaction to all sections of the rural community?

    Eggs (Winter Prices)
    Lord Willoughby de Eresbyasked the Minister of Agriculture whether he will consider introducing at an earlier date than usual the winter price for eggs so as to off-set, in some measure, the burden falling upon egg-producers through the recent sharp rise in the cost of poultry feed.
    Mr. T. Williams: I would refer the noble Lord to the answer I gave on 11th April last to the hon. Member for Evesham (Mr. De la Bère) in which I pointed out that when the price for eggs for the year 1949–50 was fixed full account was taken of all relevant factors, including recent increases in the prices of feedingstuffs.
    Lord Willoughby de Eresby: Could the right hon. Gentleman give any indication when the winter price will, in fact, come into force?
    Mr. Williams: I am afraid it will be doubtful wisdom to do so, because people would only hold back the eggs until the higher prices come along.

    Horses
    Mr. Osborneasked the Minister of Agriculture how many working farm-horses are employed in agricultural work today; and what was the corresponding figure in 1939.
    Mr. T. Williams: The number of horses used for agricultural purposes, including mares kept for breeding, as returned by occupiers of more than one acre of agricultural land in England and Wales was: 384,000 in June, 1948, compared with 549,000 in June, 1939.
    Mr. Osborne: Could the Minister say whether the numbers are still falling?
    Mr. Williams: I have not got the June returns for this year yet.

  NATIONAL FINANCE

    Sterling Area (Dollar Losses)
    Mr. W. Fletcherasked the Chancellor of the Exchequer how many United States dollars have been lost to the sterling bloc in the six months ended 31st May through sales of wool, hides and skins, rubber and diamonds, respectively, made by countries outside the sterling bloc who purchased these commodities in sterling and resold them in dollars.
    The Economic Secretary to the Treasury (Mr. Douglas Jay): I am not able to give any reliable figure for these losses but I take a serious view of them.
    Mr. Fletcher: In view of the fact that it is probable that this loss will run into some tens of millions of dollars and owing to the very serious position in regard to the dollar, would the hon. Gentleman take some more drastic and effective action than he has done up to date in view of the fact that the leakage has been known and put before him for well over a year?
    Mr. Jay: As the hon. Gentleman knows, we have been taking very drastic steps for a long time past, as my right hon. and learned Friend said only the day before yesterday in this House, and we are taking further steps now, including consultation with the Governments concerned.
    Mr. Gallacher: Is the Minister aware that I received 30 United States dollars yesterday for royalties on a book entitled "The Case for Communism," and will the hon. Gentleman encourage the sale of this book so that it will be a real dollar earner?
    Mr. Fletcher: Will the Economic Secretary realise that consultations have gone on for over a year without having the slightest effect, and that they must now be replaced by action?

    Income Tax
    Mr. W. Fletcherasked the Chancellor of the Exchequer whether, in view

    449
    of the fact that in making Income Tax returns, it is legitimate to deduct, by way of expenses, a reasonable expenditure upon necessary entertainments, the Commissioners of Inland Revenue will accept claims for such expenses incurred prior to 5th April, 1948.
    The Financial Secretary to the Treasury (Mr. Glenvil Hall): I am not clear as to the type of case which the hon. Member has in mind. If he would send me particulars I will look into the matter.
    Mr. Boyd-Carpenterasked the Financial Secretary to the Treasury whether he will reconsider the decision to insist upon the payment of Income Tax in a case, particulars of which have been sent to him, in which the liability arose while the taxpayer was a prisoner of war in respect of earnings by the taxpayer's wife, despite express requests by the latter to the Inland Revenue at the time that appropriate deductions by way of Pay as You Earn should be made from her earnings.
    Mr. Glenvil Hall: I have recently written to the hon. Member about this case.
    Mr. Boyd-Carpenter: Is the right hon. Gentleman aware that, while his letter is couched in the usual courteous terms, it does not carry the matter any further; and is it not a fact that this liability arose while the taxpayer was a prisoner of war in Germany and arose solely by reason of an error in the tax office? In the circumstances, is it fair to pursue this man into civil life with this liability?
    Mr. Glenvil Hall: Unfortunately, I have not the authority to allow arrears of Income Tax to go unpaid. Secondly, there is some dispute whether the facts alleged by the hon. Gentleman are correct.
    Mr. Boyd-Carpenter: Arising out of the first answer, is the right hon. Gentleman taking any steps on the Finance Bill to arm himself with the powers which he says he unfortunately lacks?
    Lieut.-Colonel Elliot: Will not the right hon. Gentleman give some answer to this question, because it was admitted generally by the House over 12 months ago that the House would be only too willing to see this moderate reform carried out?
    Mr. Glenvil Hall: It can hardly be described as a moderate reform, but the point is, if people who owe arrears of tax do not pay, then those who have paid might feel it would be very unfair to them.
    Lieut.-Colonel Elliot: Is not this a most unfortunate attitude on the part of the Financial Secretary. [Interruption.] I am asking whether the right hon. Gentleman does not feel that it is a most unfortunate attitude that we must avoid all reforms of small injustices because great injustices go unredressed?

    RICCALL HALL, YORK
    Mr. Odeyasked the Secretary of State for War whether, in view of the fact that Riccall Hall, York, has stood empty for several months in the care of three watchmen working on shifts to prevent squatters, he will take steps to derequisition this building, if it is no longer required by Government Departments, in order that it may be used to alleviate the housing problem in Riccall.
    The Under-Secretary of State for War (Mr. Michael Stewart): This property is now no longer required by the War Department and in accordance with normal procedure is being notified as redundant to the Ministry of Works. Any application by the local authorities for the use of this property for housing would be a matter for my right hon. Friend the Minister of Health in consultation with the Minister of Works.
    Mr. Odey: Would the Minister bear in mind the intense irritation that is caused when premises of this kind are left unoccupied for some months, at a time of acute housing shortage?
    Mr. Stewart: I should point out that this property was offered to the local authorities for housing purposes and was refused by them before it was requisitioned by the War Department.

BUSINESS OF THE HOUSE
Mr. Eden: May I ask the Leader of the House to tell us the Business for next week?
The Lord President of the Council (Mr. Herbert Morrison): Yes, Sir. The Business for next week will be as follows:
Monday, 27th June and Tuesday, 28th June—Conclusion of the Committee stage of the Finance Bill.

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Wednesday, 29th June—Second Reading of the Airways Corporation Bill; and of the Patents and Designs Bill [Lords], and Committee stage of the necessary Money Resolutions.
Thursday, 30th June—Supply (18th Allotted Day); Committee. Debate on Industry and Employment in Scotland, with particular reference to Agriculture, Food and Transport.
Friday, 1st July—Report and Third Readings of Private Members' Bills.
During the week the House will be asked to consider the Motions to approve the Draft Police Pensions Regulations and similar Regulations for Scotland.
Mr. Eden: I would ask the Leader of the House whether he does not think that Wednesday's business is rather heavy. I understand that both Bills are likely to involve some considerable discussion. I presume that this is the only day on which the right hon. Gentleman can put down the Draft Police Pensions Regulations. We have been told at Question Time that there is a great deal of interest in that matter in all parts of the House. Could some re-arrangement be considered so as not to take the Draft Police Pensions Regulations at a very late hour?
Mr. Morrison: My difficulty is that the regulations are timed to operate from 1st July. We must get them by that date. I thought, contrary to what the right hon. Gentleman has said, that Wednesday's programme was pretty light. The Airways Corporation Bill is limited to merging two of the Airways Corporations. The Patents and Designs Bill is a technical Measure which everybody will understand. I did not think there was much controversy about it. I was therefore hoping that those two Measures would be dealt with fairly expeditiously, so that the House could get to the Draft Police Pensions Regulations at a reasonably early hour. We are as I say, in the difficulty that they operate from 1st July.
Mr. Eden: I hope that the right hon. Gentleman's optimism on the Patents Bill is justified. I understand that there were about 100 Amendments in the other place.
Mr. Morrison: Then they have done a good job.
Mr. Eden: For which tribute, many thanks. I would ask you, Mr. Speaker, a question in connection with the Draft Police Pensions Regulations. Can you give me any guidance about the extent to which it will be in order to discuss the recommendations of the Oaksey Committee, about which Questions were asked today, so far as they affect police pensions?
Mr. Speaker: I have been asked to give a Ruling on this point, and I have looked the matter up. These draft regulations implement only the recommendations of the Oaksey Report dealing with pensions. Only the part of that Report dealing with pensions can be discussed in the Debate upon the regulations. That, of course, leaves out all matters connected with pay.
Mr. Lipson: Can the Leader of the House give an assurance that there will be adequate time for discussion of the Police Pensions Regulations in view of the fact that many members of the Police Force are not too happy about them and that the least they can expect is that the regulations will be adequately discussed in this House before they are brought into operation?
Mr. Morrison: It is really up to the House as to how far we can deal reasonably expeditiously with the other Bills. While I have no right, and would not presume to order the House in that respect, I would, nevertheless, say that there was reality in what was said by the hon. Member, and I very much hope that we can get co-operation generally with a view to handling the other business reasonably expeditiously so that there can be fairly good time for the discussion of the Police Pensions Regulations.
Mr. Skeffington: Can my right hon. Friend say if time will be given to discuss the Interim Report of the Leasehold Committee, which deals with the subject of business premises?
Mr. Morrison: I appreciate that that is a matter of very great importance and intense interest. I understand that a Question is down to my right hon. Friend the Prime Minister for Monday. Perhaps we might await what he says. The Report has not been in the hands of the Government for a long time—it is quite recent—and we have not yet made up our minds about it, so that I am afraid that

453
I cannot give any clear reply to my hon. Friend. However, I will take note of what he says.
Mr. Platts-Mills: Has the Leader of the House yet been able to consider the question of giving time for discussion of the Motion in the name of my hon. and learned Friend the Member for North Hammersmith (Mr. Pritt) and myself about trade union recognition for the custodians and other workers in the House.
[That, in the opinion of this House, the refusal of the Lord Great Chamberlain to consult with the Civil Service Union or other bona fide trade union regarding the terms and conditions of employment of the custodians and coal porters employed in and about the Palace of Westminster is not in accord with present day conceptions of industrial relationships, and is a matter for regret.]
When I raised the matter previously, the Leader of the House said that he would be good enough to consider it, but in view of the obdurate refusal of the Lord Great Chamberlain to recognise the trade union to which all these men belong—
Hon. Members: Oh.
Mr. Speaker: The hon. Member must not make reflections on the Lord Great Chamberlain.
Mr. Platts-Mills: I withdraw the word "obdurate." In view of the refusal of the Lord Great Chamberlain to recognise the union, and in view of the much fuller information about the negotiations and so on, now in the hands certainly of all hon. Members on this side of the House, cannot the Leader of the House consider that Motion?
Mr. Morrison: I have no recollection of promising the hon. Gentleman consideration on that point. I think I indicated that I thought a Debate would be inappropriate. These high officers who deal with these matters in relation to Parliament are not, I think, under Parliamentary control, and indeed, Mr. Speaker, the promptness with which you had something to say to the hon. Member indicates to me that it would be a difficult matter for the House to take up by way of Debate. I am, therefore,
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afraid that I cannot give an undertaking about it.
Mr. Blackburn: In relation to the intention of the Government to introduce a revised Supplies and Services Act, can the Leader of the House say whether that will take place in the lifetime of this Parliament?
Mr. Morrison: My hon. Friend, who is a close student of political affairs, ought to know that the statement which somebody made at Blackpool, I understand, clearly related to the programme of a certain political party in relation to the next General Election and was not a pronouncement on behalf of this Government in this Parliament.
Mr. Walter Fletcher: Can the Leader of the House say if an opportunity will be given very shortly to debate the new and very serious situation that is arising in China?
Mr. Morrison: I should have thought it would be somewhat premature to discuss that situation at this juncture and that it might come later on. It is a matter really for the Opposition to consider in relation to Supply, but I should have thought it would have been injudicious as things stand.
Mr. Godfrey Nicholson: As the Committee stage of the Finance Bill may be considerably protracted, is the decision to conclude the Committee stage on Tuesday irrevocable?
Mr. Morrison: Yes, Sir. Somehow we must finish it on Wednesday. [HON. MEMBERS: "Why?"] So that we can get it on to the Statute Book within the proper time. I really think four days for the Committee stage of the Finance Bill adequate. It all depends on whether the House uses its time with reasonable economy. If the House prefers to discuss at considerable length matters which are not of such importance as to justify it, which it is competent for the House to do, it means that the House must sit later. I am sorry about that, but it is not unusual for long sittings to take place on the Finance Bill under all sorts of Governments.
Mr. Nicholson: What is the reason for the enormous hurry?
Mr. Oliver Stanley: Is the Leader of the House aware that although the period

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of four days allotted is too short, on one of those days we shall be without the presence of the Chancellor of the Exchequer? In view of that, would it not be possible, in considering any re-arrangement of Business for Wednesday, to give us, say, half a day on Wednesday and allot the rest, perhaps, for the Police Pensions Regulations, which would then give ample time for discussion at a proper time of day?
Mr. Morrison: I always regret any Member of a Front Bench contradicting another Member of a Front Bench. The right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden) has represented to me that the Business on Wednesday is already overloaded. Therefore, I do not see how this half day can be given. I deplore this lack of unity on the Opposition Front Bench. I am afraid that that suggestion is not possible. As to the absence of the Chancellor of the Exchequer, I do not see that that affects the issue of time one way or the other.
Mr. Nicholson: Does the Leader of the House recognise that discussions on the Finance Bill are among the most precious rights of hon. Members of this House, and is it not rather undesirable that he should lecture the House on the use of its time in relation to a particular matter? In addition, is he not risking the loss of all Wednesday's Business?
Mr. Morrison: I do not think so. I think we shall be all right. My impression is that four days for the Committee stage is reasonable, particularly in relation to this Finance Bill. I really do not think we have been ungenerous, and if we can help each other, I am sure that we shall get through with adequate consideration of the essential points involved.
Mr. Gallacher: Reverting to the Motion referred to by my hon. Friend the Member for Finsbury (Mr. Platts-Mills), if we do not have a discussion on that Motion, will it be possible to have any discussion if the custodians and workers come out on strike for trade union recognition?
Mr. Morrison: The hon. Gentleman's political party has done quite enough in that direction without starting it up in this House.
Mr. Stanley: Referring again to the Finance Bill, is the Leader of the House aware that we are being given one day less this year than we had last year, and that even last year it was not possible to get through without at least one very late sitting? Is the right hon. Gentleman also aware that I made it quite plain that I was not suggesting the addition of half a day on the Finance Bill for Wednesday but a possible re-arrangement by which half a day on Wednesday could be devoted to the Finance Bill and the other half to the Police Pensions Regulations?
Mr. Morrison: I am very glad that the right hon. Gentleman has put that point right. With regard to the time factor, my recollection is that the Finance Bill last year did warrant more Parliamentary time than this one. It has to be remembered that, by the decision of the House itself, whereas last year numerous Amendments to the Purchase Tax proposals could be moved, and were moved, the House this year has deliberately decided that such Amendments shall not be moved.
Major Guy Lloyd: Could it be that the right hon. Gentleman's complacent remark that "we shall be all right" implies that the Government will use the Closure whenever they want to?
Mr. Morrison: I would much sooner these things were done by sweet reasonableness, if we can, than by the Closure.
Commander Noble: Would not things have been easier if we had not had quite such a long holiday at Whitsun?
Mr. Morrison: The hon. and gallant Gentleman is very ungrateful. The hon. and gallant Gentleman and all other hon. Members opposite have enjoyed their so-called holiday as much as anybody else. I did, except that I got too much Government paper.

SELECT COMMITTEES (EVIDENCE)
Sir Waldron Smithers: With your permission, Mr. Speaker, I desire to raise a point which I think is of great constitutional importance and to which you, Sir, kindly said that you would be prepared to give a Ruling. In the Minutes of Evidence taken before the Select Committee

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on Estimates on 18th January, 1949, the Chairman. I think gratuitously, said this to the witnesses:
"I should like to point out that you can speak with perfect frankness, because copies of the transcript are submitted to anybody who gives evidence, and you can sideline anything which you do not wish to appear in print, though the Sub-Committee reserve their right to base their recommendations on that evidence."
And another Chairman on 25th January, 1949, said this to the witnesses:
"We have to thank you for your attendance, gentlemen; and may I remind you that you may sideline any parts of your evidence which you think should not be made public."
I do not advocate any evidence being made public on subjects, such as atomic energy, which it might not be in the public interest to disclose. However, I ask you, Sir, to give a Ruling that with regard to evidence given before a Committee of this House, it should not be left to the discretion of the giver of that evidence whether it should be published or not, especially as the Committee take that evidence into consideration. It may be that a civil servant gives evidence which his Minister would not like and, when he shows it to the Minister, he says, "You had better wipe that out." I do not call that fair to the Committee, or to the House and I ask you for a Ruling because, as our liberties are being gradually filched from us, I think we ought to fight every step for our freedom of speech and freedom as Members of this House in order to see that evidence should be maintained as it is given upstairs in Committee.
Mr. Speaker: I think the hon. Member is under a misapprehension when he suggests that witnesses before the Select Committee on Estimates are allowed to suppress evidence that they have given before the Committee. The procedure is that the witness is asked to indicate for the information of the Committee if there is any part of this evidence which, for security reasons or in the public
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interest, he would prefer not to be published. It is then open to the Committee to decide whether or not that part of the evidence shall be reported to the House for publication.
As the hon. Member will see, in Erskine May, 14th edition, page 606, it is written as follows:
"It is usual to present the evidence to the House together with the report. A committee may, however, instead of reporting the whole of the evidence to the House, report only so much of it, or such summary of it, as the committee may judge necessary in order to present the grounds of its conclusions to the House."
Sir W. Smithers: I thank you, Sir, for the trouble you have taken to answer my question, but may I once again appeal to you to be a Sir Thomas More, even if you do lose your head, and stand up for the rights and liberties of hon. Members.
Mr. H. D. Hughes: Further to that point Mr. Speaker, would you make it clear that this is not a new procedure but has been the practice of the Select Committee for many years?
Mr. Speaker: That is laid down on page 606 of Erskine May. It is the procedure for Select Committees and not Committees of the House.

SCOTTISH ESTIMATES
Committee of Supply discharged from considering the Estimates set out hereunder and the said Estimates referred to the Scottish Standing Committee—
Class IV, Vote 14—Public Education, Scotland;
Class III, Vote 16—Approved Schools, Scotland;
Class V, Vote 13—Department of Health for Scotland;
Class V, Vote 14—National Health Service, Scotland.—[Mr. H. Morrison.]

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee. [Progress, 22nd June.]
  [Major MILNER in the Chair]

  FINANCE BILL

    Clause 14.—(CHARGE OF INCOME TAX FOR 1949–50.)
    3.45 p.m.
    Mr. David Eccles: I beg to move, in page 8, line 4, to leave out "nine shillings," and to insert "eight shillings and sixpence."
    I am sorry that the Chancellor of the Exchequer cannot be here this afternoon. We know he has been called away to critical negotiations in Brussels and even he cannot say "no" in two places at once. In view of the heavy pressure upon the £ sterling, we all hope that the issue of those talks in Brussels will be satisfactory to the United Kingdom.
    My right hon. and hon. Friends have put down this Amendment to reduce the standard rate of the Income Tax as a declaration of war against the burden of Socialist taxation. I wonder what hon. Gentlemen would have replied if, four years ago, when peace and Socialism arrived together, they had been asked what they expected the rate of Income Tax to be in the financial year 1949–50? I wonder if a single one of us imagined that we should still be paying 9s. in the £? Certainly that was not the view of His Majesty's Ministers, for it is well known that they instructed the Service Departments to work out the post-war scale of pay and allowances upon the basis of an Income Tax of 7s. 6d. in the £.
    An Income Tax of 7s. 6d. in the £ after four years of peace was a reasonable expectation and until this last Budget it was possible to go on hoping that one day it would be fulfilled. Now, however, those hopes are dead, for all who heard the Chancellor's Budget speech must have realised that so long as the Socialists do the spending there can be no more significant reductions in taxation. While their fingers are in the national till, the rates of tax falling upon personal incomes and upon the earnings of industry must remain unaltered.
    The Conservative Party utterly refuse to accept this kind of penal servitude as
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    part of the British way of life. When we take our stand on that, we are thinking of everybody, for the effort of carrying our present burdens must destroy the prosperity of all classes, whether they pay Income Tax or not. The Committee is well aware just how heavy those burdens are. The combined demands of the rates, taxes and insurance stamps now claim over 40 per cent. of the national income. That is extortion without parallel in time of peace, and if we look round the world we find in no country where freedom is valued are the people asked to carry anything like the British burden.
    I can speak only roughly, but to the best of my information the comparable rates are about 5s. in the £ in the United States, and in such different countries as Sweden, South Africa and France, they are between 4s. and 5s. in the £. That compares with our 8s. [HON. MEMBERS: "Nine shillings."] That compares with our 8s., taking the whole range of taxation as a proportion of the national income. The system of taxation by which we succeed in extracting this tremendous and unique proportion of the national income is as complex as any torture invented by the ancient Chinese, but the Committee will agree that among all these wealth-destroying instruments the centrepiece is the Income Tax.
    It is the Income Tax which is the heaviest stroke of all. That is why my right hon. and hon. Friends, when they were considering how best to make a plain protest against the gross weight of Socialist taxation, decided to move a reduction in the standard rate of Income Tax. I can hear the Economic Secretary, if he is to reply, say that if the Amendment is carried the Budget will be unbalanced; he will certainly ask us whether we are now in favour of a deficit. When we say that we are not, he will go on to make his stock inquiry, where would we cut expenditure? While I fear that on this Amendment I should not be in Order to answer that inquiry in detail, I hope that by way of illustration I may be allowed to say this.
    At some time or other we have all been faced with a situation in which we knew with absolute certainty what it was right to do but had not the particular knowledge to say exactly how it should be

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    done. It happened to me a few weeks ago. I wanted to get the builders out of my house. I had not, as the Committee will readily agree, the skill to do the builders' job for them. The only thing to do was to move in and to chivvy them until they finished and went. The time has come to move in upon these Socialist spendthrifts. For four years we have watched their profligate behaviour and we can now see that if they are left alone they will never economise and never reduce taxation.
    The Opposition are not in a position to say exactly how much and what waste can be cut out by each of these spending Departments, but we know for certain that several hundred millions of pounds must go. Therefore, we intend to move in on this Government and, by pressing the Amendment, to shake them out of their complacent extravagance.
    Mr. Benn Levy: As the hon. Gentleman confesses that he does not know, and is not in a position to know, where this saving of several hundred millions is to be found, why is he so certain that there is a saving of several hundred millions?
    Mr. Eccles: I do not suppose the hon. Gentleman has ever exceeded his income and had to go to his banker and talk to him about it, but if he had, his banker would not be prepared to tell him where he was to cut down; he would simply say, "You have got to cut down." That is the position we are in.
    We are certain to be told by the Government that there is no need to be alarmed about the present weight of taxation. Ministers must say, since they impose these taxes, that a standard rate of Income Tax of 9s. in the£is well within the capacity of the country to bear. If the Chancellor were here it would not surprise any of us if the right hon. and learned Gentleman rubbed in the salt by adding that it was good for our souls to surrender so much to the State. That sort of easy view about the weight of taxation sounds well at party conferences but it does not impress the man who has to pay, especially when he learns that he has to find more than half as much again as his opposite number in any of the free countries.
    Mr. Beswick: What does he get in return?
    Mr. Eccles: I am just coming to that. A short time ago the Economic Secretary tried to explain away the unique burden of British taxation by reminding us that the social services relieved our taxpayers of a number of payments which those in other countries have to meet out of their own pockets. To what extent is that argument true? A family which eats subsidised food and which has no school fees or doctor's bills to pay is saved substantial calls upon its purse. If we look at those reliefs from the expenditure side of the National Budget, and especially if we are making a speech from a party platform, it is quite easy to describe them as unqualified blessings. But are they unqualified blessings? If they were, why not have more of them? Why stop until food is completely free and rents are subsidised to the vanishing point?
    Of course, the answer is that, mixed up with the blessing of receiving, is the pain of finding the money. We cannot approve the expenditure side of the Budget until we have asked who pays, how they pay, and what effects the payments have upon the rest of their lives. When Ministers talk about the benefits of the vast total of Socialist spending they conveniently forget that the act of collecting the money to pay for those benefits leaves a deep scar upon the taxpayer's efficiency as a producer, upon his ability to save and upon his character as an individual. They forget that the act of collecting the money from industry diminishes the fund out of which plant and machinery can be improved or wages increased.
    The truth is that the gathering of the revenue itself sets up a chain of social and economic results that are quite independent of what the Government does with the money. If that was not so there might be an argument, although I should not support it, for raising not 40 per cent., but 60 or 70 per cent., of the national income and returning it to the people in the form of free food and free houses. Since, I suppose, no one in his senses would advocate that course, we have to consider what is the proportion of the national income which it is wise and safe to raise in taxation.
    Mr. Fairhurst: Is the hon. Gentleman suggesting that we should wind up the social services?
    Mr. Eccles: I am not suggesting anything of the sort, but the hon. Gentleman is on a good point. I am trying to lead up to a rational consideration of how much money we should spend through the State. There will always be disputes about the exact figure. The argument will go on as long as we have representative government and debates upon Finance Bills. On this side of the Committee we are quite clear that the level of taxation imposed by the Socialist Government has already seriously passed the safety line. We do not say that relying upon some obstruse mathematical calculations. My hon. Friends have not much confidence in those sort of paper solutions to human problems. We try to see life in the round and we look about us and observe what is actually happening to the enterprise, the savings and the peace of mind of our constituents. That is the ultimate test of whether taxation is too heavy or not. I would not assert that we on this side alone can take a human view of taxation.
    4.0 p.m.
    The Committee will recall that during the Debate on the Budget Resolutions we had an important speech from the hon. and gallant Member for Central Hull (Captain Hewitson), who struck home when he said that those whom he represented did not consider that social services and sympathy were enough. He said that they wanted more money to spend for themselves. He might well have added that they wanted more money to save for their families and their old age. There is the real issue. Ministers deny the facts of life when they argue that the exceptional weight of British taxation does not matter because it is a transfer from private to public spending. The truth is that 99 men and women out of 100 prefer to spend their own money themselves rather than to give it to someone else to spend. The exceptional man—and he does exist—is someone like the Chancellor, or the Economic Secretary to the Treasury. They are rare birds and, thank Heaven, they will soon be extinct.
    I must deal with a second argument brought against a reduction in the standard rate of Income Tax. Our opponents often say that the post-war taxes have been very high, but they have not had any bad effect upon enterprise and upon
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    the volume of production. That is a serious point which deserves our attention. During the last four years, output, exports, and the revenue have all moved to higher levels. Why, we are asked, do the Opposition continue to cry "wolf" when it is clear by now that the wolf does not exist? Is it not time for the Tories to admit that their forebodings always were wrong and always will be wrong? [HON. MEMBERS: "Hear, hear."] I am glad to hear that that is so.
    It is my firm belief that if direct taxation had been lower, British recovery would have been faster and our economy would have been more solidly based and better able to stand up to the fall in world prices. It is not possible to measure with accuracy the harm that has been done by excessive taxes falling upon the costs and capital reserves of industry, but during the Debate on this Clause and subsequent Clauses we on this side of the Committee will produce facts and figures to strengthen our view that the harm has been very great. Nevertheless, it will always remain a matter of argument and, in the opening speech on this Amendment, I want to confine myself to points on which we can agree.
    There should be no dispute that there must be some rate of Income Tax which would kill the private sector of our economy. I suppose even the purest Socialist knows in his heart that a standard of rate of, say, 15s. in the £, if imposed today, would be followed by bankruptcies and unemployment. I think it is also beyond question that we must look further than the rate of Income Tax itself. The effect of any particular rate of tax—we are now thinking of 9s. in the £—changes with the changing phases in the trade cycle. What is bearable in a boom becomes intolerable in a slump.
    I would not allude to anything so obvious if we had any evidence whatever that Socialist Ministers, when framing their domestic policies, have paid any attention at all to the probable ups and downs of world trade. It appears that they have done the whole of their planning upon the incredible assumption that the post-war boom would go on for ever. If that were not so, how can we account for the folly of saddling this country with a level of expenditure which at the end of the boom demands rates of taxes which, everyone knows, leave no

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    margin for increases? What were the Committee doing all yesterday afternoon and evening? We were discussing the small, desperate efforts of the Chancellor to prevent the revenue falling a few millions in one direction and in another to snatch a few millions by putting halfpennies on match boxes and so on. It is perfectly clear from Part I of the Bill that we have reached the end of the boom and reached the marginal capacity of taxation at the same time.
    I hope I have said enough to enable me to turn to the actual rate of 9s. in the £. For the period when prices were rising rapidly even that rate could be borne without disaster. Paper earnings, paper profits rose also and the Revenue automatically increased. The current year's expenditure was taken care of by the previous year's inflation. But how long can that deceptive process go on? It depends on the duration and pace of the upward swing in the trade cycle. Socialist finance begins to resemble the old story of the heavily laden sleigh pursued by the wolves of the forest. Unless a considerable amount is thrown overboard, the wolves will catch us up, pull us down and tear to pieces horses, passengers and driver. [HON. MEMBERS: "Who are the wolves?"] Hon. Members ask who are the wolves. The wolves are the facts of life.
    That is the situation of British finances today. Right hon. Gentlemen opposite imagine that because they have clambered on to the driving seat the wolves no longer exist., They have loaded the country with a burden of expenditure that can only be carried if the pace of the boom is maintained. Unfortunately, so excessive is that burden, that a small slackening in trade threatens us with a run on our gold reserves to be followed by an unpredictable increase in unemployment. It is no use shutting our eyes to these facts, which are right upon us now. Are we to wait until the crisis arrives? Are we going to postpone to the next Parliament, because we are so afraid of losing votes, what we ought to do now to deal with this menace? If we do so it will be a very poor act of statesmanship. For the longer we put off cutting out the waste and reducing costs and taxation, the more we shall have to throw to the wolves in the end.
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    What are the measures that should now be taken? The Amendment to which I am speaking is one of them. It is a small but significant part of the great salvage operation which every sensible man now sees is necessary. On this occasion we are only moving to reduce the standard rate by 6d. That is a token figure which we put forward as a step in the right direction. The Opposition have not the advantage of knowing all the facts of our financial situation. Were we armed with inside knowledge, I do not doubt we could put forward a very much larger reduction. But if we Members of Parliament are in the dark, how much more in the dark are our constituents? I sometimes think that all the economic information the Government have given the public may prove to have done more harm than good because it has been so selective.
    What is the general impression about the Budget left by the White Papers and their popular editions? As far as I know it is that there is nothing wrong with the total size of the Budget. There has been no attempt to make the people understand what it means to the country's economy and their own future to take 8s. in the £ of our national income. What has the Chancellor done to rub in the direct connection—it is one of cause and effect—betwen the high level of Government expenditure and the cost of living? He never mentions that. Why has the Chancellor not made it plain that there is an inescapable choice between high taxes and personal savings, and that he has chosen high taxes? Does the right hon. and learned Gentlemen really think that the public understand what is meant by such a phrase as "The marginal capacity of taxation has been exhausted"? The Government have not helped us to make up our minds on the really big issues such as the one raised by the hon. Gentleman opposite of what is the wise and safe proportion of the national income which we can spend through taxes. Yet that is a crucial decision for the survival of democracy.
    It is certainly my view that in the days when the Industrial Revolution was changing the face of Britain the House of Commons ought to have urged successive Governments to spend more through the social services. Our predecessors must take some part of the blame for the fact that the pendulum has now swung to the

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    other extreme. I beg hon. Gentlemen opposite to realise that they are putting all their reforms in danger by trying to spend far too much money at once. They are laying upon the British people burdens of taxation which are provoking resentment at all levels in the community. The people for whom the hon. and gallant Member for Central Hull spoke when he said that sympathy does not make a noise in the frying pan are not backward children waiting to be taught by the Economic Secretary how to think and act; they are voicing the old British demand to be allowed to run their own lives.
    What happens to Governments which disregard such demands? The lesson of the history book is quite plain. It shows that when taxes are piled too high the most powerful communities lose their vigour and spirit, and their place in the world is taken from them by younger and less handicapped competitors. I have lately been in Rome. The visitor who there gazes upon the ruins of the past must, like Edward Gibbon, ask himself how came that mighty Empire to decline and fall. That tragedy has fascinated the greatest historians. They have offered us many and contradictory reasons to account for the collapse of so great a power, but all those authorities are agreed upon one point: all of them have fastened upon the severity of the taxation. One and all inform us that the increasing weight of the taxes, accompanied by a network of controls and social services, induced a sour listlessness throughout the Empire. Men and women of all classes came to feel that whether they worked or not the State would keep them, and if they did choose to be industrious there was no certainty that their industry would be rewarded. It was the taxation—
    Mr. Shurmer: What social services were there in the Roman Empire?
    Mr. Eccles: The hon. Member might visit the Baths of Caracalla. It was the taxation which crippled their industry, destroyed their middle class, and with it the Roman virtues of endurance and integrity. While that suffocating process was going on the barbarians from the East were beating upon their gates, but those within, bullied and bled white by the
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    hordes of officials, had not the strength or the will to hold fast. When Rome fell she gave us one of the great lessons of history.
    4.15 p.m.
    We, too, have an Empire. The barbarians from the East are knocking on our gates. We have not much time to learn the Roman lesson. Before it is too late our universal electorate must grasp what it means to live within the national income, and what readjustments are necessary in the timing of their hopes if we are to make progress towards the fulfilment of them all. I yield to no one in my desire to raise the standard of life of the people, but I am convinced that for that great purpose the first and unbreakable rule is to leave to every citizen a sufficient proportion of his earnings and savings to make him think it worth while to do his best for himself, his family and his country. It is with that rule in mind that I move this Amendment.
    Major Bruce: I should like first to deal with the effect of the Amendment which has been moved by the hon. Member for Chippenham (Mr. Eccles). On the face of it, any proposal to reduce the standard rate of taxation is one which appears to have a considerable ameliorative effect upon the population as a whole; and on the face of it, those reading that there was a proposal to reduce the standard rate of Income Tax by the amount proposed in this Amendment would probably say to themselves that there was a possibility of some reasonable relief in what they paid under P.A.Y.E. when they get their wage packets at the end of every week. Therefore, any proposal of this kind immediately has its attractions.
    When we consider the details of such proposals I think it wise that we should examine their effect on various income grades throughout the country. I was a little surprised that the hon. Member for Chippenham, who is usually so very frank with the House, did not feel it worth while to go into those details in the first instance. I appreciate that he went into the overall economic effects, and I should also like to deal with them later. The effect of the proposal before us on a married man with two children, who is receiving £400 a year, would be a relief amounting to the princely sum of 3¼d. a month. That is what the relief

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    proposed by hon. and right hon. Members opposite would bring to the ordinary wage earner who earns £400 a year. A married man with two children who earns £500 a year would receive a relief, as a consequence—
    Mr. Ralph Morley: I should imagine that a man with a wife and two children who earns £400 a year does not pay Income Tax at 9s. in the £.
    Major Bruce: I was assuming, as I think I was entitled to assume, that the reduction of the standard rate of tax from 9s. to 8s. 6d. would have the effect of reducing the lower rates of tax charged on the first £50 of taxable income and on the next £200.
    Mr. H. D. Hughes: I do not know why my hon. and gallant Friend should be so charitable to the Opposition. Their proposal does not seem to me to be anything like so progressive as he indicates.
    Major Bruce: I am always perfectly willing to take the remarks of the Opposition within the context in which I believe them to be intended. I do not believe they merely intended to reduce the standard rate of tax without at the same time following up its effects on the reduced rates. I am prepared to argue my case, if my hon. Friend will permit me, on the basis of giving the opposition as much as possible, and I think that is the best way of conducting the argument.
    A married man with two children earning £500 a year—on the assumption that the standard rate was reduced and that the reduced rates and reliefs were reduced by a comparable amount—would actually save 2s. 1d. per month. A married man earning £1,000 and who had two children would, on a similar basis, actually save a sum of £1 0s. 10d. a month. One could go on up the grades of these various income groups to decide who in fact will benefit by the reform. It is only when one comes right up to the top of the income grades, the people who are earning £10,000 a year or over—of which there are 10,000 in this country at the present time—that we find what would be the effect of this reform upon them. They would get, on average, a relief per annum of something between £450 and £460, or between £37 and £39 per month, or approximately £9 a week. If this is
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    an example of the Conservative Party's "property-owning democracy" we can see exactly which way these things work.
    It has always been the case of the Opposition, as I see it, that the working people of our country in particular—and they always address their remarks to the working people—are in need of a considerable incentive at the present time.
    Vice-Admiral Taylor: Who are the working people?
    Major Bruce: The hon. and gallant Member should really learn the facts of life and read his own party literature. The suggestion of the Conservative Party is always that the working people are in need of an incentive; that the existing high rate of taxation prevents them from putting forward their best; that they are really not getting as much out of the social services as they are putting in. That, broadly speaking, is the case of the Conservative Party.
    What are the Conservative Party now offering the working people in order to provide them with the incentive which they, the Conservative Party, seem to think they ought to have? The vast number of incomes in this country as a matter of fact are under £500 per annum; that is the overwhelming mass of working-class incomes in this country. The Conservative Party propose to offer them relief at the rate of 3¼d. a month. This is an extremely instructive doctrine from the Conservative Party. It may well be that the Conservative Party do not believe in their own propaganda that the working-class are doing the job. It may well be that this proposal to reduce the tax by 6d. with its effect upon the various income groups is a straightforward admission by the Conservative Party that the working people of our country are doing very well indeed.
    Mr. Lipson: The hon. and gallant Member has told us what the Conservative Party are prepared to offer to the working people earning below £500 a year. Can he say what the Government in this Budget is proposing to offer them?
    Major Bruce: I shall deal with the hon. Member in my own way in the course of my speech. I should like to produce some documentary evidence in support of the contentions which have been put over from this side. I do not

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    think it is generally realised that over the last four years, since the end of the war, far from the working people in this country having slackened—as is always the sneer or imputation of quite a considerable number of hon. Members of the Opposition—the production per man in this country has gone up at a higher rate than in any other nation in Europe involved in the war. If hon. Members wish to have any kind of verification of that I would suggest that they turn to Table IV of the Economic Survey for Europe for 1948. There they will find that if the index of output per man in 1938 stood at 100, the figure in the United Kingdom is 108. There are other countries, Belgium for example, which at the moment stands at about 97. I have no doubt that hon. Members will obtain those figures if they wish.
    Those figures do not disclose that the working people of this country, on whom the bulk of our agricultural and industrial effort depends, are slacking. Yet all the Conservative Party propose to do in this world shaking reform—which is presumably the curtain-raiser to the declaration of their Leader on 23rd July—is to offer them a reform at the rate of 3¼d. a month; without at the same time stating exactly where the cuts are to be made in Government expenditure to enable this reduction of taxation to be made possible.
    It is quite true that the relief for the purposes of taxation on the middle income groups is somewhat more extensive. I have already said that a married man with two children earning £1,000 a year is likely to benefit by this relief at the rate of £10s. 10d. a month. A person earning £2,000, a married man, with two children would in fact benefit at the rate of £71 5s. per annum, which is no inconsiderable sum. So it further appears that the Conservative Party actually hold the view that the people in our country who are really in need of an incentive at the present time are the people who are earning between £2,000 and £10,000 a year, and indeed over, because those are the people to whom the vast benefits of this reform would in fact go. There are about 165,000 of them earning between £2,000 and £10,000 and about 10,000 which are over the £10,000 a year.
    I always thought—I may be wrong—that the praise of the Conservative Party
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    was reserved for those middle income groups, the income groups of over £2,000; that it was the courage, initiative and foresight of this particular class of the community which lay at the base of Britain's industrial recovery; which lay at the base indeed of Britain's greatness, and that everything fundamentally depended on this class. Is it very complimentary to this class of individual—those persons who are already enjoying a very considerable share of the national income—to say to them, "We do not believe you will work unless we give you over 400 times the incentive which we are prepared to offer the people who are earning below £500 a year"? Because that is exactly what this reform offers. It offers to people in the income groups over £2,000 some 443 times the incentive offered to people in the lower income groups. I should have thought that this was rather a veiled insult to the middle-class.
    I am perfectly aware, as are all hon. Members on this side of the Committee, of the very great contribution which is made by the management and technicians whose responsibility it is to organise industry. We should be extremely churlish if we did not pay to them the tribute which indeed is due; but who in this Committee would insult this great section of our community by remotely suggesting that if they did not get incentives many hundreds of times greater than those given to the working people then national production would go down and that our productive effort would be stultified? People in this class of the community are well aware of the facts of the situation.
    4.30 p.m.
    It may be, as the hon. Member for Chippenham (Mr. Eccles) said, that no country has such a high rate of taxation as we have, but he did not say that no country in the world is devoting such a high proportion of its national income to capital investment as we are at present. It would have been a little fairer if the hon. Gentleman had mentioned that. As is well known—I think it has even become appreciated by Members of the Opposition—one of our greatest difficulties, apart from the outside difficulties with which we have to contend in the terms of adverse balance of payments and the extremely adverse terms of trade we

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    have had, is that we face a war against the consequences of war of which this country has had, per head of the population, probably rather a greater share than anybody else.
    It was clear to certain Members of the Coalition Government, including some of the right hon. Gentlemen who now adorn the Front Bench opposite, that in the years following the war there would have to be a considerable expansion in capital investment. It is therefore the case that one of the reasons—indeed the principal reason—why so much money is taken out of the pockets of the taxpayer today is precisely because we have to maintain a high rate of capital investment, which is some 22 per cent. of the national production as a whole, not only to deal with the aftermath of war itself but also to deal with a considerable amount of neglect before the war.
    The so-called middle-class people in front of whom this carrot of a 6d. reduction in Income Tax is being dangled will appreciate that in matters of this kind there should also be some regard to the moral aspect. I suggest that there will be thousands upon thousands of people who are fortunate enough to have incomes above £1,000 or £2,000 a year who will be very proud indeed as Britons to be able to make a greater contribution to the country's need in aid of the plight of their less fortunate fellows. There are many people who will not be guided by the eternal rapacity with which the Conservative Party continue always to insult them by saying that they will not work unless they have sufficient monetary incentives. There are a large number of people in these income grades who will think in that way.
    What would be the result of the reform which the Tory Party suggest? It would cost the Exchequer between £80 million and £100 million. My estimate is as good as anyone's, and I have not the accurate figures. This sum would have to be found somewhere. As the hon. Member for Chippenham indicated, something would have to be dropped from the sledge. We have already had hints about what would be dropped from the sledge by the right hon. Member for Scottish Universities (Sir J. Anderson) who suggested that it was a little early to increase family allowances and old age pensions. There have been a number of suggestions about where
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    economies might conveniently be made. This proposal would have little effect on the vast majority of the working-class population. It would not even have a substantial effect on the income group between £500 and £1,000.
    All that it would be is a practical implementation of the policy of the Leader of the Tory Party of what he describes as "setting the people free." In fact it would set free the greedy people to exercise consuming power to the tune of between £400 and £500 more per annum than they are able to exercise now, in some cases by driving around in their cars and getting more sweets than they were able to get under rationing. It would set the greedy people free. That is all that the Conservative Party policy would do, and I invite the Committee to reject the Amendment.
    Mr. Spearman: We have heard from the hon. and gallant Member for North Portsmouth (Major Bruce), as we have come to expect from him, a speech which was perhaps more vigorous in manner than thoughtful in content. Later I should like to take up some of the remarks he made. There is a substantial reason for pressing for a reduction in Income Tax because of the hardship which it inflicts upon a very large and deserving portion of the community. I use the word "deserving" deliberately, because the vast majority of people suffering from taxation are people with small fixed incomes who have not acquired those incomes very easily. They have not acquired them by winnings on the race course or from the football pools, but rather by hard work and great frugality, thereby increasing the wealth of the country. That makes a very strong case that they should now have a rather easier time. I think that some hon. Members opposite would entirely disagree with what I have just said. They would say, "We do not like any sort of inequality. Let us not bother about pushing up the income of certain people. Let us get equality somehow or other by bringing incomes down."
    I am sure that the Chancellor of the Exchequer would not take that view. I think that he and many of his colleagues on the Front Bench would say, "We sympathise with that. We should like to bring down taxation for these deserving people if it could be done by cutting out

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    any waste, but we just do not see how to do it by any means of that sort." I suggest that if it was not a question of avoiding the hardship on these people but, instead, it was a danger to the country as a whole, the attitude would be entirely different. I suggest that it is a question of avoiding general poverty, hunger and large unemployment.
    The hon. and gallant Member for North Portsmouth thought that the amount by which taxation would be reduced by our Amendment was too insignificant to be of any benefit. It may be that the benefit for a man earning £400 a year is very small, but the point of our Amendment is not a small reduction of taxation made on the gamble of a surplus by the Chancellor but rather that the cost should be met by economies made by the Government. If the Government spend less this year, our economy will be in a sounder position and larger reductions can be made next year. If, on the other hand, these economies are not made, we might move into a most calamitous situation in which it is not a question of saving somebody 4d., but of a danger that there will be huge unemployment and a great deal of hunger in this country. I think the present situation—I am not going to overstate it and say that it is immediately alarming—is extremely disturbing. The Chancellor of the Exchequer, on 18th May, was not then of that opinion, because in one of his moments of optimism—which I am glad to say have become increasingly rare—said this:
    "If we continue to follow the policies which we have been following, I believe that we shall continue to have that degree of recovery which up to the present time has made such a remarkable inroad—."—[OFFICIAL REPORT, 18th May, 1949; Vol. 465, c. 571.]
    He stopped there, through an interruption from my hon. Friend the Member for Northern Midlothian and Peebles (Lord John Hope), that seemed to have shaken the Chancellor out of his optimistic mood, because he never completed the sentence. Perhaps he was bearing in mind at that moment that it was only that very month's "Bulletin for Industry," which is published by his Department, which said this:
    "The dollar deficit for the first quarter was still at a rate of well over £300 million a year, in spite of United States aid, and United
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    Kingdom gold and dollar holdings were £80 million less than when E.R.P. started."
    It goes on to say that the exports to soft currency areas cannot pay for the wheat, bacon, cheese, tobacco, cotton, timber, non-ferrous metals, machinery and vital food supplies which the United Kingdom must still buy from North America. It says:
    "During the past twelve months, well over two-thirds of such supplies have been paid for out of gifts and loans from the United States and Canada."
    It goes on to say:
    "The record so far this year is disappointing. First quarter exports to Canada and U.S.A. were both lower than in the previous quarter, and the proportion of total U.K. exports going to these two markets together was less than pre-war."
    Mr. Crossman: Would the hon. Gentleman explain how a reduction of 6d. in the Income Tax, which presumably will give a greater degree of purchasing power to the people, is going to assist our export drive?
    Mr. Spearman: The point I am trying to make is that, when everything is well in the world, the Chancellor will not be so disturbed about the rate of taxation except so far as there is hardship concerning certain people, but when, in fact, the position of the economy of this country is really alarming, then it is vitally necessary to cut down expenditure, whatever suffering it might entail.
    Mr. Crossman: Will the hon. Gentleman continue that argument to show how a reduction of 6d. in the Income Tax, which is putting more money with which to buy goods in the pockets of the people, is going to help the export drive?
    4.45 p.m.
    Mr. Spearman: The whole theme of what may well be an inadequate speech is to make that point, but I cannot do it in one sentence. So far, I have been trying to show that, in spite of the optimistic statement of the Chancellor during the Second Reading Debate on the Finance Bill, the situation of the country today is a very difficult one indeed, and our sunshine period is over. It has been awfully easy for us to export to a starving world which had an enormous pent-up demand resulting from the war, and a world which had no factories working in large parts of many territories. Now, people have filled up their larders with the things of which they were short during the war

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    and they have built up their factories, so that we have now got a very difficult situation with which to compete.
    The hon. and gallant Member for North Portsmouth was very pleased with the progress we have made, compared with what has been done in other parts of Europe, but he did not take into account the comparison with those areas which were outside the German occupation. I say to him that it is not only the question of that, but a question, in the era after the war, of having to compete both as regards price and production, instead of only in regard to production, in the very difficult situation which has arisen. We all know that at the present time we are only just meeting the dollar gap and managing to pay for our raw materials and food, because of our exports and dollar aid. We know that dollar aid is to be drastically reduced, and the present trade returns indicate a very sharp fall in exports.
    I quite agree that it may be some considerable time before these exports fall to a dangerous level, but the situation is disturbing, and I think we should face it, because if we do face it, we are more likely to get the better of it. The world as a whole just now is a great deal more sensitive than it has been in the past, and if it is true that the trade returns are getting worse month by month, and our gold is diminishing month by month, there are people on the Continent who are saying already that we are heading for devaluation. That will mean that they will be put off buying our goods, and if that happens our exports must fall, not slowly but calamitously, and devaluation will be forced upon us.
    Major Bruce: Does not the hon. Gentleman agree that rumours of that kind are being deliberately encouraged by irresponsible statements made by hon. Members of his own party concerning the achievements of his own country?
    Mr. Spearman: Indeed, I do not. On the contrary, I think that if only there could be some response to our efforts to persuade the Government to make drastic economies, that would be the answer. In reply to the hon. Member for East Coventry (Mr. Crossman) if we were to reduce taxation by only a small amount coming out of a real economy, it would give a degree of confidence to the world.
    Mr. Crossman: What the hon. Gentleman is really asking us is to go again to the American bankers and go through that all over again?
    Mr. Spearman: I was not thinking about America, but of the world as a whole. America is helping us enormously, but all over Europe there are people who are now saying—and I have just come back from certain countries in Europe—that they are expecting devaluation. It is for that reason that we should try to create confidence, but we are not going to create confidence by refusing to face the facts as they are, but only by facing the situation and being able to take some action to deal with it. Only a short time ago, the Minister of Supply, speaking at Charing Cross on 1st September, said this:
    "It is now three years since the end of the war, and we are still heavily dependent on outside help. Indeed, if we had been forced to rely on our own unaided efforts, we should now be experiencing widespread hunger and unemployment far worse than anything we knew between the wars."
    If that is the sort of situation we are afraid of, surely we must avoid it at all costs? What I am urging is that, if we can get a reduction in taxation as the result of economy and steadily reverse that situation, we shall be doing a great deal.
    I would like to quote from a very distinguished Socialist, Mr. Colin Clark, who recently wrote for "The Economist." He said:
    "Excessive taxation always leads to a discouragement of production, and it also leads to the expansion of money income, which means inflation."
    He goes on to say that today we have got excessive taxation in this country; this comes from a distinguished Socialist who has so often been a candidate for Parliament and who is a well-known contributor to the Fabian Society. I therefore ask his colleagues and friends to listen to his views. He said:
    "I believe that the elector is not nearly so enamoured of the Social Service State as the politicians, of all parties, now make him out to be. Tell the elector that in future he will be allowed to keep most of what he earns and get his beer and tobacco at cost price; give help to large families; give social assistance to the genuinely indigent (which means going back to local administration); and I think that under these circumstances the elector would be quite ready to forgo all the other social services and make his own provision for his family's needs."

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    Then he goes on to say, and this is the real crux:
    "After an inflation, it will be necessary to begin again on these lines anyway; it is more sensible to take these steps now, and avoid the inflation and the disastrous loss of real income which it will entail."
    Mr. Jenkins: As the hon. Gentleman has been talking about the dangers of inflation, is he now arguing that the Amendment on the Paper to which he is speaking would, in itself, be a direct disinflationary Measure, and would save us from the dangers of inflation?
    Mr. Spearman: My argument is that if we had a reduction in Income Tax, a reduction made not because the Chancellor took a gamble, but because he made drastic economies, then that would be a direct incentive to production and a disincentive to inflation. We have to produce much more. The hon. and gallant Member for North Portsmouth was very pleased that we were producing so much and with how much we were spending on capital investment. But I suggest to him that the proof of the cooking is in the eating. Since before the war our production has gone up comparatively little, whereas in America, where there has been an enormous addition of capital equipment, production has doubled. I do not think we have done enough by way of capital investment, but when Government and local government Departments are taking over £4,000 million a year, obviously there is not enough left of the national income with which to re-equip industry in the way we ought.
    Secondly, I think we must work harder. I do not agree with patting everyone on the back and saying, "Well done." Let us face the facts. If leisure is untaxed, and if the production of the time spent on work is taxed, then we shall reach the point when people will prefer untaxed leisure. We must reduce taxation in order to get people to work harder. I am not going to pretend that every industrialist is as enterprising as he ought to be, but what incentive is there to an ordinary industrialist to take up a new proposition when, if it fails, he will lose heavily, and, if he succeeds, he will gain nothing? It is heads he loses and tails he does not win. For those reasons, it is
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    vital to reduce Government expenditure and to reduce taxation.
    I should like to quote quite briefly from a very interesting article in "The Listener" which is a record of Professor Robbin's speech on the Budget. As many hon. Members know—and many right hon. Gentlemen on the Front Bench opposite know him intimately—he was head of the Cabinet Economic Secretariat for the last three or four years of the war and for the first year or two of the peace. In the article, he says:
    "But for the rest—the Civil Vote, which amounts to little short of £2,000 million—is it really arguable that there is nothing here which we should be willing to see reduced, if it meant a reduction of taxation? Let me begin by asserting a persistent belief in the possibilities of general economy. When I look at these vast totals, I find to hard to believe that there is no scope for marginal reductions, involving no important changes of policy, which, although each fractional in itself, would in the sum amount to something quite substantial. I am confident that, if Ministers and high civil servants would give more of their minds to these matters, they would find quite a lot that they could do without raising major issues of policy."
    However that may be—and I do not think the argument of Professor Robbins can be ignored—the whole point of what I am trying to say is that if sufficient economies cannot be made in that way, then there must be drastic reductions in Government expenditure. After all, one does not blame the doctor if he cuts off one's big toe in order to save one's leg. It may be a horrible thing to happen, but it is obviously a lesser evil of two. I am quite convinced that Government expenditure at this rate is, in the long run, going to ruin this country. In the words of "The Economist," it will sap energy, enervate initiative and impede development. Unless the price of Government is drastically reduced, the British economy will gradually strangle itself.
    Mr. John Lewis: I choose to regard the Amendment on the Order Paper in the name of the hon. Member for Chippenham (Mr. Eccles)—and, the speech that he made—in an entirely different light from that in which my hon. Friends who have already made a contribution to this Debate regard it, and for the following reasons. I am quite satisfied that the hon. Member for Chippenham moved that the rate of Income Tax should

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    be reduced from 9s. to 8s. 6d. for precisely the same reason as the Labour Government prior to the war moved that there should be a reduction in the Estimates for the Armed Forces, not because they were of the opinion that we should not spend that money, but because they wished to draw attention to what they regarded as a matter of principle. I believe that the hon. Member for Chippenham was not really concerned whether this amount was 6d. or 1s., but was only concerned to draw attention to the fact that, in his view, and in the view of his party, the rate of Income Tax is too high.
    Therefore, although my hon. and gallant Friend the Member for North Portsmouth (Major Bruce) made a very excellent speech in which he referred to the effects of a reduction in Income Tax by 6d., it might well have been that, without taking into account the consequences of his proposal, the hon. Member for Chippenham was quite prepared to see Income Tax reduced to a much greater extent than 6d. in the £ irrespective of the consequences of such a reduction. That may be the case, and I think it is regrettable that in the course of his speech, with some of which I agree, he did not refer to the fact that Income Tax on the lower income groups had already been substantially reduced by this Government. In fact, the arguments which he advanced in order to prove his point that the present rate of Income Tax bore heavily on other groups might or might not be justified, but the part of his argument to which I attach the greatest importance is that which affects the question of reserves and capital investment, and it is with that argument that I propose to deal this afternoon.
    The hon. Member for Chippenham was not prepared to say in what respect he considered that expenditure could be cut. That is nothing new. The Conservative Party have decided that, from their own point of view, it would be wiser not to express any point of view, if in fact, they hold any at all. We do not know. But what the hon. Member for Chippenham did not realise was that we on this side of the Committee are quite well aware what the effect would be if we cut expenditure and lowered taxation. We know full well that if we did that, we should merely be reverting to an economic situation with which this country was faced many years ago. At that time, the
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    Government of the day had little or no obligation to safeguard the needs of the people.
    But times have changed. Hon. Members opposite may think we are wrong, but it is one of the prime purposes of the Labour Government's policy to ensure that we take into account, in our administration and in our legislation, the needs of the people, because we are aware that the level of taxation in the old days was, to a large extent, exactly in proportion to the level of human misery. I do not think that this Government will be prepared at any time to reduce taxation if it means that we have to cut vital social services which we are agreed are essential to the needs of the community to whom they have been denied for so long.
    I turn now to the question of the effect of the present rate of taxation on capital reserves. I am quite sure that no one will suggest, however much he may be opposed to my right hon. and learned Friend's policy, that my right hon. and learned Friend is not ingenious in his fiscal arrangements. He may be regarded as being ingenious for the manner in which he introduced the Special Contribution. But we are all agreed that he is capable of improvising, and I feel that a certain amount of improvisation will be necessary to enable us to maintain our position in the near future, and I am of the opinion that it is by means of the machinery of differential taxation that it will be possible for us to sell more goods in the dollar markets.
    5.0 p.m.
    I propose in this respect to outline precisely what I have in my mind. The Chancellor of the Exchequer has made it abundantly clear on more than one occasion, and recently in his speech at Blackpool, that, so far as our dollar payments are concerned, we have to face the possibility of having reached a peak in our exports and of the gap in our balance of payments in the Western Hemisphere becoming larger. That, of course, would be a very serious matter because if, as the trend indicates at the moment, our export markets in the sterling area are becoming more restricted because of import restrictions in those countries and for other reasons, and if there is as a result a widening of the gap in our dollar account, it means that

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    without the slightest doubt we shall have to face increased unemployment. [Interruption.] I may be putting forward a hypothetical case at the moment; I am saying that if that were to take place we should be faced with increased unemployment.
    I maintain that the Government have failed to take the necessary steps either to coerce or induce private enterprise to sell goods in the dollar areas. The situation today is quite easy to understand. If a firm wishes to sell its goods abroad, it will do so in the easiest market. It will not go to Canada or South America where there may be difficulties, because in fact there is no incentive for it to do so. We must recognise that the section of private enterprise which is responsible for directing sales policy are the managers or the owners who are responsible for the outlook of their respective concerns. If, in fact, the management of any particular concern does not wish or does not feel that there is sufficient incentive to sell goods in the dollar areas, the goods will not be sold there and it may well be that thousands of men will become unemployed because advantage was not taken of a market which was available if some effort had been made.
    In that respect I feel that the Chancellor should introduce the machinery of differential taxation in order to assist our national economy and thus provide some incentive for those responsible for management in industry to sell goods in the dollar areas. That is an alternative to coercing private enterprise, and it is better that it should be done on a voluntary basis by means of incentive. But if, as I have mentioned, we find that the gap in our dollar payments has widened and we in this country are faced with widespread unemployment, the Government will be forced to take other steps, perhaps coercive and however unorthodox they may be, in order to force goods into the dollar areas. I am satisfied that if the Chancellor said to industry, "I am prepared to introduce a differential rate of taxation on profits made from the sale of goods in the dollar or hard currency areas, on the assumption that you will not distribute your profits, which would be inflationary, but will put them to reserve for the purposes of capital investment,"
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    that in itself would be sufficient incentive to British manufacturers to go out into the dollar areas to sell their goods.
    Mr. Selwyn Lloyd: How much does the hon. Gentleman suggest should be knocked off the standard rate for that purpose?
    Mr. Lewis: In the circumstances I have outlined it might be possible to reduce Income Tax on profits made from the sale of goods in dollar areas to say 5s. in the £. If that were done it would give an opportunity to the manufacturer to share some of that reduction with the Chancellor, and reduce the cost of the goods and thus make them more economical in price so that they could be sold in competition with other countries.
    Mr. Kenneth Lindsay: I have been following the hon. Gentleman's argument, but I do not understand how he relates it to the Amendment. Is he speaking in favour of a general reduction of 6d. in the Income Tax, or is he speaking in favour of a differential reduction to achieve a particular object?
    Mr. Lewis: At the moment I am speaking in relation to a reduction to achieve a particular object. I am taking advantage of this Amendment in order to make these points, as another opportunity may not be available to me at a later stage.
    Mr. Attewell: Would my hon. Friend enlighten the Committee as to where we should obtain the additional tax to make up for the reduction which he is proposing?
    Mr. Lewis: So far as the sterling balances and our budgetary policy are concerned, these are of insignificant importance compared with the serious menace of the deficit in our dollar account. That is the most serious consideration, and it must come first.
    As to the question of the increase in profits which might be obtained as a result of a reduction of taxation in this particular way, I feel that they should not be distributed, but that the reduction in the rate of Income Tax should be permitted on the assumption that any increase in reserves from such profits should be retained for the purpose of

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    capital investment. As to capital reserves, the Government's policy of taxing reserves at the rate of 12½ per cent. after all account has been taken of Income Tax, has the effect of driving firms into the City of London to raise money to carry out investment programmes, and in many cases this has the effect of creating new money. It has the effect of sending people to brokers in the City of London and raising money at great expense, when in fact their own reserves should have been sufficient to enable them to carry out their capital re-equipment programmes. I am not afraid to say this, because I know it to be true.
    Whereas I am diametrically opposed to any increase in distributed profits, because I regard it as contrary to the Government's fiscal policy which in the main I support, I am certainly of the opinion that there should be some radical alteration to make it unnecessary for firms who are prepared to put their profits into reserve accounts for capital re-investment, to have them taxed away to that extent that when they wish to carry out an expansion policy which has the approval of the Government they are forced to go to people in the City of London and raise money at expensive rates, utilising all that archaic machinery which should be quite unnecessary. I hope the Financial Secretary will have something to say on that matter.
    I am sorry that my hon. and gallant Friend the Member for North Portsmouth (Major Bruce) has left the Chamber, because he voiced an opinion which I think is widely held by hon. Members on these benches, to the effect that the worker is not concerned with incentive or money values but makes his contribution to our common weal, irrespective of those considerations. But I must say this, because I believe that responsible trade union leaders agree with me, that we must face up to these facts and speak frankly about them: it would be quite wrong to assume that, in all respects, there are any sections of the community who are entirely altruistic when at the same time other sections desire to take as much as they can out of the national economy. There are many industrialists who seek to serve the interests of the national economy by conforming to Government policy. The vast majority of workers have done a magnificent job, but in many cases, as I know from practical
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    experience, the responsibility for increased output has not only been due to their efforts but has also been due to the wages system under which they are employed.
    In cases where there is a certain level of output, if a wages system which correlates output to a production bonus is introduced then production increases. If workers are earning, say, a basic rate of £7 a week, and get a production bonus of £2 a week, it is no use suggesting that if the production bonus is cut down by £1 a week there will be no drop in production. There undoubtedly will be. I believe the worker is entitled to share in the benefits of increased production because he is mainly responsible for it, but do not let it be assumed that out of sheer altruism people are prepared to make their contribution without some return, because that most certainly is not the case.
    Major Bruce: I am sure my hon. Friend would not wish to misrepresent what I said. I did not say anything of the kind. I was endeavouring to say that the financial gain to lower income groups offered by this particular reform was virtually negligible. I was careful to point out that the inducement offered to the middle income groups by this reform was greater, and I made it clear that in a good number of cases they were entitled to amelioration.
    Mr. Lewis: If I misrepresented my hon. and gallant Friend's point of view I most certainly apologise, but there are Members in all parts of the Committee who are inclined to the view that only one section of the business industrial community is doing its duty. On the other side it is said that all industrialists are blue-eyed boys, and on this side there are some who say that workers are prepared at all times to make their contribution without any consideration whatsoever to the returns which they get in the form of wages.
    I say that the majority of our people are trying as hard as they can to ensure that we get out of our economic difficulties. I speak as one who is in constant touch with the trade union movement and with industrialists. Despite this fact I accept part of the argument put forward by the hon. Member for Chippenham (Mr. Eccles), that the industrialist today has no incentive to increase his output. I

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    will not argue whether that is right or wrong at the moment; it depends on what the Government think is right in that respect. But from my experience the majority of industrialists are seeking to expand production and assist the country in getting out of its economic difficulties without taking into account the fact that they personally, by virtue of our taxation policy, will reap no benefit. That should be recognised, and indeed the Chancellor has made it abundantly clear in his speeches that he accepts this view.
    Major Bruce: Does that apply in the cotton industry?
    5.15 p.m.
    Mr. Lewis: My hon. and gallant Friend is justified in making that intervention. If there is any exception which proves the rule it exists in the cotton industry, where managements have not taken advantage of the facilities afforded them by the Government for consolidation and reaping an advantage on capital expenditure for re-equipment.
    I hope no one on this side will be under the impression that by suggesting that there should be a differential rate of taxation on profits earned in dollar areas, as an incentive to sell goods in these areas, that I am suggesting that any distribution of those profits should be permitted by way of dividends or in any other way. My intention is that there should be some incentive to induce people to sell in these markets, and that any additional profits made in this way should be put to reserve for capital investment. I am pleased to see that my right hon. Friend the President of the Board of Trade is in his place. Let us take account of the warnings which come not only from the opposite side of the Committee about an impending slump but from the Chancellor himself who is continually warning us about the serious position with which we may be faced in the future. Something must be done, however unorthodox the methods employed may be, to force goods into the dollar areas; otherwise, we shall be faced with an extremely serious economic position from which we may not be able to extricate ourselves. I believe that goods can be sold in the dollar markets.
    Mr. Leslie Hale: My hon. Friend is making a courageous and able
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    speech, but is he really seriously suggesting that if I were a manufacturer, and supplied goods to Melbourne, I should get a bonus for transferring those goods to the New York market?
    Mr. Lewis: Yes. Most certainly. Any sales to places in the sterling area which can be transferred to the dollar area are of vital benefit to our economy.
    Mr. Hale: I am not trying to heckle my hon. Friend, but is he seriously suggesting that the same policy should apply to the rest of the sterling area, that Australia, for instance, should send her meat products and raw materials to the dollar markets if she can find a market there?
    Mr. Lewis: We have a surplus in our balance of payments in the sterling area whereas we have a great deficit in our dollar account. In view of our reliance on goods and raw materials from the dollar areas we must be in a position to continue to import these goods and raw materials or our production must fall. Without increased sales of goods in the dollar areas we shall be unable to do so. I hope the suggestion I have made will be seriously examined by the Government. They should look at this principle of differential taxation to see whether it may be applied so as to induce manufacturers to sell goods by the means I have outlined. Otherwise, I cannot conceive a reduction in Income Tax, or in anything else other than the standard of living being made in the next 10 years.
    We are face to face with an economic position which is not of our own making; we are the victims of a world situattion over which we have no control whatever, and our magnificent achievements to date, of which we can be so rightly proud, can be vitiated to a large extent by the happenings of the next few months or years. That will not be due to the policy of His Majesty's Government; it will be due as I have said to world conditions over which we have no control. I ask the Government seriously to consider any proposals, however unorthodox they may be, which will have the effect of increasing our sales of goods in the dollar areas. I believe that British manufacturers would respond to the incentive I have outlined if it were offered,

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    and I trust that my right hon. Friend will deal with these points when he replies to the Amendment.
    Mr. Walter Fletcher: I almost hesitate to intervene in the brisk Debate which has been taking place on the other side of the Committee, but I think everybody will agree that the speech of the hon. Member for Bolton (Mr. J. Lewis) had in it a very great amount of knowledge and courage. I do not believe that what he is putting forward will solve our problem. I do not believe that the target, at which all of us are aiming at the present moment, can be hit by the means he suggests. What he is really suggesting is an ingenious form of special subsidy, which has to be paid for by somebody else, to force goods into the dollar market. I think one of the difficulties in that argument arises from this fact: it is not the manufacturer who sells the goods. In most cases it is the merchant who goes out as the pioneer and arranges all the necessary means by which the goods can be sold. The intervention of the merchant between the manufacturer and the public, which is very necessary and which is the best and most economical means, rather vitiates the argument the hon. Member put forward.
    I shall not, therefore, follow him very far in his argument, which I think he was fortunate to be able to make on this occasion. His argument was a little wide of the point. I will, however, take the beginning of his argument, when he indicated what I think is the correct fact—that this Amendment for tax reduction has been put forward largely to draw attention to the vital necessity to reduce Government overheads. In the end that is the same point as the one at which the hon. Member for Bolton aimed—greater ability to sell our goods throughout the world, whether in the dollar area or in any other area. We must not over-exaggerate the need for selling in the dollar area. There are other areas—hard currency areas and soft currency areas—where we have to sell our goods and from which we receive goods and commodities just as useful as those from the dollar area.
    The real question is one of confidence. At the present moment the gap, whether it is the dollar gap or the gap between
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    imports and exports, depends almost entirely upon a dwindling confidence in sterling as the token currency of this country and of the sterling area. That arises very largely from the knowledge in nearly every other country in the world that if there is such a heavy proportion of expenditure on Government services as we have now in this country, that will inevitably lead to what has been seen on many occasions in commercial history in other countries—the collapse which we all wish to avoid.
    That problem presents itself time and again to business—the question of cutting down overheads when business becomes more difficult. I venture to say that possibly we stand, on the word of the Chancellor of the Exchequer and of any other informed person, on the brink of very great disaster; possibly it is the brink of a minor recession, but certainly there is the danger of its getting out of hand. Nearly every firm, whether manufacturing or exporting or in whatever line it is, is thinking of the question of cutting overheads. I cannot believe that the extremely obstinate attitude of hon. and right hon. Gentlemen opposite who say this cannot be done, is based in any way on a close study of the facts.
    Nearly 25 years ago I was sent to East Africa to go into the question of running a large number of sisal estates there, where overheads were swamping the cost of production of that vital commodity. When I met the staff for the first time, I suggested that overheads were too high and that in six months' time it would be necessary to make a 25 per cent. cut in staff, in personnel and in every other phase of production. I said that in six months' time I would review the matter when I saw who really were the people who would have to go. What was the result? At the end of six months production had gone up to such an extent, there had been such an enormously greater effort of production, that there was no need to get rid of anybody. Production had gone up sufficiently to overtake overheads and we were again sailing on an even keel.
    What is quite wrong at the present day is the idea which pervades every Government Department, from top to bottom, that there is not going to be much of a cut. There is no incentive of any sort such as that provided by the idea that

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    a greater effort will have to be made. As long as we have that equanimity on the other side of the Committee, with the feeling that everybody on the other side seems perfectly content, as long as expenditure on the present level is regarded as being quite in order—and really because the figures are so large they are regarded as a matter of congratulation, showing in what a big way Socialism can do things—then we shall not get that effort. Until that idea is brought to an end—let us hope not by dire necessity but, before that, by thought and examination—we shall not restore the position.
    What is happening at the present time? For every £100 we are exporting, whether in textiles, in machinery or anything else, we are able to buy, certainly in a good many areas, only about £60 worth of meat or any other commodity. Look at what happened the other day in the Argentine. Look at what is happening in the negotiations which are going on there. This is exactly what is happening: with every £100 we export the price is put up against us to an extent based on the outside world's estimate of the value of sterling, which is not the official rate. We are getting the worst of both worlds. That is all based on this increasing lack of confidence in the value of sterling.
    I brought up this question two years ago on the Budget, when our situation was in many ways rather better than it is now. There was then an opportunity to take certain action. Today that action, which should have been taken by our own volition and as a sign of confidence, may be thrust upon us very much against our will and at a very much worse period, as a sign of lack of confidence. That may bring in its train very great disasters.
    Mr. J. Lewis: The hon. Member talks about lack of confidence. Supposing there were every confidence in sterling and we had all the sterling in the world; can we, in the sterling area, purchase all the goods we need? Is it not a fact that we are forced into the dollar areas, the hard currency areas, to purchase the goods and raw materials we require?
    Mr. Fletcher: That is perfectly true. Confidence is not a thing which can be canalised and retained inside the sterling area. This lack of confidence plays just
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    as big a rôle in the dollar area. If there were greater confidence in the dollar area about sterling, it would be very much easier for us to sell our goods there. One of the main reasons why we cannot sell our goods was instanced in the speech made by the President of the Board of Trade in Canada. One of my friends wrote to me from there saying, "He has come over here and he has criticised the country for having to be brought up to date much more, saying that that would no doubt bring lower prices." What happened in the minds of the buyer?
    The President of the Board of Trade (Mr. Harold Wilson): I saw some cuttings from certain sections of the British Press, but has the hon. Member's attention been drawn to the "Manchester Guardian"? Two days later the correspondent of that paper, usually regarded as fairly accurate, who was present at the conference, said there was no foundation for that statement whatever.
    Mr. Fletcher: I am delighted to hear that. It may have been quite false and I am only too delighted to accept that, but the fact was that a large section of the community stopped being buyers. We shall not be able to sell in the dollar areas as long as there is no confidence there, because they will think all the time that they will eventually be able to buy the goods cheaper.
    The hon. Member for East Coventry (Mr. Crossman), who intervened to ask a question about why we should have this alteration of 6d. to increase the purchasing power in this country, must take this as an answer; if any hon. Member opposite thinks he can divorce the home market from the export market he will have to bring his ideas up to date. At the present moment this country is full of frustrated exports. South Africa cuts off exports and the Dutch East Indies cut them off, too. It is also done by the Pakistan Government. At the moment this country is full of frustrated exports and the President of the Board of Trade knows full well that unless we have a certain purchasing power in the home market to mop up those exports then we have the whole process which leads to lack of confidence, bringing us to the point where manufacturers will not be able to sell their goods anywhere.
    Mr. Crossman: The hon. Member's aim now is to increase the purchasing power of the wealthier classes so as to mop up the exports we are failing to sell abroad, and his view is that that will restore the confidence of the world in our ability to balance our trade and close our trade gap.
    5.30 p.m.
    Mr. Fletcher: I did not say that at all but if the hon. Member likes to hug that debating point to his bosom he may, although this is far too serious a question on which to try to score petty points of that sort.
    Mr. Warbey: That is precisely the effect of this Amendment which we are discussing. It is to increase the purchasing power of the wealthy.
    Mr. Fletcher: Let us see how we can restore confidence. There is a lack of confidence. If we go to France we see that France, which has been in much worse difficulty than this country for several years since the end of the war, has now got back not only her own confidence but the confidence of the world. The French are producing more than we are; they are working harder; they are beginning to make a return to confidence in their own currency. Unless that lesson is learned and applied here no amount of petty taxation, and not the keeping of the present level of taxation, will be of the least effect.
    The only answer to the difficult question that faces us is for the world to know that we are going to return to some sanity in our finance. The Chancellor does not wish to devalue our currency. There are very many good arguments why it should not be done. There are some to the contrary. He realises above everything else that chief among the weapons that are put into his hands is power to bring the Government's expenditure into some reasonable ratio with Government income. I am surprised that he, who is fighting so hard to defend sterling now at its present level—whether it be right or wrong—should not know that the first duty he has before him, as it is the duty of other members of the Government, is to cut down the Government's expenditure. It can be done. There is not the slightest doubt it can be done. It will entail hardships, and the hardships must be evenly spread; but
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    until there is that result, and until the world sees that result, ingenious methods of selling more in one area than another, in getting greater production and a proper flow of food and materials, will all be in vain. This Amendment brings forward this fundamental issue of proper finance, which must precede any other way of achieving that return to confidence which we want to see.
    Mr. Crossman: I am very grateful to the hon. Member for Bury (Mr. W. Fletcher) for bringing the argument back to the Conservative Amendment, which I now know to be a token Amendment. It is interesting to notice what it is that the Conservatives have taken as their token Amendment. One could have selected many tokens to indicate one's desire to find a way to cut Government expenditure. If one were interested in the working class one could have a token reduction of indirect taxation, which clearly affects the living standards of the working class. But, clearly, that does not interest hon. Gentlemen opposite. If one were interested in the middle class one could have a token Amendment concerned with increasing children's and family allowances, according to the Report of the Royal Commission on Population. But hon. Gentlemen opposite are not interested in the middle class either. They have chosen a token Amendment whose overwhelming benefit is to one small class—the wealthy.
    Mr. Selwyn Lloyd: Has the hon. Gentleman studied the Notice Paper? Has he seen the Amendments and new Clauses which have been put down to be moved from this side of the Committee?
    Mr. Crossman: I am now discussing this token Amendment. Perhaps the hon. and learned Gentleman was not here when the Amendment was moved. It was moved as a token Amendment to define the basic conflict between Tory financial policy and Socialist financial policy, and I am drawing the attention of the Committee to the fact that in selecting this token Amendment the Tories, consciously or unconsciously, reveal the bias—their old bias—in favour of a class in which they are mainly interested. One quarter of the population will not be concerned with this Amendment at all, because one quarter of the population are members of

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    families who do not pay any Income Tax at all.
    Mr. Godfrey Nicholson: Is the hon. Gentleman aware that every member of the community is profoundly affected by the level of Income Tax?
    Mr. Crossman: We are all concerned with the level of Income Tax, and we here now are discussing which level of Income Tax pays us best. What I am indicating is that the reduction in the standard rate of Income Tax primarily benefits not the working class, not the middle class, but the wealthy class; and that is an indisputable fact.
    Viscount Hinchingbrooke: Does the hon. Gentleman really think that a married couple with £400 a year do not belong to the middle class, and that they will not benefit by this Amendment?
    Mr. Crossman: I think the gain for such a family is 3¼d. a month under this Amendment. I would suggest—and I should think that it is incontestable—that a reduction in the standard rate of Income Tax, compared with increases in wives' allowances or in family allowances, primarily benefits the rich and not the poor. However, I am glad that hon. Members opposite now see their mistake in selecting this symbol in their attack on Socialism.
    Now I want to turn to the arguments, because this Debate has revealed with fascinating clarity at last the real desires and intentions of hon. Gentlemen opposite. They say to us, "Look, we cannot tell you how sixpence off the Income Tax will help the export trade, but it will win us the confidence—of the bankers." They are always the people they have in mind. The bankers and the financial circles in New York do not trust the Socialists. There are men in France who do not trust the Socialists. There are men in Italy who do not.
    Mr. W. Fletcher: Who used the word "banker"?
    Mr. Crossman: They are not bankers, then. They are just Very Important People.
    Mr. Fletcher: The consumers.
    Mr. Crossman: Very important consumers. Very rich men.
    Hon. Members: No.
    Mr. W. Fletcher: The hon. Gentleman really must not make a travesty of what is said on this side of the Committee in a Debate of this seriousness. We have been talking—as did also the hon. Member for Bolton (Mr. J. Lewis)—about the consumers—rich, poor, or any other sort of consumers. To use the word "banker" is to draw a red herring across the path of the Debate, and that is entirely and utterly wrong.
    Mr. Crossman: I am not responsible for what the hon. Member for Bolton said. I think he made a cross-bench speech equal to none. I am now told that hon. Gentlemen opposite mean the consumers. These must be the wealthy consumers, the men who are upset about the cost of the Socialist experiment in Great Britain. I have met some working class consumers in France and Italy, and they have no such concern, nor do they say, "You are spending too much in Britain." On the contrary they have said to me, "Your experiment is all-important to us." So I come to the conclusion that once again we see that what hon. Gentlemen opposite mean by "consumer" is one class of consumer—the class which is worried about the success of the Socialist experiment in this country. The Tories are saying to us, "In order to win the confidence of the men who have reconstructed France, Germany, and Italy"—on the old pre-war model, who have brought back every social evil, who have brought back record size Communist Parties in the course of so doing—"we have to bow to their wishes. We have to win their confidence." And we have to win the confidence of the men in Congress, the men in Congress which is at present an Insanity Fair, producing by every action it is taking the very thing it is most alarmed about—the slump.
    Lieut.-Commander Gurney Braithwaite: The hon. Gentleman among others, is living on them.
    Mr. Crossman: It is said we have to base our fiscal policy here on the winning of confidence. I have heard that before. It was said before the 1931 crisis. We were told that the important thing was to do something which really hurt the working class. That would restore the confidence of these important "consumers." We would regain their confidence by slashing the social services. And

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    now this great, new, rejuvenated Tory Party has tabled this symbolic token Amendment. It means "back to 1931"—back to the whole of the old system of "curing" a slump, which is to say that when we are in a slump, or before we are in a slump we should cut the Government expenditure and thereby increase the nature and the evils of the slump. The good old-fashioned Tories, who learn nothing, come to us today to tell us to re-win the confidence of the world by cutting our expenditure here on—they do not tell us what: but by just a few hundred millions, as the hon. Member for Chippenham (Mr. Eccles) said—just a few hundred millions.
    Mr. Boothby: Does the hon. Gentleman seriously believe that in our present situation with our present adverse balance of trade, we can spend our way out of a slump in this country?
    Mr. Crossman: I am very sorry, but I am concerned with a Tory Amendment which says that we can keep out of the slump by cutting 6d. off the Income Tax, as a token for hundreds of millions of savings—on what? That is the awkward question. I do not think it is on the Armed Forces. I doubt whether hon. Gentlemen opposite feel that hundreds of millions should be lopped off the Armed Forces. I doubt whether any of them who know anything about it think that more than tens of millions can be saved by economies in the Civil Service. If it is neither of those two, what is it? The only honest, open and frank man opposite was the hon. Member for Scarborough and Whitby (Mr. Spearman), who said we must do things which hurt, by which he meant cuts in education, social security and hospitals. He was honest. He said that we cannot afford pensions—
    Mr. Spearman: I quoted an eminent Socialist writer, Colin Clark, and said I agreed with his conclusion that we must do things that hurt a little rather than those that hurt a great deal.
    Mr. Crossman: I was putting it into plain language so that the electorate understand the full meaning of what the Opposition are saying. They say we should cut the social services which help the people who vote for this side of the Committee, but not those who vote for the other side. That is not very strange.
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    We all recommend what hurts the other side; that is politics, and it is nice to see it coming out now.
    What upsets me about this symbolic Amendment is that, after all, hon. Gentlemen opposite have already had plenty of time to see this experiment carried out in three other countries in Europe. This experiment of solving the crisis by cutting the expenditure of the Government, and by having what is called "a moderate return" of unemployment, which is an essential part of the same policy, has already been tried in a country visited by the hon. Member for Chippenham. He went and contemplated Rome, and his mind ranged over the great work of Gibbon. On that I would only say that I wish he had read Gibbon instead of merely talking about him. He suggested that Gibbon told us the Roman Empire declined because of large-scale social services. [HON. MEMBERS: "No."] Oh, yes, he did, and he quoted the Baths of Caracalla as an example of those social services. I would say that the basic reason why the Roman Empire collapsed was the existence of slavery and the maintenance of privilege—the maintenance of a privileged hierarchical society which was unable to keep up with the economic developments of the time.
    Viscount Hinchingbrooke: Exactly what you are doing now.
    Mr. Crossman: If the noble Lord Lord wishes to join with me in destroying the last vestiges of privilege and developing a genuine community in this country and the world he had better come over to this side to help do it. Taking 6d. off the standard rate and slashing the social services by hundreds of millions of pounds is a very funny way of destroying privilege.
    I wish the hon. Member for Chippenham, when he went and contemplated ancient Rome, had looked around at modern Rome, where the exact policy laid down by the Opposition has been in action for two years, with the result that there are three million unemployed. There are for the tourist, of course, wonderful goods in the shops and great activity. But study the standard of living of the working-class; study the size of the Communist Party. Hon. Members opposite would be the best allies of Communism in the world if they were in power because they would try to re-create

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    privilege. Go to Rome, but do not think of Gibbon; rather look at the standard of living there and the size of the unemployment figures.
    If the Opposition do not like that, let them go to Germany. In Western Germany the Americans, in conjunction with German reactionaries, have carried out a magnificent experiment in precisely the policy which hon. Members opposite want: cut Government expenditure and give incentives to business. There are now one and a half million unemployed in Western Germany, and almost every worker is on short time. There is no country in Europe where social injustice is more grotesque and horrible than it is in Western Germany, where the Opposition policy is being carried out.
    5.45 p.m.
    Mr. Boothby: We are not responsible for Germany. You are responsible for Germany.
    Mr. Crossman: I fully agree that you are never responsible for Conservative policy.
    Mr. Boothby: You are governing Germany.
    Mr. Crossman: Let us be frank. This Committee knows perfectly well, as do you—
    The Deputy-Chairman (Mr. Bowles): Hon. Gentlemen must address the Chair. They must not address one another across the Chamber.
    Mr. Crossman: This Committee knows well enough that since, unfortunately, the dollar controls Germany today, our influence there has been small and American policy has prevailed. I regret the fact that we have connived at American policy; I regret the fact that certain British officials seem to have carried out American policy; but it is a fact that Western Germany is the perfect experiment in Conservative policy, of cutting Government expenditure and doing what the charming hon. Member for Scarborough calls "making it hurt for us"—by which, of course, he means the poorer people. It hurts the German working-class; it hurts the Italian working-class. But it does not hurt the working-class here so much, because Socialists are in power.
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    Strangely enough, we are told that the crushing burden of Government expenditure here is destroying our power of recovery. Our recovery as evaluated by E.C.E.—an anonymous and objective body—is greater than that of France, and greater than that of Italy. The astonishing achievement of carrying through a programme of social services and capital investment, combined with a record export drive, has done one thing at least. It has given us a social stability which not one other of the European countries possesses. We are a bulwark against Communism, because it is not worth while for the British worker to be a Communist. But on the Continent of Europe Communism is a permanent menace because the old society has been reconstructed by men whose confidence the Tories want to win.
    Let me turn again to the situation across the Atlantic. One of the most outrageous suggestions of the Opposition is that the present drain on our gold reserves has something to do with the weight of taxation here. Let us be perfectly clear what the present crisis is about. Is it really as a result of the amount of money we are spending on social services that the Americans have ceased buying Malayan rubber? What is the real crisis? The Americans, threatened with a slump, are cutting expenditure on wool, rubber, tin and cocoa, thus ruining West Africa and Malaya. I am now told that it is something to do with the weight of taxation in this country. Let us be clear. The crisis which is approaching is the tornado of the American slump spreading over to Europe, and has nothing to do with the issue of taxation in this country. It is a far wider and profounder issue than that. Again I make the point: Study those gentlemen in Congress and it will be found that the speeches made here—fortunately only by the Opposition—are today dominating American policy: "Cut expenditure. Cut Marshall aid if possible. Things are getting difficult, therefore cut Government expenditure."
    If we get a slump now it will be because the mentality of this Amendment is the mentality of Congress in America. It creates the slump by its own psychology. Blind confidence in the capitalist system, refusal to plan, refusal to fight unemployment, refusal to learn

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    from John Maynard Keynes. Refusal to learn any of the lessons of planning—that is what will precipitate the world into a crisis. And now hon. Members opposite are asking us to introduce the crisis here by legislation.
    Mr. Spearman: Does the hon. Gentleman really think that it is quite unimportant that our cost of production, and therefore the level at which we can sell abroad, is above the world level?
    Mr. Crossman: The hon. Gentleman does not answer the question I asked, which was how the reduction in Income Tax would affect the cost of production. I am told it is a matter of confidence, which is either the confidence of the American businessman, who does not believe in Socialism, or the confidence of the British businessman. Apparently we have to make the British businessmen have confidence by giving them purchasing power before we give it to the people who really require it. We are not going to do that. Members opposite have got to get used to the society in which we are now living. Never again will confidence be given to the old ruling class as it was in 1931, by taking away from those whose need is greater than theirs. That is not because the Labour Party is in power, but because the people of the country have come to the decision that that class are effete and will not have them back.
    Mr. Osborne: The hon. Member says that the old ruling classes are effete and useless. Is that why he keeps borrowing them and putting them on the Government Front Bench?
    Mr. Crossman: It is quite true, of course, and it is one of the reasons why this country is surviving, that there have always been members of the ruling class who see the sense of a new world. If it had not been for that, we should not have had a peaceful social revolution in this country. But that is a long way from this Conservative "symbolic" Amendment.
    We are faced with a crisis today. We are faced with a crisis which within six months may make it essential to cut and cut ruthlessly our imports. The real things we have to cut are not the social services but unessential imports. They are the luxuries, and they are the things
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    we cannot afford. We can and must afford education, but there are certain imports which may have to go. We may have to eat less. [HON. MEMBERS: "Oh."] I would rather see food cuts than raw material cuts which would destroy full employment.
    Mr. Osborne: In other words, advocating lower rations.
    Mr. Crossman: I am taking the words of the hon. Members for Scarborough and Whitby and Chippenham, who both say we are facing a serious crisis but believe we can meet it by reducing Income Tax. We have to meet it by seeing that our exports and imports balance. We cannot face the crisis by the method of giving to those who have and taking away from those who have not. It cannot be done. If we are to tighten our belts, it must be by an austerity of fair shares for all and it will have to be a great deal fairer than it is today. Members opposite who are proposing symbolic Amendments to benefit the rich—[HON. MEMBERS: "Oh."] Surely we are all agreed on that. Let us realise that, when the crisis hits us, we shall not only have to balance our exports and imports but have a greater levelling of personal incomes than we have at present, if we are to keep our people loyal and working. But to ask the nation in this crisis to accept a cut in the standard rate of Income Tax is an insult to its intelligence, whose recklessness shows that nothing has been learnt by Members opposite since 1931.
    Mr. Boothby: I had not intended to intervene in this Debate, but I must say that the speech to which we have just listened makes me feel that I must offer one or two observations. It was, without exception, the most reckless and mischievous speech I have ever listened to in this House. The hon. Member for East Coventry (Mr. Crossman) went out of his way to insult, in words which may be reported all over the globe, because he has a considerable international reputation, the Americans, the Italians, the French and the Germans.
    Mr. Crossman: No.
    Mr. Boothby: If the hon. Member will examine his speech in the cold light of HANSARD tomorrow he will see just how insulting he was to all the Western democracies,

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    upon whose close co-operation in my judgment, and in the judgment of a great many members of his own party, our main hopes now depend.
    Mr. Crossman: It depends with whom we are co-operating. I did not insult those who live in Italy, France or Germany, but the forces which lead them. If we in this House are to be told it is improper for us to expose the evils and social scandals of modern Germany and Italy, it is a sad time for freedom of speech in this House.
    Mr. Boothby: Does the hon. Member deny the large participation of Social Democrats in the present Italian Government and in the present German Government, as far as Germany has been allowed to have a government at all by the hon. Member's own Government; or in the present French Government? Does he deny the participation of Social Democrats, such as Signor Saragat, in Italy? He certainly insulted both the French and Italian Governments; and he went on from that to insult the Germans in every shape and form, giving, as it were, a kind of by-pass insult to the United States, and denying any responsibility on the part of the present administration in this country for the conditions in Western Germany. We know that that is not true.
    I say that the present Government have a very heavy responsibility for the present conditions in Germany. For months and years, as the hon. Member well knows, they spent most of their time blowing up Western Germany. That was the policy of the hon. Member's Government, supported and advocated by the Foreign Secretary; and, having done that, the Minister responsible suddenly found himself sacked and came down to the House to make an impassioned speech opposing the whole policy, root and branch, which he had been carrying out. Is the hon. Member also repudiating Sir Brian Robertson? He says we have no responsibility at all for the administration of Germany, that we have now handed it over entirely to the dollar economy of the United States, and that Sir Brian Robertson is merely a cypher, doing what the dollar tells him to do.
    Mr. Crossman: If charges are to be made across the Floor of the House, it is important that the hon. Member should
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    also be careful. I said that the economic policy prevailing in Germany today, when we have two-thirds of the import-export Board (JIEA) American controlled, means that the export-import policy is in fact American policy. The decision to have currency reform without the Soziale Lastenausgleich was because the Americans would not have a capital levy which was the only way to make the currency reform socially just. I am only stating the facts. I stated them more than a year ago, and it is important to remember them now when they have become true.
    Mr. Boothby: The hon. Member knows as well as I do that the decision to have a currency reform rescued Germany from the total economic collapse brought about by the policy of this Government.
    The hon. Member went on to say that we ought to adopt the policy Keynes advocated in 1931, but he knows as well as I do that conditions today are diametrically opposed to the conditions which prevailed in 1931. If he does not know that, then he ought to. The hon. Member knows that Keynes was then advocating a policy designed to counter an acute world deflation, in which the main problem confronting this country and the world was a glut of commodities due to the lack of purchasing power.
    Can it be said that today we are suffering from a glut of commodities? As my hon. Friend the Member for Chippenham (Mr. Eccles) rightly pointed out, if we try to spend our way out of this economic crisis we shall aggravate the crisis of the balance of payments to a point where it will become absolutely unendurable, and which can result only in a drastic cut in our standard of living. The hon. Member knows perfectly well the conditions in 1930–1 were fundamentally different to the conditions which prevail in the world today, when we cannot possibly count, as we could then, on an adequate supply of food and raw materials at very low prices. Then it was possible to spend our way out of the crisis, but now it is not.
    6.0 p.m.
    Mr. Sydney Silverman: Would the hon. Gentleman explain what is the difference between the

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    slump and its causes now threatening in the United States of America and that which happened in 1929–30?
    Mr. Boothby: First of all, the conditions in 1930–31 were entirely different, because they were caused by a great excess of commodities not merely in the United States but throughout the world, and also becouse of lack of confidence and of purchasing power. I am not denying that the United States is threatened at the moment, internally, with a surplus of commodities; but I am denying that there is any threat to this country of a glut of commodities of any sort or kind, and it is with this country and this country alone that I am dealing.
    Mr. Silverman: The hon. Gentleman always addresses himself realistically to any argument. I suggest that he is missing the point. Surely what my hon. Friend was saying was that a slump in the United States caused domestically, will produce a further glut of commodities, and that the Americans are still attempting to apply to that situation methods which they so catastrophically applied to a similar situation domestically in America, in the slump of 1929–30.
    Mr. Boothby: I do not know what remedies they are going to apply, because they are not yet apparent. Nor do I admit that there is a major slump in the United States. We have yet to see whether this is a temporary recession, due rather to a healthy growth of competition in the United States, or not. We do not know, but what I do know is that until quite recently hon. Members on both sides of the Committee were agreed that a fall in the price level in the United States was desirable from every point of view. The point is whether that fall is going to develop to such an extent as to become a slump or not; and I submit that that is not yet apparent.
    That has nothing to do with this Debate, or with this country. I am not denying for a single moment that it will be very unpleasant for us if there is a major slump in the United States. I am only saying that it is not yet apparent. I am also arguing that, between the time when Keynes put forward his theories in 1931 and today, there has been a second world war, which has resulted in the impoverishment of this country and of Europe and in the doubling of the productive
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    capacity of the United States; and that makes a very considerable difference. I do not think that the hon. Member can seriously argue that our way out of this crisis is to spend our way out. Incidentally, to spend what?
    The hon. Gentleman was not very flattering to the United States. He has just been there. I have read some of the interesting articles and observations he has made; and he was not half so ungenerous in print as he was this afternoon in the House of Commons. He implied that the United States were pursuing a ruthless, selfish policy, without regard to any other State; and he described Congress as "Insanity Fair." When we are anxious to get a renewal of Marshall Aid I do not know whether it is wise to describe the people who are going to give that aid to us, and are giving it us just now, as "Insanity Fair." It is hardly a deft piece of diplomatic activity on behalf of this country—
    Mr. Crossman: It happens to be true.
    Mr. Boothby: The hon. Gentleman says that it happens to be true. Perhaps Congress will take note of that, and I am afraid it will. I hope it will also take note of the fact that there are other Members in this Committee who do not think so. The hon. Gentleman knows that the Congress of the United States has imposed substantial additional taxation upon the people of the United States in order to aid Europe; and it did not do it merely for its own advantage, but quite simply to aid this country and Europe.
    Mr. Crossman: They are trying to cut it.
    Mr. Boothby: "They are trying to cut it" says the hon. Member, with indignation, as though we had any right at all to demand it.
    Mr. Crossman: If the hon. Gentleman is trying to heal differences he is doing it in rather an odd way. Hon. Gentlemen opposite are pressing for cuts in British taxation, while we on this side are opposed to it in our country and regard it as unwise in America. The Tories want a cut in taxation here while encouraging the Americans to pay.
    Mr. Boothby: I can only say that if the hon. Gentleman thinks that the United States believes that the present level of

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    taxation in this country is satisfactory from the economic point of view, or provides an inducement to invest money in this country or in the sterling area, he is very much mistaken. He knows perfectly well that the present level of direct taxation in this country is the main reason for the lack of confidence in sterling at the present time all over the world. The hon. Gentleman goes on talking as if we had a right to demand permanent Marshall Aid from the United States of America. We have no such right.
    Mr. Crossman: In whatever way we may differ and disagree, we ought not to attribute things which have no resemblance to what has been said. I did not claim that we have a permanent right to Marshall Aid. On the contrary, I think it is absolutely essential for this country to get into its head that it has got to be independent of America as soon as possible. That is why cuts in Income Tax are insane. To do this is to reduce purchasing power at a time—
    Hon. Members: Sit down.
    Mr. Boothby: If the hon. Gentleman for East Coventry would allow me to intervene for a moment, I would only say that if he reads his speech tomorrow he will see that he has said things which are even more monstrous than I have suggested; and I hope he will withdraw them in public print at some later stage. I do not think he knew what he was saying.
    We have put down this Amendment for a trifling reduction in Income Tax, because Income Tax is the key of our whole tax structure. It hits everybody—the middle classes, the workers, and the wealthy classes. I do not know whether we can talk about the "wealthy classes" today. We can admit, however, that this tax also hits the few wealthy men who still exist in this country today, though they are not a very large number. Income Tax remains the key tax. The only remark that the hon. Gentleman for East Coventry made which had any contact with accuracy at all was when he stated that we put down this Amendment as a protest against the general weight of taxation in this country; and, of course, of Government expenditure.
    Mr. Warbey Mr. Warbey rose—
    Mr. Boothby: No I am not going to give way, because I intend to sit down very soon. I am going to say this in conclusion. The national income of this country today does not justify either the present level of Government expenditure or the present level of taxation. We cannot go on indefinitely under these conditions. No economy whether capitalist, Socialist or Communist can survive indefinitely the present level of taxation. We are taking over 40 per cent. of the total national income in taxation. It is too much for any economy to sustain; and I challenge anybody to deny that it is an enormous disincentive throughout the whole range of industry. Our productivity is not large enough, in every sense of the term, and it cannot sustain for very much longer our present standard of living. This country has got to learn in either the easy or the hard way, that our productivity is not sufficient to sustain our standard of living at the present moment; and that the only thing that enables us to do it is Marshall Aid, which is derided by the hon. Member for East Coventry.
    Many of us have ideas about how we may be able to build up a new economy in Western Europe. Not very much is being done at the present moment. The Chancellor of the Excehquer is now in Brussels fighting to defend our gold. I do not object to that, but why is he in that position? It is because there is no confidence in the stability of the British economy, because the foreigner has not now got adequate confidence in sterling. I am sure we will all support the right hon. and learned Gentleman in his efforts to prevent any further losses of gold or dollars, because we cannot afford them. Nevertheless, a major factor in our difficulties is the present crushing burden of taxation, which makes itself felt on every section of industry, and which impinges on the life, livelihood and standard of living of every family in this country, from the poorest to the richest.
    It is no good hon. Gentlemen opposite saying that we are out to champion only the very well-to-do. Another of the reckless observations of the hon. Member for East Coventry was that we did not even care about the middle class. We know jolly well that the middle class count a lot in this country, and that they are, to a large extent, the backbone of the

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    country. We also know that they are now largely merged with the working class. The hon. Gentleman drew a sharp distinction; but I am not clear which is working class and which is middle class. Perhaps one has to be a Wykehamist in order to distinguish between these two classes.
    The Government of this country have explicitly laid the responsibility for production and for the maintenance of our export trade, as to 80 per cent., upon private enterprise and private industry. They cannot do that, and at the same time tax it indefinitely at the rate of 9s. in the £. That is our simple proposition, on which we shall stand and which I believe will be accepted in the country. It is a proposition on which I hope that we shall vote in a few minutes.
    Mr. W. T. Williams: In spite of some confusion, I think the issue has been clearly enough put in the Debate. What is clear is that out of this Debate has come a very definite difference of principle with regard to what is to be given and what is to be taken away from the different sections of the community that make up the population of Britain. Hon. Gentlemen opposite have at last made it clear that they are arguing a case that depends for its validity upon premises which we on this side of the Committee cannot and will not accept. These premises are simple enough. It has been said that the present system is one of penal servitude, that it results in a reduction of enterprise and of production, that if it were reduced our recovery would be quicker and sounder, and that if Income Tax is not reduced quickly by 6d. in the £ ruin waits for us around the corner.
    All that was clear in some of the speeches, particularly the speech just made by the hon. Member for East Aberdeen (Mr. Boothby), which revealed itself as special pleading in its most mischievous form. We have been invited by that hon. Member, who accused one of my hon. Friends of being mischievous and not having regard to the effect of his speech upon world opinion, to present the world with an invitation to have no confidence in Britain, in Britain's policies or Britain's economic stability. During the whole of the Debate, hon. Members on
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    the other side of the Committee have been guilty of the same kind of special pleading, having little regard to the facts and wandering from modern France to ancient Rome in what one can only call a picture of history written by Walt Disney in glorious Tory technicolour. It would seem that the people who make our prosperity are only those who now feel the pinch. It has been suggested that we could increase their purchasing power, which would result in the creation of confidence in the world in respect of this country, and that those are the only conditions in which confidence can be created.
    6.15 p.m.
    Without attempting in any way to minimise the contribution of the salary earners or such rentiers as remain in the country, I think the Debate has clearly revealed a conflict about a way of life. It is important that hon. Members on this side of the Committee who have strong and definite views, should say categorically that the premises to which we work are different and that the conviction that inspires our legislation is that for many millions of people this is the first escape they have ever known from penal servitude which has been inflicted upon them in the ages past by the people who sit now on the benches opposite and who are tasting for the first time the fruits of loss of office. We believe that it is now our duty in this time, to ensure that there is a minimum standard below which we shall not allow our people to go.
    The greater part of Government expenditure is on the social services. We know that to cut that expenditure would mean hardship for the people whom in the main we represent. We know that all these things have to be paid for and that they can be paid for only by such taxation as the Government are able to produce. We believe that it is right, when the world and our country in particular are facing an economic crisis, that the cost of a standard of living which we believe to be right and proper should be borne by the whole community. We have no doubt about the fact that the masses of the people in the country would not have reacted as they have done, and rocketed production to levels which are unprecedented in modern history, unless the social services which they enjoy had been introduced.

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    It is not only improper but it is untrue to suggest, as has been suggested both directly and by inference by hon. Gentlemen opposite, that our recovery is anything other than phenomenal. France has been cited. I love France and have spent as much of my time there as I could. I know it to be true in many parts of that country, from my own experience, that there is no comparison between the standards of living of the ordinary people of this country and of the ordinary people in France. When hon. Members opposite sink to the level of saying what they want to believe rather than what they know to be true, it is time that some sort of recognition was brought home to them that we do not live in a vacuum. So many of the things which they have asserted as facts are arguable, while we maintain what we believe to be indisputable. Without the Government which has been in power, Britain would have been faced with widespread unemployment and with industrial strife.
    It may be true that there is need for relief and that some of the acts of the Government bear hard upon some sections of the people, but surely if we are to have a protest against that kind of austerity the protest ought to have been made at some other point than in relation to the present level of Income Tax. If there is need of relief, it is not there. If the Government were persuaded, as I am confident they will not be, by the appeals and by the attacks which have been made by hon. Gentlemen opposite, to reduce Income Tax by 6d. in the £, they would betray the principles on which they were elected.
    Viscount Hinchingbrooke: I am glad that the Debate is now taking place in a quieter atmosphere which is perhaps natural after our labours early this morning. We have heard a great deal of violent polemics. The hon. Member for East Coventry (Mr. Crossman) was not here last night to take part in the wearing-down process in which most of us were involved, and he got away with a speech which, as my hon. Friend the Member for East Aberdeen (Mr. Boothby) implied was, even for him, unusually demagogic. I will take the opportunity of bringing the Debate back again to its central theme as set
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    by my hon. Friend the Member for Chippenham (Mr. Eccles), with his usual wisdom and skill.
    Our object here is to centralise our whole complaint against the burden of taxation and Government expenditure in what has rightly been called this token or symbolic Amendment. It is symbolic of the desire of the Conservative Party steadily to get away from the planned economy, the regulations and controls backed by the force of the police [HON. MEMBERS: "Oh."]—from the great Cripps freeze upon wages, profits, dividends, rents and currency and upon the passage of goods into and out of the country. This Amendment states in legislative terms our desire to restore what we understand by the progressive free society of Britain.
    We have moved to reduce the Income Tax by 6d. this year. I hope that next year it will be 1s., and 1s. more after that. This is not a class or particular income group Amendment. [HON. MEMBERS: "Oh."] As we have repeatedly explained, it symbolises our main theme. Hon. Gentlemen will find on the Order Paper various Amendments designed, in association with this, to assist other sections of the community. I have one relating to dependants' allowances. The hon. Member for East Coventry chided us with doing nothing for the lower income groups. The Chancellor has removed that possibility by not allowing any reductions in Purchase Tax to be moved, which we should have liked to do. In my Budget speech I said I hoped that we would be able to put down an Amendment to reduce the duty on beer by 2d. instead of 1d. and on cigarettes by 6d. There is every kind of disposition on this side of the Committee to do things to reduce the pressure on all sections of society.
    We must do everything we can at this very grave time for the future of the country to break the power of the collectivist State before it breaks us and ruins the spirit and individuality of everyone in the country. We should do it traditionally and constitutionally by refusing Supply and refusing Ways and Means. We ought now to reverse some of our thinking. The war taught us to do a lot of things first and to pay for them afterwards, and bureaucracy has done nothing but inherit the mood of the Armed Forces of the Crown in the war.

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    I serve on the Estimates Committee with other hon. Members on both sides of this main Committee. We all know how impossible it is adequately to cover the whole field of Government expenditure. When we are able to bite upon any single item, we reveal most disturbing figures and trends. Hon. Members opposite know it and say it not only privately but now, fortunately, publicly in no uncertain terms, as the Reports come out.
    What we are finding out is that, in spite of the period which has gone by since the end of the war, when there ought to have been a gradual decentralisation and demobilisation of the whole collectivist bureaucratic machine, the tendency in departments is still to proliferate in expenditure and still to branch out with new items and new designs of thought. No one under the Socialist Government is working within a strict budget. All down the line staff are being taken on—Departments at home, sub-departments, the British Council, the Arts Council, Embassies, and Colonial establishments are now filled with people who are doing jobs which were never done before in peacetime. [HON. MEMBERS: "Hear, hear."] Those jobs are not comparable with any jobs done by other States which are much more frugal and at the same time much livelier than we are.
    The taxpayer exerts absolutely no control over the trend of events. On the contrary, control is exercised exactly in the reverse direction. The Treasury is much too weak to resist the spending Departments of the State, and the taxpayer is too weak to resist the Treasury. The taxpayer today is at the complete mercy of every bureaucrat with an idea, just as during the war, with much greater justification, the taxpayer was at the mercy of every engineer or every soldier with an invention. The secrecy and complexity of government are used today by the Socialist Government as a deliberate shield to prevent the taxpayer, who is, after all, the author of all fiscal power, from seeing whether what he is writing is making any kind of sense. As I said before, the only organisation that we have in this House which can touch upon these events in passing, the Estimates Committee, is quite incapable of lifting the veil of secrecy adequately, so that our constituents may see what is going on.
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    I therefore plead that this Committee should make a conscious decision to vote on this Amendment in order to resist the trend of events, to limit the growth of expenditure and to give deliberate instructions to the Treasury that they are to budget Departments strictly and restore to the taxpayer some of the power of which he has been deprived. If we do not do that, I suggest to the Committee that we face a very serious precipice, just as every country behind the Iron Curtain is facing it today and as even the United States faced it in the days of prohibition. That precipice is a very grave change in the moral character of our people.
    I am very seriously concerned, as every hon. Member must be, at the widespread evasion of the law. There must be countless thousands of persons in this country, all the way down from high financiers to lowly traders, who are evading Income Tax illegally. Many more people again are suffering a moral deterioration of character through using their capital savings, whether earned or inherited, as income without any thought at all of future generations and their welfare. Excessive taxation leads them to do this. The great economist, Mr. Colin Clark, has referred to that trend and has also stated that excessive taxation actively promotes inflation. I will quote a short passage from his letter to the "Economist":
    "Excessive taxation acts on real income through an economic process of disincentives with which we are familiar, and at the same time"—
    here is the point about the deterioration of moral character—
    "expands money incomes through the less familiar socio-political process of weakening those forces … which can normally be relied on to resist inflationary pressure."
    6.30 p.m.
    So from that we see that economics and sociology combine in this period of Socialism to destroy personal standards. It is a grave charge against the Government that it should actively teach its citizens to explore the techniques of moral collapse, and that is what the Chancellor of the Exchequer is doing. He is, I believe, a good man and a Christian, but if he thinks that by austerity and high taxation he can compel people to be good and Christian he is terribly wrong. What he is compelling them to do is to turn their

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    thoughts away from their work and their normal way of life towards devising by every means possible ways of overcoming him and his legislation; in other words, society in a period of excessive taxation turns introvertedly upon itself and becomes self-destroying. A generation ago, and again now, Europe experienced their terrible process.
    The Population Report shows that classes of persons of great value to society today are being denied the means to express themselves and to give their lives and activities to the State out of the comfort and grace of home life. It is quite true that there are certain classes which the Socialists have actively aided. The coalminer, the engineer and other sections of society have risen in status, but other sections have fallen severely in the last few years—clergymen, teachers, retired Service officers, elderly spinsters, widows and university professors. These and many others are in poor circumstances today, and the mother of children is the most harshly hit of all. There never has been a Government which has acted with so little restraint against liberal-minded and educated people. [HON. MEMBERS: "Oh!"] Oh, yes, and the very people on whom we most rely to preserve and exemplify the moral force and stature of the country.
    Mr. H. D. Hughes: Will the noble Lord allow me to interrupt for one moment?
    Viscount Hinchingbrooke: Let me finish my point. Again there never has been a Government which has aided quite so blatantly as this Government have their own friends, most of them strong materialists. We see these prototypes rising today above the general standard, singled out by the Socialist Government for special treatment—the scientist, the electrician, the engineer, the coal miner, the nationalised board executive and the trade union boss.
    Mr. Hughes: If the noble Lord will allow me, since he has mentioned education, he may or may not be aware that this Government is spending far greater amounts on university development than ever before in peacetime in this country; and also expenditure on scholarships and allowances at the universities is some 13 times what it was in the 1930's.
    Viscount Hinchingbrooke: I am not at this moment talking about how many people are being paid by the Government for undergoing a course. I am not talking about whether the standard of education is low or high, and on the whole I believe it to be deteriorating. What I am talking about is the quality of living of some of these people—not necessarily what they are doing in paid work, but in their leisure hours and holidays in the home and out of the home.
    Mr. Ronald Chamberlain: May I interrupt for one moment?
    Viscount Hinchingbrooke: I cannot give way. The point may well be made that the whole community pays Income Tax on the general scale laid down, but I believe that the principle of equal burden for all is being vitiated by the generous allowances and benefits given to selected classes of society; allowances and benefits ranging from canteens for coal miners and engineers to travelling, living and entertaining expenses of those whom Socialism thinks ought to be particularly privileged.
    I have a number of family budgets here of people who fall just inside and just outside the class covered by this Amendment. Because it might be said that a number of them do not pay Income Tax—though they suffer terribly from indirect taxation—I do not propose to detail them to the Committee. However, there are comments made upon them such as "We have drawn out all our savings to help us." "We cannot afford anything like football pools, dog racing, the cinema and other entertainments"—comments of that kind throughout this correspondence make most distressing reading. Indeed I sympathise at times with the hon. Member for Central Bradford (Mr. Webb) when he wants to make conditions of living much easier for these people, for these weekly budgets, with the letters accompanying them, tell heartrending stories.
    I ask what is to become of the life and power of Britain if, through Socialism, every single private reserve of energy is taxed to the full? What marathons shall we run in the future? What victories shall we win? How shall we find the self-refreshing inner spirituality, in the life which the community is today forced to lead through the activities of the

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    Socialist Government? How are we ever to find the inner harmony which will sustain us in perhaps five or 10 years when we are threatened with some crisis? The high strategy of the Chancellor's statesmanship in economics is gravely at fault. He is not thinking sufficiently about creating a reserve of energy and inner spirituality in our people for the tide of events that may befall us in some years' time. When the right hon. and learned Gentleman returns from Brussels he should give deep thought to this in the midnight hours to see whether he cannot open his heart to Christian charity and goodwill.
    The Economic Secretary to the Treasury (Mr. Douglas Jay): We have had an instructive and wide-ranging Debate, including a number of imaginative references to both ancient and modern Rome. However, what this Amendment proposes is a reduction in the standard rate of Income Tax from 9s. to 8s. 6d. That would cost £73 million in the present financial year and £83 million in a full year. Some of the reductions in taxation suggested by the noble Lord, running several years ahead, would cost nearer £800 million than £80 million.
    Viscount Hinchingbrooke: No, exactly £200 million.
    Mr. Jay: But even £80 million would convert the overall surplus of £14 million, for which we have budgeted this year, into a deficit, with all the injurious and inflationary consequences that we would have unless, of course, at the same time hon. Members opposite proposed to make large reductions in food subsidies and social services or other expenditure. Obviously a reduction in the standard rate of Income Tax is something we should all like to make when we can afford it, and when the resources of the country permit. Indeed, if our general campaign for higher production and productivity continues to succeed, it should be possible in time to raise a given total revenue with lower rates of tax. However we do not mean to achieve heavy tax cuts by means of heavy reductions in social expenditure, which would be necessary if it were to be done this year as proposed by the Amendment.
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    The Commitee should be under no misapprehension about the heavy financial commitments, from the Budget point of view, which these growing social services will entail. But the people of this country have voted for these services because they ensure a fairer distribution of income. They are still voting for them, and that is one reason why, after four years of agitation, the Opposition have not yet won a Parliamentary by-election. These services have also given us the finest system of social services in the world. The hon. Member for Chippenham (Mr. Eccles) said that our level of taxation was tremendous and unique—those were his words; he did not tell us that our system of social services is also tremendous and unique.
    What separates us, therefore, from hon. Members opposite is that we are determined not to achieve financial economies by cuts in social expenditure, which would entail the gravest social hardship and injustice. Indeed, if there were £70 million of revenue which we could afford to give away this year, a reduction in the standard rate of Income Tax is not the first claimant. As my hon. Friends the Members for North Portsmouth (Major Bruce) and East Coventry (Mr. Cross-man) quite rightly pointed out, such a reduction would benefit mostly the bigger taxpayer and the company, and would have the effect of materially reducing the taxation on company profits. I suppose that that is one reason why hon. Members opposite want to make such a reduction.
    We take the view that the earner of a small income has a better prior claim. It is for that reason that since 1945 we have steadily made large concessions in Income Tax; including increases in the single and married persons' allowances in 1945; a rise in the children's allowance in 1947 from £50 to £60; a rise in the earned income allowance from one-tenth in 1945 to one-eighth in 1946, one-sixth in 1947, and one-fifth last year; a rise in the wife's earned income allowance and the extension, also last year, of the reduced rate to the married woman's earned income. Altogether, since 1945 we have relieved nearly 4 million people from payment of Income Tax and have given concessions totalling £581 million in the full year.
    We do not believe that this is the moment for a material reduction in the

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    tax on profits. At present the Exchequer is taking from 50 to 60 per cent. of the profits of every company.
    Mr. Frederic Harris: It is nearer 60 per cent.
    Mr. Jay: The hon. Gentleman is right—it is nearer 60 per cent. That, in our view, is the most real and effective system of profit-sharing and co-partnership by the workers in industry, because those sums are paid out again to the workers in food subsidies, family allowances, the health service and other benefits. Indeed, in this way the State has become a large shareholder in practically every business in the country, although many people on both sides of the Committee have not, perhaps, noticed this peaceful revolution. If the party opposite were sincere in their belief in profit-sharing, co-partnership and a property-owning democracy, they would support us in retaining this tax on profits and would not be putting forward the Amendment.
    Mr. W. Fletcher: In co-partnership, should not there be some right to choose one's partner?
    Mr. Jay: There is freedom in this country to choose one's employer.
    Mr. H. D. Hughes: Except in John Lewis's.
    6.45 p.m.
    Mr. Jay: Hon. Members opposite have argued their view, although not with much conviction, that the present rate of tax on profits is injurious to enterprise and production. If it were true that the present taxation on company profits were a serious brake on production, I agree that there would be a strong case for bringing down the tax; because nobody should underrate the difficulty and gravity of the production and overseas payments problem now facing us. In this connection, I noted the practical suggestions of my hon. Friend the Member for Bolton (Mr. J. Lewis); we shall sympathetically consider them—as, indeed, we have done already—as well as others. But the practical evidence is not to the effect that high taxation is having any effects of that kind.
    The hon. Member for Chippenham said that we should judge by life in the
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    round. The remarkable fact is that in the past year we have had the highest rate of taxation on profits in our peacetime history; and that at the same time we have had the highest production, the highest exports and the highest rate of investment. I am the first to say that one reason for that has been the Marshall Aid payments which we have received by the generous and statesmanlike action of the American Government; and I should like to dissociate myself from the remarks of the hon. Member for East Coventry (Mr. Crossman) on the subject of the United States Congress and the United States Government. His views are not the views of the British Government.
    Mr. Bramall: Is my hon. Friend dissociating himself from the remarks of the hon. Member for East Coventry relating to those people in the United States Congress who are trying to cut down Marshall Aid?
    Mr. Jay: I meant exactly what I said. Let us also remember, when we are considering the effects of taxation on work and enterprise, that there used to be once in this country a number of persons who lived idly on independent incomes and who have now been induced to work by the present level of taxation. Let us also remember, above all, that one of the greatest incentives to work for the great mass of wage and salary earners today is their knowledge that with the present levels of taxation income is more fairly shared than ever before.
    I noticed that hon. Members opposite—apart from the noble Lord the Member for South Dorset (Viscount Hinchingbrooke), who always carries things to extremes—have hardly tried seriously to argue that the £80 million which would be involved by the concession they propose could be found simply by economies in administration. The fact is that at the Treasury we have saved and are constantly saving as our normal duty and function, which the Chancellor has recently intensified and redoubled—
    Mr. Nigel Birch: Three years late.
    Mr. Jay: —hundreds of thousands—indeed millions—of pounds; but the idea that tens of millions of pounds can be saved by administrative economies without

    521
    changes in policy is sheer moonshine. Not a shred of evidence has been produced today by any hon. Member opposite that that could be done. If it could be done, surely the Public Accounts Committee and the Select Committee on Estimates, of which the noble Lord spoke, which have ample facilities for examining these things and include representatives of the Opposition, would by now have discovered some of these big economies; but, in fact, they have not done so. Indeed, no independent inquiries, any more than the normal working of the Treasury system itself, have ever been able to discover these large economies which could be made without changes in fundamental policy. It is significant that the only times when sweeping cuts have been made were at the time of the Geddes and May Committees, when great changes in policy were made and savage cuts carried out, with the consequences which we all remember.
    What this Amendment really proves—as did the speech of the noble Lord, and as do the posters which Lord Woolton seems to be able to pay for so lavishly all over the country from the resources behind his financial iron curtain—is that if the Tory party really had the chance, it would make cuts in food subsidies and social expenditure at the expense of most of the people, as it has always done in the past. The hon. Member for Chippenham said that I would ask what he would do. I will go further and tell him what his party would do. As they resolutely refuse to tell us their policy in public, we do not know for certain whether all the cuts would fall on the food subsidies, on old age pensions, or family allowances or some on one and some on the other.
    But the Committee and the country are entitled, by way of illustration, to know what in fact this would mean. If this £80 million cut, to take it at the lowest without the embellishments of the noble Lord, were to fall on the food subsidies, it would involve a rise in retail prices to the housewife of 1s. 5d. a pound on butter, 4½d. on margarine, 8d. on tea and 4d. on cooking fat, all at the same time. The hon. Member for Chippenham said that the people generally wanted more money themselves to spend. They would not get more money
    522
    that way, but less as a result of a rise in prices.
    If the cuts were to fall on family allowances, they would be more than wiped out. If they were to fall on war pensions they would be wiped out almost completely. That is the measure of what hon. Members opposite, are proposing. Whatever those hon. Members say or think in private, the country should know, on the evidence of this Amendment and of the posters displayed by the Tory party proposing cuts in expenditure throughout the country, that this is the sort of thing the Tory party would do if they got the chance. The hon. Member said that this Amendment was a declaration of war. We are exceedingly glad to accept this challenge and we earnestly hope that today the Opposition will not run away from it, as they did from their challenge on the Health Estimates.
    This Amendment proves that the Tory party are insincere in their support of the idea of profit sharing, co-partnership and a property-owning democracy, and also makes clear to this Committee and the country that another Tory Government would mean large cuts in food subsidies and other social services. For that reason, we are very glad to accept the challenge and go into the Division Lobby on it tonight.
    Mr. Oliver Stanley: The Economic Secretary has made a characteristic speech. In fact, I think every time I hear that speech he makes it better, but I must confess it was more effective when he made it before the Chancellor of the Exchequer made his Budget speech. The propaganda as to what the Tory Party would do to the food subsidies and what the Tory Party would do to the Health Service was very much more effective before we knew what the Chancellor of the Exchequer has done to the food subsidies—
    Mr. H. D. Hughes: He has increased them by £13 million.
    Mr. Stanley: —and what he has threatened he may have to do to the Health Service. We do not accept, and none of the evidence of the valuable Committees to which the hon. Gentleman referred leads us to accept, the view that there are not still economies to be made—
    Mr. Tolley: Where?
    Mr. Stanley: I can tell the hon. Member one of them. Would it not have been better if we had not spent £20 million on growing 1,000 tons of groundnuts; would it not have been better, instead of that, to spend a few hundred thousand pounds on buying an engine and a couple of trucks to carry 1,000 tons of groundnuts which were lying rotting at Kongwa?
    We have had a very long Debate and are just as anxious as the hon. Gentleman to get to the Division; therefore, I am only intervening for a very few minutes.
    Mr. Shurmer: Tell us where the £60 million are to come from.
    Mr. Stanley: The hon. Member for Sparkbrook (Mr. Shurmer) carries on a running conversation during a whole sitting and all I can do is to appreciate the patience of the Chairman and the terrific fortitude of the hon. Member's throat. I have only one regret, and I think it is a regret shared by the right hon. Gentlemen opposite, in regard to this Debate. I am sorry that it has had a result, which I do not think any of us could have foreseen, of giving an opportunity to the hon. Member for East Coventry (Mr. Crossman) to make his speech. The Front Bench opposite must feel that he is even more dangerous to them when supporting them than when, as is more customary, he is opposing them. The object of this Amendment and of the discussion which it has provoked was to establish and bring before the Committee certain principles upon which we can differ, but which, if we are really to meet the economic problems facing us, it must be possible to discuss as economic problems without heat and with some attempt to understand differing points of view.
    The first proposition we tried to establish is that the present level of taxation, a level which takes 8s. in the £ of the national income, is an intolerable burden and, if continued, will lead, through processes of disincentive and oppression, to falling production and even an increased burden of taxation. No one can sweep that aside as a wholly partisan view put forward by one political party off its own bat with no serious basis. Hon. Members behind me have already quoted Mr. Colin Clark and Mr. Lionel Robbins.
    524
    They are not people who can be dismissed as party hacks merely putting a party case. We believe that the present level of taxation, if continued over a period, will be found to be intolerable and to have inflicted the gravest injury on our national economy. In fact, hon. Members opposite, in their hearts, agree with that proposition. They have accepted the present Budget, but they and many of their supporters have given a pretty good indication that they are only accepting it for this year, and that if this burden continues they, too, will find it intolerable.
    The second proposition was a sincere belief that in the existing circumstances a reduction of direct taxation—I am not saying the amount or the particular form which it should take—should have a priority, if not the greatest priority, in any tax reduction. One which might share it, and in my view would certainly share it, would be the Purchase Tax, but that, owing to the trickery—I call it that—of the Treasury we are not able to discuss on this Finance Bill. [Interruption.] I call it trickery; I repeat, trickery.
    7.0 p.m.
    The Financial Secretary to the Treasury (Mr. Glenvil Hall): What is the trickery?
    Mr. Stanley: The trickery was that an innovation was introduced into the Finance Bill, the effect of which was to prevent discussion of the Purchase Tax. That was an innovation of importance which was obviously a matter of great interest to the Committee. Everybody knows that at that period of the Budget Debate we are not looking at the details of drafting but at the main principles concerned. It would have been perfectly easy for the Chancellor of the Exchequer, in his Budget speech, to have drawn the attention of the Committee to this complete innovation he was making, and to have explained to us at the time the reasons for making it. It was because he hoped it would slip through unnoticed that I call it trickery.
    Mr. Jay: The right hon. Gentleman knows perfectly well that the Budget Resolution, which was before the Committee for four days had included in it plainly the words "except Purchase Tax." They were commented on during the Debate by one of the right hon. Gentleman's own back benchers. I think it

    525
    rather hard when, owing to incompetence, the Opposition did not notice it, to call the incompetence of the Opposition the trickery of the Treasury.
    Mr. Stanley: The hon. Gentleman also knows perfectly well that it happened that that was the one Budget Resolution left open, and to have voted against that in order to protest against that one matter would have been voting against the Budget as a whole, and would have been represented as such in the country.
    Mr. Jay: If that is so, will the right hon. Gentleman say why it was that his right hon. Friend the Member for North Leeds (Mr. Peake), in winding up the Debate that night, after one of his own back benchers had pointed out the fact, made no reference whatever to this point?
    Hon. Members: Leave it alone.
    Mr. Stanley: Yes, I will leave it alone. I have described what I sincerely believe it to be, and I will leave it at that.
    I was saying that one of the objects of this Amendment was to establish the fact that a reduction of direct taxation should have priority—shared perhaps by that other subject which in the circumstances I have described I am prevented from discussing—in the reduction which we believe must be made in this intolerable burden of taxation. I really thought that the time had passed when it would be thought necessary to discuss any proposed reduction of Income Tax wholly on the basis of class differences, wholly on the basis that we who proposed a reduction in Income Tax are doing something merely designed to benefit the rich. I cannot see how that proposition can now be sustained by hon. Members opposite in view of the fact that it was only a year or two ago that their own Chancellor, the predecessor of the present Chancellor, reduced the standard rate of Income Tax not by 6d. but by 1s. Was his object, as we have been told today is our object, only to benefit the very rich?
    I advise hon. Members opposite who have either used that argument or fallen for it to read the issue of HANSARD concerned, and see how the present Chancellor of the Duchy of Lancaster himself described the objects of a reduction in direct taxation, and the benefits which he expected to accrue. I did hope that after that we should be able to
    526
    discuss a question of this kind free from mere political prejudice of that kind. Indeed, I think in one of the more Dr. Jekyll moments of his speech, most of which was obviously the product of Mr. Hyde, the hon. Gentleman himself gave every support to my view, because he started by saying that this reduction in direct taxation was something that we should all like to make. I am sure he would not have expressed that view if the only effect would be, as one might be led to suppose from some of the speeches made by hon. Members behind him, merely to help the very rich.
    We put forward this proposal as one of the first priorities of any reduction in taxation because we sincerely believe that a reduction of direct taxation will, perhaps more immediately than any other, have its effect upon production and prices, and, as the hon. Gentleman himself said, that is our urgent problem of the moment. The hon. Gentleman attempted to meet the cogent arguments which were put forward by hon. Friends behind me with what I thought was rather a non sequitur. He said, in effect, "It shows how wrong you are because last year, when we had the highest taxation, we also had the highest production and the highest export figures." If it is as simple as that, we need not worry about the impending crisis which we see before us. All we have to do is to increase taxation still more and up will go our production and our exports. The hon. Gentleman knows that he was relying on an unsound argument. He knows that what gave the fillip to production and to exports was the Marshall Aid which we received. There is no knowing whether, had the burden of taxation been less, production and exports would have been higher.
    In one particular, I do not think that the hon. Gentleman treated the economic problem quite as seriously as it demands. I refer to the effect of direct taxation, whether it be Income Tax or Profits Tax, on the ability of companies to build up adequate reserves. I think he said that he would not do anything which would remove taxation from company profits because in some curious way he thought that was bringing about partnership between workers and industry. Is he really satisfied that under the present burden of direct taxation of all kinds, companies are able to put to reserve

    527
    sums sufficient to cover not only normal replacement of existing plant, but what is surely the most important matter for the future, to provide the new machines and new developments which alone can bring down our costs, increase our production, and, therefore, give us any confidence in the overseas balance battle? It is on company reserves above all, that our case with regard to direct taxation can be based.
    There is a second category, the incentive. I believe that in all ranks of industry, as the hon. Member for Bolton (Mr. J. Lewis) so truly said, incentive still is a necessity. I believe that in many of those ranks, and some of the most important, reductions in direct taxation can give that incentive. Finally, there is the incentive to save. No one, surely not the right hon. Gentleman, can be satisfied with the position of private savings today, and it is the burden of taxation which has largely brought that about.
    The Chancellor of the Exchequer the other day described hon. Members on this side of the Committee who appeared to prophesy any difficulties at all in the future as "Dismal Jimmies." If he had been here tonight and listened to some of his own supporters, including the hon. Member for East Coventry, he would not describe us as "Dismal Jimmies." I am not blaming them, I am blaming only the Chancellor; because I think it is right that all of us should be prepared to face the dangers which can be coming upon us. I do not think there is anyone—certainly no one I know, and no one I would want to know—who welcomes the idea of approaching economic difficulties,
    or indeed disaster, because he thinks that out of them he will get some political advantage. We do not.
    I do assure hon. Members opposite that when we talk about the dangers ahead of us it is not through any desire to see them come, because by that means we might change over from this side of the House to the other. It is with a deep anxiety as to what, if they come, they will bring in their wake; the anxiety of whether, if they come and we are incapable of solving them, there will be any point in changing, or any possibility of changing in future from one side to the other of this democratic House. Although many hon. Members opposite may disagree, I hope they will disagree on a basis of belief in each other's mutual sincerity. As we try to do with them, let them try to do with us. We have brought forward this Amendment today because we honestly believe that it is a contribution to meeting the difficulties which we have to meet in the next few months. So far as we are concerned we would sooner have the policy of our party to cut the Income Tax before that disaster comes, than the policy of the hon. Member for East Coventry to let the disaster come and then cut the food of the people.
    Several Hon. Members Several Hon. Members rose—
    The Parliamentary Secretary to the Treasury (Mr. Whiteley)The Parliamentary Secretary to the Treasury (Mr. Whiteley) rose in his place, and claimed to move, "That the Question be now put."
    Question put, "That the Question now be put."
    The Committee divided: Ayes, 276; Noes, 136.

    Division No. 171.]

    AYES

    [7.15 p.m.

    Acland, Sir Richard

    Bing, G. H. C.

    Cobb, F. A.

    Adams, Richard (Balham)

    Binns, J.

    Cocks, F. S.

    Albu, A. H.

    Blenkinsop, A.

    Coldrick, W.

    Allen, A. C. (Bosworth)

    Blyton, W. R.

    Collick, P.

    Alpass, J. H.

    Bowden, Fig. Offr. H. W.

    Collindridge, F.

    Anderson, A. (Motherwell)

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

    Colman, Miss G. M.

    Attewell, H. C.

    Braddock, T. (Mitcham)

    Corbet, Mrs. F. K. (Camb'well, N. W.)

    Austin, H. Lewis

    Bramall, E. A.

    Corlett, Dr. J.

    Awbery, S. S.

    Brook, D. (Halifax)

    Cove, W. G.

    Ayles, W. H.

    Brooks, T. J. (Rothwell)

    Crawley, A.

    Ayrton Gould, Mrs. B.

    Broughton, Dr. A. D. D.

    Crossman, R. H. S.

    Bacon, Miss A.

    Brown, T. J. (Ince)

    Cullen, Mrs.

    Balfour, A.

    Bruce, Maj. D. W. T.

    Daggar, G.

    Barnes, Rt. Hon. A. J.

    Burden, T. W.

    Daines, P.

    Barstow, P. G.

    Burke, W. A.

    Davies, Edward (Burslem)

    Barton, C.

    Butler, H. W. (Hackney, S.)

    Davies, Ernest (Enfield)

    Battley, J. R.

    Callaghan, James

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

    Bechervaise, A. E.

    Carmichael, James

    Davies, R. J. (Westhoughton)

    Bellenger, Rt. Hon. F. J.

    Chamberlain, R. A.

    Davies, S. O. (Merthyr)

    Benson, G.

    Champion, A. J.

    Deer, G.

    Berry, H.

    Chetwynd, G. R.

    Delargy, H. J.

    Beswick, F.

    Cluse, W. S.

    Dobbie, W.

    Dodds, N. N.

    Leonard, W.

    Rogers, G. H. R.

    Donovan, T.

    Levy, B. W.

    Ross, William (Kilmarnock)

    Driberg, T. E. N.

    Lewis, A. W. J. (Upton)

    Royle, C.

    Dugdale, J. (W. Bromwich)

    Lewis, J. (Bolton)

    Scott-Elliot, W.

    Dumpleton, C. W.

    Lindgren, G. S.

    Segal, Dr. S.

    Edwards, W. J. (Whitechapel)

    Lipton, Lt.-Col M.

    Shackleton, E. A. A.

    Evans, Albert (Islington, W.)

    Logan, D. G.

    Sharp, Granville

    Evans, John (Ogmore)

    Lyne, A. W.

    Shawcross, C. N. (Widnes)

    Evans, S. N. (Wednesbury)

    McAdam, W.

    Shawcross, Rt. Hn. Sir H. (St. Helens)

    Fairhurst, F.

    McAllister, G.

    Shurmer, P.

    Farthing, W. J.

    McEntee, V. La. T.

    Silverman, J. (Erdington)

    Fernyhough, E.

    McGhee, H. G.

    Silverman, S. S. (Nelson)

    Field, Capt. W. J.

    McGovern, J.

    Simmons, C. J.

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

    Mack, J. D.

    Skeffington, A. M.

    Follick, M.

    McKay, J. (Wallsend)

    Skeffington-Lodge, T. C.

    Foot, M. M.

    Mackay, R. W. G. (Hull, N. W.)

    Skinnard, F. W.

    Forman, J. C.

    McKinlay, A. S.

    Smith, H. N. (Nottingham, S.)

    Freeman, J. (Watford)

    Maclean, N. (Govan)

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

    Ganley, Mrs. C. S.

    McLeavy, F.

    Snow, J. W.

    Gibbins, J.

    MacPherson, Malcolm (Stirling)

    Sorensen, R. W.

    Gilzean, A.

    Mallalieu, E. L. (Brigg)

    Soskice, Rt. Hon. Sir Frank

    Glanville, J. E. (Consett)

    Mallalieu, J. P. W. (Huddersfield)

    Sparks, J. A.

    Goodrich, H. E.

    Mann, Mrs. J.

    Steele, T.

    Gordon-Walker, P. C.

    Manning, C. (Camberwell, N.)

    Strauss, Rt. Hon. G. R. (Lambeth)

    Greenwood, A. W. J. (Heywood)

    Marquand, Rt. Hon. H. A.

    Stubbs, A. E.

    Grey, C. F.

    Mathers, Rt. Hon George

    Sylvester, G. O.

    Grierson, E.

    Mellish, R. J.

    Symonds, A. L.

    Griffiths, Rt. Hon. J. (Llanelly)

    Messer, F.

    Taylor, H. B. (Mansfield)

    Griffiths, W. D. (Moss Side)

    Middleton, Mrs. L.

    Taylor, R. J. (Morpeth)

    Guest, Dr. L. Haden

    Mitchison, G. R.

    Taylor, Dr. S. (Barnet)

    Gunter, R. J.

    Monslow, W.

    Thomas, D. E. (Aberdare)

    Guy, W. H.

    Moody, A. S.

    Thomas, George (Cardiff)

    Hale, Leslie

    Morley, R.

    Thomas, I. O. (Wrekin)

    Hall, Rt. Hon. Glenvil

    Morris, Lt.-Col. H. (Sheffield, C.)

    Thomas, John R. (Dover)

    Hamilton, Lieut.-Col. R.

    Morris, P. (Swansea, W.)

    Thurtle, Ernest

    Hardman, D. R.

    Mort, D. L.

    Titterington, M. F.

    Hardy, E. A.

    Moyle, A.

    Tolley, L.

    Harrison, J.

    Murray, J. D.

    Turner-Samuels, M.

    Hastings, Dr. Somerville

    Nally, W.

    Ungoed-Thomas, L.

    Haworth, J.

    Naylor, T. E.

    Vernon, Maj. W. F.

    Hobson, C. R.

    Neal, H. (Claycross)

    Viant, S. P.

    Holman, P.

    Nichol, Mrs. M. E. (Bradford, N.)

    Wallace, G. D. (Chislehurst)

    Holmes, H. E. (Hemsworth)

    Oldfield, W. H.

    Warbey, W. N.

    Horabin, T. L.

    Oliver, G. H.

    Webb, M. (Bradford, C.)

    Houghton, A. L. N. D.

    Orbach, M.

    Wells, P. L. (Faversham)

    Hoy, J.

    Paget, R. T.

    Wells, W. T. (Walsall)

    Hubbard, T.

    Paling, Rt. Hon. Wilfred (Wentworth)

    Wheatley, Rt. Hon. John (Edinb'gh, E.)

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

    Paling, Will T. (Dewsbury)

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

    Hughes, Hector (Aberdeen, N.)

    Palmer, A. M. F.

    Whiteley, Rt. Hon. W.

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

    Pargiter, G. A.

    Wigg, George

    Hynd, J. B. (Attercliffe)

    Parker, J.

    Wilkes, L.

    Irvine, A. J. (Liverpool)

    Parkin, B. T.

    Wilkins, W. A.

    Irving, W. J. (Tottenham, N.)

    Paton, Mrs. F. (Rushcliffe)

    Willey, F. T. (Sunderland)

    Janner, B.

    Paton, J. (Norwich)

    Willey, O. G. (Cleveland)

    Jay, D. P. T.

    Pearson, A.

    Williams, D. J. (Neath)

    Jeger, G. (Winchester)

    Peart, T. F.

    Williams, J. L. (Kelvingrove)

    Jeger, Dr. S. W. (St. Pancras, S. E.)

    Popplewell, E.

    Williams, Ronald (Wigan)

    Jenkins, R. H.

    Porter, E. (Warrington)

    Williams, Rt. Hon. T. (Don Valley)

    Jones, D. T. (Hartlepool)

    Price, M. Philips

    Williams, W. T. (Hammersmith, S.)

    Jones, Elwyn (Plaistow)

    Proctor, W. T.

    Williams, W. R. (Heston)

    Jones, P. Asterley (Hitchin)

    Pursey, Comdr. H.

    Willis, E.

    Keenan, W.

    Randall, H. E.

    Wills, Mrs. E. A.

    Kenyon, C.

    Ranger, J.

    Wilmot, Rt. Hon. J.

    Key, Rt. Hon. C. W.

    Rankin, J.

    Woodburn, Rt. Hon. A.

    Kinghorn, Sqn.-Ldr. E.

    Reid, T. (Swindon)

    Wyatt, W.

    Kinley, J.

    Rhodes, H.

    Yates, V. F.

    Kirby, B. V.

    Richards, R.

    Young, Sir R. (Newton)

    Lang, G.

    Robens, A.

    Younger, Hon. Kenneth

    Lavers, S.

    Roberts, Goronwy (Caernarvonshire)

    Lawson, Rt. Hon. J. J.

    Robertson, J. J. (Berwick)

    TELLERS FOR THE AYES:

    Lee, F. (Hulme)

    Robinson, Kenneth (St. Pancras, N.)

    Mr. Joseph Henderson and

    Mr. Hannan.

    NOES

    Agnew, Cmdr. P. G.

    Bower, N.

    Channon, H.

    Amory, D. Heathcoat

    Boyd-Carpenter, J. A.

    Clarke, Col. R. S.

    Assheton, Rt. Hon. R.

    Braithwaite, Lt.-Comdr. J. G.

    Conant, Maj. R. J. E.

    Astor, Hon. M.

    Buchan-Hepburn, P. G. T.

    Corbett, Lieut.-Col. U. (Ludlow)

    Baldwin, A. E.

    Bullock, Capt. M.

    Crosthwaite-Eyre, Col. O. E.

    Birch, Nigel

    Butcher, H. W.

    Crowder, Capt. John E.

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

    Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)

    Cuthbert, W. N.

    Boothby, R.

    Carson, E.

    Darling, Sir W. Y.

    Bowen, R.

    Challen, C.

    Davidson, Viscountess

    530

    531

    Digby, Simon Wingfield

    Keeling, E. H.

    Rayner, Brig. R.

    Dodds-Parker, A. D.

    Lancaster, Col. C. G.

    Roberts, Emrys (Merioneth)

    Donner, P. W.

    Langford-Holt, J.

    Roberts, H. (Handsworth)

    Dower, Col. A. V. G. (Penrith)

    Legge-Bourke, Maj. E. A. H.

    Roberts, W. (Cumberland, N.)

    Drewe, C.

    Lipson, D. L.

    Ropner, Col. L.

    Dugdale, Maj. Sir T. (Richmond)

    Lloyd, Selwyn (Wirral)

    Ross, Sir R. D. (Londonderry)

    Duthie, W. S.

    Low, A. R. W.

    Scott, Lord W.

    Eccles, D. M.

    Lucas, Major Sir J.

    Shepherd, W. S. (Bucklow)

    Elliot, Lieut.-Col. Rt. Hon. Walter

    Lucas-Tooth, Sir H.

    Spearman, A. C. M.

    Erroll, F. J.

    MacDonald, Sir M. (Inverness)

    Stanley, Rt. Hon. O.

    Fletcher, W. (Bury)

    Macdonald, Sir P. (I of Wight)

    Stewart, J. Henderson (Fife, E.)

    Foster, J. G. (Northwich)

    McFarlane, C. S.

    Stoddart-Scott, Col. M.

    Fraser, H. C. P. (Stone)

    Mackeson, Brig. H. R.

    Strauss, Henry (English Universities)

    Fraser, Sir I. (Lonsdale)

    McKie, J. H. (Galloway)

    Stuart, Rt. Hon. J. (Moray)

    Fyfe, Rt. Hon. Sir D. P. M.

    Maclean, F. H. R. (Lancaster)

    Sutcliffe, H.

    Gage, C.

    Macmillan, Rt. Hn. Harold (Bromley)

    Taylor, C. S. (Eastbourne)

    Galbraith, Cmdr. T. D. (Pollok)

    Maitland, Comdr. J. W.

    Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

    Galbraith, T. G. D. (Hillhead)

    Manningham-Buller, R. E.

    Thomas, J. P. L. (Hereford)

    Glyn, Sir R.

    Marples, A. E.

    Thorneycroft, G. E. P. (Monmouth)

    Gomme-Duncan, Col. A.

    Marsden, Capt. A.

    Thornton-Kemsley, C. N.

    Gridley, Sir A.

    Marshall, D. (Bodmin)

    Touche, G. C.

    Grimston, R. V.

    Marshall, S. H. (Sutton)

    Turton, R. H.

    Hannon, Sir P. (Moseley)

    Mellor, Sir J.

    Wadsworth, G.

    Hare, Hon. J. H. (Woodbridge)

    Molson, A. H. E.

    Wakefield, Sir W. W.

    Harris, F. W. (Croydon, N.)

    Morris, Hopkin (Carmarthen)

    Walker-Smith, D.

    Harvey, Air-Comdre, A. V.

    Nicholson, G.

    Ward, Hon. G. R.

    Head, Brig. A. H.

    Noble, Comdr. A. H. P.

    Webbe, Sir H. (Abbey)

    Hinchingbrooke, Viscount

    Nutting, Anthony

    White, J. B. (Canterbury)

    Hogg, Hon. Q.

    Odey, G. W.

    Williams, C. (Torquay)

    Hollis, M. C.

    O'Neill, Rt. Hon. Sir H.

    Willoughby de Eresby, Lord

    Holmes, Sir J. Stanley (Harwich)

    Osborne, C.

    Winterton, Rt. Hon. Earl

    Hope, Lord J.

    Peake, Rt Hon. O.

    York, C.

    Howard, Hon. A.

    Peto, Brig. C. H. M.

    Young, Sir A. S. L. (Partick)

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

    Pickthorn, K.

    Hulbert, Wing-Cdr. N. J.

    Ponsonby, Col. C. E.

    TELLERS FOR THE NOES:

    Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

    Poole, O. B. S. (Oswestry)

    Colonel Wheatley and

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

    Prescott, Stanley

    Lieut-Colonel Bromley-Davenport.

    Jeffreys, General Sir G.

    Price-White, Lt-Col. D.

    Question put accordingly, "That the words "nine shillings" stand part of the Clause."
    The Committee divided: Ayes, 282; Noes, 135.
    Mr. Birch: I beg to move, in page 8, line 5, to leave out "total," and insert "taxable."
    The effect of this Amendment is to levy Surtax on taxable income and not on total income over £3,000, as is now the case. The present law involves an anomaly. Surtax, after all, is the higher rate of Income Tax, and is so described in this Bill. Income Tax itself is levied after earned income relief, after children's allowances and after marriage allowance and so forth, but Surtax is levied on the surplus over £2,000 without taking into account individual circumstances. I do not know whether it is anti-social or not, for Ministers have over £2,000 and Members of nationalised boards also have it. It may be anti-social; I do not know, but, in any case, there is a very considerable anomaly here.
    To a man earning between £1,900 and £2,000, the effective rate of tax is 7s. 2d., whereas if he earns between £2,000 and £2,100 the tax jumps up on the surplus to 11s. in the £. We get a very sharp jump directly the income goes over £2,000, because the earned income relief stops at £2,000, and, so far as Surtax is concerned, no account is taken of any individual reliefs. This matter was discussed very shortly last year in this Committee, and I am emboldened to pursue it today for two reasons. The first is the Report which came out yesterday or the day before of the Royal Commission on Population. In that report, there is a passage which is very relevant to this matter, and, in paragraph 658, the following recommendation is set out:
    "(3) that the ordinary economic deterrents to parenthood are aggravated in the higher and upper-medium income ranges by an unfair
    536
    incidence of taxation, and that parents in these income ranges are entitled to such further tax reliefs as can be justified on grounds of fiscal equity."
    That is the first quotation from that paragraph, and the second I should like to make is from sub-paragraph (7) which is as follows:
    "(7) that in computing the income chargeable to income tax, the deduction made from the income in respect of each dependent child should be either £60 as at present (as a minimum); or one-tenth of the earned income in excess of £1,000, subject to a maximum deduction of £150."
    If hon. Members will work that out, they will find that it gives relief up to an income of £2,500.
    The Economic Secretary to the Treasury, who has just now given us the benefit of his opinions, is very fond of introducing the maximum degree of class prejudice and hatred into his remarks, following the example of his master. I hope he will be very careful, because the Commission whose recommendations I have quoted include a lady who was an ornament to that Commission and who happens to be the wife of the Economic Secretary. Though she made a memorandum of dissent at the end, it did not cover the point with which I am now concerned, and I think the hon. Gentleman should be very careful not to abuse his wife in this matter, because it may very well get back to him.
    The second reason why I am emboldened to raise this was the sparkling answer which the Financial Secretary to the Treasury gave to my right hon. Friend the Member for the City of London (Mr. Assheton) when he raised this matter on a previous occasion in this House.

    537
    During the Committee stage of the 1948 Finance Bill, the Financial Secretary then said:
    "Logically there is an excellent case"—
    Mr. Glenvil Hall: No, a good case.
    Mr. Birch: No, the right hon. Gentleman said an excellent case, and I am quoting from HANSARD. He said:
    "Logically there is an excellent case for giving these allowances in respect of Surtax in the same way as they are given in respect of ordinary Income Tax."
    The right hon. Gentleman sees no logical flaw of any sort in that argument, and he went on to say that the reason why he was not giving this concession was that other Income Tax concessions had been given in that Budget for married men, but that, of course, is not the case in this Budget. The right hon. Gentleman said:
    "I personally can foresee the time when conditions are different from now and when some sort of concession might be given along the lines suggested."—[OFFICIAL REPORT, 2nd June, 1948; Vol. 451, c. 1076–7.]
    The conditions perhaps are not very different, but there is one condition that is different, and in that connection we have had this report, which I would have said is wholly in line with the Amendment which we are proposing. It appears to be an anomaly, and I very much hope that we may have a good answer—even a better answer than before—and that the hon. Gentleman will not only say that we are right, but will admit that we are right by accepting the Amendment.
    Mr. Erroll: I think that we are entitled to some measure of explanation on this matter. Either the Government are pursuing a policy of pure expediency and are not just prepared to admit the logic of our case, or they are using a continuation of the present injustice as a further means of reducing large salaries and large incomes. If this is indeed just a question of expediency, perhaps we must bear with the Government and show some sympathy, because the Finance Bill is riddled with expediency. Occasionally, there are blinding flashes of principle as, for example, when the Mechanical Lighter Duty goes up in sympathy with the Match Duty. But when we go a little further on and come to the Pools Duty, we find expediency rearing its ugly head once again.
    538
    From the reply we received last year, it was plain that this was a matter of expediency, that the Government liked having the tax this way because it yielded a little more revenue at a time when they were hard pressed for revenue, and I have no doubt that the same argument could serve again this year when the Government are even harder pressed than they were last year. But I think we are entitled to an explanation on quite different grounds. It is time that the Socialist Government came out clearly into the open with their policy towards large salaries and large incomes. Are they against large salaries and large incomes which still exist? All their acts, their behaviour, and their sneers would seem to indicate that. On the other hand, they continue to pay their own Ministers salaries of £5,000 a year, and of course, they pay the chairmen and members of nationalised boards salaries ranging from £2,000 to £8,000 a year.
    We on this side of the Committee believe it is necessary and right to pay large salaries to men of outstanding ability and brilliance, and that they are entitled to a big reward for their exceptional qualities and for the drive and determination they show in applying those qualities for the benefit of the organisation which they serve. But it is surely wrong to take away the advantage of those large salaries by excessive rates of Surtax. It is surely wrong, particularly, to have such a steep step at the £2,000 a year level, because the effect of the law as it stands at present is to introduce a very steep increase in the effective rate of tax at the £2,000 a year level. Our Amendment would eliminate the steepness of that step, and would enable salaries and incomes of £2,000 or £3,000 a year to be more effective in the pockets of their possessors. It would, in short, be a better reward, taxed as they are at present, to those for whom higher rewards are justified, as we believe them to be justified.
    On the other hand, it may be that the Socialists do not think that anybody should have an income of over £2,000 a year. If that is really the case, however, let them come into the open and be honest about it, and say that they do not think any man should have an income in the Surtax range at all, and that if they have the chance they will steadily bring incomes down to that level. If, however,

    539
    it is really their intention to reward ability and brains, then let them rectify this injustice and rely no longer on a policy of expediency as their sole justification.
    7.45 p.m.
    Mr. Jay: May I first make clear that in contributing to this Debate I am expressing the opinions of His Majesty's Government and not those of the Royal Commission on Population, though I am very glad to hear that the hon. Member for Flint (Mr. Birch) has read that report, including the dissenting note. In the lively Debate we had just now, when we on this side said that the Opposition were wishing to make a reduction in the standard rate of Income Tax and that that would mainly benefit the wealthy classes of the community, we were told by the Opposition that they had other Amendments down which would, to some extent, adjust that. But what we find, when we come to the first of these Amendments, is that it is, in fact, a proposal to reduce the Surtax. What this Amendment proposes is that Surtax should be charged on taxable incomes in excess of £2,000 instead of on total incomes. At present, of course, the personal allowances and reliefs are only given against the standard rate of Income Tax and are not a deduction for Surtax purposes.
    I agree that there is a theoretical argument as between one Surtax payer and another for a change of this kind. One would, perhaps, naturally expect a Royal Commission to put forward a theoretical argument, but, in practice, it has always been held up till now that if these personal allowances were granted for incomes under £2,000, then we were providing in the law for the worst hardship and for the cases of most onerous family responsibilities where they fell on people with the lower incomes. Therefore, as I say, I think that some theoretical case can be made for doing this at some time, but certainly not in the present situation of the country, and when those with the smaller incomes today have to face the very great difficulties in connection with the cost of living.
    This Amendment is, in effect, a proposal for a cut in Surtax which would actually concede £15 million a year to certain Surtax payers. It would, of course, be most inequitable in present
    540
    circumstances because it would—as compared with the three-farthings a month which one of my hon. Friends pointed out would accrue to the £400 a year married man with two children, in the proposal to reduce Income Tax by sixpence—give a married man with two children who was earning £5,000 a year a concession of as much as £157 10s. It would give the corresponding married man with £10,000 a year a relief of £262 10s.
    Mr. Erroll: Is that per month or per annum?
    Mr. Jay: It is per year.
    Mr. Erroll: Surely, it is rather unfair to compare the monthly rate of the lower income with the yearly rate of the higher income?
    Mr. Jay: I thought that the hon. Member with his well known mental agility would be able to multiply by 12. One has only to multiply the monthly figure by 12 to arrive at the yearly figure. In our opinion, a relief to Surtax payers of £15 million a year in present circumstances would be far too heavy and quite out of balance with the rest of our Budget proposals. Therefore, we do not think that this concession should be made in present circumstances.
    Mr. R. A. Butler: Can the hon. Gentleman explain why he gives an estimate of £3 million more for a full year than the Financial secretary gave in the Debate last year?
    Mr. Jay: Presumably, because Surtax payers' incomes have risen since then as a result of higher profits and their relationship to the national income.
    Mr. Butler: Perhaps if I put down a question to the hon. Gentleman he will give me an answer?
    Sir William Darling: He is a bold man who rises, even in this empty Chamber, to defend the Surtax payer, and I make a claim to boldness in this respect. I am encouraged by His Majesty's Government and their representatives. Labour marches on, Socialism progresses. Last year the Financial Secretary told us that logically there was a good—or an excellent—case. It was either "good" or "excellent"; I am not going to quarrel as to which it

    541
    was, but I am quite satisfied with the lesser qualifying adjective. I am happy to rest on the admission of the Financial Secretary that there is a good logical case, especially when it is reinforced tonight by the Economic Secretary who says that we have a good theoretical case. If I have got both logic and theory on my side, Mr. Mathers, you will understand how encouraged I am to take up the case of the Surtax payer. What else is required to help the argument, I do not know; these are powerful contributions, and they do not come from this side of the Committee.
    I think there is something to be said for encouraging the Surtax payers. They are persons who, by a combination of luck and ability—and I put luck as high as hon. Members opposite care to put it—are able to acquire annually a large and substantial income. This income is taken from them by the State. I am inclined to think that those persons who have the genius and the ability to acquire this purchasing power, which is acquired by serving the public in some way or another, are likely to distribute it more ably than His Majesty's Government. Earlier today we heard from the Economic Secretary a most ingenious argument which he dare not mention in any factory or works. That argument was on the previous Clause, but it is relevant to this one. The argument is that the workers in the factories feel that the present heavy taxation which is imposed upon them and others is a form of co-partnership. The Economic Secretary put forward the view that the workers in a large factory would rejoice and say "Hip, hip, hooray, this is real profit-sharing, this is real co-partnership; we prefer our dividends in the form of wigs and spectacles which we cannot get."
    I do not think the Government are good spenders of hard-earned money, and I put the view that it is to the public advantage to allow the Surtax payer to enjoy a large measure of his lawful gainful earnings; the Surtax payer who has been fortunate in acquiring those earnings is likely to be more fortunate in their expenditure. I know a great many Surtax payers. The great things in this country were the creation of Surtax payers. Our libraries, museums, the permanent achievements and lasting advantages of
    542
    our country were made possible by men whose accumulations were spent more wisely by themselves than if they had been taken from them and spent by the State. Who will tell me that the great work of Andrew Carnegie, for example, would have been as well done by any Government or local government department? I belong to the effete school of economic thought which believes in persons. I believe that governments do very few things well. In fact, I have yet to learn what they do well. I believe in systems which encourage people.
    There are very few people in this country who come in this qualification. I believe we should encourage those men and women to do the best for themselves, because they cannot do the best for themselves without doing the best for others. I believe in the uniqueness of the Surtax payers. They are unique persons who cannot be replaced. There is one, Henry Cotton. If we dispose of Henry Cotton, we will not immediately find someone to take his place. There is only one Financial Secretary. If he were disposed of he could not easily be replaced. I say to the Government: I beg you to nourish and cherish those magic men who are irreplaceable in the same sense as the two examples which I have given.
    We do not like it. Humble, plain men like myself are always jealous of abler men and men of greater ability. It is natural for a democracy to be jealous of its great and able men, and to try and bring them down to one's own immediate level. I do not believe in an egalitarian society. As Lord Balfour once said, we cannot have a steeple without a foundation. While I agree that the foundation should be sound, I want more steeples. I want more men on the Surtax levels. It is impossible for them to make these large incomes without benefiting the community. What can a Surtax payer do with his extra money? He does not wrap it up in his napkin. He puts it to good purpose. He increases the national wealth by his activities and genius.
    While I plead for the Surtax payer, I am also pleading for the common man, the ordinary man, whose living, work and future depend upon the creation and encouragement of abler and better

    543
    men than we are able to find today. I hope this Amendment will receive the support of the Financial Secretary who believes there is a good logical case, and of the Economic Secretary who believes there is a good theoretical case, Logic and theory are with me. I hope the Government will be with me in the Lobby, too.
    Amendment negatived.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Colonel Dower: I feel there is one criticism of this Clause which should be made. I refer to the special hardship which, under the present Income Tax, married couples have to face. Time after time we have seen legislation, and in this Finance Bill there is even more legislation, which has the direct effect of penalising married people. In this Bill we find a continuation of the same injustices which have existed for so long. I have in mind the system by which the incomes of a husband and wife are coupled together for the purpose of levying taxation.
    I should like to give three instances to show the effect on three different ranges of income. In the case of a man and wife who each have £500 a year—I am taking £500 as being the generally accepted income of working people—they have to pay a tax of £324 instead of £260 which they were paying before they got married. In other words, the State has inflicted upon them, because they have embarked upon the honourable state of matrimony, an increased tax of £64 per annum. Let me now take the highest range of the ordinary Income Tax payer, but not yet amongst the wealthy; I refer to the man who earns £2,000 per annum. In the case of two people with £2,000 each, before they are married they pay £1,610, but from the moment they get married they have to pay £1,961, which is an additional £351 a year. Lastly, let me give an example of two wealthy people who each have £5,000 a year. Before they get married they have to pay £5,336 between them, and from the moment they get married they have to pay £6,561, or a penalty of £1,225 more of tax from the moment they are married, which is at the rate of nearly £3 a day.
    544
    8.0 p.m.
    I see the Financial Secretary questioning me; I should be pleased to go through the Table with him, which I have in my hands. In view of the Report of the Royal Commission on Population, which says that it is to the interest of the country that many more people should marry and have children, our present system of penal taxation should be re-examined with a view to ensuring that those who do marry do not have to pay more taxation than they did before they reach this honourable state. Just before you took the Chair, Mr. Mathers, your predecessor, pointed out that this was not a Bill which dealt with morals. I say that this continuing hardship is having a bad moral effect.
    Mr. Houghton: Is the hon. and gallant Member suggesting that people would rather live in sin than pay tax under the present system?
    Colonel Dower: No, but I do not see why the tax on virtue should be so high. Because people do the right thing, and marry and have children, I do not see why they should be forced to meet extra penalties in the form of increased taxation.
    Mr. Houghton: The hon. and gallant Member suggested that the present system was having a prejudicial effect on morals.
    Colonel Dower: No, but quite a large number of people might prefer to remain single, instead of getting married and having children. They might not wish to incur a further burden of taxation by getting married.
    The Financial Secretary may say that the State cannot afford to lose revenue, but I am getting a little tired of that argument every time these questions of taxation are raised. A tax is either good or bad; if it is bad it is up to the Government to find an alternative source of revenue. It has often been said, when a particular tax has been defeated on grounds of conscience, that the Government could not afford to forgo the revenue. We cannot accept that argument indefinitely. I know the right hon. Gentleman will give me a stony answer, but I felt the point ought to be raised because if there is one thing which the country wants more than anything else it is more marriages and children.
    Mr. Houghton: What the hon. and gallant Member has been saying relates to the wife's unearned income. Under existing arrangements, earned income relief and differential rates of tax apply to a married woman with earned income, as they do to an unmarried woman with earned income.
    Colonel Dower: I am pleased to hear the hon. Gentleman say that, because it appears that the Government have started to admit the principle of what I am saying. The days of the Married Women's Property Act have gone by. Now, married women have their freedom, their own estates and, in many cases, their own businesses and careers. There are women Members of Parliament, and the other day we read of a woman being made a King's Counsel. Some may not approve of this new development, but it is occurring. Because a woman is married she is no longer regarded as being the property of her husband yet, for the purposes of taxation, she and her husband are considered as one.
    Mr. Glenvil Hall: The hon. and gallant Member for Penrith and Cockermouth (Colonel Dower) has given us the example of two people getting married, each fortunate enough to have an income of £5,000 per annum. As single people they kept, I assume, separate establishments, and their individual incomes were subject to tax as such. When they married they set up a joint home, and their incomes became a joint income. Allowances are made to married people against the total income that accrues to them—in this case, £10,000. If the wife wishes she can have the joint income separated and herself assessed separately, but what the Inland Revenue will not do, and quite rightly, is to forget that if she does that, the income is still a joint one for herself and her husband. The common-sense reason is that if that is not done it would be possible for the husband and wife so to divide up their incomes and pretend—I use that word in no invidious sense—that a certain amount was the wife's and a certain amount was the husband's when, in fact, the whole of the money was the husband's.
    Colonel Dower: I was not referring only to people with incomes of £5,000 a year. I gave an illustration of £500 a year. Why grant an allowance in the
    546
    case of a married woman earning her own living?
    Mr. Glenvil Hall: We are all anxious that women who are able should work, and to help them my right hon. Friend the Chancellor of the Duchy of Lancaster, when he was Chancellor of the Exchequer, increased the special wife's earned income allowance to £110 to induce them to go out to work because it was found that when their incomes were added to those of their husbands the Income Tax which had to be payable was a deterrent.
    Clause ordered to stand part of the Bill.
    Clause 15 ordered to stand part of the Bill.

    Clause 16.—(INCREASE IN INITIAL ALLOWANCES, ETC., IN RESPECT OF MACHINERY OR PLANT.)
    Mr. R. A. Butler: I beg to move, in page 8, line 25, at the end, to insert:
    "(2) Where on or after the sixth day of April, nineteen hundred and forty-seven, but before the sixth day of April, nineteen hundred and forty-nine, a person carrying on a trade has incurred any capital expenditure on the provision of machinery or plant for the purposes of the trade he shall be treated for the purposes of subsection (1) of this section as having incurred on the sixth day of April, nineteen hundred and forty-nine, capital expenditure on the provision of that machinery or plant equal to the amount of that expenditure and there shall be made to him an initial allowance equal to two-fifths of the expenditure less any initial allowance already made to him under subsection (1) of section fifteen of the Income Tax Act, 1945, and any annual allowances made to him under Rule 6 of the Rules applicable to Cases I and II of Schedule D for any year of assessment before the year ended fifth April, nineteen hundred and fifty-one."
    I must apologise for being obliged to discuss some rather serious economic arguments on this Amendment. Listening to the Debate, and especially to the speech of the Economic Secretary to the Treasury, I imagined myself at Hyde Park Corner, listening to a stump orator giving a false picture of his opponents' political views. Fortunately, it is not my turn to give an answer, and I am sure you would rule me out of Order, Mr. Mathers, if I were to try to do so now.
    The rather serious arguments I wish to advance deal with what are known as the wear-and-tear allowance for industry.

    547
    This Clause increases the initial allowance for wear and tear, or depreciation, from 20 to 40 per cent. To that extent we are grateful to the Chancellor of the Exchequer for making a concession in this matter, but, as the Financial Secretary has stated, this is no gift to industry; it is simply an advance of money which is taken back at a later date; and to the extent that it is an advance of money it helps a certain number of companies for an intermediate period provided they are large enough and well enough off to have the capital to take advantage of the offer—that is, to buy their machinery from undistributed profits.
    But the only circumstance, as I read this concession, in which an industry or company gets any definite advantage is when there is by any chance a reduction in direct taxation in the intervening period during which the allowances run. The chances of getting a reduction in taxation, judging by the speeches of the Economic Secretary and the Financial Secretary hitherto, are absolutely nil, and I am quite certain that the speeches made by Government spokesmen today, in direct insult to the capital of this country, and the companies and industries of this country, are not going to create any confidence in industry at all. I am convinced, therefore, that we cannot in any way rely on this Government's producing any reduction in direct taxation to help legitimate and honourable companies with the task which is absolutely vital to our competitive power—that is, of improving their machinery and thereby helping the workers a great deal more than the capitalists, because no worker can do proper work unless he has the proper tools, and no company can compete in the markets of the world with British products unless the equipment be absolutely up to date.
    The concession which the Chancellor has made in the form of increasing the initial allowance and letting it run over a certain period, and then get it back, does not, unfortunately, help small industries. Nor does it help with the major problem of industry, which is, that the law does not keep pace with the rise in the cost of living—that is to say, the cost of replacing machinery, which now is, according to all the most expert figures I have been able to obtain from
    548
    the most reliable sources, something like three times up on what it was in 1948. Businesses at the same time have to meet the extra cost which is necessary in the replacement of capital out of their own resources, which are themselves taxed. I have already given some indication of the importance of improving our competitive power and of improving working conditions by establishing machinery. I will go further, and say that in moving this Amendment, in moving subsequent Amendments later, and in moving a new Clause later, as we hope to do, our sole idea is to make the productive industry of this country better able to compete by having better machinery.
    There is a sort of idea, according to the speech of the Economic Secretary today, that the making of profit by industry is immoral. I should like to warn the Government and their supporters that the State cannot escape responsibility for this subject, and for the possible modernisation of the plant of industry itself. If they doubt my word, I shall only draw attention to a big industry—the cotton trade—which has been unable, out of its own resources, to modernise its machinery, with the result that the State, in the shape of the taxpayer, in the shape of hon. Members opposite, has had to come to the relief of the spinning section of the cotton industry already, and has had to provide out of taxes a State subsidy. So the State is going to get it put upon its shoulders and the taxpayer has to have the burden of making it possible for an industry—an honourable industry—to make provision for its own re-equipment out of its own resources and its own undistributed profits. The weaving section of the cotton industry has not yet had a subsidy, but I can well believe that unless it is able out of its own resources to provide for itself, we shall have to help it to enable the cotton industry to compete in the markets of the world. I hope, therefore, I have made the case for moving an Amendment of this sort.
    8.15 p.m.
    The only other general matter I want to refer to at the outset is that the Chancellor has himself set up an inquiry. This inquiry we welcome, and I trust that this inquiry will receive evidence from all those in industry who are acquainted with this subject. I do not

    549
    mind saying that it will receive a variety of advice, because there are a great many suggestions as to how this depreciation allowance should be improved, and, in particular, how a special allowance might possibly be provided to help industry. I should like to say that I hope that this inquiry will report without undue delay, and that, as a result of it, the Chancellor will be able to take some further action at a future date if this Government still remain in power and he still remains Chancellor.
    Before I come to deal with the detail of the Amendment itself, I just want to dispose of the question of the supposed piled up profits which exist in industry itself and which, it is said, makes it unnecessary for this Committee to take any interest in this question of allowing for depreciation. My figures show me that between 1938 and 1948 rents, dividends and interest increased by roughly 33 per cent., and that wages and salaries increased over that period by 105 per cent. After making deduction for tax, I work out that wages, the workers' share, have gone up from some 31 per cent. in 1938 to 40 per cent. in 1948. Of course, I am not saying anything to suggest that that is anything but a good thing; but I am simply drawing attention to these figures. Profits, interest and rents, on the other hand, have gone down from 34 per cent. to 28 per cent.
    If we look at these matters fairly and squarely, and not in the extremely unfair way the Chancellor did on Second Reading in answer to my speech, I think we see that the Chancellor, at Blackpool, was a great deal more to the point on the profits of industry than he was on the Second Reading of the Finance Bill; because at Blackpool, returning to his senses—at least to a certain extent—he said that profits had been a great deal lower in 1948 than in 1947. I can assure the Chancellor that it is likely that these industrial profits will be lower this year. It is true to say also that distributed profits since 1938 have gone up by 45 per cent., but the cost of consumer goods has gone up by 80 per cent., and the wage bill has gone up by 130 per cent.
    I do not want to revert to the Chancellor's speech on the Second Reading of the Finance Bill, because it has already
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    been pointed out that, with extreme unfairness, he did not make any statement indicating the amount of undistributed profits which are taken in taxation. The sum of no less than £670 million is taken by him in taxation. This leaves a comparatively small figure, which, I am assured by all those who have taken an interest in this subject in industry, is insufficient for dealing properly with depreciation, judging the cost of replacement machinery now to be three times what it was before the war.
    Mr. Chamberlain: While agreeing the figure, may I ask the right hon. Gentleman if he will agree that free reserves after taxation are more than three times what they were before the war?
    Mr. Butler: I have no figure for that. I am merely giving the Committee an indication of the figures I have available to me here.
    Mr. Chamberlain: They are officially recorded.
    Mr. Butler: That brings me to the details of the Amendment. We suggest in this Amendment, which is a very modest one, that the concession shall go back for a two-year period. That might mean that this concession, if made by the Government, would, in fact, taking into account a firm which had already taken advantage of the initial allowance, and of the first year's allowance, and of the second year's allowance, mean a very small additional cost for individual firms that had taken advantage of the depreciation allowances already existing. The Amendment, therefore, is not dealing with the whole major issue of depreciation. We hope to raise that later, when we come to our proposed new Clause suggesting the provision of some special allowances for depreciation. This Amendment simply extends the Chancellor's concession, and makes it refer back for a two-years' period.
    We do not think, subject to any information which may be given us by the Government, that this is an unreasonable suggestion. Indeed, we go further and say that, not only is it not unreasonable but it is a more moral solution than the Chancellor's of a very difficult problem, because it does help to give this concession on depreciation allowances to

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    firms which looked ahead and dealt with the problem of replacement earlier than some firms which will now be able to get advantage from the Chancellor's own concession, which only dates from a later period. I move this Amendment on the understanding that we shall not only have a good deal to say on depreciation later on further Amendments, but that on the proposed new Clauses we shall hope to ventilate the subject of a special allowance.
    Mr. Erroll: This Clause is a direct result of the inflationary tendency which has existed in this country over the past few years. We are now reaping the dubious benefit of the period of "Daltonian" prosperity, and of course the previous inflationary effect of the war while it was in progress. We therefore find that, whereas firms have only been allowed to accumulate out of untaxed profits depreciation allowances up to the original cost of the old asset, they are now faced with bills considerably in excess of those repairs for the purchase of replacement machinery. It appears to be quite clear that the community as a whole has been living, to a large extent, on the capital of industry. We have been draining away in current taxation certain of the capital of industry which should have been retained by industry for the purpose of re-equipping itself at the new and higher post-war prices.
    The problem does not, of course, rest with plant and machinery alone. This same eroding process has been going on in regard to stocks of commodities and work in progress, where stocks have acquired higher monetary values as a result of the purely paper increase in values which has been taxed. Firms now faced with the need to replace those stocks at the new high prices are faced with a real difficulty in finding the money. What we have been doing through the operation of a taxation system designed for stable values of the £ is draining away from industry a very important part of its lifeblood, and mainly its capital.
    As the magnitude of this problem became apparent to everybody, so a number of solutions were suggested, but it is significant that not one solution has been found to provide a satisfactory formula for this very complicated matter. I will
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    not weary the Committee with all the various suggestions which have been made. One formula which seemed to commend itself to a number of industries was put forward by the Federation of British Industries, who advocated the granting of an additional depreciation allowance for the years 1945 and 1946. Of course, such a solution, apart from the immense amount of work it would necessitate, would prove of some advantage to those firms which had largely written down their assets before the datum years of 1945 and 1946.
    It seems that, in fact, there really is no solution for compensating firms for past taxation which has been taken from them. It therefore looks as though we shall not be able to get much further than the ad hoc and simple solution implemented by the Chancellor in this Clause. It is a relief, certainly, and industry is naturally grateful for all relief at the present time. But it is not a very great relief, for the simple reason that it represents no more than a tax-free loan for a period of several years. While the relief comes now, a greater amount of tax will have to be paid later unless the standard rate of Income Tax is reduced, so that in the end industry will have to bear the same burden as it has been bearing. I believe that, while this Clause does afford an immediate relief of some consequence, the relief at present envisaged is of limited value since it provides relief only to those firms who can finance their replacements out of profits. I know certain hon. Gentlemen opposite, including particularly the hon. Member for Norwood (Mr. Chamberlain)—who seems to have come into collision with a balance sheet, or something like that—suffer from the delusion that all companies make very large profits.
    Mr. Chamberlain: I said no such thing. I said that the general run of profits is extremely high and excessive. I never said that all firms made big profits. Let us get it right.
    Mr. Erroll: In view of his explanation, the hon. Member will doubtless subscribe to my contention that there are many firms, most of them small firms, who will find this relief of comparatively little value, since in the period of declining trade activity in which we find ourselves today sufficiently large profits will not

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    necessarily be earned to enable full advantage to be taken of this relief. It is a relief limited only to those firms which can afford it. It seems a strange way indeed of giving relief. This Amendment seeks to rectify that situation to a certain extent, because a far bigger proportion of firms were making reasonable profits in the two preceding years, so that if this retrospectively acting Amendment were accepted they would get a benefit which will probably be denied to them if the Clause goes through in its present form.
    The relief afforded by the Clause in its present form is a relief to the slothful. It is very tiresome to hear from, for example, the Lord President of the Council that enterprise must be really enterprising and then to come here and find a Clause designed to give relief not to the enterprising but to the slothful. This Clause puts a premium on enterprise; it gives reward to people who sat tight and did nothing, who ignored the Government's call, nay, the nation's call, to re-equip and modernise, who said "It is expensive. We will go slow. We will not do it now." These firms get all the benefits as a result of this Clause, whereas the keen and efficient firms, the firms we Conservatives believe in, which we regard as the best examples of the private enterprise system, are as one would expect from a Socialist Government, heavily penalised. This Amendment seeks to rectify that injustice, and I sincerely hope that the Government will see their way to accept it.
    8.30 p.m.
    The Solicitor-General (Sir Frank Soskice): I am sorry to say that my right hon. and learned Friend feels he cannot accept this proposal, which would further extend the relief the Bill affords for the purposes of replacement of machinery. The purpose of the relief is to come to the aid of companies in order to enable them to replace their machinery now and in the future. Putting the matter quite broadly, we do not see that retrospective relief, such as this Amendment would give to companies, really contributes much by way of incentive for the purpose of replacing machinery now and in the future. That is past relief, and what is required, and what is in fact given by Clause 16 as it stands, is a double initial allowance now and in the future.
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    The hon. Member for Altrincham (Mr. Erroll) said that it would only operate in favour of the slothful who had postponed replacement. He has not sufficiently taken into account one set of circumstances. The right hon. Member for Saffron Walden (Mr. R. A. Butler) also made the point that only large companies would be aided by this, because they were the only ones which could afford to pay the higher price of machinery now in comparison with 1938. Both have failed to take into account that the company which desires now to buy new machinery in order to replace old machinery will have been able to write off over the years the expenses of the machinery which it is replacing.
    I will give an example. Suppose that in 1938 a company bought a machine for £1,000 and desires to replace it in 1948 at a cost of £2,000. Under the provisions of the Bill, the company gets an initial allowance of 40 per cent. against the new machine. It will also get in the first year in which it replaces the machine five-fourths multiplied by the amount of the fraction regarded as reasonable wear and tear. If that is taken at 10 per cent., the result is that in the first year it replaces the new machine it gets 40 per cent. plus 10 per cent., so that it gets an allowance of 50 per cent. against the cost of the new machine. In other words, it replaces the new machine at £2,000, and by way of the initial allowance and the first annual allowance it gets £1,000, or 50 per cent. of the cost.
    But not only that. It will have been writing off over the years the cost of the machine it bought in 1938. Suppose that it bought that machine in 1938 at £1,000. It will have written off and placed to reserve, by being able to write off the cost, £1,000, so that when it comes to replace the machine with the £1,000 it has placed to reserve by writing off the allowances it has previously enjoyed, plus the new increased initial allowance and the first annual allowance, it will have the £2,000 necessary to replace the new machine at the increased cost. That is the position. Of course, I am taking an extremely simple example, which obviously is not characteristic of all cases.
    What I am seeking to establish is that both Members have failed to take into account the fact that the company will have placed to reserve what it has been

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    able to write off against the cost of the old machine.
    Mr. R. A. Butler: The Solicitor-General's argument is quite fallacious, in that it supposes that the cost to replace a machine has doubled since 1938. Every figure I have had from companies with which I have been in touch shows the cost has increased three times. That makes the figure in the case mentioned £3,000. Will the Solicitor-General address himself to that?
    The Solicitor-General: If the company has to pay £3,000, the initial allowance and the first year's allowance come to £1,500, and if the company has £1,000 against the old machine, it will have to find only £500. It is not correct, therefore, to say that only the big companies are advantaged, companies which can afford to pay large sums for machinery. There is a gap, but it is a much smaller gap than Members opposite have seemed to indicate. I wanted to make that position clear in answer to the first point.
    What I have said is that we want to enable companies to replace their machinery now, and in those circumstances we do not think that it will greatly assist them for this purpose to give them retrospective allowances referable to an earlier period. Quite apart from that, the extension proposed by the Amendment to be given to companies under Clause 16 would be an extremely expensive one. In point of fact, the drafting of the Amendment is a little ambiguous. It is not clear whether the new allowance is to be two-fifths of the excess of the expenditure over the allowances already given, or whether it is to be calculated by first taking two-fifths of the expenditure and then deducting from that the allowance already given. That is an ambiguity in the drafting but it makes a difference in the expense.
    On the first construction of the Amendment the cost would be £140 million in the year 1950–51 and £30 million in the year 1951–52. On the alternative construction it would still be expensive—£50 million in 1950–51 and £10 million in 1951–52. That has to be taken into account with the cost of the original concession, which is granted by Clause 16 as it already stands, for an increase of initial allowances from 20 per cent. to 40 per
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    cent., which in the year 1950–51 will be £40 million and in 1951–52, £75 million. For those reasons it would be extremely expensive to make this further concession, and for the reason which I gave, that it is unnecessary when one takes into account the full circumstances of the result of writing off the allowances in respect of the original and new machinery, we feel that we cannot go any further than the concession we have made. We, therefore, ask the Committee to reject this Amendment.
    There was, of course, a case of granting retrospective allowances in the Income Tax Act, 1945, which brought in initial allowances in the first place. That is no analogy to the present case, because the then Chancellor of the Exchequer had already previously promised that he would as from a post-war date introduce a system of initial allowance, and that is why, when he came to introduce it, he had to make it retrospective to a date two years before the Income Tax Act, 1945, became operative. For those reasons we feel that a case has not been made out for this substantial, and, indeed, extremely expensive concession.
    Mr. R. A. Butler: What is the alternative cost on the different readings of the wording of the Amendment? I think the right hon. and learned Gentleman only gave one.
    The Solicitor-General: I gave both but I will give them again. The first reading is two-fifths of the excess of the expenditure over the allowances already given. The other is to take two-fifths of the expenditure deduct the allowances already given. The cost of the proposed extension of the relief on the first construction would be about £140 million in 1950–51 and about £30 million in 1951–52, and on the alternative construction it would be £50 million in 1950–51 and £10 million in the year 1951–52. Hon. Gentlemen opposite will agree that this is a substantial increase in expenditure, which my right hon. and learned Friend feels he cannot at the moment accept.
    The right hon. Member for Saffron Walden who moved the Amendment, intimated, although he began his speech with more general references to the situation, that he and his hon. Friends desire a full discussion on the question of these

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    initial allowances at a later stage of the Bill when we come to the new Clauses. I have, therefore, limited myself in the answer to the arguments he put in his speech. I hope that the Committee will agree with us that this Amendment is not one that we should accept.
    Sir Arnold Gridley: I tried to follow the argument put forward by the Solicitor-General, but I think that he is perhaps not quite so familiar with what is going on in the way of replacing industrial machinery as I am myself, because in the last three years I have been very heavily engaged in that process. The argument which he put forward and the figures which he gave, were, I assume, based upon the assumption that if new machines are bought those which they are intended to replace are entirely scrapped or written off. That is not necessarily what is going on. Perhaps I may give a concrete case. Only last week I was considering the scrapping of a number of tools in a certain factory and replacing them with new—
    The Solicitor-General: Perhaps it would assist the hon. Gentleman in his argument if I venture to put in something now which I left out. He has mentioned the possibility of machinery not being scrapped. If it is scrapped, of course, and the trader has not written off the full cost of the machine, he is entitled to a balancing allowance. If he sells it or disposes of it in some way or other for a price, then he has not only the amount which he has been able to write off but the price of the machine which he has disposed of. If the price of that machine exceeds the unwritten-off value of the machine, then he has to pay a balancing charge, a tax upon the balance. That is a charge represented by the excess of the price which he gets over the unwritten-off value of the machine. I do not think that fact makes much difference to the principle of the argument which I was advancing.
    Sir A. Gridley: Perhaps I may continue the explanation which I was trying to make. Frequently it is a case of not scrapping the machine but putting it on one side as no longer useful for the particular purpose. In our drive for exports, we have to put down new machinery in order to develop new products. That position is not taken care of under any
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    of the points which have been made by the Solicitor-General. As one who has not been idle in this matter, but in 1946 and in 1947 incurred a great deal of expenditure in the process, which is still going on, I feel that it is indeed a hardship if firms with whom I may find myself in competition are to get an advantage because they have been lazy in the process of modernising compared with myself, who have endeavoured to carry out the exhortations of the Chancellor of the Exchequer that industry should bring its equipment up to date. I think there is a case here which needs reconsideration.
    The figure of £150 million or £50 million as the cost of the concession certainly seems to be staggering and I do not understand how it can possibly have been arrived at. I am sure that the example which I have given is being repeated in many of our industrial establishments, which are putting aside for the time being machines whose useful life is not yet finished but are not fitted at the present time for the particular purpose of producing products which one has to sell in these times, if one is to do any business at all. This situation always comes after every great war. New industries develop, or have to be developed. We should be in a very sorry state in this country now if new industries had not been discovered as the result of the first world war and had not been quickly developed in the intervening period. The same thing is happening now.
    8.45 p.m.
    If we are to be in a position to compete with industries overseas, British industrialists must not be handicapped but must be given every possible relief to enable them to produce as cheaply as possible. We have appreciated the help which the Chancellor has given us in various ways, but it was a disappointment to industry when this concession was first made to find that it was only a temporary loan. This writing off of 40 per cent. initial allowance in the first year does not mean that we shall get more than 100 per cent. over a period of years. It comes to the same thing in the long run, but we get immediate relief now. The advantage of that is that it should encourage firms who have to face expenditure on capital goods to spend that money and so increase the trade of the country and put us in a position to

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    develop our export trade with greater hope of competing with our opposite numbers overseas.
    I hope that the Solicitor-General will agree that further consideration of this is justified by the argument I have submitted, that it is a question not necessarily of writing off machine tools which are out of date but of replacing a great number which are not worn out with more modern plant or special-purpose machines required for the special purposes of present circumstances.
    Lieut.-Commander Gurney Braithwaite: I was glad to see the Solicitor-General at the Box just now as an indication that we are moving into a calmer and more courteous period of treatment from the Government Front Bench compared with the truculent orations to which we were subjected recently. In spite of that, I was rather shocked at the opening sentence of the Solicitor-General. I hope he will not take it amiss if I say why. It is frequently the case when the Chancellor is absent from the Chamber that the Minister who deputises tells us that his right hon. and learned Friend regrets that he is unable to accept an Amendment, having, of course, considered the situation in the light of the Debate. It is rather a new departure to be told that his right hon. and learned Friend is unable to accept an Amendment when his right hon. and learned Friend left for Brussels in the small hours of this morning.
    The Solicitor-General: That is not exactly what I meant to say. Naturally, my right hon. and learned Friend had carefully considered the proposal as soon as it was put on the Order Paper. He had carefully considered it with his expert advisers and had come to the provisional conclusion, which is subject to further arguments which may be advanced in the Debate. I meant to imply by what I said that I did not feel from anything which had been said in the Debate up to that moment, that there was sufficient reason for a change in the provisional decision to which my right hon. and learned Friend had come.
    Lieut.-Commander Braithwaite: I am relieved to hear the Solicitor-General say that the decision was provisional. He did not make that plain before. At the beginning and the end of his speech he
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    said that his right hon. and learned Friend could not accept the Amendment. I am glad to hear that there is a certain flexibility in this matter and that the arguments which have been put have not merely fallen on deaf ears. I am glad to hear the Solicitor-General say that because there is a matter which requires further consideration between now and the Report stage.
    There is a certain amount of luck in this matter. It is possible that firms which are neither slothful nor tardy in their arrangements received their plant and machinery on the right side of the line subsequent to 6th April, 1949, and will get the qualification although they may have put in the order at precisely the same moment as firms which got a quicker delivery and will, therefore, be disqualified. This is a somewhat arbitrary arrangement and the right hon. and learned Gentleman should look into this matter again for two reasons. The first, I admit, is not one of great strength, but it is worth while putting across to him, that in the present financial year under review in this Bill there will be no cost to the Exchequer. Incidentally the sums which the right hon. and learned Gentleman mentioned for 1950–51 and 1951–52 seemed to me to be excessive and I was surprised at the figures he gave.
    Would the Solicitor-General apply his mind to the real problem with which we are faced? It was well put by my hon. Friend the Member for Stockport (Sir A. Gridley). Surely the main consideration which should weigh with the Government is the heavy drain on industrial capital involved at a time when all of us know that there has to be a tremendous effort made, not only to capture fresh foreign markets, but to hold the markets which we have at this moment, and modernisation and re-equipment is a number one priority in that struggle. I hope that the Solicitor-General may be persuaded to say that, when his right hon. and learned Friend returns from the important conference which he is attending, he will represent to him the strong opinions which have been put. I do not think he would lose anything at all if he would say that, and on the Report stage tell us if anything can be done.
    Mr. Benson: If the Solicitor-General has any desire that this

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    Amendment should be accepted by the Chancellor, I hope he will not call the attention of his right hon. and learned Friend to the Debate we have had so far, because nothing I have heard from the other side suggests any persuasive effect upon the Chancellor. To begin with, hon. Gentlemen opposite have not made up their minds why they want this Amendment. Do they want it as a reward to the firms that put in plant two years ago or do they want it as an incentive? They ought to make up their minds. Obviously this Amendment cannot be an incentive to put in plant as it only refers to plant already put in during the last two years. What effect could it have, except to hand over a certain amount of tax relief? Does the hon. and gallant Member wish to say something?
    Lieut.-Commander Braithwaite: I was merely remarking that it was discriminatory as between one firm and another.
    Mr. Benson: Every Act we pass is discriminatory between the people affected by it and the people who are not affected by it. In new legislation it is completely impossible to make retrospective every Amendment which gives a concession for future activities. If it is discriminatory, why stop at two years? Why not go back over the last 15?
    Lieut.-Commander Braithwaite: I am sorry to interrupt the hon. Gentleman again but I am trying to follow his argument. If he objects to these reliefs being made retrospective, has he the same objection to taxation which is made retrospective?
    Mr. Benson: Taxation is never made retrospective except after warning has been given on Surtax avoidance, and the hon. and gallant Gentleman knows it. Even then it is seldom made retrospective. It ought to be, but it is not. Here it is a question of giving a concession, and the purpose for which the Chancellor gave this concession was to facilitate future installations of machinery, not to reward past installations. The hon. Member for Stockport (Sir A. Gridley) referred to the estimate by the Solicitor-General of £140 million as astonishingly high. What is being asked for is two years' concessions, or approximately double the extent of the cost of the Clause,
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    which is £70 million as stated by the Chancellor himself.
    Mr. R. A. Butler: The Solicitor-General's reading of the Amendment is not correct in relation to the £140 million. It is correct in relation to the £50 million; that was the intention of the Amendment.
    Mr. Benson: The reason why this concession is so very high is that, despite what the right hon. Member for Saffron Walden (Mr. R. A. Butler) has said, the amount of new plant put in under the Labour Government is between two and three times as much—in volume, not in value—as under the Tory Government before the war. That is why these concessions are so costly. I am, in fact, sceptical whether the original concession given by the Chancellor is really necessary. Never in the history of this country has more new plant been put into industry than at present. Industry is extremely liquid. Certain firms are tight, but industry has never been more liquid financially than it is today. For evidence of this we need only look at the bank reserves, a very large amount of which are held by industrial firms. There are now something like £24,000 million of gilt-edged securities as compared with £7,000 million before the war. A very large part of that figure is reserves piled up by industrial companies. The financial position of industry is more liquid than ever before, and firms are putting in between two and three times as much plant as before the war.
    The right hon. Member for Saffron Walden said that machinery was now costing about three times as much as before the war. I am very sceptical about that. A very good measure is the cost per ton of machinery exported from this country; we are exporting very large quantities of machinery, and of every type. If the right hon. Gentleman will refer to the trade returns he will find that the cost per ton of machinery exported today is exactly double—and not a penny more—what it was in 1938. Great exaggeration is frequently made in statements about the increasing cost of plant. What may, and no doubt frequently does, happen is that plant is replaced not by identical machinery, but by far more efficient, modern and larger machinery. That does not mean that the costs of

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    replacement are now doubled, for not only is plant being replaced but productive capacity is being expanded.
    Mr. Erroll: One important factor which the hon. Gentleman omits from his comparison is the cost of installation, which is a proper part of the cost of replacement, does not appear in the export figures.
    Mr. Benson: The cost of replacement has not gone up so greatly that it raises the price of the machine plus installation to three times what it was before.
    Mr. Erroll: What about the Central Electricity Board?
    Mr. Benson: If anything, the Chancellor has been over-generous. Whatever may be the position in four or five years' time, there is at present no pressing need for the concessions that have been given, and the demand that this concession should be retrospective is fantastic.
    Mr. Selwyn Lloyd: I shall attempt to deal with some of the arguments of the hon. Member for Chesterfield (Mr. Benson). Before doing so, let me reiterate the remarks of my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) that in view of what the Solicitor-General has said we feel that we are pleading this case to a sort of absentee judge who has already given his decision against us. We hope that these arguments will receive serious consideration, for there is very much more in this question than the hon. Member for Chesterfield would have the Committee believe.
    9.0 p.m.
    I listened to the right hon. and learned Gentleman very carefully. His point was that retrospective relief does not provide any incentive and I agree with him in that regard. He went on to talk of an example of a machine purchased in 1938 and replaced in 1948. I understood him to say that if it were replaced in 1948 the allowance would be 40 per cent., plus an extra 10 per cent. by way of wear and tear allowance—
    The Solicitor-General: 1949.
    Mr. Lloyd: I thought the right hon. and learned Gentleman said 1948.
    The Solicitor-General: I meant 1949.
    Mr. Lloyd: We are asking the right hon. and learned Gentleman to take 1948
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    and in that case the amount would be 20 per cent. and not 40 per cent. In spite of what the hon. Member for Chesterfield (Mr. Benson) said, I think it is the experience of many of us that the figure for increased cost is between two and three times and not limited to twice the amount. The right hon. and learned Gentleman used a very favourable figure for himself when he spoke of 10 per cent., but in many cases the wear and tear allowance is not 10 per cent., nor is it the figure of which 10 per cent. is five-fourths. If I followed his argument he suggested that the 10 per cent. was five-fourths of the amount.
    Leaving those figures on one side, because they do not affect cases of machinery bought in 1947–48, the next point was that this Amendment would be very expensive. In the long run it would not cost anything, because it is simply a re-arrangement of an allowance which would be made in any case. It is only bringing forward the burden in exactly the same way as the Chancellor's original proposal was a bringing forward of the burden. Although it may impose an additional burden for certain years, in the long run it would not cost the taxpayer anything, but would simply be a re-arrangement.
    We were invited to give our arguments for putting the proposal forward. The first argument is to be found in the Chancellor's Budget speech in which he said:
    "During the past year, I have received representations from many quarters as to the difficulty which industrial companies are experiencing."—[OFFCIAL REPORT, 6th April, 1949; Vol. 463, c. 2097.]
    In other words, he admitted that it was during the past financial year that he has been receiving representations. He decided to do something about it and fixed the date at which the relief was to take place as the date of his Budget speech. If he were satisfied that the representations made to him during the year were good and valid, one would have thought he would have made the remedy designed to meet them retrospective at least to the extent of a year. The difficulty must have been existing throughout that fiscal year and, as we suggest, during the former year. It is another case of the slothful getting the benefit and the active and enterprising not receiving a just reward for their enterprise.

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    When one is asked what benefit the State will get out of making a thing of this sort retrospective, the answer is that it will be the feeling on the part of people in industry that it will not be to their detriment in the future to be active and enterprising in this regard. If, as difficulties get greater, there is a feeling that further concessions will possibly be made, one will find people hanging back to find out what the Chancellor's policy is to be before embarking on expensive new enterprises of replacement. It is in order to do justice and in order that there shall be no discrimination that we desire this Amendment to be made retrospective.
    The second reason is to enable the companies which have incurred this expenditure at inflated rates during the past two years to be better able to face the difficulties of the future. I gave the example during the Second Reading Debate of a company the depreciation allowances of which for tax purposes are something like one-fifth of the amount which they have to set aside in order to maintain the productive capacity of their plant. There are many cases such as that. There are many companies which, in order to re-equip themselves, to replace their plant, have had to dip into reserves which should really be maintained as free reserves simply because the level of depreciation allowed them by the Treasury in the past has not been adequate to cover the replacement cost.
    Our point is to enable companies which have not been treated fairly from this point of view in the past to be better able to face the difficulties with which they may be confronted in the future. The difficulty in which one is left after hearing the Government's answer on this sort of matter, particularly after hearing the sort of remarks which the hon. Member for Chesterfield (Mr. Benson) has just addressed to us, is that we do not quite know where we are, so far as the Government are concerned, on the question of profits and on the question of the resources of industry.
    We are told by the Chancellor that he is not at all certain that profits are correctly assessed for tax purposes. He has said that the technical issues which arise in—
    The Chairman: I hardly think that the hon. and learned Member's remarks
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    are appropriate or relevant to this Amendment.
    Mr. Lloyd: I quite appreciate that you ruled, Major Milner, or it was the desire of the Committee, to keep the Debate on the Amendments within fairly narrow limits in order that at a later stage we might have a wider Debate on the general question of depreciation should a certain new Clause be selected. The purpose of my remarks is to try to show to the Committee that this concession should be made retrospective for two years because the level of the profits made by companies during the past two years has not been adequate to enable them, taxed on the basis upon which they have been taxed, to make adequate provision for this sort of replacement. That is the point I wished to make. Having made that observation by way of explanation to you, Major Milner, I will not develop it further.
    We are left in a state of complete uncertainty as to the Government's views on profits. One moment they are "frightfully high"; the next moment they are not, because we have to have this inquiry as to whether they had been correctly computed. The Economic Secretary said yesterday that the profits of the match industry were not very high and that they needed the assistance proposed. Then he indicated to us that their profits were high after all. We do not know where we are or what is the attitude of the Government in this matter. [An HON. MEMBER: "They do not know either."] I suspect that they do not know either.
    Leaving out of account the question of profits, the second matter in considering whether this suggestion should be made retrospective is, have depreciation reserves been adequate; during the past two years were adequate depreciation reserves set aside? On that matter I would remind the Committee of an article which I am sure all Members, particularly the hon. Member for Chesterfield, studied and analysed with great care. It was by Mr. Chambers in "Lloyds Bank Review" of January, 1949. He was dealing with the question of depreciation reserves for 1947, which is one of the years embraced by this Amendment. I will not weary the Committee with all the details of the

    567
    argument, but he comes to the conclusion that owing to replacement costs the £600 million set aside for depreciation should in fact have been £1,000 million. The total reserves set aside having been insufficient owing to the unfair method of computing profits, it is really essential that the funds which have been drawn upon during the past two years should have this extra allowance made to replenish them.
    Mr. R. A. Butler: I do not think it would be possible to adduce more telling arguments than have already been adduced by the hon. and learned Member for Wirral (Mr. Selwyn Lloyd). We do not propose to press this Amendment to a Division. We are very keen to discuss the next Amendment on the building question. There has been some doubt expressed by the learned Solicitor-General as to the exact meaning of the Amendment. I should like to explain that its effect was to give for capital expenditure incurred in 1947 the 40 per cent. allowance, less any initial and annual allowances already received. Thus if a business expended, for example, £100 in 1947 they have already received an initial allowance of 20 per cent. plus the first year's allowance of say 10 per cent. and a second year's allowance of 7 per cent. making a total of 37 per cent. The object of the Amendment would be to bring it up to 40 per cent.
    I cannot believe that the cost can be so great as has been computed by the Treasury, but in view of the doubt about the cost and the inquiry sitting on this matter, we think it wiser to leave this question, at any rate, until the Chancellor's return, and perhaps raise the matter again on the Report stage. In those circumstances we shall not press it.
    Amendment negatived.
    Mr. Osbert Peake: I beg to move, in page 8, line 25, at the end, to insert:
    "(2) In relation to expenditure incurred on or after the sixth day of April, nineteen hundred and forty-nine, section one of the Income Tax Act, 1945 (which provides for initial allowances in the case of expenditure on the provision of industrial buildings or structures), shall have effect as if for the words 'equal to one-tenth thereof' there were substituted the words equal to one-fifth thereof.'"
    568
    The purpose of this Amendment is quite clear from the wording. The Income Tax Act, 1945, with which I had something to do when it was passing through this House, provided for the 20 per cent. initial allowance on industrial plant and machinery, which of course was coupled with the annual wear-and-tear allowance and final balancing allowance or charge in order to clear the matter up at the end of the life of the industrial plant and machinery; but coupled with that was a corresponding proposal, a novel proposal at the time, for an initial allowance upon industrial buildings. The initial allowance upon industrial buildings was 10 per cent., that is to say half the rate of the initial allowance upon industrial plant and machinery, and the annual allowance upon industrial buildings was at the rate of 2 per cent. per annum giving a notional life of 45 years on the industrial building.
    The Chancellor has conceded the point that the initial allowance for plant and machinery is not adequate owing to the rise in costs, and he is doubling the initial allowance upon plant and machinery. What we suggest in this Amendment is that he should do exactly the same thing in respect of the industrial buildings which are essential for the housing of the plant and machinery and make an initial allowance upon industrial buildings of 20 per cent. in place of the 10 per cent. provided by the Act of 1945.
    The Government, of course, have complete control, owing to the licensing system, over the erection of all industrial buildings; and it cannot be supposed that any extravagant or unnecessary industrial buildings will be erected, at any rate in the near future. It would therefore seem logical, and it would maintain the balance between plant on the one hand and buildings on the other which was the considered basis of the Act of 1945, if the Government would accept the Amendment to double the initial allowance upon industrial buildings in the same way as they are doubling the initial allowance upon industrial plant and machinery.
    9.15 p.m.
    Mr. Erroll: The Government have a curious reluctance to grant the same measure of relief or subsidy to industrial building as they propose to grant from

    569
    time to time to plant and machinery. We had a similar trouble when we considered the Cotton Spinning (Re-equipment Subsidy) Bill. Subsidy was to be granted to plant and machinery purchased under the terms of that Bill, but no subsidy was to be permitted in respect of new buildings required to house the machinery. Surely this position can only arise through the phrase "plant and machinery" becoming a catch-phrase. A phrase which is constantly used is that "industry requires plant and machinery." Therefore, we find written into this Bill a relief in respect of new plant and machinery.
    But new plant and machinery very often require new industrial buildings to house them. Surely it is right in logic to grant a proportionate relief to any new building which may be required for any re-equipment programme. That is especially important where the fabric of the building makes a definite contribution towards the functioning of the plant inside it. The most obvious example is that type of industrial building the walls of which support the rails of an overhead crane, the crane being an essential part of the equipment required to operate the plant inside the premises.
    The industrial building, however, is not to qualify for relief: only the machinery inside the building will qualify. Our Amendment seeks to remove the anomaly and to grant a corresponding relief to industrial building. Some people might be afraid that this would lead to a spate of unnecessary industrial building. I would remind the Committee that all industrial building is fully controlled by the Government. First, the capital necessary for the new building must be approved by the Capital Issues Committee, unless the money is found out of current income. Second, the actual physical work can only be executed when a building licence has been given. There is no danger of any run-away spate of new industrial building. Here is an opportunity for the Government to be logical and equitable in their treatment of an industry very much in need of relief and assistance today.
    Mr. Glenvil Hall: It will come as no surprise to any hon. or right hon.
    570
    Gentleman opposite when I say that I must ask the Committee to reject this Amendment. As has already been pointed out, the proposal is that the initial allowance should be doubled—that is that the figure should be turned into 20 per cent. instead of 10 per cent.—for expenditure on new industrial building. The hon. Member for Altrincham and Sale (Mr. Erroll) said that there could be no real difference between plant and machinery and industrial buildings, and that the Government have been rather sticky about refusing to extend the allowance to the latter. The short answer is that there is a real difference between plant and machinery and industrial buildings.
    There is at the present time not the same great need for the replacement of industrial buildings as there is for the replacement of machinery and the installment of new machinery. A further argument is that with the shortage of materials and the other overriding need for as much concentration as possible to be devoted to the provision of houses, it does appear to us unreasonable that this allowance should at the moment be given. In our view, considering the life of an industrial building, the present allowance of 10 per cent. plus 2 per cent. a year is not ungenerous and does bear some reasonable relationship to the life of buildings. There is, of course, too, the question of cost. My right hon. and learned Friend cannot lose sight of that. In the present year it would be negligible, but in the next financial year, 1950–1, the cost would be £4,500,000, and in the financial year 1951–2, £8,000,000. I hope this argument will clinch the matter for the Committee.
    As the Committee knows, the system of computation of allowances for industrial buildings, with other matters, is to be considered by the committee which my right hon. and learned Friend announced when he opened his Budget. As that committee is to be set up to review the computation of net trading profits for taxation purposes, and can hardly consider those matters without considering also the particular point which is the subject of this Amendment, I hope that, the Committee will agree that now is not the time to make this change.
    Mr. Selwyn Lloyd: Will not that committee also consider the question of the replacement of machinery and plant?
    Mr. Glenvil Hall: I take it that it will be within the competence of that committee to consider all relevant matters, including the one to which the hon. and learned Gentleman has just referred; nevertheless, it should, I think, certainly consider this one, and for that reason, as well as others which, I think, are substantial, and which I have endeavoured to give quite briefly, I hope the Committee will reject this Amendment.
    Mr. Hollis: I really think that the right hon. Gentleman's reasons for rejecting this Amendment are even more frail and unreal than the reasons to which we are accustomed from him. We were told to begin with—and so far as it went it is true—that industrial buildings were one thing and that plant and machinery were another thing. Then we advanced from that great truism to the purely arbitrary statement, which we had to take upon his saying so, that there was no need for the replacement of buildings. He gave us no evidence whatsoever for that statement the apparent probability of which must surely be evident to everybody. But if there really is no need for replacement then, if that is absolutely true, this Amendment would at least be innocuous, because then there would be no replacement.
    Then we come to the right hon. Gentleman's second reason, in which he reminded us of the profound truth that there is a shortage of building materials in this country and that it was very necessary that the greater part of those building materials should be used for the building of houses. Profoundly true; but what conceivable bearing has that upon this Amendment? My hon. Friends have pointed out that the Government already have adequate powers to be quite certain that reckless industrial building could not be indulged in in any event, whether this Amendment were passed or not. It is therefore quite irrelevant to argue whether there could be much building or little building. The argument is on whether there should be just financial terms for the building that does take place.
    We then came again to the question of cost. As far as this Amendment is
    572
    concerned, we must always bear in mind that right hon. Gentlemen opposite are slipping into the habit of talking as if this were absolute cost which would be lost to the Government for ever, as if the £4½ million we are talking about was to be spent entirely. In that absolute sense nothing under this Amendment, or indeed this Clause, will cost anything eventually. It is merely a question of timing. On costs, the Government already have absolute control over what building should take place, so that again we need not bear in mind any possibility of this leading to reckless industrial building, because of the nature of things it could not do so.
    The Financial Secretary, having adduced all those arguments, and perhaps having a certain suspicion that the Committee would not be very deeply convinced by them, played his trump card, which was that we really had no business to be considering this matter at all, because the whole question was to be considered by a committee. I really do not know why one rule should apply to pool betting and another to industrial building. The trouble is that this country is facing a desperate economic and industrial crisis; time is not unlimited, and we cannot afford to sit around saying, "We will think about the problem of industrial re-equipment when a committee, which has not yet started to function, has seen fit to report." We must do something about it now. Industrialists must do something about it now, and there have to be conditions in which they can do something. Of all the arguments, in face of the difficulties with which this country will be faced in the future, to say that we can do nothing about industrial building until a committee has reported, is the least convincing I have yet heard.
    Mr. Hale: I think that the answer of the Financial Secretary, that this matter is shortly to be considered by a committee, is an adequate one, because this is a subject which needs careful consideration, a good deal of evidence, and a good deal of thought. However, I feel this Amendment to be one which merits and which ought to have more consideration. One of the problems we have to face with regard to our industries in the future is, not merely whether the building is adequate to house the machinery that makes the goods but whether the building

    573
    is adequate to house the workmen who have to work in it. Anyone who knows anything about industrial conditions in Lancashire will know that that is a very real problem. Anyone who has seen cotton industries abroad will know that in the future hon. Members on all sides ought to hope to see much more adequate buildings, much more space being utilised, much better and more favourable conditions, and more room made available for the workers. If we are to get that, we must at some stage consider the granting of additional depreciation allowances to encourage it to be done.
    There is a second and very serious point. There are some industries in which the line of demarcation between buildings and plant and machinery is almost impossible to ascertain. In the pottery industry, in which we are now trying to introduce moving mechanical kilns, it is very difficult to say just what is building, what is plant, and what is machinery. Anyone who knows the pottery industry in Staffordshire at the moment will know that the work Wedgwood's did some years ago, in moving their plant to a new, large, capacious and well-developed site, was not merely of great value to the industry, as it is of value to the country today, but was of real value to the health of the workers. That must be faced in Staffordshire, where the present position is that some of the best pottery workers are working in grossly overcrowded conditions; where the kilns have to be pushed up in odd corners to fill up space; where workers are going up and down steps carrying pots on planks balanced on their heads.
    Sometime or other we have to face the real problem of rehousing industry. It is worth considering, although I accept what the Financial Secretary has said, that this is not the moment to judge the matter in view of the fact that it is being considered by a committee.
    9.30 p.m.
    Lord John Hope: On a point of Order. I did not wish to interrupt the hon. Member for Oldham (Mr. Hale) when he was speaking and appear to be discourteous, but is it in Order, Major Milner, for a
    574
    Member to stand on one leg when making a speech? It looks extremely comfortable, and I might want to do it myself sometime.
    Mr. Hale: Further to that point of Order. May I point out that not all Members have two legs, and so I cannot see how it can possibly be out of Order?
    The Chairman: I do not see that a point of Order arises. In my experience quite a number of politicians frequently stand on one leg—in more senses than one.
    Mr. Birch: I should like to pick up what the hon. Member for Oldham (Mr. Hale) has just said. Metaphorically, at any rate, he was standing on two legs when he made his speech. The fact is we cannot dissociate buildings from plant. It is nonsense for the Financial Secretary to say that buildings are less antiquated than plant—at least that is what I understood him to say. This point was made very strongly by the Pottery Working Party. They said:
    "We are convinced that Depreciation Allowances for Income Tax purposes have a direct bearing on the conduct of an industry, and that there is a close association between the small pre-war allowances and the continuing employment of antiquated buildings and processes."
    I believe that to be profoundly true in many cases.
    It is impossible to have new processes unless there are new buildings. What has happened is that the initial allowances for plant have been increased, but the initial allowances for buildings have not. But the inquiry about to take place will cover both the question of allowances for plant and the question of allowances for buildings. Why is it, therefore, that the fact that an inquiry is to take place is held to be a good defence for doing nothing about buildings, but is not held to be a good defence for doing nothing about plant? I think that the right hon. Gentleman owes us a more logical argument than he has vouchsafed.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 119; Noes, 267.

    Division No. 172]

    AYES

    [7.25 p.m.

    Acland, Sir Richard

    Butler, H. W. (Hackney, S.)

    Fernyhough, E.

    Adams, Richard (Balham)

    Callaghan, James

    Field, Capt. W. J.

    Albu, A. H.

    Carmichael, James

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

    Allen, A. C. (Bosworth)

    Chamberlain, R. A.

    Follick, M.

    Alpass, J. H.

    Champion, A. J.

    Foot, M. M.

    Anderson, A. (Motherwell)

    Chetwynd, G. R.

    Forman, J. C.

    Attewell, H. C.

    Cluse, W. S.

    Freeman, J. (Watford)

    Austin, H. Lewis

    Cobb, F. A.

    Ganley, Mrs. C. S.

    Awbery, S. S.

    Cocks, F. S.

    Gibbins, J.

    Ayles, W. H.

    Coldrick, W.

    Gibson, C. W.

    Ayrton Gould, Mrs. B.

    Collick, P.

    Gilzean, A.

    Bacon, Miss A.

    Colman, Miss G. M.

    Glanville, J. E. (Consett)

    Baird, J.

    Corbet, Mrs. F. K. (Camb'well, N. W.)

    Goodrich, H. E.

    Balfour, A.

    Corlett, Dr. J.

    Gordon-Walker, P. C.

    Barnes, Rt. Hon. A. J.

    Cove, W. G.

    Greenwood, A. W. J. (Heywood)

    Barstow, P. G.

    Crawley, A.

    Grey, C. F.

    Barton, C.

    Crossman, R. H. S.

    Grierson, E.

    Battley, J. R.

    Cullen, Mrs

    Griffiths, Rt. Hon. J. (Llanelly)

    Bechervaise, A. E.

    Daggar, G.

    Griffiths, W. D. (Moss Side)

    Bellenger, Rt. Hon. F. J.

    Daines, P.

    Guest, Dr. L. Haden

    Benson, G.

    Davies, Edward (Burslem)

    Gunter, R. J.

    Berry, H.

    Davies, Ernest (Enfield)

    Guy, W. H.

    Beswick, F.

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

    Hale, Leslie

    Bevan, Rt. Hon. A. (Ebbw Vale)

    Davies, R. J. (Westhoughton)

    Hall, Rt. Hon. Glenvil

    Bing, G. H. C.

    Davies, S. O. (Merthyr)

    Hamilton, Lieut.-Col. R.

    Binns, J.

    Deer, G.

    Hannan, W. (Maryhill)

    Blenkinsop, A.

    Delargy, H. J.

    Hardman, D. R.

    Blyton, W. R.

    Dobbie, W.

    Hardy, E. A.

    Bowden, Fig. Offr. H. W.

    Dodds, N. N.

    Harrison, J.

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

    Donovan, T.

    Hastings, Dr. Somerville

    Braddock, T. (Mitcham)

    Driberg, T. E. N.

    Haworth, J.

    Bramall, E. A.

    Dugdale, J. (W. Bromwich)

    Henderson, Joseph (Ardwick)

    Brook, D. (Halifax)

    Dumpleton, C. W.

    Hobson, C. R.

    Brooks, T. J. (Rothwell)

    Edwards, W. J. (Whitechapel)

    Holman, P.

    Broughton, Dr. A. D. D.

    Evans, Albert (Islington, W.)

    Holmes, H. E. (Hemsworth)

    Brown, T. J. (Ince)

    Evans, John (Ogmore)

    Horabin, T. L.

    Bruce, Maj. D. W. T.

    Evans, S. N. (Wednesbury)

    Houghton, A. L. N. D.

    Burden, T. W.

    Fairhurst, F.

    Hoy, J.

    Burke, W. A.

    Farthing, W. J.

    Hubbard, T.

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

    Mitchison, G. R.

    Skeffington-Lodge, T. C.

    Hughes, Hector (Aberdeen, N.)

    Monslow, W.

    Skinnard, F. W.

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

    Moody, A. S.

    Smith, H. N. (Nottingham, S.)

    Hutchinson, H. L. (Rusholme)

    Morley, R.

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

    Hynd, J. B. (Attercliffe)

    Morris, Lt.-Col. H. (Sheffield, C.)

    Snow, J. W.

    Irvine, A. J. (Liverpool)

    Morris, P. (Swansea, W.)

    Sorensen, R. W.

    Irving, W. J. (Tottenham, N.)

    Mort, D. L.

    Soskice, Rt. Hon. Sir Frank

    Isaacs, Rt. Hon. G. A.

    Moyle, A.

    Sparks, J. A.

    Janner, B.

    Murray, J. D.

    Steele, T.

    Jay, D. P. T.

    Nally, W.

    Strauss, Rt. Hon. G. R. (Lambeth)

    Jeger, G. (Winchester)

    Naylor, T. E.

    Stubbs, A. E.

    Jeger, Dr. S. W. (St. Pancras, S. E.)

    Neal, H. (Claycross)

    Sylvester, G. O.

    Jenkins, R. H.

    Nichol, Mrs. M. E. (Bradford, N.)

    Symonds, A. L.

    Jonas, D. T. (Hartlepool)

    Oldfield, W. H.

    Taylor, H. B. (Mansfield)

    Jones, Elwyn (Plaistow)

    Oliver, G. H.

    Taylor, R. J. (Morpeth)

    Jones, P. Asterley (Hitchin)

    Orbach, M.

    Taylor, Dr. S. (Barnet)

    Keenan, W.

    Paget, R. T.

    Thomas, D. E. (Aberdare)

    Kenyon, C.

    Paling, Rt. Hon. Wilfred (Wentworth)

    Thomas, George (Cardiff)

    Key, Rt. Hon. C. W.

    Paling, Win T. (Dewsbury)

    Thomas, I. O. (Wrekin)

    Kinghorn, Sqn.-Ldr. E.

    Palmer, A. M. F.

    Thomas, John R. (Dover)

    Kinley, J.

    Pargiter, G. A.

    Thurtle, Ernest

    Kirby, B. V.

    Parker, J.

    Titterington, M. F.

    Lang, G.

    Parkin, B. T.

    Tolley, L.

    Lavers, S.

    Paton, Mrs. F. (Rushcliffe)

    Turner-Samuels, M.

    Lawson, Rt Hon. J. J.

    Paton, J. (Norwich)

    Ungoed-Thomas, L.

    Lee, F. (Hulme)

    Pearson, A.

    Vernon, Maj. W. F.

    Lee, Miss J. (Cannock)

    Peart, T. F.

    Viant, S. P.

    Leonard, W.

    Popplewell, E.

    Wallace, G. D. (Chislehurst)

    Levy, B. W.

    Porter, E. (Warrington)

    Warbey, W. N.

    Lewis, A. W. J. (Upton)

    Price, M. Philips

    Webb, M. (Bradford, C.)

    Lewis, J. (Bolton)

    Proctor, W. T.

    Wells, P. L. (Faversham)

    Lindgren, G. S.

    Pursey, Comdr. H.

    Wells, W. T. (Walsall)

    Lipton, Lt.-Col. M.

    Randall, H. E.

    Wheatley, Rt. Hon. John (Edinb'gh, E.)

    Logan, D. G.

    Ranger, J.

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

    Lyne, A. W.

    Rankin, J.

    Whiteley, Rt. Hon. W.

    McAdam, W.

    Reid, T. (Swindon)

    Wigg, George

    McAllister, G.

    Rhodes, H.

    Wilkes, L.

    McEntee, V. La T.

    Richards, R.

    Willey, F. T. (Sunderland)

    McGhee, H. G.

    Robens, A.

    Willey, O. G. (Cleveland)

    McGovern, J.

    Roberts, Goronwy (Caernarvonshire)

    Williams, D. J. (Neath)

    Mack, J. D.

    Robertson, J. J. (Berwick)

    Williams, J. L. (Kelvingrove)

    McKay, J. (Wallsend)

    Robinson, Kenneth (St. Pancras, N.)

    Williams, Ronald (Wigan)

    Mackay, R. W. G. (Hull, N. W.)

    Rogers, G. H. R.

    Williams, Rt. Hon. T. (Don Valley)

    McKinlay, A. S.

    Ross, William (Kilmarnock)

    Williams, W. T. (Hammersmith, S.)

    Maclean, N. (Govan)

    Royle, C.

    Williams, W. R. (Heston)

    McLeavy, F.

    Scott-Elliot, W.

    Willis, E.

    MacPherson, Malcolm (Stirling)

    Segal, Dr. S.

    Wills, Mrs. E. A.

    Mallalieu, E. L. (Brigg)

    Shackleton, E. A. A.

    Wilmot, Rt. Hon. J.

    Mallalieu, J. P. W. (Huddersfield)

    Sharp, Granville

    Woodburn, Rt. Hon. A.

    Mann, Mrs. J.

    Shawcross, C. N. (Widnes)

    Wyatt, W.

    Manning, C. (Camberwell, N.)

    Shawcross, Rt. Hn. Sir H. (St. Helens)

    Yates, V. F.

    Marquand, Rt. Hon. H. A.

    Shurmer, P.

    Young, Sir R. (Newton)

    Mathers, Rt. Hon George

    Silverman, J. (Erdington)

    Younger, Hon. Kenneth

    Mellish, R. J.

    Silverman, S. S. (Nelson)

    Messer, F.

    Simmons, C. J.

    TELLERS FOR THE AYES:

    Middleton, Mrs. L.

    Skeffington, A. M.

    Mr. Collindridge and

    Mr. Wilkins.

    NOES

    Agnew, Cmdr. P. G.

    Davidson, Viscountess

    Harris, F. W. (Croydon, N.)

    Amory, D. Heathcoat

    Digby, Simon Wingfield

    Harvey, Air-Comdre. A. V.

    Assheton, Rt. Hon. R.

    Dodds-Parker, A. D.

    Head, Brig. A. H.

    Astor, Hon. M.

    Donner, P. W.

    Hinchingbrooke, Viscount

    Baldwin, A. E.

    Dower, Col. A. V. G. (Penrith)

    Hogg, Hon. Q.

    Birch, Nigel

    Drewe, C.

    Hollis. M. C.

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

    Dugdale, Maj. Sir T. (Richmond)

    Holmes, Sir J. Stanley (Harwich)

    Boothby, R.

    Duthie, W. S.

    Hope, Lord J.

    Bowen, R.

    Eccles, D. M.

    Howard, Hon. A.

    Bower, N.

    Elliot, Lieut.-Col. Rt. Hon. Walter

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

    Boyd-Carpenter, J. A.

    Erroll, F. J.

    Hulbert, Wing-Cdr. N. J.

    Braithwaite, Lt.-Comdr. J. G.

    Fletcher, W. (Bury)

    Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

    Buchan-Hepburn, P. G. T.

    Foster, J. G. (Northwich)

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

    Bullock, Capt. M.

    Fraser, H. C. P. (Stone)

    Jeffreys, General Sir G.

    Butcher, H. W.

    Fraser, Sir I. (Lonsdale)

    Keeling, E. H.

    Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)

    Fyfe, Rt. Hon. Sir D. P. M.

    Lancaster, Col. C. G.

    Carson, E.

    Gage, C.

    Langford-Holt, J.

    Channon, H.

    Galbraith, Cmdr. T. D. (Pollok)

    Legge-Bourke, Maj. E. A. H.

    Clarke, Col. R. S.

    Galbraith, T. G. D. (Hillhead)

    Lipson, D. L.

    Conant, Maj. R. J. E.

    Glyn, Sir R.

    Lloyd, Selwyn (Wirral)

    Corbett, Lieut.-Col. U. (Ludlow)

    Gomme-Duncan, Col. A.

    Low, A. R. W.

    Crosthwaite-Eyre, Col. O. E.

    Gridley, Sir A.

    Lucas, Major Sir J.

    Crowder, Capt. John E.

    Grimston, R. V.

    Lucas-Tooth, Sir H.

    Cuthbert, W. N.

    Hannon, Sir P. (Moseley)

    MacDonald, Sir M. (Inverness)

    Darling, Sir W. Y.

    Hare, Won. J. H. (Woodbridge)

    Macdonald, Sir P. (I. of Wight)

    534

    535

    McFarlane, C. S.

    Peto, Brig. C. H. M.

    Taylor, C. S. (Eastbourne)

    Mackeson, Brig. H. R.

    Pickthorn, K.

    Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

    McKie, J. H. (Galloway)

    Ponsonby, Col. C. E.

    Thomas, J. P. L. (Hereford)

    Maclean, F. H. R. (Lancaster)

    Poole, O. B. S. (Oswestry)

    Thorneycroft, G. E. P. (Monmouth)

    Macmillan, Rt. Hn. Harold (Bromley)

    Prescott, Stanley

    Thornton-Kemsley, C. N.

    Maitland, Comdr. J. W.

    Price-White, Lt-Col. D.

    Touche, G. C.

    Manningham-Buller, R. E.

    Rayner, Brig. R.

    Turton, R. H.

    Marples, A. E.

    Roberts, Emrys (Merioneth)

    Wadsworth, G.

    Marsden, Capt. A.

    Roberts, H. (Handsworth)

    Wakefield, Sir W. W.

    Marshall, D. (Bodmin)

    Roberts, W. (Cumberland, N.)

    Walker-Smith, D.

    Marshall, S. H. (Sutton)

    Ropner, Col. L.

    Ward, Hon. G. R.

    Mellor, Sir J.

    Ross, Sir R. D. (Londonderry)

    Webbe, Sir H. (Abbey)

    Molson, A. H. E.

    Scott, Lord W.

    White, J. B. (Canterbury)

    Morris, Hopkin (Carmarthen)

    Shepherd, W. S. (Bucklow)

    Williams, C. (Torquay)

    Nicholson, G.

    Spearman, A. C. M.

    Willoughby de Eresby, Lord

    Noble, Comdr, A. H. P.

    Stanley, Rt. Hon. O.

    Winterton, Rt. Hon. Earl

    Nutting, Anthony

    Stewart, J. Henderson (Fife, E.)

    York, C.

    Odey, G. W.

    Stoddart-Scott, Col. M.

    Young, Sir A. S. L. (Partick)

    O'Neill, Rt. Hon. Sir H.

    Strauss, Henry (English Universities)

    Osborne, C.

    Stuart, Rt. Hon. J. (Moray)

    TELLERS FOR THE NOES:

    Peake, Rt. Hon. O.

    Sutcliffe, H.

    Colonel Wheatley and

    Lieut.-Colonel Bromley-Davenport

    Question put, and agreed to.

    Division No. 173.]

    AYES

    [9.33 p.m.

    Agnew, Cmdr P. G.

    Grimston, R. V.

    Osborne, C.

    Assheton, Rt. Hon. R.

    Hannon, Sir P. (Moseley)

    Peake, Rt. Hon. O.

    Astor, Hon. M.

    Hare, Hon. J. H. (Woodbridge)

    Peto, Brig. C. H. M.

    Birch, Nigel

    Harris, F. W. (Croydon, N.)

    Pickthorn, K.

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

    Harvey, Air-Comdre. A. V.

    Ponsonby, Col. C. E.

    Boothby, R.

    Head, Brig. A. H.

    Poole, O. B. S. (Oswestry)

    Bowen, R.

    Hinchingbrooke, Viscount

    Prescott, Stanley

    Bower, N.

    Hogg, Hon. Q.

    Raikes, H. V.

    Boyd-Carpenter, J. A.

    Hollis, M. C.

    Ramsay, Maj. S.

    Braithwaite, Lt.-Comdr, J. G.

    Holmes, Sir J. Stanley (Harwich)

    Rayner, Brig. R.

    Bromley-Davenport, Lt.-Col. W.

    Hope, Lord J.

    Roberts, Emrys (Merioneth)

    Buchan-Hepburn, P. G. T.

    Howard, Hon. A.

    Roberts, H. (Handsworth)

    Bullock, Capt. M.

    Hulbert, Wing-Cdr. N. J.

    Ropner, Col. L.

    Butcher, H. W.

    Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

    Ross, Sir R. D. (Londonderry)

    Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)

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

    Shepherd, W. S. (Bucklow)

    Carson, E.

    Lancaster, Col. C. G.

    Spearman, A. C. M.

    Challen, C.

    Legge-Bourke, Maj. E. A. H.

    Stanley, Rt. Hon. O.

    Channon, H.

    Linstead, H. N.

    Stoddart-Scott, Col. M.

    Clarke, Col. R. S.

    Lloyd, Selwyn (Wirral)

    Strauss, Henry (English Universities)

    Corbett, Lieut.-Col. U. (Ludlow)

    Low, A. R. W.

    Stuart, Rt. Hon. J. (Moray)

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

    Lucas, Major Sir J.

    Sutcliffe, H.

    Cuthbert, W. N.

    Lucas-Tooth, Sir H.

    Taylor, C. S. (Eastbourne)

    Darling, Sir W. Y.

    MacDonald, Sir M. (Inverness)

    Teeling, William

    Davidson, Viscountess

    Macdonald, Sir P. (I. of Wight)

    Thorneycroft, G. E. P. (Monmouth)

    De la Bère, R.

    McFarlane, C. S.

    Touche, G. C.

    Dodds-Parker, A. D.

    Mackeson, Brig. H. R.

    Turton, R. H.

    Dower, Col. A. V. G. (Penrith)

    Maclean, F. H. R. (Lancaster)

    Wadsworth, G.

    Drewe, C.

    Macmillan, Rt. Hn. Harold (Bromley)

    Wakefield, Sir W. W.

    Eccles, D. M.

    Maitland, Comdr. J. W.

    Walker-Smith, D.

    Erroll, F. J.

    Manningham-Buller, R. E.

    Ward, Hon. G. R.

    Fletcher, W. (Bury)

    Marples, A. E.

    Webbe, Sir H. (Abbey)

    Foster, J. G. (Northwich)

    Marsden, Capt. A.

    Wheatley, Colonel M. J. (Dorset, E.)

    Fraser, H. C. P. (Stone)

    Marshall, D. (Bodmin)

    White, J. B. (Canterbury)

    Fraser, Sir I. (Lonsdale)

    Marshall, S. H. (Sutton)

    Williams, Gerald (Tonbridge)

    Fyfe, Rt. Hon. Sir D. P. M.

    Mellor, Sir J.

    Willoughby de Eresby, Lord

    Gage, C.

    Molson, A. H. E.

    York, C.

    Galbraith, Cmdr. T. D. (Pollok)

    Mott-Radclyffe, C. E.

    Young, Sir A. S. L. (Partick)

    Galbraith, T. G. D. (Hillhead)

    Neven-Spence, Sir B.

    George, Lady M. Lloyd (Anglesey)

    Nicholson, G.

    TELLERS FOR THE AYES:

    Gomme-Duncan, Col. A.

    Odey, G. W.

    Major Conant and

    Gridley, Sir A.

    O'Neill, Rt. Hon. Sir H.

    Mr. Wingfield Digby.

    NOES

    Acland, Sir Richard

    Chamberlain, R. A.

    Follick, M.

    Adams, Richard (Balham)

    Champion, A. J.

    Foot, M. M.

    Albu, A. H.

    Chetwynd, G. R.

    Forman, J. C.

    Allen, A. C. (Bosworth)

    Cobb, F. A.

    Freeman, J. (Watford)

    Alpass, J. H.

    Cocks, F. S.

    Gaitskell, Rt. Hon. H. T. N.

    Anderson, A. (Motherwell)

    Coldrick, W.

    Ganley, Mrs. C. S.

    Attewell, H. C.

    Collick, P.

    Gibbins, J.

    Austin, H. Lewis

    Collindridge, F.

    Gibson, C. W.

    Awbery, S. S.

    Colman, Miss G. M.

    Gilzean, A.

    Ayles, W. H.

    Corbet, Mrs. F. K. (Camb'well, N. W.)

    Glanville, J. E. (Consett)

    Ayrton Gould, Mrs. B.

    Corlett, Dr. J.

    Goodrich, H. E.

    Bacon, Miss A.

    Cove, W. G.

    Gordon-Walker, P. C.

    Baird, J.

    Crossman, R. H. S.

    Greenwood, A. W. J. (Heywood)

    Balfour, A.

    Cullen, Mrs.

    Grey, C. F.

    Barnes, Rt. Hon. A. J.

    Daggar, G.

    Grierson, E.

    Barstow, P. G.

    Daines, P.

    Griffiths, Rt. Hon. J. (Llanelly)

    Barton, C.

    Dalton, Rt. Hon H.

    Griffiths, W. D. (Moss Side)

    Battley, J. R.

    Davies, Edward (Burslem)

    Guest, Dr. L. Haden

    Bechervaise, A. E.

    Davies, Ernest (Enfield)

    Gunter, R. J.

    Benson, G.

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

    Guy, W. H.

    Berry, H.

    Davies, R. J. (Westhoughton)

    Hale, Leslie

    Beswick, F.

    Davies, S. O. (Merthyr)

    Hall, Rt. Hon. Glenvil

    Binns, J.

    Deer, G.

    Hamilton, Lieut.-Col. R.

    Blenkinsop, A.

    Delargy, H. J.

    Hannan, W. (Maryhill)

    Blyton, W. R.

    Dobbie, W.

    Hardman, D. R.

    Bowden, Fig. Offr. H. W.

    Dodds, N. N.

    Hardy, E. A.

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

    Donovan, T.

    Harrison, J.

    Braddock, T. (Mitcham)

    Driberg, T. E. N.

    Hastings, Dr. Somerville

    Brook, D. (Halifax)

    Dugdale, J. (W. Bromwich)

    Haworth, J.

    Brooks, T. J. (Rothwell)

    Dumpleton, C. W.

    Henderson, Joseph (Ardwick)

    Broughton, Dr. A. D. D.

    Evans, Albert (Islington, W.)

    Holman, P.

    Brown, T. J. (Ince)

    Evans, John (Ogmore)

    Holmes, H. E. (Hemsworth)

    Bruce, Maj. D. W. T.

    Evans, S. N. (Wednesbury)

    Horabin, T. L.

    Burden, T. W.

    Fairhurst, F.

    Houghton, A. L. N. D.

    Burke, W. A.

    Farthing, W. J.

    Hoy, J.

    Butler, H. W. (Hackney, S.)

    Fernyhough, E.

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

    Carmichael, James

    Field, Capt. W. J.

    Hughes, Hector (Aberdeen, N.)

    576

    577

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

    Morris, Lt.-Col. H. (Sheffield, C.)

    Sparks, J. A.

    Hynd, J. B. (Attercliffe)

    Morris, P. (Swansea, W.)

    Steele, T.

    Irvine, A. J. (Liverpool)

    Mort, D. L.

    Strauss, Rt. Hon G. R. (Lambeth)

    Irving, W. J. (Tottenham, N.)

    Moyle, A.

    Stross, Dr. B.

    Isaacs, Rt. Hon G. A.

    Murray, J. D.

    Stubbs, A. E.

    Janner, B.

    Nally, W.

    Swingler, S.

    Jay, D. P. T.

    Naylor, T. E.

    Sylvester, G. O.

    Jeger, G. (Winchester)

    Neal, H. (Claycross)

    Symonds, A. L.

    Jeger, Dr. S. W. (St Pancras, S. E.)

    Nichol, Mrs. M. E. (Bradford, N.)

    Taylor, H. B. (Mansfield)

    Jenkins, R. H.

    Oldfield, W. H.

    Taylor, R. J. (Morpeth)

    Jones, D. T. (Hartlepool)

    Oliver, G. H.

    Taylor, Dr. S. (Barnet)

    Jones, Elwyn (Plaistow)

    Orbach, M.

    Thomas, D. E. (Aberdare)

    Jones, P. Asterley (Hitchin)

    Paget, R. T.

    Thomas, George (Cardiff)

    Keenan, W.

    Paling, Rt. Hon. Wilfred (Wentworth)

    Thomas, I. O. (Wrekin)

    Kenyon, C.

    Paling, Will T. (Dewsbury)

    Thomas, John R. (Dover)

    Key, Rt. Hon. C. W.

    Palmer, A. M. F.

    Thurtle, Ernest

    King, E. M.

    Parker, J.

    Titterington, M. F.

    Kinghorn, Sqn.-Ldr. E.

    Parkin, B. T.

    Tolley, L.

    Kinley, J.

    Paton, Mrs. F. (Rushcliffe)

    Turner-Samuels, M.

    Kirby, B. V.

    Paton, J. (Norwich)

    Ungood-Thomas, L.

    Lang, G.

    Pearson, A.

    Vernon, Maj. W. F.

    Lavers, S.

    Peart, T. F.

    Viant, S. P.

    Lee, F. (Hulme)

    Piratin, P.

    Walkden, E.

    Lee, Miss J. (Cannock)

    Popplewell, E.

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

    Leonard, W.

    Porter, E. (Warrington)

    Warbey, W. N.

    Levy, B. W.

    Proctor, W. T.

    Webb, M. (Bradford, C.)

    Lewis, A. W. J. (Upton)

    Pursey, Comdr. H.

    Wells, P. L. (Faversham)

    Lewis, J. (Bolton)

    Randall, H. E.

    Wells, W. T. (Walsalf)

    Lindgren, G. S.

    Ranger, J.

    Wheatley, Rt. Hon. John (Edinb'gh, E.)

    Lipton, Lt.-Col M.

    Rankin, J.

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

    Logan, D. G.

    Reid, T. (Swindon)

    Whiteley, Rt. Hon. W.

    Lyne, A. W.

    Rhodes, H.

    Wigg, George

    McAdam, W.

    Richards, R.

    Wilkes, L.

    McAllister, G.

    Roberts, Goronwy (Caernarvonshire)

    Wilkins, W. A.

    McEntee, V. La T.

    Robertson, J. J. (Berwick)

    Willey, F. T. (Sunderland)

    McGhee, H. G.

    Rogers, G. H. R.

    Willey, O. G. (Cleveland)

    McGovern, J.

    Ross, William (Kilmarnock)

    Williams, D. J. (Neath)

    Mack, J. D.

    Royle, C.

    Williams, J. L. (Kelvingrove)

    McKay, J. (Wallsend)

    Scott-Elliot, W.

    Williams, Ronald (Wigan)

    Mackay, R. W. G. (Hull, N. W.)

    Segal, Dr. S.

    Williams, W. T. (Hammersmith, S.)

    McKinlay, A. S.

    Shackleton, E. A. A.

    Williams, W. R. (Heston)

    McLeavy, F.

    Sharp, Granville

    Willis, E.

    MacPherson, Malcolm (Stirling)

    Shawcross, Rt. Hn Sir H. (St. Helens)

    Wills, Mrs. E. A.

    Mallalieu, J. P. W. (Huddersfield)

    Shurmer, P.

    Wilson, Rt. Hon. J. H.

    Mann, Mrs. J.

    Silverman, J. (Erdington)

    Woodburn, Rt. Hon A.

    Manning, C. (Camberwell, N)

    Silverman, S. S. (Nelson)

    Wyatt, W.

    Mathers, Rt. Hon George

    Simmons, C. J.

    Yates, V. F.

    Messer, F.

    Skeffington-Lodge, T. C.

    Young, Sir R. (Newton)

    Middleton, Mrs. L.

    Skinnard, F. W.

    Younger, Hon. Kenneth

    Mitchison, G. R.

    Smith, H. N. (Nottingham, S.)

    Monslow, W.

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

    TELLERS FOR THE NOES:

    Moody, A. S.

    Sorensen, R. W.

    Mr. Snow and

    Morley, R.

    Soskice, Rt. Hon. Sir Frank

    Mr. George Wallace

    Mr. Erroll: I beg to move, in page 8, line 27, to leave out from "April," to "section."
    The subsection as it stands at present extends to machinery intended for research purposes. By specifically including this machinery, the subsection excludes the benefits of the relief from being extended to the laboratory buildings themselves. We seek to remove that anomaly and to extend the relief to the laboratory buildings. In the course of the last few days the Labour Party have issued a pamphlet called "The Labour Party and Science." It was one of those brightly written documents designed to attract scientists into the Socialist fold. If any scientists have been deluded by the pamphlet, they will have been strangely shocked to see this Clause and this subsection because they show how very
    578
    ignorant the Labour Party are about science if they think the major part of any laboratory installation consists of plant and machinery.
    9.45 p.m.
    I feel that the drafters of this subsection and the Minister have in mind the sort of laboratories which are to be found in provincial technical institutes and they have not in mind a modern specialised laboratory, specially built for a particular research programme. It is not possible to take over any existing building. The argument which was applied against our Amendment a little earlier, that there is not a shortage of industrial buildings, certainly cannot apply in the case of specialised laboratories, because such special laboratories do not exist until they are built, and it is very rarely possible to convert ordinary buildings, such as a block of offices or an old school or a

    579
    group of temporary Nissen huts, into a satisfactory laboratory for a specialised piece of research.
    I hope the Committee will bear with me if I give one or two examples. For instance, there are acoustic laboratories where the structure of the walls and the chambers is an integral part of the whole research which is to be carried out, and the plant and machinery which may be installed, such as motors, microphones and switchgear, is a relatively small part of the whole expenditure. In the case of aeronautical research and the provision of wind tunnels, the building is by far the most expensive and complicated part of the laboratories. The plant and machinery for which extended relief alone is to be given is a minor part of the total expenditure. As to atomic research, some of us were privileged to see the new laboratories being built at Harwell last Summer and there we saw what very complicated buildings are necessary for examination of the developments in atomic research. These complicated laboratories will not be reserved solely for Government research; industrial undertakings attempting any aspect of industrial atomic research will require to be similarly equipped with special chambers specially insulated and ventilated and specially provided with means for removing radiation phenomena which would be harmful to the laboratory assistant.
    It is therefore less than fair to exclude laboratory buildings from the relief and to confine the relief only to the plant and machinery. A modern laboratory being built for a special piece of research is a very specialised undertaking and should get the relief at present only granted in respect of the machinery, such as it is, which may be installed inside.
    Mr. Glenvil Hall: It may shorten our labours on this Amendment if I indicate straight away that, on behalf of the Government, I have very much pleasure in accepting it.
    Amendment agreed to.
    Lord John Hope: I beg to move, in page 9, line 5, at the end, to add:
    "(4) Where there is a contract for the sale of a ship and either—

    580

    (a) the price becomes payable before the sixth day of April, nineteen hundred and forty-nine, but the ship is delivered in performance of the contract on or after that date; or

    (b) the price is payable in instalments, some of which are payable before that date, and some of which are payable on or after that date,

    so much of the price as becomes payable before that date shall for the purposes of the provisions of the Income Tax Acts relating to initial allowances be deemed to have become payable on that date:
    Provided that where—

    (i) an initial allowance falls to be made by virtue of this subsection in respect of the price or any part thereof for any year of assessment; and

    (ii) an initial allowance in respect of the price or, as the case may be, that part of the price, has been given, or, apart from this subsection, falls to be given, for a year of assessment earlier than that year.

    the allowance given or to be given for that earlier year shall not be affected by the provisions of this subsection but the amount of the allowance to be given by virtue of this subsection shall be correspondingly reduced."
    The purpose of this Amendment is to secure that instalments paid for a ship during the course of construction as well as on final delivery, rank for the increased wear-and-tear allowance. I do not intend to delay the Committee more than a moment or two because a similar Amendment to this was moved during the Debate on the Income Tax Act, 1945, and was accepted by the Government, and obviously the Government will treat this Amendment in the same way.
    The test for the granting of the increased 40 per cent. initial allowance under Subsection (1) of this Clause is the incurring of expenditure on or after 6th April, 1949. The first part of the Amendment covers the case of a ship delivered on or after that date, but where the purchase price is payable before that date. In such a case the Amendment provides that payment shall be deemed to have been made on that date. The second part of the Amendment provides that where, in the case of the purchase of a ship, its price is payable by instalments, any of which are paid on or after 6th April, 1949, the preceding instalments shall be considered to have been paid on the same date. I need not dwell on the proviso, the need for which will be as obvious to the right hon. Gentleman as it is to me.
    The Solicitor-General: Again I am happy, on behalf of the Government, to accept this Amendment.
    Amendment agreed to.
    Clause, as amended, ordered to stand part of the Bill.
    Clause 17 ordered to stand part of the Bill.

    Clause 18.—(ANNUAL ALLOWANCES, ETC., FOR OVERSEAS MINERAL RIGHTS.)
    Mr. Eccles: I beg to move, in page 9, line 36, after "on," to insert:
    "(a) the acquisition of the site of the said source, or of the site of any works provided that in either case such site is likely to be of little or no value when the source is no longer worked, or, where the source is worked under a foreign concession, is likely to become of little or no value when the concession comes to an end to the person working the source immediately before the concession comes to an end, or
    (b) rights in or over any such site, or
    (c)."
    I hope this will be a case of "third time lucky" As the Committee knows, Clause 18 extends the allowances given to overseas mining companies. This is an old story. When my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) brought the Income Tax Act, 1945, before Parliament, one or two of my hon. Friends and myself raised this point, that Part III of that Act, which dealt with the allowances given to mining companies, were not sufficiently wide, and every year since we have laboured in this direction. Last year we were rewarded by the Chancellor, who appointed a Departmental Committee to go into this question of the relative taxation upon British overseas mining companies compared with the taxation paid by Canadian, American and other mining companies. The Clause we are now seeking to amend is the result of the labours of that Committee, and I would begin by thanking the Treasury for the work they have done and by saying that while we are grateful for what the Clause does, we still feel it does not quite cover the field we had in mind.
    The Amendment provides that the type of capital expenditure upon which the allowance may be granted shall be widened by the inclusion of money spent upon the site. The Clause as drafted grants the extra allowance upon the deposit of the minerals, but very frequently the company which is exploiting
    582
    the minerals also has to buy the site. Furthermore, these sites in foreign countries are often in remote places; and as soon as the mineral is discovered the price of the land adjacent to the deposit goes up, as hon. Gentlemen opposite very well know. If the purpose of the allowance is related to the fact that when the deposit of the mineral is worked out the site is no longer of any value and, therefore, the allowance must be given over the life of the workings of the mineral deposit, it also follows that the value of the land which the company must buy for the erection of buildings, houses, offices, dumps and so on, ceases to have any substantial value in a remote place when the mine itself is exhausted.
    It sometimes happens that the purchaser of the mineral deposit buys from one and the same seller the land adjacent; there is one transaction. Therefore, as the Clause stands, there would have to be an apportionment between the value of the mineral deposit and the value of the surrounding land to discover what the new allowance would be. That is a very clumsy arrangement, and I hope that the Government will see that it is reasonable to include the site.
    There are some mines where the deposit is in a mountain range and the ground is very steep, and it is not possible adjacent to the shaft to erect the buildings and dumps. Hon. Gentlemen will know that there are many cases where the ore is conveyed by rope railway or something of that description to a more level piece of ground in the valley, which acts as the centre for refinement and the metallurgical plant and the buildings connected with the mine. I do not know whether hon. Gentlemen are familiar, for instance, with the very well-known British wolfram mine in Portugal belonging to the Beralt Company. That is an excellent example of a mine situated in an utterly desolate region. When that ore body is exhausted the site and the buildings will be absolutely valueless. I cannot imagine anyone in his senses going to live in that valley once the mine is finished.
    It is quite reasonable, therefore, that we should ask for the new depreciation allowance to cover the site. Although I never like to say that things are done better in other countries than here, it is

    583
    a fact that American and Canadian mining companies get the allowance on the site. It is not unreasonable, therefore, that we should ask the Government to extend the very welcome provisions of the Clause to cover the site.
    10.0 p.m.
    Mr. Erroll: My hon. Friend the Member for Chippenham (Mr. Eccles) has pointed out that, having gone some way towards improving the position, it is a pity that the brake should have been put on when such a just and obvious case can be made out for this concession. It is really striking how often overseas minerals are located in apparently the most worthless areas of the world. There seems almost to be some form of compensation operating whereby in a barren desert or lonely mountains, mineral deposits should be found instead of in good agricultural land.
    One only has to look at sites on the African Continent today to see how little value is the land once the minerals have been worked out. The Northern Rhodesia copper belt is in a large stretch of desolate scrub country which can have no value once the copper has been worked out, and the same is true of mines on the Gold Coast, 30 or 40 miles inland, where prosperous townships have grown up because of the existence of the mines. Those who make additional mines in the future will be faced with a comparatively expensive proposition of buying the property to erect the ore crushing and ancillary plant. Once those mines have been worked out—and they will not be limitless—the land will revert to semitropical forests of no particular value.
    A more striking case can be found in the oilfields, particularly in the Persian Gulf regions, which were desolate until the works were established. The land rapidly acquires a new value, thanks to the enterprise of Arab merchants not hindered nor fettered by a Town and Country Planning Act, or any other device. To deny this allowance to a British-owned oil company is to impose a burden upon it when the oil is worked out and the land will revert to the desert it always was. One can see the increase in land values taking place at Kuweit, whereas, further down the coast, at Bahrein, where the field is approaching exhaustion, the reverse process begins to
    584
    operate. I hope that the Solicitor-General will extend the equity and logic of the case so far put forward as to cover the whole of this matter.
    The Solicitor-General: The points advanced by the hon. Members who put forward the Amendment are already adequately covered by the Clause as it stands. If hon. Members will look at Subsection (9) they will see that it incorporates in the Clause some of the provisions of the Income Tax Act, 1945, and amongst the provisions incorporated in the Clause is Section 58 (1) of that Act. That has the effect that when one speaks of acquiring minerals and right to mineral deposits overseas in Clause 18, one is taken to refer to acquiring rights to the mineral deposits plus land which one buys with those rights so far as one can say that the land, on a just apportionment, should be taken as being coherent with the rights.
    Supposing one buys land on which there are mineral deposits and that land extends some distance apart from the mineral deposits and independently of their existence, has a value, as agricultural land. The independent value it has as agricultural land has no connection with its mineral deposit value and in a case like that the effect of the Clause is this: When one buys the land and the deposits one is taken to include in one's purchase of the deposits the purchase of that part of the land which immediately relates to the deposits. The effect of that is that what hon. Members had in mind is already covered. The site of the mineral deposits, so far as it can be fairly be said to be the site of them is already in the provisions of the depreciation allowances.
    That is the effect of reading Section 58 (1) of the 1945 Act into the Clause. One has to say what it is one has bought. One has bought land on part of which there are mineral deposits. A just apportionment is worked out, which has to be settled by the Inland Revenue in case of disagreement. If the company which buys the land disagrees with the Inland Revenue with regard to the apportionment, if it thinks that a wider stretch of land should have been apportioned to the mineral deposits, it has its ordinary right of appeal to the General or Special Commissioners, and they can review the

    585
    question of whether the apportionment is a just one.
    I think that hon. Members will agree, on reflection, on hearing that this Section of the 1945 Act is incorporated in Clause 18, that their point is already covered. By that I mean that when one buys a deposit one has the right to have a depreciation allowance not merely in respect of the price of the deposits themselves but also in respect of that part of the price which is attributable to acquiring to what can fairly be said to be the site of the deposits. If there is some part of the land which has a value quite independently of the mineral deposits—I have taken agricultural land as an example—I think hon. Gentlemen will agree that it is not reasonable for a writing off allowance to be granted against that portion of the value. One is entitled to get one's depreciation allowance against that part of the price which is referable to the purchase of the deposits and to that part which is referable to the site on which the deposits are to be found. For those reasons I hope that hon. Gentlemen will not desire to press their Amendment.
    Sir Wavell Wakefield: Could the Solicitor-General indicate whether what he has said covers the point made by my hon. Friend the Member for Chippenham (Mr. Eccles) in the case of mineral deposits on a mountain which have to be taken down to some place on the flat land where the necessary buildings have to be erected? It may be that that flat land cannot by any stretch of the imagination be said to adjoin the mineral site; it may be some distance away. From what the Solicitor-General said it did not seem to be quite clear that that case was covered by the provision of the 1945 Act. Will the right hon. and learned Gentleman give us an assurance that that point is covered?
    The Solicitor-General: May I quote the relevant words of Section 58 of the 1945 Act? They are that such portion of the whole property:
    "as, on a just apportionment, is properly attributable to the first-mentioned property. …"
    One cannot give a priori a castiron ruling on the point. One has to consider the circumstances in relation to each purchase. One has to try to get a just apportionment, and there is a right of appeal in a case in which the company thinks the decision to be unfair to it. Having
    586
    regard to the sort of overseas property which one is considering, that is as near to justice and fairness as one can get, and, as I said, I hope that hon. Members will not press their Amendment.
    Mr. Eccles: I am much relieved to hear the explanation of the Solicitor-General. Would he also give an assurance that if the land is not bought at the same time as the mineral deposit that purchase also ranks for consideration under the provision of Section 58? I ask that because there are clearly times when a mine extends its operations and might need to buy a little extra land.
    The Solicitor-General: I am afraid that that is not covered. It has to be bought pursuant to one bargain. The requirement of Section 58 is that there has to be one bargain and therefore the answer to the hon. Member's question will be in the negative.
    Mr. Eccles: Then I am afraid it is not satisfactory, because after all mining is a very speculative business. One may start in a small way and after a bit be fortunate enough to discover that the ore bed is bigger than was thought, and additional land is needed. It really is not logical to give an allowance in respect to some land bought for a pilot plant, and not give an allowance in respect of land necessary to put up a large production plant and the additional dumps.
    It may be that my Amendment can be framed more narrowly simply to meet this particular point. I am prepared to withdraw it on the understanding that I may look at the wording of my Amendment again, and re-draft it and put it down on Report stage. It is not logical to confine an allowance to the original piece of land. I beg to ask leave to withdraw, but I shall put this down again in a more practical form.
    Mr. Hugh Fraser: May I draw the attention of the right hon. and learned Gentleman to a case in point in Venezuela, where at this very moment the British Shell Company is being forced to refine its oil in that country, and being forced to acquire additional sites to those already possessed for oil production in Venezuela? Here is an example of what can happen unless something like the Amendment is accepted.
    Amendment, by leave, withdrawn.
    Mr. Eccles: I beg to move, in page 10, line 11, to leave out from the beginning, to the end of line 41, page 11.
    I think that these subsections were put down under a misapprehension. The Clause as it is now drawn confines the allowance to the bargain struck by the first British purchaser of the foreign property. It appears to me that the Treasury do not understand the general practice of mining companies abroad. The fact is that in very many instances the company which is proposing to exploit the mineral deposit purchases it from another British company which has done the prospecting. I think it is right to say that, at one time at any rate, the British South Africa Company owned all the mineral rights in Rhodesia. Therefore, any other company, whether it be British or American, which goes into Rhodesia and wishes to start a mine there must deal with the chartered company. That being so, as the Clause is drafted, the allowance could only be calculated on what the chartered company in the dim past gave to some African chief when they were making a treaty with him to cede the mineral rights to them. Really, that goes against the principle of the Clause.
    10.15 p.m.
    I think it also possible that the Treasury have felt that bargains at arm's length do not occur between two British companies, that they will be connected companies and that the prospecting company, if the Clause were amended as I wish it to be, would put up the sale price to the mining company in order to get a bigger allowance. That is covered already by the provisions of the Income Tax Act, 1945. Section 59 of that Act ensures that for the purpose of capital allowances sales shall be deemed to have taken place at a price which the property would have fetched in the open market if that price is lower than the value at which the property did in fact change hands. There is also a provision in Section 28 of that Act for balancing charges to be met where the source, or part of it, is sold as a going concern.
    Those provisions were incorporated in the 1945 Act in order to safeguard the Revenue against claims based on artificial figures of expenditure. Since they are recognised as being adequate for that purpose in relation to all the other assets ranking for allowances, there seems to be no reason why they should not be simi-
    588
    larly adequate in the case of mineral deposits. Again, it will create a hardship as between British and American mining companies if the Clause is left as it stands. An American mining company could purchase a mineral deposit from a British prospecting company and obtain allowances on the whole of the price, whereas our companies could not do that. That is not desirable and I hope that the Government will extend the width of this Clause in the manner which this Amendment seeks.
    Mr. Erroll: I wonder whether, when the Treasury had this Clause in draft, they fully appreciated that the development of mining properties very often is a two-tier or double-decker undertaking. The first tier or level consists of the prospecting company specialising in that class of work, taking that class of risk which involves initial surveys and following up scanty evidence, as it often is at first, until it has reached the stage where it can say that a definite mining property can be said to exist. Having reached that stage it then sells an area which is reasonably well proved to another company which takes on the second stage of exploitation—namely, the large-scale extraction of the ore from the ground.
    It seems wrong to subject British mining companies to what in effect is a form of double taxation. It means that the prospecting company has, in fact, to pay tax on the result of its prospecting work, because as it specialises in that class of work it pays on all increases in value of the property which it acquires on sale—on the difference between the original purchase price and what it sells the property for as a reasonably well-proved area. It is surely, therefore, quite illogical to allow to the purchasing company for tax relief purposes only the original purchase price which the prospecting company paid for the land when it was not at all sure there was any mineral there at all. It is quite unfair to insist that growth in value of the property as a result of the first company's work should be taxed a second time in the hands of the second company when that company is developing a proved area which it is taking over. It seems quite indefensible to allow this additional burden to fall on what is inevitably a very risky and speculative business, namely, the development of mineral properties overseas.

    589
    My hon. Friend the Member for Chippenham (Mr. Eccles) has fully pointed out how any danger of abuse can be prevented. It may be, indeed, that these subsections have been introduced only because of the danger of such abuse, but it is quite clear, of course, that the relevant Clause of the Income Tax Act, 1945, designed specifically to prevent transactions between inter-connected undertakings at artificial prices for the purpose of avoiding tax, can equally well apply to transactions between a prospecting company and a mining company that may be tempted to avoid any tax. We have shown how abuses can be prevented; we have shown how the subsections, as they stand at present, are a definite handicap to British mining enterprise overseas; and I hope that the Solicitor-General will see his way to accept our Amendment.
    The Solicitor-General: I am sorry to say that we do not see our way to accept this Amendment, and I cannot help thinking that the proposal contained in the Amendment is really based on a misconception of what we are proposing in Clause 18. Clause 18, as appears on its face, provides for annual allowances on the acquisition of overseas mineral rights. Now, in order to explain my objection, I think I must refer to the principle upon which the taxation of these mineral rights proceeds, and which really finds its root in the many existing Income Tax principles in these matters. They were, as hon. Members know, examined and reported upon by the Royal Commission on the Income Tax in 1920.
    I think the Committee remembers that that was a comprehensive report which examined the whole basis of the Income Tax legislation of this country, and the principles of that Report, which are of general application, have been adopted and followed, and are still followed, in general outline at any rate, in the Income Tax legislation which we have at this moment. It is a fundamental principle of the Income Tax legislation of this country, and a principle which was restated—I will not say laid down, but re-stated—in the Report of the Royal Commission on the Income Tax in 1920, that a depreciation allowance or a writing-off allowance cannot be conceded in the case of mineral rights in this country.
    590
    The general reason, the general basis, of that principle is this. If mineral rights in this country are already potential sources of income, and if they are transferred from one person to another, there is no new source of wealth created, as it were. There is nothing one can write off an allowance against when all that happens is that a source of income is transferred from one person to another. That was accepted as a basic reason why depreciation allowance should not be written off against exploitation of mineral rights existent in this country. They are already here as a source of income.
    A not unanalogous process of reasoning can be applied to other sources of income. There cannot be depreciation allowances against the purchase price of sources of income. Consider, for example, a lease. Hon. Members know that often in this Committee on previous occasions we have discussed whether in principle a depreciation allowance should be granted against a premium when paying for a lease. That has always been resisted, by successive Governments, in conformity with the principle which has been stated in the Report of the Royal Commission on the Income Tax.
    The Royal Commission said that where there is brought into existence something which was not theretofore a source of income in this country, then certainly there can be a depreciation allowance against the cost of bringing it into existence. Therefore, when, by buying overseas mineral rights, a new source of income is brought into existence, it is perfectly consistent with the principle that the Royal Commission laid down that depreciation allowances should be allowed against the purchase price of that right to foreign income. For that reason, and in order to assist the exploitation overseas of mineral rgihts, we are in Clause 18 following that principle by providing depreciation allowances upon the acquisition of mineral rights overseas.
    Against that, the principle which we are following requires that depreciation allowances will be given only against the first cost; that is to say, the cost first incurred by the United Kingdom company in the acquisition of the rights. If one English company buys rights for £100,000 and then sells to another English company for £200,000, depreciation is allowed against the first £100,000, because

    591
    the second £100,000 does not create any new sources of wealth in the United Kingdom. It is the first purchase for £100,000 which has brought into existence that taxable asset as an asset upon which United Kingdom tax can be levied. That is why, in conformity with that principle, which I am afraid is rather complicated—to those hon. Members who have probably looked on more than one occasion at the report of the Royal Commission, I would point out that I am quoting from paragraph 191—we say, as there recommended, that the only writing off allowance should be against the first cost to some United Kingdom company; that is to say, some company controlled from or owned in the United Kingdom.
    For those reasons, I feel that if we accepted this Amendment we should be entirely throwing overboard that principle, and it would constitute a very serious departure which would involve the Revenue in loss. The general principle is that the Exchequer must be entitled to get its tax on all profits from United Kingdom property. Therefore, we have to look to the first cost of creating a United Kingdom asset in asking what the depreciation allowance can be written off against. It is my fault if I have not made it clear, but it is a rather subtle and difficult principle to expound. It has been accepted over a number of years, and I am taking it directly from paragraph 191 of the Report of the Royal Commission on Income Tax, prepared in 1920, which has been consistently followed, and which we are now following in framing the proposals of Clause 18. For those reasons, I hope the Committee will agree that there is no sound reason for accepting this Amendment. It would indeed lead to serious loss and a great deal of confusion if we departed from the very clear principle stated by the Royal Commission.
    Mr. Eccles: What an out-of-date, old-fashioned party we find opposite us today. Here is a party, which prides itself on being modern, but which in tackling all the different situations of the postwar world compared with the pre-war world bases itself on an out-of-date principle of 1920. Let us just follow what happens. The Solicitor-General says that if mineral rights have once existed they bring to somebody an income, and if they
    592
    change hands there cannot be any depreciation allowance given to the second or third buyer because it is already within the taxable ambit of this country, and they have existed here for some time.
    10.30 p.m.
    Look what nonsense this makes of overseas mining. There are many British prospecting companies. They acquire the right to some tract of country for very little money, and they send out an expedition of geologists and mining engineers. The company spends a lot of money and after a time proves that there is an interesting ore body there. They have to get that money back. That tract of land is now worth a very great deal more than when the company first acquired its rights. The company itself is not a mining company. It has to sell the right to exploit the ore body on which it has spent a great deal of capital to someone who will develop it. Who wants to develop the deposits? Well, there are Americans, Canadians, people from all over the world anxious today to open up raw materials. But if they go to a British buyer, that British buyer is handicapped. He has got to pay, naturally enough, market price. That includes the money which has been spent upon proving the particular ore body. But he can get no allowance on the money spent because of this principle of Income Tax.
    I dare say it is wonderfully good in law or logic, or whatever it may be; but it goes against the interests of this country. I want to see British mining companies upon an equal footing with other mining companies in developing the world. Oil companies are included in this Clause. Why should we be handicapped because of this dusty old principle? I think it is an absurd argument which has been put up. We must see that our overseas business is on all fours with the overseas business of other countries. To have a legal objection of this sort put up to us just will not do.
    Sir W. Wakefield: I hope the Government will reconsider this position. After all, what we want is that British companies shall operate overseas so as to bring revenue to this country. As the law stands now, what is going to happen is that an overseas concession is not going to be operated or exploited by a British company. It will be operated or exploited by American or Canadian com-

    593
    panies, or by some company or companies formed in South Africa or Southern Rhodesia, or somewhere else. Revenue which might accrue to this country will go to these other countries. That is a situation which is not in the interest of this country, and I hope that for the reasons which have been so clearly stated,
    the Government will look at this again, and put right what obviously is wrong.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 257; Noes, 109.

    Division No. 174.]

    AYES

    [10.35 p.m.

    Acland, Sir Richard

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

    McLeavy, F.

    Albu, A. H.

    Follick, M.

    MacPherson, Malcolm (Stirling)

    Alpass, J. H.

    Foot, M. M.

    Mallalieu, E. L. (Brigg)

    Anderson, A. (Mother Well)

    Forman, J. C.

    Mallalieu, J. P. W. (Huddersfield)

    Attewell, H. C.

    Freeman, J. (Watford)

    Mann, Mrs. J.

    Austin, H. Lewis

    Gaitskell, Rt. Hon. H. T. N.

    Marquand, Rt. Hon. H. A.

    Awbery, S. S.

    Ganley, Mrs. C. S.

    Mathers, Rt. Hon. George

    Ayrton Gould, Mrs. B.

    Gibbins, J.

    Middleton, Mrs. L.

    Bacon, Miss A.

    Gibson, C. W.

    Mitchison, G. R.

    Baird, J.

    Gilzean, A.

    Monslow, W.

    Balfour, A.

    Glanville, J. E. (Consett)

    Moody, A. S.

    Barstow, P. G.

    Goodrich, H. E.

    Morley, R.

    Barton, C.

    Gordon-Walker, P. C.

    Morris, Lt.-Col. H. (Sheffield, C.)

    Bechervaise, A. E.

    Greenwood, A. W. J. (Heywood)

    Morris, P. (Swansea, W.)

    Bellenger, Rt. Hon. F. J.

    Grey, C. F.

    Mort, D. L.

    Benson, G.

    Grierson, E.

    Moyle, A.

    Berry, H.

    Griffiths, Rt. Hon. J. (Llanelly)

    Nally, W.

    Beswick, F.

    Griffiths W. D. (Moss Side)

    Neal, H. (Claycross)

    Bevan, Rt. Hon. A. (Ebbw Vale)

    Guest, Dr. L. Haden

    Noel-Baker, Rt. Hon. P. J. (Derby)

    Binns, J.

    Gunter, R. J.

    Oldfield, W. H.

    Blenkinsop, A.

    Guy, W. H.

    Orbach, M.

    Blyton, W. R.

    Hale, Leslie

    Paget, R. T.

    Bowden, Fig. Offr. H. W.

    Hall, Rt. Hon. Glenvil

    Paling, Rt. Hon. Wilfred (Wentworth)

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

    Hamilton, Lieut.-Col. R.

    Paling, Will T. (Dewsbury)

    Braddock, T. (Mitcham)

    Hannan, W. (Maryhill)

    Palmer, A. M. F.

    Brook, D. (Halifax)

    Hardman, D. R.

    Parker, J.

    Brooks, T. J. (Rothwell)

    Hardy, E. A.

    Parkin, B. T.

    Broughton, Dr. A. D. D.

    Harrison, J.

    Paton, J. (Norwich)

    Brown, T. J. (Ince)

    Henderson, Joseph (Ardwick)

    Pearson, A.

    Bruce, Maj. D. W. T.

    Holman, P.

    Peart, T. F.

    Burden, T. W.

    Holmes, H. E. (Hemsworth)

    Piratin, P.

    Burke, W. A.

    Horabin, T. L.

    Porter, E. (Warrington)

    Butler, H. W. (Hackney, S.)

    Houghton, A. L. N. D. (Sowerby)

    Price, M. Philips

    Callaghan, James

    Hoy, J.

    Proctor, W. T.

    Carmichael, James

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

    Pursey, Comdr. H.

    Chamberlain, R. A.

    Hughes, Hector (Aberdeen, N.)

    Randall, H. E.

    Champion, A. J.

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

    Ranger, J.

    Chetwynd, G. R.

    Irvine, A. J. (Liverpool)

    Rankin, J.

    Cobb, F. A.

    Irving, W. J. (Tottenham, N.)

    Rees-Williams, D. R.

    Coldrick, W.

    Isaacs, Rt. Hon. G. A.

    Raid, T. (Swindon)

    Collindridge, F.

    Janner, B.

    Rhodes, H.

    Colman, Miss G. M.

    Jay, D. P. T.

    Richards, R.

    Cook, T. F.

    Jeger, G. (Winchester)

    Roberts, Goronwy (Caernarvonshire)

    Corbet, Mrs. F. K. (Camb'well, N. W.)

    Jeger, Dr. S. W. (St. Pancras, S. E.)

    Robertson, J. J. (Berwick)

    Corlett, Dr. J.

    Jenkins, R. H.

    Robinson, Kenneth (St. Pancras, N.)

    Cove, W. G.

    Jones, D. T. (Hartlepool)

    Rogers, G. H. R.

    Crawley, A.

    Jones, Elwyn (Plaistow)

    Ross, William (Kilmarnock)

    Crossman, R. H. S.

    Jones, P. Asterley (Hitchin)

    Royle, C.

    Cullen, Mrs.

    Keenan, W.

    Segal, Dr. S.

    Daggar, G.

    Key, Rt. Hon C. W.

    Shackleton, E. A. A.

    Daines, P.

    King, E. M.

    Sharp, Granville

    Dalton, Rt. Hon. H.

    Kinley, J.

    Shawcross, C. N. (Widnes)

    Davies, Edward (Burslem)

    Lang, G.

    Shawcross, Rt. Hn. Sir H. (St. Helens)

    Davies, Ernest (Enfield)

    Lavers, S.

    Shurmer, P.

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

    Lee, F. (Hulme)

    Silverman, J. (Erdington)

    Davies, R. J. (Westhoughton)

    Lee, Miss J. (Cannock)

    Silverman, S. S. (Nelson)

    Davies, S. O. (Merthyr)

    Leonard, W.

    Simmons, C. J.

    Deer, G.

    Lever, N. H.

    Skeffington, A. M.

    Delargy, H. J.

    Levy, B. W.

    Skeffington-Lodge, T. C.

    Donovan, T.

    Lindgren, G. S.

    Skinnard, F. W.

    Driberg, T. E. N.

    Logan, D. G.

    Smith, H. N. (Nottingham, S.)

    Dugdale, J. (W. Bromwich)

    Longden, F.

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

    Dumpleton, C. W.

    Lyne, A. W.

    Snow, J. W.

    Edwards, W. J. (Whitechapel)

    McAdam, W.

    Sorensen, R. W.

    Evans, Albert (Islington, W.)

    McAllister, G.

    Soskice, Rt. Hon. Sir Frank

    Evans, John (Ogmore)

    McGhee, H. G.

    Sparks, J. A.

    Evans, S. N. (Wednesbury)

    McGovern, J.

    Steele, T.

    Fairhurst, F.

    Mack, J. D.

    Stewart, Michael (Fulham, E.)

    Farthing, W. J.

    McKay, J. (Wallsend)

    Stross, Dr. B.

    Fernyhough, E.

    Mackay, R. W. G. (Hull, N. W.)

    Stubbs, A. E.

    Field, Capt. W. J.

    McKinlay, A. S.

    Swingler, S.

    Sylvester, G. O.

    Walkden, E.

    Williams, J. L. (Kelvingrove)

    Symonds, A. L.

    Wallace, G. D. (Chislehurst)

    Williams, Ronald (Wigan)

    Taylor, H. B. (Mansfield)

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

    Williams, W. T. (Hammersmith, S.)

    Taylor, R. J. (Morpeth)

    Warbey, W. N.

    Williams, W. R. (Heston)

    Taylor, Dr. S. (Barnet)

    Webb, M. (Bradford, C.)

    Wills, E.

    Thomas, D. E. (Aberdare)

    Wells, P. L. (Faversham)

    Wills, Mrs. E. A.

    Thomas, George (Cardiff)

    Wells, W. T. (Walsall)

    Wilmot, Rt. Hon. J.

    Thomas, I. O. (Wrekin)

    Wheatley, Rt. Hon. John (Edin'gh, E.)

    Wilson, Rt. Hon. J. H.

    Thomas, John R. (Dover)

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

    Wyatt, W.

    Thurtle, Ernest

    Whiteley, Rt. Hon. W.

    Yates, V. F.

    Titterington, M. F.

    Wigg, George

    Young, Sir R. (Newton)

    Tolley, L.

    Wilkes, L.

    Younger, Hon. Kenneth

    Tomlinson, Rt. Hon. G.

    Wilkins, W. A.

    Ungoed-Thomas, L.

    Willey, F. T. (Sunderland)

    TELLERS FOR THE AYES:

    Vernon, Maj. W. F.

    Willey, O. G. (Cleveland)

    Mr. Popplewell and

    Viant, S. P.

    Williams, D. J. (Neath)

    Mr. Richard Adams.

    NOES

    Agnew, Cmdr. P. G.

    Gridley, Sir A.

    Peto, Brig. C. H. M.

    Assheton, Rt. Hon. R.

    Grimston, R. V.

    Pickthorn, K.

    Astor, Hon. M.

    Hare, Hon. J. H. (Woodbridge)

    Poole, O. B. S. (Oswestry)

    Baldwin, A. E.

    Harris, F. W. (Croydon, N.)

    Prescott, Stanley

    Birch, Nigel

    Harvey, Air-Comdre. A. V.

    Raikes, H. V.

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

    Hinchingbrooke, Viscount

    Ramsay, Maj. S.

    Boothby, R.

    Hogg, Hon. Q.

    Rayner, Brig. R.

    Bowan, R.

    Hollis, M. C.

    Roberts, Emrys (Merioneth)

    Bower, N.

    Hope, Lord J.

    Ropner, Col. L.

    Boyd-Carpenter, J. A.

    Howard, Hon. A.

    Ross, Sir R. D. (Londonderry)

    Braithwaite, Lt.-Comdr. J. G.

    Hulbert, Wing-Cdr. N. J.

    Shepherd, W. S. (Bucklow)

    Buchan-Hepburn, P. G. T.

    Hutchison, Lt-Cdr Clark (Edin'gh, W.)

    Spearman, A. C. M.

    Bullock, Capt. M.

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

    Stanley, Rt. Hon. O.

    Butcher, H. W.

    Lancaster, Col. C. G.

    Stoddart-Scoot, Col. M.

    Butler, Rt. Hn R. A. (S'ffr'n W'ld'n)

    Legge-Bourke, Maj. E. A. H.

    Strauss, Henry (English Universities)

    Challen, C.

    Linstead, H. N.

    Stuart, Rt. Hon. J. (Moray)

    Channon, H.

    Lipson, D. L.

    Sutcliffe, H.

    Clarke, Col. R. S.

    Lloyd, Selwyn (Wirral)

    Taylor, C. S. (Eastbourne)

    Conant, Maj. R. J. E.

    Low, A. R. W.

    Teeling, William

    Corbett, Lieut.-Col. U. (Ludlow)

    Lucas, Major Sir J.

    Thomas, J. P. L. (Hereford)

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

    Lucas-Tooth, Sir H.

    Thorneycroft, G. E. P. (Monmouth)

    Cuthbert, W. N.

    Macdonald, Sir P. (I. of Wight)

    Touche, G. C.

    Darling, Sir W. Y.

    McFarlane, C. S.

    Turton, R. H.

    De la Bère, R.

    Maclean, F. H. R. (Lancaster)

    Wadsworth, G.

    Digby, Simon Wingfield

    Macmillan, Rt. Hon. Harold (Bromley)

    Wakefield, Sir W. W.

    Dodds-Parker, A. D.

    Manningham-Buller, R. E.

    Walker-Smith, D.

    Dower, Col. A. V. G. (Penrith)

    Marples, A. E.

    Ward, Hon. G. R.

    Drewe, C.

    Marsden, Capt. A.

    Webbe, Sir H. (Abbey)

    Eccles, D. M.

    Marshall, D. (Bodmin)

    Wheatley, Colonel M. J. (Dorset, E.)

    Elliot, Lieut.-Col. Rt. Hon. Walter

    Marshall, S. H. (Sutton)

    Williams, Gerald (Tonbridge)

    Erroll, F. J.

    Mellor, Sir J.

    Willoughby de Eresby, Lord

    Fletcher, W. (Bury)

    Molson, A. H. E.

    York, C.

    Fraser, H. C. P. (Stone)

    Neven-Spence, Sir B.

    Young, Sir A. S. L. (Partick)

    Fyfe, Rt. Hon. Sir D. P. M.

    Nicholson, G.

    Gage, C.

    Odey, G. W.

    TELLERS FOR THE NOES:

    Galbraith, Cmdr. T. D. (Pollok)

    O'Neill, Rt. Hon. Sir H.

    Brigadier Mackeson and

    Galbraith, T. G. D. (Hillhead)

    Osborne, C.

    Lieut.-Colonel Bromley-Davenport.

    George, Lady M. Lloyd (Anglesey)

    Peake, Rt. Hon. O.

    Question put, and agreed to.

    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Birch: I want to raise one point on this Clause. The complexities of construing this Clause are very great indeed, and if one looks at subsection (9), which says:
    "This section shall be construed as if it were contained in Part III of the Income Tax Act, 1945.…"
    one sees how difficult it is for people to follow through this Act. The taxation is first based on the Income Tax Act, 1918, and then followed subsequent enactments and a special ruling from Somerset House. This shows the reason why the labours of the hon. and learned Member for East Leicester (Mr. Donovan) are both so
    596
    arduous and so lucrative. It shows how difficult these things are. It is high time we had a consolidation Act.
    10.45 p.m.
    Mr. Eccles: I want to ask the Government whether they will publish the Report of the Departmental Committee upon which this Clause is founded. It is of great interest to a British mining company to know what view the Government take about the handicaps, if I may use that word, put upon our companies in the way of taxation, particularly compared with the mining companies of other countries. I presume the Departmental Committee went into all that fully, and I think it would be in the public interest if we could see their report.

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    I think the Committee ought to realise that, even if Clause 18 had been amended as we wished to amend it, British companies still would be under a substantial handicap compared with those of the United States or Canada. Both Canadian and American companies enjoy what is generally known as a straight depletion allowance. They get a percentage of their profits, calculated I presume on the notional life of the mine, allowed completely tax free, and they get it every year. I can see some objections to that form of allowance, but none the less it is an advantage to other mining companies compared with ours.
    Of course, there is a further general advantage enjoyed by United States and Canadian companies in the standard rates of tax obtaining in those countries, which are much lower than ours. Roughly speaking, they pay 8s. in the pound, whereas our companies will pay 11s. in the pound. In other words, in this very risky business they can keep almost half as much again of their winnings as our companies. That just happens because our level of taxation, as we were discussing earlier today, is much heavier than that in other countries. All this is important if we are to maintain our place in the world. We have to develop these overseas sources of raw material and of income.
    I should like to draw the attention of the Committee to the fact that, even with the concessions in this Clause, British companies, mining and oil, still suffer a handicap, and it may well be that, if the dollar crisis develops with great seriousness, the Committee in future years will have to consider ways of equalising the burdens upon British companies with those sustained by foreign companies. In the United Kingdom we are not now in any position to work under handicaps compared with the companies of other countries, and I feel that we have not heard the end of this mining tax. I should be grateful if the Government could see their way to publish the Report of the Department Committee.
    The Solicitor-General: I am afraid that I cannot give any undertaking with regard to the publication of the Departmental Committee's Report. The Report which I referred to has been long published. The Royal Commission's Report contained the principles I was seeking to
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    expound, and has no doubt been in the hands of hon. Gentlemen who are interested in this aspect of taxation. Beyond that I cannot go, and I cannot give an undertaking with regard to another publication on this matter.
    With regard to the observations of the hon. Member for Flint (Mr. Birch), it is unfortunate that this kind of legislation is of necessity extremely complicated. We are anxious that it should be simplified as much as possible, and made as comprehensible and easily accessible as can be to the ordinary citizen. It is a tremendous task, and we are fully aware of the difficulty the ordinary citizen has in understanding the legislation. One has to bear in mind that it is primarily designed for the use of accountants and expert advisers, who normally would be concerned with the actual working out of the tax legislation. We will, however, bear in mind the observations made with regard to the Clause.
    Mr. Stanley: The right hon. and learned Gentleman might at least give some reasons for refusing the request of my hon. Friend the Member for Chippenham (Mr. Eccles). My hon. Friend asked, not for the expenditure of large sums of money, but for the publication of a Report which might be of great interest to the people concerned in this technical matter. I think that if a request of this kind is to be refused, it should be refused for adequate reasons.
    We can understand that neither the right hon. and learned Gentleman, nor even the Financial Secretary to the Treasury, nor indeed, the Economic Secretary to the Treasury, or all three of them are, in the absence of the Chancellor of the Exchequer, in a position to give us any definite assurance on this or any other point. I think we are entitled to know whether there is any real reason why the publication of this Report should be refused and, if there is any real reason, we should be perfectly satisfied by an assurance from one of the three right hon. Gentlemen that the matter will be represented to the Chancellor of the Exchequer and that, in due course, we shall hear from him.
    Mr. Glenvil Hall: I think my right hon. and learned Friend gave a perfectly straightforward answer to this query. He

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    said that he could give no undertaking on this matter, and by that he implied that the matter would be considered—[Laughter.] The vacant laughter of right hon. and hon. Gentlemen opposite sometimes is such that it makes one wonder whether there is not a good deal of truth in all one hears about their mental capacity.
    The right hon. Member for West Bristol (Mr. Stanley), knows very well that the report of a Departmental Committee is not usually published. The membership of such a committee is made up of officials and civil servants who are the administrative members of the Departments concerned and normally the interchange of view between representatives on these committees does not lend itself to the issue, in a proper official form, of an extensive report. What they do report is sufficient to the Government which has set up the committee. The Government can act on the information which the committee supplies and on the recommendations which it might make.
    The Departmental Committee to which reference has been made is one of that kind. Nevertheless, I will report to my right hon. and learned Friend the Chancellor of the Exchequer the request that has been made tonight, and although I think it unlikely, in view of the make-up of the committee, that the report will be published, if the information can be given I am sure he or the Government will be pleased to give it either by placing it in the Library or by publication in some other form.
    Mr. Stanley: I am grateful to the right hon. Gentleman for going as far as he has gone. Much time might have been saved if the Solicitor-General had anticipated his right hon. Friend by going as far as that. It is impossible to read into the Solicitor-General's answer what we are now to understand was implicit in it; that he would refer the matter to the Chancellor of the Exchequer. In regard to one part of the Financial Secretary's speech, I would urge on him a little caution. He must not mistake the reasons for the extreme kindness with which we always treat him. I would urge on him, when he comes to intellectual capacity and comparisons of the kind he was making, that a man who lives in a house
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    of such extremely brittle glass should not only avoid throwing stones, but should be equally careful to avoid throwing cotton wool.
    Clause ordered to stand part of the Bill.

    Clause 19.—(INTEREST PAYABLE ABROAD TO BE DEDUCTIBLE IN COMPUTING PROFITS IN CERTAIN CASES.)
    Mr. Peake: I beg to move, in page 12, line 32, after "secured," to insert "mainly."
    Clause 19 is inserted, I believe, in order to correct a decision of the courts to the effect that interest payable overseas by a person carrying on a trade in the United Kingdom is not liable as a deduction for assessment of Income Tax in the United Kingdom. The Clause provides that, subject to five very stringent conditions, interest of that character shall be liable against assessment for Income Tax here. The second of the conditions is that the payment of the interest is secured upon assets outside the United Kingdom which are employed in the trade. It has been represented to us that there may be cases where the payment of the interest is primarily secured upon assets situated overseas but where also there is a floating charge upon assets situated in this country. For that reason we propose to insert the word "mainly."
    The Solicitor-General: I am happy to say, on behalf of the Government, that we can accept this Amendment.
    Amendment agreed to.
    Mr. Peake: I beg to move, in page 12, line 41, to leave out from the beginning, to "without," in line 42.
    Encouraged by the success we have just had, I move this Amendment. I need not repeat what I have said about the Clause, but the fifth condition of being allowed to charge interest incurred overseas against assessment of Income Tax here is that the interest is paid to a person not resident in the United Kingdom. There are cases where persons have two residences, one in the United Kingdom and one elsewhere, and we wish to provide for the case where the payment of interest overseas is made to a person who is not only resident overseas, but also resident in the United Kingdom.
    The Solicitor-General: I am very sorry to disappoint the right hon. Gentleman on this occasion. The position with regard to a person who is resident in the United Kingdom would be that he would be taxable upon the interest, the debenture charge, or whatever it may be, which is paid to him. That being so, the English company paying the debenture charge, in the ordinary way, would be entitled, if it were paid out of taxed income, to deduct the tax in paying the resident and retain that tax. If it was not paid out of taxed income, the ordinary Rule 21 would apply and the tax would have to be paid out of tax to the Revenue. My reason for saying we cannot accept this Amendment is that the position is already dealt with under existing legislation.
    Amendment negatived.
    11.0 p.m.
    Mr. Selwyn Lloyd: I beg to move, in page 13, line 6, to leave out subsection (3), and to insert:
    "(3) Where the trade is carried on by a partnership or by a company in which the director in question has a controlling interest, sums allowed in respect of interest payable to any partner or the director in question shall not exceed an amount which the Commissioners having jurisdiction in the matter may consider a reasonable rate of interest in all the circumstances."
    Subsection (3), as it stands, represents an exclusion from the concession which the Clause represents. The subsection deals with two separate matters. It says:
    "Where the trade is carried on by a partnership, this section shall not apply to any interest which is payable to any of the partners or is payable in respect of the share of any partner in the partnership capital."
    On the question of interest which is payable in respect of the share of a partner in partnership capital, I am advised that it is already well-established that such interest is not deductible under any circumstances at the present time. Therefore, it would not appear to be necessary to exclude such interest from this concession.
    But the main point of my Amendment is to deal with the other type of interest referred to in the subsection; that is, interest payable in respect of any loan by a partner. It seems to me quite unreasonable that such interest should be excluded from the benefit of the section. I am told that if there is a question of a loan payable to one of the partners, that
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    is an expense which can be deducted and held against the partnership profits.
    Mr. Donovan: That is because the property for which the rent is paid is outside the partnership capital.
    Mr. Selwyn Lloyd: Supposing capital which forms a loan in respect of which interest is paid is brought into a business, not as part of the partnership capital, but as a temporary loan from a bank or other person to tide over a temporary difficulty, that is precisely analogous with the rent on the business. I agree that if it is part of the partnership capital, it should not be entitled to exemption, but if the partner has to act as a banker to tide over a temporary difficulty, it seems quite unreasonable that interest on such a loan should not be regarded as an expense of the partnership. I am told that this is a point of some substance and I ask that it be given sympathetic consideration.
    The Solicitor-General: This is, I feel, rather an unreasonable Amendment. It is one thing to say that capital which is raised by borrowing abroad should have the relief which is provided for in this Clause. It seems to me, at any rate, that it is very far from that to say that when there are two or three partners, one of whom is a foreign resident and is paid interest by the partners here, they should be entitled to be placed in the same position as a company which for various reasons has to raise part of its money in the foreign money market. The two situations are entirely dissimilar. After all, the partner is a co-owner of the firm's business.
    I ask the Committee to reject this Amendment, not from the narrow legalistive view, but from the general view that it is not the sort of thing contemplated at all. Where a number of persons really own the same business and some of them are paying interest to one resident abroad—never mind what it is for—that is a situation which is utterly different from the sort of situation we are contemplating here. One can well understand that in some cases it might create a real temptation to try and evade the law and create an excessive payment by manipulation of the partnership business. I am quite conscious of the fact that the Amendment concludes with the words:

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    "… shall not exceed an amount which the Commissioners having jurisdiction in the matter may consider a reasonable rate. …"
    At the same time I think it is placing an almost impossible burden on the Commissioners to expect them to investigate the affairs of a partnership business in every case with a view to determining in every case what is a reasonable rate of interest. There might be cases where it was somewhat over the reasonable rate, although it could not be said to be out-and-out excessive. One would get all sorts of gradations, and to put upon the Commissioners, in the case of a claim for interest, the burden of nicely discriminating where the exact reasonable line arose would put a too excessive burden upon them.
    I ask the Committee to say that this relief is granted for a very particular case, that is, where a company has to raise money on a foreign money market, and in which it should have the same measure of relief as if it raised it here. This ought not to be extended to an area which is different and in which, if it did so extend, there might be some temptation on the part of dishonest partners—or partners at any rate open to be influenced by facts of that kind—to charge rather too high a rate of interest, when it would not be possible in all circumstances for the Commissioners to go into the whole matter and say exactly what is a reasonable interest to be charged. For those general reasons, and because this is not the kind of thing which the Clause is intended to cover, I hope that the Committee will agree that the Amendment ought not to be accepted.
    Mr. Birch: I think it is an established principle that a partnership is entitled to charge rent payable to one of the partners.
    Mr. John R. Thomas: He pays rates and taxes, so what is the difference?
    Mr. Birch: The point made by the Solicitor-General was that this proposed Amendment could not work, because it would be impossible for the Income Tax Commissioners to decide what was reasonable interest. The effect, therefore, of refusing this Amendment is that such partnerships will be penalised.
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    Might not that be avoided, and substantial justice done if the Government accepted a suggestion under which the maximum interest was 5 per cent., or something like that? Could the Solicitor-General give an assurance that he would accept an Amendment which did not put the onus upon the Commissioners of deciding what was a reasonable rate of interest?
    Mr. Eccles: If I understand this aright, I am inclined to agree with what the Solicitor-General says about the difficulty of the Commissioners investigating the rate of interest, but surely all the person has to do is simply to find a third party—a bank, or his wife, or somebody else—and say, "Here is £5,000 which I am going to lend to the partnership. I am not allowed to lend it direct and get the allowance, so you take it and lend it for me." It seems too easy. Would it not be better to put the matter in the law?
    Mr. Selwyn Lloyd: I do not propose to develop the argument further tonight, or to ask my hon. and right hon. Friends to divide on this matter, but I hope it will be given some reconsideration. It is a small point, but one on which we are clearly quite right.
    Amendment negatived.
    Clause, as amended, ordered to stand part of the Bill.

    Clause 20.—(AMENDMENT OF FINANCE ACT, 1946, s. 27.)
    Mr. Piratin: I beg to move, in page 13, line 27, to leave out from "benefit," to the end of line 31.
    With your permission, Major Milner, I should like to take in conjunction with this Amendment, the Amendment to leave out paragraph (a). Clause 20 aims to amend Section 27 of the 1946 Act so far as collecting Income Tax is concerned from those who are in receipt of certain benefits—unemployment, sickness, and maternity. This change has been introduced as from 11th May, and I seek, and I hope to have the support of many hon. Members, to repeal that change. Until that change was made, people who paid contributions—which amount to 4s. 7d. a week for a male employee—were exempt from Income Tax. In turn, when they were in receipt of benefit,

    605
    it was subject to Income Tax, providing that their total income qualified for tax. Many people in receipt of unemployment benefit, would not, of course, so qualify. The position now, however, is the other way. The effect of this Clause was to turn the thing upside down, and instead of the recipients of the benefit paying Income Tax in respect of that benefit, now each contributor, each week for as long as he contributes, is no longer exempt in respect of the contributions for these particular benefits. They amount to 1s. 7d. out of the 4s. 7d., and it has been estimated that on an average it may result in an increase of Income Tax to those who pay that tax of some sixpence a week.
    This is a most unjust Clause. It is very unfair. The Chancellor expects a £10,000,000 addition as a result of this change in the method of taxation, and the way he expects to do it is by imposing on all contributors—which means every working man, and all other people who contribute to National Insurance—that tax shall be paid on the contributions they make for these three benefits. He could not do that but for P.A.Y.E. He cannot do it in regard to people who pay insurance through an ordinary insurance company and subsequently receive benefits—when, for example, they are sick. In those cases they will pay Income Tax only when they receive the benefit. Meanwhile, with each payment they are entitled to exemption from tax. Workers in industry who pay their weekly National Insurance contributions had, until now, the same rights as people paying a regular amount to an insurance company. We have all accepted that as being reasonable and fair, but, just because, as the Chancellor himself says in his Budget speech
    "The taxation of these occasional benefits is a great trouble, both to the Inland Revenue and to the recipients,"
    he proposes to put a burden on every contributor whether he subsequently receives benefit or not.
    11.15 p.m.
    Let us take it in some detail. The three benefits concerned are unemployment, sickness and maternity. There are some fortunate people, I imagine, even in a capitalist society, who are never unemployed until they retire. They pay their weekly contributions for unemployment
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    benefit and will not be exempt from Income Tax on their contributions although they will never receive benefit, because when they retire they will receive retirement pensions. Yet they are expected to forgo exemption from Income Tax.
    There are some fortunate people—not Members of Parliament—who go through their working life in the best of health and are never sick or involved in an accident. They make their weekly contributions, but will never claim sickness benefit, but they are not to be exempt from Income Tax on their contributions. The third case is farcical, because there is no dubiety about it. There are men and women who never get married or who, if they do marry, decide not to have children. Maternity benefit will not be received, but nevertheless the contributions are made. It is clearly an injustice on the contributors that they should pay this tax every week throughout the year, throughout their lives, whether they receive benefit or not.
    It seems to me that the Committee should ask the Chancellor to take back this Clause. I would say that it is even a bit cold-blooded. The way in which the Chancellor himself referred to it in the concluding remarks in that part of his Budget Speech was quite callous. He said:
    "I hope, in fact, as a result of this change, the Exchequer will be £10 million better off than otherwise it would, since it will be able to collect tax on contributions, whereas it is almost impossible to do so on benefits."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2099.]
    It is really unjust to say that because it is too difficult to collect a tax from those who come within the Income Tax level and who receive benefits, the Chancellor of the Exchequer is entitled to pass the burden on to all the contributors to National Insurance. This must be as plain as a pikestaff to every Member of the Committee. I hope that it will have widespread support and that this will have its effect on the Chancellor and that he will accept it.
    Mr. Houghton: I feel a good deal of sympathy with the Amendment moved by the hon. Member for Mile End (Mr. Piratin), although I need scarcely say that I have no political sympathy with the source from which the Amendment

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    comes. But since the hon. Member is without the support of the other half of the Communist Party at this moment, I will presume to take its place. In the speech which I made on the Budget Statement, I referred to the administrative difficulty and dilemma in which the Chancellor of the Exchequer found himself on account of the mistake, as I see it, of his predecessor in the 1946 Finance Act, when it was decided that all these benefits should be subject to Income Tax, and that a corresponding set-off against tax liability should be made in respect of the corresponding portion of the contributions.
    I presumed to warn the then Chancellor of the Exchequer, from my knowledge of the administrative problems involved, that he would stand little, if any, chance of collecting the tax on unemployment, sickness, and maternity benefits, for the simple reason that while tax could be taken from the pay packet under "Pay as you Earn," it cannot be taken by the Ministry of National Insurance out of National Insurance benefits—not without a great deal of elaborate machinery to advise the Ministry of National Insurance of the rate of tax at which it should collect the deduction.
    In the case of these benefits it would be necessary to await the end of the financial year before the Inland Revenue would be able to decide whether the benefits should be taxed, and if so, at what rate. It follows from that, that in almost every case where a taxpayer drew unemployment, or sickness benefit, or his wife or the taxpayer herself drew maternity benefit, the tax on those benefits would be subject to a time lag which would extend into the following financial year, and which would bring all the difficulties of explaining to the taxpayer why his or her tax code number has been altered, or why a demand for tax has been made. It would be necessary to tell the taxpayer that, 12 months ago, he or she had a fortnight's sickness and received benefit, or received benefit for some other reason.
    The Chancellor of the Exchequer has had to meet the obvious difficulty of not being able to collect the tax on these benefits and, as I complained at the time, he has not only made a virtue of a necessity
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    but has set out to make a substantial profit out of it as well. What he has done, as the hon. Member who moved the Amendment has pointed out, is to exempt from tax the benefits on which he failed to collect the tax, and he proposes to make a corresponding adjustment in the tax set-off on National Insurance contributions. What it means is, that tax on £3 is to be disallowed in the Income Tax set-off for National Insurance contributions. According to whether a taxpayer is liable to Income Tax at the rate of 3s., 6s. or 9s. in the £. the additional tax imposed upon the taxpayer amounts to 2d., 4d. or 6d. a week.
    To give effect to these changes it has been necessary to issue revised tax tables to all employers—two million copies of amended tax tables, 26 pages, 52 amended tables. In the instructions given on the face of the document it is said that the sheets should be cut down the middle and pasted over the corresponding tables for the weekly payments—and the Stationery Office does not even provide the gum. Two million copies have been issued to give effect to this rather small change in the liability of a very large number of people, and I ask the Financial Secretary whether he is going to say that, however costly it is to issue two million copies of the table, it will cost more to withdraw them and issue new ones. I expect that is what will be said, but that is one of the difficulties into which we have got over this comparatively small matter.
    As the hon. Member for Mile End has pointed out, the Chancellor has shifted the burden of tax from the beneficiaries to all who pay contributions, irrespective of whether they get benefits or not. The Chancellor cannot say he had any loss of revenue to make good; he never had it, because he could not collect it; and the Chancellor said at the end of his Budget Statement that he hoped to make £10 million out of the change, which is equivalent to an increase of six-eighths of a penny in the taxation. It is regrettable that the Chancellor should have made this arrangement for meeting an administrative difficulty; that he should have imposed an additional tax, however small, on the whole of the persons who pay National Insurance contributions.
    Mr. R. A. Butler: I cannot let this matter pass without saying that it is a particularly cynical proposal by the Chancellor. The truth is that, for administrative convenience, the Chancellor has landed the employed persons with an additional burden of £10 millions a year, resulting in a considerably increased number of pence a week. Anybody paying at the full rate will lose as much as ninepence a week, and I do not think that the Committee ought to let this go by without drawing the attention of the public to the charges falling on them. Employed persons have found their tax deductions increased by several pence a week.
    I should like to ask the Financial Secretary for some description of the manner in which this extra £10 millions burden is made up; can he give further information than that vouchsafed by the Chancellor in his two short references to this matter—made with a large space in between, so that the tax burden came to us as a big surprise? It is not usual when suggesting that one is making a concession, to land the taxpayer with an extra burden of £10 millions, and I hope that the Financial Secretary will say that the Chancellor is using this Clause to raise a substantial measure of extra taxation from the working population of this Country.
    11.30 p.m.
    It affects unemployment, sickness, and maternity benefits, and it turns the existing system upside down. It therefore raises a major issue for any of us who have interested ourselves in the past in the social services and is not a matter which ought to be allowed to pass by this Committee without further explanation from the right hon. Gentleman. I am quite convinced that either on this occasion or on the occasion of the Clause being put, we shall have more to say on this subject, and whether we shall do so at great length or not, I am certain that unless we get a satisfactory explanation from the right hon. Gentleman we shall have to ask the Committee to divide on the Clause in order to indicate our disquiet at a manoeuvre undertaken by the Chancellor of the Exchequer at the expense of the working population.
    Mr. Glenvil Hall: I think that the speech we have just listened to is particularly
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    unfortunate because the situation in which we find ourselves in this matter and which my right hon. and learned Friend seeks to remedy in the Clause to which this Amendment has been moved, is entirely in accord with the views held by the party opposite and that put forward by the Chancellor of the Exchequer who represented that party in 1944. The right hon. Member for the Scottish Universities (Sir J. Anderson) indicated when he was Chancellor of the Exchequer that, as people would be getting certain benefits from the National Insurance services, it would be only fair, as they were income, that they should be taxed, and equally fair that, if that income was taxed, any contribution made in respect of it on the other side of the balance sheet should receive tax allowance. That view was written into the 1946 legislation, and so far as I know met with no opposition and no query from anybody on the other side of the Committee. It is only because administratively we have found the thing impracticable that the Chancellor made the suggestions which are now before this Committee.
    Mr. Butler: That is a reversal of the previous arrangement.
    Mr. Glenvil Hall: Yes, I know.
    Mr. Butler: There is nothing very remarkable in drawing attention to it.
    Mr. Glenvil Hall: The right hon. Gentleman took the view that we are now placing a burden on the working classes which, as I understand him, the party opposite would not have imposed. This administratively impossible situation has arisen, not because of anything which this party did, but because the party on the other side of the Committee initiated this policy. We agreed to it and it was then thought by all parties that it would work. I put it to the Committee that it is unfair if people are to be taxed on maternity benefit—not the maternity grant—the unemployment benefit, and the sickness benefit, that they should not at the same time be given an Income Tax allowance by way of deduction for the contributions they have paid. In effect, the Amendment seeks to give them the best of both worlds. It is unfair to the general body of taxpayers.

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    It is unfortunate that the original scheme was found administratively unworkable, but it is only right that at the earliest opportunity the Government, whatever its complexion, should put this matter to the House and let it decide whether it wants to alter it. We suggest to the Committee it should. As my hon. Friend the Member for Sowerby (Mr. Houghton) has pointed out, the actual burden amounts to £10 million, but that, taken as a percentage on what is raised in the shape of Income Tax, is very small indeed. Of the actual working population 2 to 3 and even more millions do not ordinarily pay tax at all. Even where it does take effect, it is 2d. a week for those who pay income tax at 3s. in the pound, 4d. for those who pay at 6s. in the pound, and for those who pay the standard rate of 9s. in the pound it means no more than 6d. a week.
    Although it is true that in the aggregate it amounts to £10 million compared with the hundreds of millions we raise from those other sources it is not the burden on the working man suggested on both sides of the Committee. It is nothing of the sort. It represents the tax on 1s. 7d. which is now if the Committee accepts this Clause, to be disallowed out of the contribution of the ordinary man of 4s. 7d. There are many many hundreds of thousands of people even now who will not be touched. It would be unfair to leave the situation as it is, and for those reasons I hope the Committee will reject the Amendment.
    Mr. Piratin: I want to take up one of two points of the Financial Secretary. He began his case by saying that he was merely carrying out the policy introduced by the right hon. Member for the Scottish Universities (Sir J. Anderson). The Financial Secretary said that the right hon. Member for the Scottish Universities had foretold that this problem was likely to come about, and therefore it might be necessary to take the step the Chancellor of the Exchequer now proposes. While it may be that is a good debating argument for the Opposition, who must stand by their friends and the right hon. Gentleman, it is really no argument for this side of the Committee. When the Financial Secretary came to argue the case from his side he had nothing to say. He still avoids the whole question and
    612
    distorted, no doubt accidentally, what I said.
    I in no way suggested that these people should have the best of both worlds. I said that the Inland Revenue were entitled to collect Income Tax from the recipients of those benefits if they qualified at Income Tax levels. I further said that the Inland Revenue were not entitled to a contribution weekly from people who may never be in receipt of those benefits. [An HON. MEMBER: "How are you going to collect it?"] We had a good hint from the hon. Gentleman the Member for Sowerby (Mr. Houghton) who referred to the possibility of taking it forward to the next year. The right hon. Gentleman and his colleagues on the Treasury Bench have plenty of very able officials at the Treasury to work the thing out. If they cannot work it out, well and good, but it is still unfair to place the burden on another section of the community who have nothing to do with the people avoiding Income Tax payments.
    The Financial Secretary then said that the total amount involved—£10,000,000—is a very minute proportion of the total of Income Tax. It is roughly 1 per cent., but the fact is that this burden is not falling on Income Tax payers as a whole but on that section who pay National Insurance contributions on a P.A.Y.E. basis. That means that, as the Fnancial Secretary has himself acknowledged and as was referred to by the right hon. Member for Saffron Walden (Mr. R. A. Butler), it will fall on working people. It is they who pay National Insurance contributions, and if the Chancellor of the Exchequer wants to cast his net wide over all Income Tax payers, let him come forward at the time of the Budget or the Finance Bill and bring in a proposal for that purpose. Then the House and the Committee could consider it. He has not done it in this case. It is a most unjust tax, and cannot be justified in any way by a Labour Ministry.
    Mr. Oliver Poole: This is the second time in our debates that the line has been taken by hon. Gentlemen opposite that any amount received by way of Income Tax only affects a small proportion of the people of this country. Though I do not often find myself in agreement with him, there is a great deal

    613
    in the argument that the hon. Member for Mile End (Mr. Piratin) has just been putting forward. On the basis that the Financial Secretary has been advancing, £10 million is being contributed by a large number of people. Some people would pay 2d. and some 6d.: my figures do not agree, for I think some might pay 9d.; but it may be reckoned that something between 4d. and 6d. will be paid.
    It means that on the average £1 a year will be paid, and that this £10 million will be contributed by 10 million people. It takes away the basis of the argument that to take 6d. off the Income Tax would benefit only a small number of the community, because here are 10 million taxpayers. The Chancellor has put a considerable burden on that section of the community which can least afford to pay. I hope these two arguments will show clearly that any incidence of Income Tax does not affect a small section of the community but affects a large section and that, therefore, we shall hear no more of this argument.
    Amendment negatived.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Lieut.-Commander Braithwaite: I re-entered the Chamber while the hon. Member for Sowerby (Mr. Houghton) was speaking, and I did not hear all that he said. If perchance I am repetitive, I apologise to the Committee. I gathered that the hon. Member was pointing out some of the accounting difficulties which arose from the proposals set forth in this Clause, particularly the large amount of unnecessary work that must be thrown, not only on accountants, but on office staffs in businesses, in apportioning the very trivial amounts which have to be set off in the books of small traders, professional men and so on. National Insurance charges will have to be more carefully segregated into their various compartments as between employees' insurance, employers' contribution which are allocated to sickness, unemployment and so forth; and, of course, there is maternity benefit.
    These proposals seem to me to be particularly unfortunate. I do not want to repeat the argument already put before the Committee, because the Financial
    614
    Secretary has emphasised it. Here there is a complete reversal of policy in every sense of the word. It is a retrograde step when one is trying to consider simplification of taxation and returns. It is, of course, also an ingenuous proposal and a cynical one. The disallowance of the proportion of the contributions relating to unemployment, sickness and maternity benefits will undoubtedly fall very largely on a class which will receive no benefit from this source.
    11.45 p.m.
    The Debate which we have had on this Clause has been of value in underlining certain aspects of Government policy. It seems that not only will a lot of the old forms have to be destroyed, but a large number of Socialist leaflets will have to be destroyed. How much longer will it be possible for hon. Members opposite to tour the country claiming that all these social services are provided free to the people of this country? We have heard, at every by-election which has been fought that this Government are providing all these blessings free. The Financial Secretary has blown that argument sky high, and I am sorry that the hon. Member for East Coventry (Mr. Crossman) was not present, because what he said this afternoon was that the return of a Tory Government would mean a slashing cut in social services.
    Now we have the Socialists' inverted method. They are going to tax the social services to the tune of £10 million, and I do not think it makes any difference to the unfortunate working man by what method it is done. The £10 million is to be taken from his pocket. We think it necessary to divide against this Clause as a protest against the extremely cynical and unbusinesslike conduct of the Government. I shall be interested to see how many Members opposite support this proposal. It will be interesting to see whether the hon. Member for Luton (Mr. Warbey) supports the imposition of a £10 million tax upon unemployment, sickness and maternity benefits. In view of all that hon. Members opposite have said and written in recent weeks and months at by-elections, there is only one course they can pursue. That is to accompany us into the Lobby and join in the protest we are making.
    Mr. Warbey: I would not have intervened but for the utter poppycock we

    615
    have heard from the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite). He seems to be completely confused about the distinction between that part of the social service benefits which are a return for insurance payments, and those which come out of national taxation. A large part of the social services is provided from Exchequer contributions which come out of general taxation. I am sorry to give the hon. and gallant Member this very simple lesson in finance, but he has really asked for it.
    The benefits which are received under the National Insurance Act are very largely paid for by the contributions made by the insured contributors and are a form of insurance which they pay out of their income. They are perfectly well aware of that. Socialists are not going about the country telling them that the benefits they receive are received entirely free. [HON. MEMBERS: "Oh."] They are as well aware of that as we are—hon. Members opposite do not seem to have discovered this yet—they have acquired a much greater degree of political alertness in the last few years than they had in the past when they could be deceived by the propaganda of hon. Members opposite. They know perfectly well when they are paying insurance contributions and receiving benefits and when they are contributing to the general taxation and receiving social services paid for out of that taxation.
    The whole question here is a simple one of whether or not one should tax that part of a person's income which goes in the form of insurance payments. That is a simple issue. I see no reason on general theoretical grounds why, if persons spend part of their income on insurance payments, that part of their income should not be subject to taxation. I think it was a little unfortunate, if I may say so, that the Chancellor of the Exchequer, in introducing this change in his Budget speech, found it necessary to express such gleeful anticipation of the benefits the Treasury would receive out of the change. It was one of those psychological blunders which the Chancellor made in some parts of his speech; but it still does not alter the essential principle which we have to decide this
    616
    evening, and which is quite a simple one—whether or not tax should be paid on that part of income which goes into insurance.
    Sir W. Darling: I want to say very briefly that it is no new thing to those who have worked for the building-up of a National Insurance system to hear of administrative problems and difficulties in connection with the National Insurance Act. I was one of the two hon. Members of the House who desired to vote against the Act but could not do so on account of the Rules of the House. I am bound to recall the warnings I voiced about the unavoidable confusion and muddle which this ill-conceived and hastily-designed plan brought about, and it does not surprise me to learn that the Government find it necessary to make this painful alteration.
    What I should like to know is how it is that the ordinary person who pays an insurance premium to an ordinary life insurance company gets a rebate on such insurance premiums up to one-sixth of income and I think 8 per cent. of the sum assured, while the working classes paying these insurance premiums are not entitled to a similar rebate? I think that surely calls for some kind of explanation. when the argument is put forward that this does not constitute an imposition of £10 million on the lowest-paid wage earners.
    I am impressed by the argument of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) that the Government have never properly acknowledged what they owe to the thousands of unpaid people engaged in elaborate calculations every week and month in the form of P.A.Y.E. This is a further imposition, this pasting of sheets of paper on these ridiculous books. The Government have no idea of the intricate worry and annoyance that these unpaid tax collectors have got to undergo. The Inland Revenue should be thankful for its highly paid and long-established administrative service, yet it really depends on thousands of unpaid tax collectors.
    Mr. W. R. Williams: Would the hon. Member say which Government introduced P.A.Y.E.?
    Sir W. Darling: I am concerned with this Clause which is put forward by the

    617
    Government on very indifferent and specious grounds. I am glad of the hon. Member's intervention because I can give him information. It is this Government I am engaged in criticising and which he is supporting. They are operating a system of P.A.Y.E. which is administratively inconvenient. They are defrauding the working class of this country of £10 million. An hour ago I made a plea for the Surtax payers, because I thought that they were a small minority being treated unjustly. Now we have £10 million being pillaged and taken from people who are encouraged to believe that National Insurance is the be-all and end-all. I hope that the Government will withdraw this proposal, because I shall speak against it again and again. This scheme, conceived in misrepresentation and propaganda, is proving to be what in fact it is, a scheme for taking money out of the pockets of the people without giving them any commensurate advantage.
    Mr. Turton: We spent a good many hours last night and this morning listening to proposals to obtain £6 million from those who gamble on the football pools. I hope hon. Members opposite will not begrudge time spent in attempting to defeat a proposal to take £10 million from the pockets of the working class people of this country.
    Mr. John R. Thomas: Why the working class only?
    Mr. Turton: Because it is the employed contributor who is paying and not the employer. The people I wish to talk about particularly are the agricultural workers of this country. Under the suggested new Clause, a great many are being brought into the Income Tax limit who were not paying Income Tax before. It is extremely unfair that when costs are going up, as they are at the present time, and this Finance Bill adds to the costs of the lower-paid worker, they should have to pay Income Tax for no very good reason.
    The argument of the right hon. Gentleman is that it is administratively convenient. Let us look at it from the point of view of the agricultural worker. Under the old National Insurance scheme he paid a very low contribution to insure against unemployment. That has been put very much higher under the present
    618
    National Insurance system. Why should he pay Income Tax on his contribution against unemployment? The justification given by the right hon. Gentleman is that if he became unemployed, we would not be able to collect the tax on the unemployment benefit. I should hope that no self-respecting Government would think of collecting tax from an unemployed agricultural worker.
    Mr. Fernyhough: Has the hon. Member ever heard of the means test?
    Mr. Turton: This is a new means test put up by the Financial Secretary, and I should be very surprised to see the hon. Member for Jarrow (Mr. Fernyhough) going into the Lobby in support of this new means test. Surely it is a most deceptive argument to put before the Committee, that merely because, in misfortune, the right hon. Gentleman and his tax officials are not qualified to collect tax, he should collect an extra £10 million from the working population of this country.
    Mr. Eccles: I support what has been said by my hon. Friend the Member for Thirsk and Malton (Mr. Turton). As a result of this Clause, one of my men has to pay 1d. a week and another 2d. a week. Neither of them was in the Income Tax range before. It is a great bother to them and it is a great bother to me having to collect the 3d. each week and hand it to the tax collector. But that is not the point with which I wish to deal. I shall vote against this Clause for a rather different reason.
    12 m.
    It no doubt would be right, sooner or later, to tidy up this matter of Income Tax on contributions and benefits, but is it right to do it at this moment? Here is the Chancellor, as the hon. Member for Luton (Mr. Warbey) properly said, gleefully telling us that he is going to get £10 million more. I agree that that was the way the right hon. and learned Gentleman spoke. It only proves how short of revenue he is. We are trying to keep incomes steady. There is a campaign which we all support to prevent further rises in industrial costs. The Government ought to take the greatest care at this time to do nothing which will in any way encourage demands for further

    619
    rises in income. What is £10 million against the total of Government expenditure? All hon. Gentlemen opposite know that if their Government knew how to housekeep, and how to manage its own affairs, it could easily save £10 million. This is the sort of tax the Committee ought to vote against, because at this critical time we should be economising and not putting on new taxes.
    Viscount Hinchingbrooke: We have heard it said that this proposal of the Chancellor's is cynical because it suddenly mulcts working people of £10 million. We have heard it described as cynical because it puts new burdens on clerks and accountants of private firms. I maintain that it is cynical on a third ground—the disposition of the Chancellor to act without reference to the House of Commons. This is not the kind of proposal which needs to be introduced immediately after the Budget, like a duty on beer or tobacco. It is a proposal attached to National Insurance, and could have been introduced at some date later in the Summer, after the House had had an opportunity to debate the merits of the scheme. But the Chancellor and the Treasury, in the characteristic way they act, have said "House of Commons opinion on this is not to be considered; it is to be put into force." The forms are printed automatically, and only when the whole thing has gone through de facto are we consulted de jure. I call that particularly cynical of the right hon. and learned Gentleman, and characteristic of the general arrogance with which he and the Treasury act.
    Mr. Hollis: I think it is cynical on a fourth ground. The Financial Secretary thought that we were criticising simply because the sum was £10 million. We are not justified in sneering at £10 million, but that was not the point in our minds. My point is similar to that of the hon. Member for Luton (Mr. Warbey)—whether it is right to tax that portion of income which goes in insurance payments. But what the hon. Member should have said was, that portion of income which goes in compulsory insurance payments. Money taken away from people without any choice on their part is not income, and therefore tax is being charged on what is not part of their income at all. When they receive
    620
    benefit, that is part of their income, and there is nothing ethically wrong in charging tax on that; but if we tax compulsory insurance payments, we are taxing as income something which is not income.
    Mr. Glenvil Hall: I should like to appeal to the Committee to get this matter in perspective. Right hon. and hon. Gentlemen opposite have said over and over again that they are against this change because it would be a burden on the working man. The reverse is very largely the case. Every year 50 million payments are being made to something like seven million people. The amount involved runs into millions of pounds. I think it is reasonable to say that the benefit of that money is going into working-class homes which, thanks to this Government, do not pay any Income Tax at all. Therefore, when the hon. and gallant Member for Holderness (Commander Braithwaite) said that this change will nullify some imaginary statements which Socialist speakers are supposed to make to the effect that these benefits are free, it should be noted that, by this change, the benefits will for a very large number of people now be free because the people will be getting the benefits now without having to pay Income Tax as the present law says they should pay. In view of the way in which the hearts of hon. Gentlemen opposite are bleeding for the working man, I think it fair to put this into perspective.
    The hon. Member for Thirsk and Malton (Mr. Turton) said that this meant that the agricultural worker would now have to pay Income Tax where previously he did not. I should like to hear of these cases. It means Income Tax only on £3. If the addition of Income Tax on £3 of their income is going to make all that difference to an agricultural worker, I should like to meet that agricultural worker. Perhaps the hon. Gentleman will introduce me to him, or anyhow send me his address.
    Mr. Turton: I will certainly do so if the hon. Gentleman will come to my constituency. The agricultural labourer now has to pay, through him, more for his meat and more for his butter and more for the other things he needs.
    Mr. Glenvil Hall: The original arrangement, with which no one on the

    621
    opposite side quarrelled, was that if allowances were made for contributions, Income Tax should be paid on the benefits they receive. I have quoted figures to show that administratively this has now become so vast a thing that it has become impossible to collect the Income Tax that would fall on those benefits which go into all these homes, and it would help to defeat what we all desire to see accomplished.
    At Question time I am often asked about the efforts of the Inland Revenue to collect arrears of tax from individuals. Here it would mean that large numbers of people would be assessed in arrear for benefits which they had received 12 months before and probably forgotten about. Otherwise, it would mean changing the codes. I hope the hon. Gentleman follows me. If we do not collect this in arrear, it means a constant change in coding and the employment of a large number of people to follow these changes. Assessment has to be made in arrear. We all dislike it, most of all the man who has received the payment, about which he has often forgotten. Therefore it seems to us that, from the commonsense point of view, what my right hon. and learned Friend suggests is the correct course for us to follow, and that it will cause no hardship to anyone. The people who will pay the £10 million will in most cases be those people—
    Viscount Hinchingbrooke: The right hon. Gentleman does not like giving it, however.
    Mr. Glenvil Hall: I am afraid I do not understand the noble Lord.
    Lord Hinchingbrooke: The point is that the right hon. Gentleman maintains that the people do not mind this £10 million imposition, but when we ask the Exchequer to give up the £10 million the right hon. Gentleman complains very much indeed.
    Mr. Glenvil Hall: I am afraid I do not see the relevance of that interjection. I am dealing with a specific point and, if I may say so, I think it is a good one. I think that collectively both sides of the Committee want to find a solution to this problem, because none of us knows how this may mount up in the years to come.
    622
    The law, as it stands at present, says that these payments have to be tracked down and assessed and Income Tax charged upon them. That is a difficult thing to do. We ought not to leave the situation as it is. We ought to clear it up. If we were to follow it up in the way suggested, and to which the party opposite agreed, it would mean vast expenditure of time and manpower. We suggest that we should follow the course proposed by the Chancellor of the Exchequer, and do what is suggested in this Clause.
    May I make one final observation before I sit down We have all been reading the Report on Population. I should like to say that this change should help to increase the population of this country, because now, although some individuals who are in the Income Tax-paying class will no longer get a deduction on their contributions amounting, as I say, at most to £3, if they draw maternity benefit, it will be free, and this will be an incentive to them.
    Mr. R. A. Butler: The right hon. Gentleman, in answering my original speech, was angry with me for raising this point. He attempted to make out that there was something dishonest or dishonourable in my remarks. He said that we were going against some arrangement made by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), who was then Chancellor of the Exchequer. It then turned out, by the process of reasoning which is peculiarly his own, that this proposal had been completely reversed. I fail to see why, if the proposal has been reversed. I have been dishonest in objecting to the proposal made by the present Government. We accept no responsibility for this arrangement.
    I said in my original remarks that unless we received from the right hon. Gentleman an explanation which was satisfactory, we would divide against the Clause. I want to say, briefly, that we have received no explanation. We do not understand why it is necessary to levy this extra £10 millions. The right hon. Gentleman has truly acknowledged, by the fact that £10 million extra is being levied, that this is a considerable burden upon the working and other classes of this country. What is somewhat enter-

    623
    taining at this late hour in this Debate is to see what has happened.
    The party which sits on this side of the Committee has been acknowledged by the Lord President himself, at Blackpool, as having the support of the working classes in this country. It stands for, and represents, their interests, and that infuriates hon. Members opposite; and here is a directive to the truth of what we said earlier in the Debate this afternoon—that we stand for all classes in this country and for their best interests, and that in any action we take, whether on the Finance Bill or in other matters, we are looking at the nation as a whole. We are not satisfied that with all this elaborate arrangement, which is imposing an extra £10 million, the nation is getting a fair deal. The Chancellor of the Exchequer himself said that, although theoretically this should lead to a reduction of receipts, it is going to lead to an increase of £10 million. If something theoretical is supposed to represent a re-
    duction, and suddenly one finds that £10 million extra burden has been put on the taxpayers, I say that is downright dishonesty. We cannot stand for that sort of thing.
    12.15 a.m.
    Finally, we come to the concluding argument of the right hon. Gentleman in his quite astonishing suggestion that, because there is a rearrangement between maternity benefit being taxed and £10 million being put on in another way, there will be an increase in the population. All I can say to that suggestion is that it is on a level with the other arguments which he has used throughout this Debate, and I do not think the Commission on Population would agree with him. I must, therefore, say without hesitation that we shall have to vote against this Clause.
    Question put, "That the Clause stand part of the Bill."
    The Committee divided: Ayes, 178, Noes, 86.

    Division No. 175.]

    AYES

    [12.17 a.m.

    Acland, Sir Richard

    Fernyhough, E.

    Lyne, A. W.

    Adams, Richard (Balham)

    Field, Capt. W. J.

    McAllister, G.

    Albu, A. H.

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

    McGhee, H. G.

    Allen, A. C. (Bosworth)

    Foot, M. M.

    Mack, J. D.

    Attewell, H. C.

    Freeman, J. (Watford)

    Mackay, R. W. G. (Hull, N. W.)

    Austin, H. Lewis

    Ganley, Mrs. C. S.

    McLeavy, F.

    Awbery, S. S.

    Gibson, C. W.

    MacPherson, Malcolm (Stirling)

    Bacon, Miss A.

    Greenwood, A. W. J. (Heywood)

    Mallalieu, E. L. (Brigg)

    Baird, J.

    Griffiths, W. D. (Moss Side)

    Mallalieu, J. P. W. (Huddersfield)

    Barton C.

    Guy, W. H.

    Mann, Mrs. J.

    Bechervaise, A. E.

    Hale, Leslie

    Mellish, R. J.

    Berry, H.

    Hall, Rt. Hon. Glenvil

    Middleton, Mrs. L.

    Beswick, F.

    Hamilton, Lieut.-Col. R.

    Mikardo, Ian

    Bing, G. H. C.

    Hannan, W. (Maryhill)

    Mitchison, G. R.

    Binns, J.

    Hardman, D. R.

    Monslow, W.

    Braddock, T. (Mitcham)

    Henderson, Joseph (Ardwick)

    Morris, Lt.-Col. H. (Sheffield, C.)

    Broughton, Dr. A. D. D.

    Hobson, C. R.

    Morris, P. (Swansea, W.)

    Bruce, Maj. D. W. T.

    Holman, P.

    Nally, W.

    Butler, H. W. (Hackney, S.)

    Holmes, H. E. (Hemsworth)

    Neal, H. (Claycross)

    Callaghan, James

    Horabin, T. L.

    Oldfield, W. H.

    Chamberlain, R. A.

    Houghton, A. L. N. D. (Sowerby)

    Orbach, M.

    Chetwynd, G. R.

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

    Paget, R. T.

    Collindridge, F.

    Hughes, Hector (Aberdeen, N.)

    Paling, Will T. (Dewsbury)

    Collins, V. J.

    Hynd, J. B. (Attercliffe)

    Palmer, A. M. F.

    Corbet, Mrs. F. K. (Camb'well, N. W.)

    Irving, W. J. (Tottenham, N.)

    Pargiter, G. A.

    Cove, W. G.

    Janner, B.

    Parker, J.

    Crawley, A.

    Jay, D. P. T.

    Parkin, B. T.

    Crossman, R. H. S.

    Jeger, G. (Winchester)

    Paton, J. (Norwich)

    Dalton, Rt. Hon H.

    Jeger, Dr. S. W. (St. Pancras, S. E.)

    Pearson, A.

    Davies, Edward (Burslem)

    Jenkins, R. H.

    Peart, T. F.

    Davies, Ernest (Enfield)

    Jones, Elwyn (Plaistow)

    Proctor, W. T.

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

    Jones, P. Asterley (Hilchin)

    Randall, H. E.

    Davies, S. O. (Merthyr)

    Keenan, W.

    Ranger, J.

    Deer, G.

    Kenyon, C.

    Rankin, J.

    Delargy, H. J.

    King, E. M.

    Reid, T. (Swindon)

    Dodds, N. N.

    Kinley, J.

    Rhodes, H.

    Donovan, T.

    Lang, G.

    Roberts, Goronwy (Caernarvonshire)

    Driberg, T. E. N.

    Lee, F. (Hulme)

    Robertson, J. J. (Berwick)

    Dugdale, J. (W. Bromwich)

    Levy, B. W.

    Robinson, Kenneth (St. Pancras, N.)

    Dumpleton, C. W.

    Lewis, A. W. J. (Upton)

    Ross, William (Kilmarnock)

    Edwards, W. J. (Whitechapel)

    Lewis, J. (Bolton)

    Royle, C.

    Evans, Albert (Islington, W.)

    Lindgren, G. S.

    Segal, Dr. S.

    Evans, S. N. (Wednesbury)

    Logan, D. G.

    Sharp, Granville

    Fairhurst, F.

    Longden, F.

    Shawcross, C. N. (Widnes)

    Shawcross, Rt. Hn. Sir H. (St. Helens)

    Sylvester, G. O.

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

    Shurmer, P.

    Symonds, A. L.

    Whiteley, Rt. Hon. W.

    Silverman, J. (Erdington)

    Taylor, R. J. (Morpeth)

    Wilcock, Group-Capt. C. A. B.

    Silverman, S. S. (Nelson)

    Thomas, D. E. (Aberdare)

    Wilkes, L.

    Simmons, C. J.

    Thomas, George (Cardiff)

    Wilkins, W. A.

    Skeffington, A. M.

    Thomas, I. O. (Wrekin)

    Willey, F. T. (Sunderland)

    Skinnard, F. W.

    Thomas, John R. (Dover)

    Willey, O. G. (Cleveland)

    Smith, C. (Colchester)

    Tolley, L.

    Williams, J. L. (Kelvingrove)

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

    Tomlinson, Rt. Hon. G.

    Williams, Ronald (Wigan)

    Snow, J. W.

    Ungoed-Thomas, L.

    Williams, W. T. (Hammersmith, S.)

    Sorensen, R. W.

    Wallace, G. D. (Chislehurst)

    Williams, W. R. (Heston)

    Soskice, Rt. Hon. Sir Frank

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

    Wilson, Rt. Hon. J. H.

    Steele, T.

    Warbey, W. N.

    Wyatt, W.

    Stross, Dr. B.

    Webb, M. (Bradford, C.)

    Younger, Hon. Kenneth

    Stubbs, A. E.

    Wells, P. L. (Faversham)

    Swingler, S.

    Wheatley, Rt. Hon. John (Edin'gh, E.)

    TELLERS FOR THE AYES:

    Mr. Popplewell and Mr. Bowden.

    NOES

    Agnew, Cmdr. P. G.

    Foster, J. G. (Northwich)

    Peake, Rt. Hon. O.

    Amory, D. Heathcoat

    Fraser, H. C. P. (Stone)

    Poole, O. B. S. (Oswestry)

    Assheton, Rt. Hon. R.

    Galbraith, Cmdr. T. D. (Pollok)

    Prescott, Stanley

    Astor, Hon. M.

    Galbraith, T. G. D. (Hillhead)

    Raikes, H. V.

    Baldwin, A. E.

    Gomme-Duncan, Col. A.

    Roberts, Emrys (Merioneth)

    Birch, Nigel

    Gridley, Sir A.

    Ropner, Col. L.

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

    Grimston, R. V.

    Ross, Sir R. D. (Londonderry)

    Bowen, R.

    Hare, Hon. J. H. (Woodbridge)

    Spearman, A. C. M.

    Boyd-Carpenter, J. A.

    Harris, F. W. (Croydon, N.)

    Stanley, Rt. Hon O.

    Braithwaite, Lt.-Comdr. J. G.

    Hinchingbrooke, Viscount

    Stoddart-Scott, Col. M.

    Bromley-Davenport, Lt-Col. W.

    Hollis, M. C.

    Strauss, Henry (English Universities)

    Buchan-Hepburn, P. G. T.

    Hope, Lord J.

    Stuart, Rt. Hon J. (Moray)

    Bullock, Capt. M.

    Howard, Hon. A.

    Taylor, C. S. (Eastbourne)

    Butcher, H. W.

    Hulbert, Wing-Cdr. N. J.

    Teeling, William

    Butler, Rt Hn. R. A. (S'flr'n W'ld'n)

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

    Thomas, Ivor (Keighley)

    Channon, H.

    Keeling, E. H.

    Thomas, J. P. L. (Hereford)

    Clarke, Col. R. S.

    Lancaster, Col. C. G.

    Thorneycroft, G. E. P. (Monmouth)

    Conant, Maj. R. J. E.

    Legge-Bourke, Maj. E. A. H.

    Turton, R. H.

    Corbett, Lieut.-Col. U. (Ludlow)

    Lloyd, Selwyn (Wirral)

    Wakefield, Sir W. W.

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

    Low, A. R. W.

    Walker-Smith, D.

    Crowder, Capt, John E.

    Lucas-Tooth, Sir H.

    Ward, Hon. G. R.

    Darling, Sir W. Y.

    Mackeson, Brig. H. R.

    Webbe, Sir H. (Abbey)

    Davidson, Viscountess

    Macmillan, Rt. Hon. Harold (Bromley)

    Williams, Gerald (Tonbridge)

    De la Bère, R.

    Manningham-Buller, R. E.

    Willoughby de Eresby, Lord

    Dodds-Parker, A. D.

    Marshall, S. H. (Sutton)

    York, C.

    Dower, Col. A. V. G. (Penrith)

    Mellor, Sir J.

    Young, Sir A. S. L. (Partick)

    Drewe, C.

    Neven-Spence, Sir B.

    Dugdale, Maj. Sir T. (Richmond)

    Nicholson, G.

    TELLERS FOR THE NOES:

    Eccles, D. M.

    Nutting, Anthony

    Colonel Wheatley and

    Fletcher, W. (Bury)

    Odey, G. W.

    Mr. Simon Wingfield Digby.

    Question put, and agreed to.

    Clause 21.—(BORROWINGS AGAINST LIFE POLICIES TO BE TREATED AS INCOME IN CERTAIN CASES.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. John Foster: I do not think this is a Clause which will increase the population of Great Britain. It is a Clause which is very strange in its effects. It has been introduced to undo the success of the hon. and learned Member for East Leicester (Mr. Donovan) who won a signal victory in another place in the judicial sense, against, I believe, the Solicitor-General. I acquit the right hon. and learned Gentleman immediately of running round to the Chancellor of the Exchequer and "doing down" the hon. Member for East Leicester by ensuring that he won in the last
    626
    court of appeal, namely, the House of Commons. But joking apart, annuities as we know them under the present law, and that is where the trouble is, are taxed for Income Tax purposes both as to the return on capital and the interest. If I pay £1,000 to an insurance company for an annuity I get back what is in fact my capital and interest. If I live exactly the right time, to the period of my expectation of life, actuarially I get back my £1,000 and interest on it. But the law of the land is such, and I have always disagreed with it, that the revenue authorities levy tax on both the return on capital and the interest.
    The Wesleyan and General Assurance Company devised a scheme by which the return on capital was not taxed, and the interest was quite properly taxed. That scheme put quite shortly was this. The Wesleyan contract say for £1,000,

    627
    on an expectation of life of say 10 years, would be this. They divide the £1,000 by the number of months between now and 10 years hence. That is 120 months, giving roughly £8 10s. a month. They say I can borrow £8 10s. a month against the £1,000 I was going to get if I died on the right date. That is the equivalent of an annuity. If I live longer than the 10 years, then for every month I live they state that the £1,000 was increased by £8 10s., and I could also borrow £8 10s. a month against it. I would thus get a fixed annual sum plus the interest for as long as I lived.
    The Wesleyan contract was a product of the evils of taxing the return on capital in an annuity. We may have some argument by the Solicitor-General that it was in the years of Tory misrule that this bad principle was brought in, but I hope that he will spare us that argument. I should like him to say whether he thinks it is right in principle, that an annuity should be taxed on that portion which is a return on capital. That is the first question of principle he should deal with. If he says he thinks that it is right I am sure that my hon. Friends will take it up with him. Let us assume he thinks that it is wrong and it is an evil to tax the return on capital. In Canada a distinction is made between interest as interest, and interest on return of capital. Although one might say it is perhaps a wrong distinction to be able to put into one contract wording so that one pays tax, and into another contract wording under which one does not pay tax, that is unfortunately all too familiar under our law.
    12.30 a.m.
    I could quite understand a Clause which would sweep away the Wesleyan contract provided the evil was cured. That is what the Government ought to have done. They should not have reversed the decision of the House of Lords, which found that the Wesleyan contract was on the right principles, that where it was a return on capital it was liable to tax and where it was providing for interest, it was not. They should rather have cured the evil of the taxation on capital annuities to which I have alluded. I am also anticipating another argument. I expect it to be said
    628
    that this will cause a loss of revenue. I do not think that argument will hold because at the present moment a man who goes in for a Wesleyan contract will find it no longer profitable for him to do so. He will not rush in for profits which are taxed as return on capital. He will abstain from making any capital at all. That abstention will not cause any loss of revenue.
    There is a small and unjust gain to the Revenue in this Clause, namely that it is retrospective in the sense that anybody who entered into the contract, relying on the decision by the House of Lords, will find he does not get the advantage of this decision. A man is entitled to rely on the law of the land as it is, but his position will be that, having entered into the contract, he now finds that, it may be a very high rate of taxation, proportionate to this income, will attach to him. If he has put all his capital into the Wesleyan contract he will find he has made his capital subject to tax and 50 per cent. has gone to the Government in taxation and, in fact, he will have lost 50 per cent. of his capital. Surely, the Solicitor-General does not think that it is just that a man who entered into a contract should find his capital turned into income contrary to the established law of the land, at the time when he entered into the contract and that half of it has gone to the taxpayer. I would like the Solicitor-General to enlighten us and to tell us the reason, apart from pique, that has made the Inland Revenue put this Clause forward. What will be the loss?
    Mr. Donovan: The incidence of tax on life annuities has long been recognised to contain a strong element of hardship. Money is saved out of taxed income; a life annuity is bought with the savings; when the annuity comes in, it is taxed in full although the bulk of it represents taxed savings coming back in the form of capital.
    Any attempt to remedy this is not immoral nor is it anti-social. Parliament itself in the Income Tax Act of 1918 proclaims that double taxation as there defined is something to be avoided wherever possible. And on many occasions recently this House on the Motion of the Government (quite rightly if I may say so) has approved convention after convention with foreign

    629
    countries for avoiding that result. The effect of this Clause, however, is to maintain that hardship so far as life annuities are concerned. I should like to say, and so would every responsible Member of this House, that if without this Clause a serious or unacceptable loss of revenue will occur the Clause must be accepted. But those who have life annuities now cannot cancel their contracts and insist on having a new one; and those who do not have life annuities now and refrain because of this double taxation disadvantage will go on refraining. In these circumstances I cannot see, any more than could the hon. Member for Northwich (Mr. J. Foster) where the loss of revenue will occur.
    It may be said that a person who took out a policy with the Wesleyan and General Insurance Company is in just the same position as if he had taken a life annuity for the amount of his loan plus interest. That is an appeal to the substance of the matter and an appeal to what one might call the broad merits of the situation. But the broad merits of the situation are that what a life annuitant is given back is capital plus interest. That is the substance of the matter, and when one finds that a company has evolved a method of distinguishing between the capital and interest content of an annuity quite fairly as between the Revenue and the taxpayer it is a little difficult to see why a decision in his favour that part of what he got was truly capital should not be reversed.
    Mr. O. Poole: I hope that when the Solicitor-General replies he will concern himself more with the two major points put forward by my hon. Friend the Member for Northwich (Mr. J. Foster) and the hon. and learned Member for East Leicester (Mr. Donovan) as to the main question of taxation of annuities, rather than the case of the Wesleyan Insurance Company. With all due respect to the hon. and learned Member for East Leicester, I am bound to say that as far as that case is concerned, I am in complete agreement with the Government in this Clause. I do not think it can be argued that anyone took out a policy of that sort without the intention of escaping an element of taxation of an annuity and, that being the case, it would not be right to allow that sort of case to continue.
    630
    I feel very strongly that the matter of taxation of annuities should be looked into and I suggest that the matter is not quite so simple as has been suggested by my hon. Friend and the hon. and learned Member. When one takes out an annuity the basis of the contract is not that the capital is returned to one but that one exchanges capital for income over an unlimited period of years. When it is a determinable period, a fixed period of years, the capital element is not taxed and it would be quite wrong for the Committee to feel that the issue is as simple as that. As my hon. Friend said, that difficulty has been overcome in Canada. I am not sufficiently conversant with the taxation situation there to know whether it would perhaps be applicable here.
    I should like the Solicitor-General to concern himself with the fact that, because of the present incidence of taxation of annuities, many people are deterred from taking them out and, therefore, this class of business, which is entirely desirable in many cases, is not being continued. I hope the right hon. and learned Gentleman will say that the Government will look into the matter, bearing in mind that it is not in any way a simple problem. I hope that no one on either side of the Committee will, on a matter of principle, oppose this Clause which deals with the particular case of the Wesleyan Insurance Company.
    The Solicitor-General: As the hon. Member for Oswestry (Mr. O. Poole) said, at any rate by implication, the position must be accepted that so long as the law of the country is that life annuities must be taxed, there can be no justification for a contract in the form of the Wesleyan Insurance Company contract to escape that taxation. I am asked by hon. Members to say what I think about taxation of the so-called capital element in annuities. The hon. Member for Oswestry put his finger on the point. There are two schools of thought on the matter. One has been adopted in the past very widely outside this country. Canada has been mentioned as the country which takes the opposite view, but the Republic of Ireland and South Africa take the same view as we do and recently confirmed that view.
    We take the view that when one has, say, £500 of capital and decides to take a

    631
    life annuity, one gets rid of the £500 and buys for it a source of income. It is a source of income which in the aggregate may amount to more than £500, or it may be less. You may live long enough to get £1,000 back for £500 originally spent or you may die so soon that you have received only £25. But you have taken £500 and spent it and you have got something in return which is entirely different. That is the view we take in this country.
    To test that view outside, that if you tax life annuities you are taxing the capital element, let us take the case of a person who lives very long and for his £500 he received payments annually which total £1,000 whereas the capital element you are taxing is in respect of the excess over the £500 which the annuitant originally spent. We think the two things are entirely different. You are spending a capital sum and buying something which may be more or less valuable to you. It is your own choice: instead of having a capital sum you can have an income. The law of the country is that that income is income which is taxable under Case III of Schedule D as to its whole incidence. That has always been the case in this country and there is no reason that we see to change that principle.
    Assuming that is so, if one looks to this contract in the Wesleyan case, we see it provided for the individual in question to spend £500. For that sum he got in all £64 per annum for his life. Of that £64 per annum, £7 was described as life annuity and as a matter of fact that sum is calculated actuarially to represent what was said to be the interest element in the life annuity. In addition to that, the contract gave him this right—to receive every month so long as he lived £4 14s. 8d. and it also gave him the right to borrow if he wished free of interest any part of the whole of that life assurance money, month by month from the start right up to the time of his death, and he did not have to repay the borrowing except out of the money he would get upon death.
    It stands to reason that the effect of that transaction is that the individual in question got £7 a year and also received £4 14s. 8d. per month so long as he lived and that totalled a payment of £64 a year. The net result of this transaction
    632
    was that he got £64 so that he did not have to pay back in cash any sum which was set off against what was due at his death. In another place when my hon. and learned Friend the Member for East Leicester (Mr. Donovan) and I argued it before their Lordships, they took the view that the legal form of that contract was that, as to the £4 14s. 8d. a month, it was in law a loan and in consequence it was not taxable. Except for that it had exactly the same effect in every conceivable possible way as if the individual in question had bought a life annuity of £64.
    12.45 a.m.
    That was the view we took or at any rate, the result was very close to what would have happened. The real substance of the matter, and the justice of the matter, was that the individual should be taxed as if he had received a life annuity. If we had not introduced this Clause everyone who wanted to get the equivalent of a life annuity free of tax in regard to a major portion of it would have entered into this sort of contract. The result would have been a loss to the Exchequer which in course of time would have become serious; we estimated it at £3 million.
    I therefore come back to what I said at the outset that so long as annuities are taxable from the point of view which I have indicated to the Committee we think there can be no justification for excepting a contract in the form of this contract which so closely approximates in its result to a life annuity. I said it was the same but I think I must correct myself by saying there was some difference in result, which we thought was entirely immaterial.
    What we have done, in point of fact, is to include in the Clause a provision which would prevent what we might describe as—I do not mean in any depreciatory sense—a genuine loan case from being affected by this Clause. We do that by subsection (3) where we say that if the Commissioners of Inland Revenue are satisfied that it is not the object of the payments to get an advantage equal to an annuity, they can except it from the scope of this Clause, and that is why we think it right to include this Clause.
    With regard to its being retrospective, it is, in a very minor sense. It affects

    633
    payments received after the time when the Act comes into force. That was intimated quite early by a Parliamentary Question asked on 24th June, 1948. The question of legislation as a result of the decision of the House of Lords was under consideration, and the decision of the House of Lords was given in March, 1948, some two or three months before that Parliamentary Question was asked. In point of fact, very few contracts indeed were affected.
    The reason why the Clause is there, is that this way of getting what is the equivalent of an annuity without paying tax, except on a small proportion, would have provided a loophole which would have been greatly extended if this Clause had not been introduced. With regard to persons who already have life annuities, they are already taxed as such. If a person has a terminable annuity at a certain date that is treated as what it is, a redemption of capital, and the person is taxed only on the interest.
    Mr. Hale: I do not think my right hon. and learned Friend has covered the important point raised by the hon. Member for Oswestry (Mr. O. Poole) which is a very serious and practical difficulty. It is the problem of the very small estate which is not sufficient to bring in an income to maintain a widow. As I understand the position at the moment, if a widow of 70 had £5,000 available and if she invests the whole of that in a life annuity—I am not defending the Wesleyan and General business—designed to cover her for life, which is after all the period which has to be covered, then she does not get any protection. But if an attempt is made to budget for the length of life she will live, and a maximum period is put, say of 30 years, there is tax protection. That seems to me to be an important point, and I would ask the learned Solicitor-General to consider that between now and the Report stage, because it is a very real hardship.
    Mr. Boyd-Carpenter: I do not want to join issue with the Solicitor-General on his general repetition of the argument which 15 months ago failed to persuade four of the greatest English judges, but I do want to press him on the relatively narrow point of the retrospective effect of this Clause. He seemed to brush that aside,
    634
    but it is a matter that calls for further consideration. Whether he is right or wrong in saying that contracts of this sort have no justification whatever I do not propose to argue. What I put to him is this. On 19th March, 1948, the highest legal tribunal found that the payment made in this form of contract did not attract tax. It was surely justifiable, therefore, in those circumstances, after that decision, for persons to make these contracts in the expectation that tax would not be attracted. Unless the decisions of the highest legal tribunal are treated in that way it is going to be impossible to carry on business at all. It does seem to be wrong now, 15 months later, to come forward with a provision which affects contracts made before this Finance Bill but since that decision of the House of Lords.
    The Solicitor-General referred to a Parliamentary Question last June. The answer to that question gave no indication whatever that the legislation then being considered would apply to contracts made before it was introduced. There was no warning whatever of that retrospective effect given in the answer, according to my recollection. I would ask him, therefore, to reconsider the position of those people who were perfectly entitled to make their calculations on the basis that payments under these contracts were tax free, and made that calculation in the light of the decision of the highest legal tribunal in the country.
    I understand that the number of people affected is limited. If that be so, the traditional Treasury argument of loss of revenue does not arise. Whether the number is large or small does not seem to me to matter very much. It seems to me to be a matter of principle. The Government are free to prohibit future contracts of this sort, but it seems wholly wrong for them—because they were defeated in legal argument 15 months ago—to say now that those who took advantage of that decision are to find that the firm legal basis on which they properly acted has been destroyed, reasonable calculations made by them vitiated, and tax levied retrospectively.
    Sir W. Wakefield: I want to add my protest on this matter of retrospective legislation. I do not see how business contracts or arrangements can be carried on if one, two, three or five years later

    635
    these contracts are to be made null and void. When a contract or business arrangement is made, it is entered into according to the law at the time. It is going to be utterly impossible to make contracts if you have to consider what the law might be three or five years ahead. I earnestly hope that the Government will omit the retrospective part of this Clause, and in future, as a matter of principle, stop making retrospective legislation.
    Mr. H. Fraser: I hope the right hon. and learned Gentleman will give us some indication of the number of annuitants who will be affected by this retrospective legislation. I am rather surprised, even mortified, by the attitude of my hon. Friend the Member for Oswestry (Mr. O. Poole). It seems unduly hard. This principle of retrospective legislation is condemned by the Charter and Declaration of Human Rights. I hope this matter will be looked into very carefully, to see whether there can be some administrative action to ensure that these unfortunate people have their losses made up to them. I think it is important that the whole question of annuities should be reviewed seriously by the Government. There is no question that Members on all sides of the House would like to see a much wider application of the possibilities which accrue to people in foreign countries where the law is more equitable to various classes of society.
    As usual, the Solicitor-General was lucidity personified, but he has put forward a case which I confess I had difficulty in following. This afternoon we saw the Government take the most absurd, anachronistic and old-fashioned view of mining development. They are taking the same attitude towards the necessity of increasing the savings of the people. A wider policy of permitting annuities would certainly help this country to build up its lamentably low rate of investment. It would be perfectly possible to overcome some of the difficulties which the Solicitor-General envisaged. If I am to pay £500 down and live for 50 years and continue to get payment in the form of capital repayment, surely it would be a comparatively easy thing to arrange that when the capital was repaid, tax would fall on further repayments. I personally have shares in a Canadian company, and this has happened under
    636
    Canadian law. When the capital is repaid, I immediately began to pay tax on any capital repaid beyond that point. Surely the Government, especially the Financial Secretary, who flatters himself on the brain power on the Front Bench opposite, can apply themselves to this comparatively simple problem, in order to see that people are not bludgeoned and bewildered by this attack when they are building up savings by a wider spread of annuity policies.
    Mr. Henry Strauss: I agree with one of the points the right hon. and learned Gentleman the Solicitor-General made. There are two different ways of regarding annuities. I agree that it is possible to take the view he gave us and to disagree with the view taken by the hon. and learned Member for East Leicester (Mr. Donovan) on what should be the general policy regarding annuities. I am bound to say, however, that there is a good deal to be said for the view of the hon. and learned Member (Mr. Donovan). Where I thought the Solicitor-General gave no justification at all for the Clause was in the matter of its retrospective action. It would be a simple matter to make a small modification of the present provision so as to prevent it applying to contracts made before the Finance Bill came into operation or made before it was introduced.
    1.0 a.m.
    The evil that can be done if contracts made by British insurance companies can have their whole effect suddenly altered is very great, not only in this country, but I should have thought abroad also in the effect on our invisible exports. It may be said that this Clause could not apply to foreigners. Nevertheless, if by the enactment of this Clause it were possible for the Government, after a decision of the House of Lords which made it clear that a particular form of contract had a particular effect, to say that by their action the law shall be deemed to be something quite different from what it was before the new legislation was introduced, that could have very evil effects indeed. I beg the Government to look into the matter again and, if they cannot go so far as some hon. Members have pleaded, at least to avoid this retrospective action.
    The Solicitor-General: There is not a great deal which I can add to what I said before regarding the general issue. I tried then to put the conflicting points of view, but I should like to say a little more upon a question which is concerning hon. Members opposite very much, and that is the matter of retrospection. The fact which I did not state fully before is this. The contract about which I informed the Committee, and which was subject to a decision of the House of, Lords, was taken out by a director of the company, without doubt, I suppose, to see what the effect was. In August, 1948, the insurance company was warned that the Chancellor of the Exchequer was considering the introduction of legislation with regard to this contract. There was no contract apart from the contract taken out by the director of the company before August, 1948. Despite that warning, the insurance company, I think, took up some 20 contracts after August, 1948. The only contracts involved are, therefore, these 20. So, I think it is true to say that this is retrospective in the sense that it applies to these contracts entered into before this Act was passed.
    Mr. Stanley: The 20 contracts were taken out after the House of Lords decision?
    The Solicitor-General: Yes. The chronological order is that one contract was taken out, then there was the decision of the House of Lords in 1948; then in August, 1948, the Chancellor of the Exchequer gave the warning; then the 20 contracts were taken out after August, 1948. No other contracts are affected. The director of the company who took out the policy before August, 1948 is, in fact, dead. That is the contract which was the subject of the decision of the House of Lords. So only the 20 contracts which were taken out after the Chancellor of the Exchequer's warning to the insurance company in 1948 are affected.
    Colonel Ropner: Can the learned Solicitor-General say what form the warning took?
    The Solicitor-General: I am told that the warning was that the Chancellor of the Exchequer was considering the introduction of legislation with regard to this
    638
    contract. Exactly what were the words used I do not know, but that was the general form of the warning. I understand that it clearly indicated that if this sort of contract was persisted in, the Chancellor of the Exchequer would introduce legislation, I suppose, to reverse the effect. The payments affected are only the payments in the future. That is to say, no payment made before the Act is passed is affected. The retrospection is in respect of payments made in future for contracts taken out before.
    Mr. Donovan: My information is that there was no warning given by the Chancellor of the Exchequer that if further policies were issued legislation would follow, that there was nothing so specific as that. My information is that this company asked the Board of Inland Revenue some time after that, whether the Board would tell it precisely what its intentions were, and whether the company could, or could not, go ahead and issue these policies. I am told that the company is still waiting for an answer.
    Mr. H. Strauss: Part of what I was about to say has just been said by the hon. and learned Member for East Leicester (Mr. Donovan), but I should like to ask the Solicitor-General this. Even if the hon. and learned Member is wrong—and I do not suggest that he is wrong—as to the warning given to the insurance company, I did not gather that the Solicitor-General is himself asserting that there was any notice to the annuitants; and surely that is equally important. Even assuming, as I do not assume, that the insurance company were in any way to blame, I cannot see that that should penalise the annuitants, and even if there are only twenty of them I do not see why the Committee should say that that is a reason why they should tolerate an injustice.
    Mr. J. Foster: Is it not a fact, too, that just to announce that legislation is under consideration is no warning? The Government announce fifty times a day that they are considering things, and if one were to accept all those as warnings we should be in a sorry state. It merely means that they are in a muddle. This warning should have said that the Government were considering legislation which would undo the Wesleyan decision and that that legislation would be retro-

    639
    spective so the people who paid money now and got repayments would find it was taxed, notwithstanding the decision. In 1935 or 1936, when the then Chancellor of the Exchequer gave a warning about accumulators, he gave the warning in the form that those entering into accumulators after that date might find certain things, because the Government might take retrospective action. The Wesleyan decision would have brought to the mind of everybody in the country the erroneous principle of taxing the return of capital and annuity; but nobody thought that the Government meant that anybody entering into this annuity arrangement after this date would find that repayment of capital, which was tax free, would then be liable to tax. This is a dishonest warning.
    The Solicitor-General: I have had inquiries made, and I am informed that upon the instructions—the specific instructions—of the Chancellor, the Inland Revenue told the insurance company and made it perfectly clear beyond any doubt whatever, that legislation would be introduced to counter this device if it was persisted in. The insurance company was told that, if they issued further policies, they should inform the annuitant; and it must be agreed that that is a responsibility of the company.
    Mr. O. Poole: Remarks which I made earlier on this subject commended themselves to hon. Members, and I hope that these few remarks will, also. I agree that there is a principle involved which has serious repercussions far and away beyond this particular case. If one thinks back to the 1947 Finance Act, it will be remembered that retrospective legislation was introduced in the original Bill which had an effect on pensions schemes. Instead of affecting just a few people on that occasion, many hundreds of schemes were affected. The Chancellor of the Exchequer in fact withdrew his proposals, and they were all redrafted. If this principle is going to be accepted that insurance policies and pensions schemes which operate over a long period of time—and many people are involved—are suddenly going to be changed at what is the whim of the party in power, whatever party it is, the whole fundamental basis of British insurance is affected.
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    It is not possible for the right hon. Gentleman to say that in one particular case he gave or did not give to the insurance company some sort of warning, and, after all, there is doubt whether that has been done. The fact remains that if it is possible at all suddenly to come to this House and cancel insurance contracts that have been made, it takes away the whole of the basis of the insurance market in this country. I would urge the right hon. Gentleman seriously to consider that aspect before he considers pursuing this particular claim. I would really ask him to do that because I think it is a most serious point.
    Mr. Hale: Surely this was done before? The General Life Assurance introduced some ingenious scheme by which one covenanted to pay annuities to trustees appointed for one's children. This was essentially an insurance device to save tax, and the policies were subsequently invalidated by retrospective legislation in a similar way.
    Mr. Poole: The hon. Member is very much more versed in legal matters than I am. That was quite a different case, and that point was different from the case we are discussing. Although I cannot remember the exact details of that particular scheme, it was more akin to the arrangements by which funds could be transferred to trustees who disposed of the income. Therefore a separate estate was created. This is quite a different thing. This is an annuity arrangement and the whole basis of contract in the other case was that it was spread over a long period of years. It is a most serious matter that these contracts can be swept away and I ask the Solicitor-General to look carefully into it.
    Mr. Stanley: I apologise for intervening because I must admit I have not heard the whole of the Debate. This obviously is a question of some importance. It raises no party political matter whatsoever, and I am therefore going to make an appeal to the Solicitor-General, I am not concerned with the rights and wrongs of the decision in another place, and the decision of the Government to reverse by legislative action the authority given to that particular type of annuity by that decision. But this question of the retrospective action is an important one of principle, and we have here

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    fortunately a case where it is easy to preserve a principle without any real cost to the Exchequer whatsoever.
    We are told that there are only 20 of these annuities in existence. The loss of revenue to the Exchequer on this 20 contracts must be infinitesimal, and I do appeal to the right hon. and learned Gentleman. I know that he cannot on his own authority make any pronouncement tonight, but I appeal to him to recognise the strength of feeling there is on this principle of retrospection, to realise the very small practical effect from the point of view of the Revenue, and to assure the Committee that he will represent to the Chancellor of the Exchequer the course of this Debate. Although we cannot expect any pledge from him, I hope he will put to his right hon. and learned Friend the strength of our feeling. If it were possible for him to say that, I think probably it would be better to pass from this Clause now, and we could raise it again on Report when the Chancellor of the Exchequer is here and will have had an opportunity to think over the course of this Debate.
    1.15 a.m.
    The Solicitor-General: I am certain my right hon. and learned Friend will read and consider carefully what has been said in this Debate, and I shall convey to him the strength of the feeling manifested by hon. Members opposite. I am bound to say that when an insurance company receives an express warning and apparently deliberately disregards it, as far as the company is concerned—I do not say anything about the persons entering into the contracts—I do not think it is entitled to very much sympathy with regard to the contracts into which it has entered. I am sure the Chancellor will agree carefuly to consider what has been said in this Debate.
    Clause ordered to stand part of the Bill.

    Clause 22.—(AMENDMENT AS TO DOUBLE TAXATION RELIEF.)
    Mr. Selwyn Lloyd: I beg to move, in page 15, line 16, to leave out "not."
    I suggest for the convenience of the Committee that we might consider this Amendment with the next on the Order
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    Paper, line 17, leave out from "to," to end of line 18, and add:
    "an annual payment only in the proportion which the net United Kingdom rate (as referred to in section fifty-two of the Finance (No. 2) Act, 1945) bears to the full standard rate of tax."
    I do not know whether the last discussion seemed to certain hon. Members to be fairly complicated, but I can warn them this will be infinitely more complicated, and I think the task of attempting to understand what I am going to say will be almost insuperable. If anyone wants to leave the Chamber now is a very convenient time to do so. To have to attempt to address this Committee at this time of the morning on the subject of double taxation relief really imposes a very heavy strain on all concerned.
    Where tax has been deducted from annual payments, and there is no profits chargeable on the taxpayer who deducted the tax that tax was collected by a special assessment under Rule 21 of the Income Tax Act of 1918. That interest or annual payment was an outgoing on which tax had been collected under Rule 21 assessment, but because no profits were to be assessed no allowance could be made under the deductor's assessment. Therefore he was allowed the right to claim a Rule 21 assessment as a loss for certain purposes.
    This Clause, as I understand it, takes away the whole of that right in a case where double taxation relief has been given. I think I am correct in saying that is the purport of the Clause. That I suggest is quite inequitable in all the circumstances. I can best illustrate my point to the Committee by giving an example. If the annual payment is £10 made out of dividends subject to double taxation relief the tax is therefore £4 10s. on that amount. The payer of the annual payment deducts that tax but the payer has made no profits, therefore the Rule 21 assessment is made on the payer to collect the £4 10s. to be deducted by him. If he had been assessable on profits he would be entitled to bring that £10 payment into account. Therefore, if he does not make a profit he should be entitled to carry forward that £10 payment as a loss and so get credit for £4 10s. under the Rule 21 assessment.
    Section 19 of the Finance Act, 1928, allowed him to do that in certain cases

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    for certain purposes, and this Clause, as I have said, takes away that right for double taxation relief and affects moneys out of which the £10 has been paid. To take a case, by way of example, suppose the double taxation relief amounts to 15 per cent. of the total sum and the total rate of tax is 45 per cent. and the foreign tax is 15 per cent. Therefore, the net United Kingdom rate is 30 per cent. That would mean, therefore, on the payment of £10 the net United Kingdom rate of tax would be £3 as opposed to £4 10s. If double taxation relief is given, I concede at once that the whole of the payment of £10 should not be allowed to count as loss. That would be going too far. My submission is that two-thirds of the payment of £10 should rank as loss. That is the purpose my Amendment seeks to effect. It is logical, administratively feasible; it only covers an exceptionally small number of cases, but it is just and I ask the Solicitor-General to accept this reasonable Amendment.
    The Solicitor-General: If I may take the example given by the hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd), I think what he has failed to take into account is the concluding words of subsection (4) of Section 52 of the Finance (No. 2) Act, 1945. What happens is that the payer who pays out of the dividend on which double taxation relief has been received deducts from the £10 the £4 10s. of which he spoke. He is only treated under General Rule 21 as having paid £10 out of untaxed income to the extent of the excess of the total tax over the net United Kingdom rate. That the hon. and learned Gentleman has overlooked. What he wants to do is to enable the payer to carry forward as a loss two-thirds of the £10, and regain tax by treating it as a loss at the net United Kingdom rate. It is the net United Kingdom rate he is allowed to keep. He is only treated as having paid £10 out of untaxed income in respect of the excess, so that the only amount he has to pay over to the Revenue is the excess over the United Kingdom rate in the £4 10s.
    Suppose the standard rate is 9s. and he pays an annual payment of £1, to take a simple figure, and relief has been re-
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    ceived in respect of 3s. foreign tax. The net United Kingdom rate is 6s. He deducts from the recipient of the annual payment 9s.: he keeps, and is entitled to keep 6s., the net United Kingdom rate; he has to account to the Exchequer for 3s., that is to say, the equivalent of the foreign tax in respect of which double taxation relief has been received. The Amendment, moved by the hon. and learned Gentleman, which proposes that he shall keep the 6s., has, if I may say with all respect to him, no merits whatever to support it. He keeps the 6s. in any case. There can be no ground for saying that he should be entitled to treat the pound, so far as the 6s. tax on it is concerned, as a loss against which he can deduct further profits. He is already entitled to keep that and put it into his pocket.
    There might have been an argument in regard to the balance of 3s., but there is not a case for that either on the merits, because the Exchequer must get the 9s. There is no reason why the recipient should have the equivalent of the foreign tax. That sum must go to the Exchequer who must receive from the recipient the full tax at the standard rate of 9s. It is the fact that the annual payment is paid out of income that distinguishes this from the case for which the loss provision is required. There is no case for the Amendment and much less for it in the form in which the hon. and learned Member has put it down than might have been the case if he sought to claim that the payer of the annual payment should be entitled to relief for the 3s.
    Mr. Selwyn Lloyd: I will be quite frank and say that at this time of night I am not carrying the argument any further. Naturally one puts down an Amendment of this sort after taking highly qualified technical advice and I shall have to consult with those who advised me in regard to the Amendment as to the explanation of the right hon. and learned Gentleman. In those circumstances, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Clause ordered to stand part of the Bill.

    Clause 23.—(ABOLITION OF DUTIES.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. Stanley: I beg to move, "That the Chairman do report Progress and ask leave to sit again."
    I move this Motion in order to ask the appropriate right hon. Gentleman opposite what are the intentions of the Government in regard to our sitting tonight. With Clause 22, we have reached the end of one part of the Bill and I am sure that, although a good deal of this discussion has been highly technical, it has been dealing with matters of considerable importance and subjects related strictly to the business before the Committee. We come now to a wholly new and extremely important part, which deals with Death Duties and the increase which is proposed by this Budget and the whole consequences of the abolition of the old Legacy Duty.
    It seems to me and my hon. Friends that it would be much more convenient if a subject of that importance could be discussed not at this late hour of night, but at the beginning of another sitting. Incidentally, I might add as an extra inducement to the Economic Secretary to the Treasury, because he no doubt will be replying in his usual speech, that he would hate to deliver it at a time of night when it is unlikely that it will be reported. If the right hon. Gentleman will look at the Order Paper he will see that once we have passed Part III, we have, as far as we on this side of the Committee are concerned, very few Amendments to the rest of the Clauses in this Bill. Although I can give no pledge—I do not know what points hon. Members opposite may wish to put or, indeed, some of my hon. Friends on subsequent Clauses—but so far as I can see, there should be no difficulty once Part III is out of the way, in disposing of the remaining Clauses of the Bill in a comparatively short time and allowing us to proceed to the important matter raised in the new Clauses and the Schedules.
    It would be for the convenience of the Committee and in the national interest that a subject of the importance of that contained in Part III should be discussed not at this hour of the night, but at a time when we all come fresh to our work and when it is quite right that matters of
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    this importance can be reported in the public Press. The Chancellor will also be back then and no doubt he will be anxious to deal with the Death Duties question.
    1.30 a.m.
    Mr. Glenvil Hall: Naturally we surveyed the work that we had to accomplish over the period of four days set apart for the consideration of the Committee stage of the Bill and we had to take account not only of what is in the Bill, but the Amendments and new Clauses that had been, very properly, put on the Paper. It did appear to us reasonable that we should, by the end of the second day's labour, have reached the end of Clause 48, that is, the end of the Bill proper, leaving the Schedules and the new Clauses to be dealt with when we came freshly to the matter on the two days set aside next week. So far, the progress made has not been all that we had hoped and we have, as the right hon. Gentleman has said, only now reached Clause 22.
    It is perfectly correct, of course, to say that Part III of the Bill is an important part of the Bill and possibly when we reach Clause 29 at the end of Part III we may have broken the back of what is in the Bill. We have, however, consulted our hon. Friends on these benches and we do feel it would be unsafe and unfair to Government business; and, in the light of the statement of the right hon. Gentleman the Member for West Bristol (Mr. Stanley) that he can hold out no promise—
    Mr. Stanley: I expressly said I did not pledge myself, but on the other hand, I think the Patronage Secretary will agree that when I made a statement of that kind it had some substance behind it.
    Mr. Glenvil Hall: What I was going to suggest—and I want to be reasonable over this—was that it is absurd that we should be working at night on this important part of the Bill. I know that hon. Members opposite do look upon this part of the Bill as something to which they, at any rate, want to give a great deal of attention. It appeared to us that Part III will take up a great deal of time and it is not unlikely that we should visualise that if we left Part III till next week we should probably spend practically the whole of the first

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    day on it and, that being so, it seems to me unlikely, to say the least of it, that we should get the rest of the Bill, with the Schedule and the new Clauses on the second day. Therefore, the suggestion I would make—and I hope it is not an unreasonable one—is that we should deal with Part III tonight before we separate and if we agree to that, I should imagine that with good will on all sides it should not take us long.
    Mr. Stanley: If in fact, the right hon. Gentleman is going to reject our plea and insist on taking these matters which we regard as important, and on which we have Amendments, at this hour, it would be just as well that we should subject the rest of the Clause to a more elaborate and, therefore, a more prolonged investigation than I envisaged when I first moved. I should like to say that when the right hon. Gentleman says it would be probable that we might spend the whole of the day on Part III, I can assure him on behalf of all my hon. Friends that we should have no intention whatsoever of spending such time upon Part III. I, personally, would have thought that the principles, important though they are, could perfectly well have been raised and discussed by us in something like three or three-and-a-half hours on Monday; leaving a comparatively short time for the rest of the Clauses in the Bill and ensuring that in fact we should get on to the new Clauses with still plenty of time left on Monday, even if we rise at a comparatively late hour.
    Mr. Glenvil Hall: If I understand what the right hon. Gentleman has said aright, the suggestion is that we should now "call it a day." Hon. and right hon. Gentlemen opposite visualise, if that is agreed, that we come fresh to this on Monday and by, say, seven o'clock or thereabouts we shall have finished the main part of the Bill—as far as Clause 48—leaving the Schedules and the new Clauses for the rest of Monday evening and Tuesday.
    Mr. Stanley: Actually, what I said was that I thought we could conclude Part III in three or three-and-a-half hours, say, by seven o'clock, and that the remainder of the Bill, so far as I can see, would not take very long after that.
    Mr. Glenvil Hall: That would include the Schedules and the remainder of the Bill?
    Mr. Stanley: No; I am sorry. I meant the remainder of the Clauses of the Bill. I was regarding the Schedules and the new Clauses as the opening of the new discussion.
    Mr. Glenvil Hall: I speak under correction, but it appears to me that once we have passed Part III there is very little in the Bill proper. I am acting for my right hon. and learned Friend, and we do not want to make a ragged job of this matter. It would be unfair to those who wish to raise matters on the new Clauses which they think important. Therefore, I think we can come to some arrangement. If I understood correctly the noises made on both sides of the Committee it is generally realised that there is very little left to which to object after the Bill proper, that is up to Clause 48. Therefore, it would seem that up to seven o'clock for the Bill, apart from the Schedules, would not be an unreasonable timetable to which to work. That would leave the Schedules and the new Clauses for the rest of Monday and Tuesday. If that is agreed to we shall raise no objection.
    Lieut.-Commander Braithwaite: The Financial Secretary realises that the Schedules follow the new Clauses?
    Mr. Glenvil Hall: I was taking the Bill as it runs here. It would be fairer to both sides of the Committee and lead to no misunderstanding if we did say that the suggestion I have made, and to which the right hon. Gentleman himself agrees, should be worked to as far as possible.
    Mr. Stanley: I think that on behalf of my hon. Friends I can say we attach considerable importance to being able to discuss the Death Duties at a reasonable hour. They would co-operate with me in an attempt, which I am sure would be successful, to finish the Clauses of the Bill by dinner-time on Monday. With regard to the length of time that the new Clauses and Schedules will take, and how late we may have to sit on Monday and Tuesday, I cannot really say, because I have no information as to which of these new Clauses are to be called. Many are in the names of hon. Members opposite and I do not know how long the discussion

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    will take. I think on behalf of my hon. Friends I can say that if we could take the Death Duties at a reasonable hour we could finish the Clauses of the Bill by dinner-time on Monday.
    Committee report Progress; to sit again this day.

CONSOLIDATION BILLS AND STATUTE LAW REVISION BILLS
So much of the Lords Message [21st June] as communicates the Resolution, "That it is desirable that all Bills in the present Session presented under the Consolidation of Enactments (Procedure) Act, 1949, together with the memoranda laid and any representations made with respect thereto under the Act, be referred to the Joint Committee on Consolidation Bills and Statute Law Revision Bills," to be considered forthwith:—[Mr. Pearson.]
So much of the Lords Message considered accordingly.
Resolved, That this House doth concur with the Lords in the said Resolution.—[Mr. Pearson.]
Message to the Lords to acquaint them therewith.
Mr. Watson discharged from the Select Committee appointed to join with a Select Committee appointed by the Lords on Consolidation Bills and Statute Law Revision Bills and Mr. Forman added to the Committee.—[Mr. Pearson.]

SCHOOL MEALS, MERTHYR TYDFIL
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Pearson.]
1.42 a.m.
Mr. S. O. Davies: I am extremely sorry, but circumstances make it inevitable that I should have to protract this Sitting a little longer. On 24th February I submitted to the Minister of Education three questions on the school meals service. They were inspired by difficulties created by the Ministry of Education in Merthyr Tydfil. Without making any inquiry, the Ministry, in the name of economy, imposed a series of
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almost crippling conditions on our local school meals service; but the economies effected by the Ministry, having regard to the extreme importance of the service, were contemptibly small. The Ministry were apparently none too happy when they inflicted these miserable, if disturbing, cuts on local education authorities and particularly, on the one in which I am proud to be interested. They were pathetically uncertain on the principles they should apply.
In the previous year we were told in Merthyr Tydfil that too many man-hours were worked by those engaged in the service, and we were forced to cut down, to the detriment of the service, the number of hours worked. To keep the service the best we could, the employees voluntarily accepted a reduction in wage rates which had been fixed by national agreement. I am not too certain whether the Ministry are conscious of the fact that by their action, they were responsible for the breaking of wage rates fixed by national agreement.
Last year the Ministry dropped the question of the hours worked, and told us that the cost of meals was too high and had to be reduced. We were urged by the Ministry to employ part-time labour, to which we took, and still take, the strongest exception. One would have thought that the present Minister of Education, with his long and honourable record of fighting the evil of part-time labour in the textile industry of Lancashire, would have been the last man to tolerate the imposition of the same evil on the splendid work of feeding our school children. I need not assure the Minister and the Parliamentary Secretary and the Government that my Socialist constituency hates, as the Socialist movement always has hated, the unmitigated evils of part-time labour.
I must tell the Ministry of Education that their attack on the school meals service is a betrayal of the provisions of the Milk and Meals Regulations of 1945. Paragraph 8 of those Regulations lays down that every dinner shall be adequate in quantity and quality; it has to be suitable as the main meal of the day and to be well prepared and cooked and served decently and in good condition. The paragraph goes on to state that the dietary for dinners shall be reasonably varied and planned in order to secure

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nutritionally balanced meals appropriate to the ages of the pupils, and that suitable records shall be kept of the amounts of the ingredients used. Paragraph 13 insists that the authorities shall employ a suitable and adequate staff other than teachers for the preparation, cooking, serving and, where necessary, transport of meals, and for washing up and other incidental matters.
I wish I had time to quote further from these very sensible and not ungenerous regulations, but I have quoted enough to assert that these regulations cannot be carried out with the uncertainty, indifference and lack of discipline invariably associated with part-time labour. It is no use the Ministry making any pretence at all that it can be done. In my constituency alone we have between 30 and 40 school canteens and restaurants. Of these there are only three with modern school kitchens. This means that we have been forced to improvise and adapt old school structures to fit in the canteens for our children. Our school meals staff have worked under extraordinary difficulties, and to my knowledge, they have worked hard, and with great devotion. The teaching staff of our schools, too, I am proud to say, have co-operated with equal enthusiasm and with equal devotion.
I should like the Parliamentary Secretary to listen to this, I know he will agree with me, even though he will not admit it on the Floor of the House. No simple formula evolved in the remote recesses of the Ministry of Education can apply to the very different conditions under which our school children over all the country are fed. The Minister seems to be incapable of appreciating what the school meals service means to such places as Merthyr Tydfil. We well knew its worth during the inter-war years when, under Tory administration, the overwhelming proportion of our people were for long years unemployed, and when, in the teeth of Tory opposition, we had to fight to feed the children in our schools; in the days when a Tory Government, for instance, cut down the half-pint of milk a day for our school children to one-third of a pint. Notwithstanding all these cruel restrictions imposed upon us by past Governments we did build up, a quarter of a century ago, a school meals service
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—and I hope the Minister of Education will appreciate this—which has been interwoven into the whole of our local school organisation.
Hence the reason why we are so sensitive to anything done in this respect which is reminiscent of past Tory administration. This Government, I admit, have done magnificent work for our school children. Why, then, the refusal on the part of the Minister to recognise that the feeding of our school children is as important as the task of ordinary education? Why this passion for part-time labour in building up the bodies of our children, in improving and sustaining the standard of health and physical well-being—that is, in the provision of a foundation without which the children cannot be educated? I must tell the Minister of Education that we do regard the feeding of the children at our schools in Merthyr Tydfil as being of the same importance as their education. In fact, with us it is priority No. 1.
At the very moment when the Ministry was attacking and lowering the standard of our meals service, the Minister of Health was extremely worried about the health of the schoolchildren throughout the country, because, on 6th April this year, an important circular was sent by the Ministry of Health to all local health authorities. I will quote a relevant paragraph from that circular. It reads:
"From information collected by the Ministers of Education and Health on the growth of children, there appears to have been a slight, but definite, decline in the growth rates between 1945 and 1947. Also, during the past two years the reduction in mortality from respiratory tuberculosis among young children has been slowed down. Therefore, the Minister of Health is proposing to make a survey of the diets of schoolchildren to ascertain whether or not they are receiving sufficient food."
At the very time conversations were taking place between the Minister of Health and the Minister of Education on this all-important subject of the health of our schoolchildren, the Ministry of Education was busily engaged in lowering the standard of our school meals service. I make that as a deliberate charge against the Ministry of Education. The Ministry of Health was worried because of the increase of tuberculosis among our children, and because of the definite decline in their growth rate, and the Ministry

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is now taking a survey regarding the diets and standard of meals throughout the country.
Our advice to the Ministry of Health is that its inquiry should begin at the Ministry of Education and its policy during the last two years regarding the feeding of schoolchildren. The next step in their inquiries should be at those schools where meals are dependent on casual, or part-time, labour. It is such schools as those dependent on part-time or casual labour that the Minister of Education used as a standard in terms of cost in the attack on school meals services as carried out by the more progressive authorities in this country. It is known that whoever bears the cost, education authorities such as my own would not skimp a single half-penny in their efforts to provide a good and well-served school meal. The Ministry of Education has at no point adversely criticised either the quality or standard of service of meals, nor have we been accused of having wantonly misspent a single penny in the provision of meals.
I must ask the Parliamentary Secretary and the Ministry to try to live up to their ideals in this great service. I know from experience in Merthyr Tydfil what a godsend is the school meals service to our children, and I must ask the Minister to build on the foundations. and not to destroy the foundations already laid. In my opinion, while I have so fanatical an interest in education, I know of no better task which the Minister might undertake than to say he will not skimp and not discourage progressive authorities in the provision of the finest school meals service we can make today. I am certain the Parliamentary Secretary will agree with me and will realise that I have been under an obligation to this Government which, as I have admitted, have done such fine work for the children, to raise this matter and I hope he will say that that Government will do nothing to undermine the foundations so well laid.
1.58 a.m.
Mr. George Thomas: I shall not keep the House long at this hour but this is a very important subject. The question of the school meals service is one occupying the minds of Ministers, the teachers, local authorities,
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and parents. The Minister has played a magnificent part in this service throughout the country, and I do not like it to be thought that the Minister of Education is lowering the standard of the school health service in any way. Nobody speaks more forcefully for his constituents than my hon. Friend the Member for Merthyr (Mr. S. O. Davies), but there is every indication that Circular 97, issued several months ago by the Ministry, needs to be more forcefully implemented by my right hon. Friend the Minister, and by the Parliamentary Secretary.
I may add this word of caution to the Parliamentary Secretary. My experience at the recent Conference of the National Union of Teachers showed that whilst the profession are exceedingly anxious to co-operate—and I was something of a rebel on this matter when I was on the Executive of the Union—they feel they have a right to look to the Ministry for a greater drive to see that sufficient assistance is brought in to help during the actual time of the meal. A teacher's job ought not to be more than that of supervision in any case, if the teacher is to do his job properly in the afternoon. I believe the Parliamentary Secretary quite agrees with that point of view, but I hope that we shall see a greater impetus given to the provision of adequate assistance in the future.
2.1 a.m.
The Parliamentary Secretary to the Ministry of Education (Mr. Hardman): I have every sympathy with the point of view expressed by my hon. Friend the Member for Merthyr (Mr. S. O. Davies) and my hon. Friend the Member for Cardiff Central (Mr. G. Thomas). The Ministry, in co-operation with the local authorities and the teachers, is determined to do all in its power to raise the standard of the school meals service and I hope we have done nothing in the case of the school meals service at Merthyr Tydfil which detracts from our ambitions in this matter.
Mr. S. O. Davies: I am sorry, you have. I am very sorry.
Mr. Hardman: There is no doubt about it that from our point of view the school meals service is and ought to be as important a part of the school day

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as any other activity that takes place. Our ambition is that there should be a sense of style in the equipment that is used and we readily admit that at present it is in many instances far from satisfactory. We hope that with the co-operation of teachers, we shall attain the highest possible standards not only in equipment, but also in conduct. There is no question about this, that the Merthyr Tydfil school meals service is an excellent service, and I want to tell my hon. Friend that that is the view of the Ministry and of my right hon. Friend.
We are prepared to acknowledge this and to give praise where it is due. The authority at Merthyr Tydfil are feeding about 70 per cent. of their school children and producing over 6,000 school meals a day. The quality of the meals is excellent and the standard of the service is likewise excellent. We want the service to be maintained at the high level it has achieved and nothing we have done or will do, is intended to have, nor need it have, the opposite effect. I claim, however, that the Ministry have wide knowledge of other authorities' great difficulties and we have knowledge how these difficulties have been overcome.
We are convinced that the Merthyr Tydfil service can be carried on just as successfully with fewer man-hours and reduced costs and the authority is now trying to economise in this particular respect.
Mr. Davies: How can it be done?
Mr. Hardman: Perhaps I may, just for a moment, go into the history of this particular case—and my hon. Friend will admit that we have been interested in this matter for some months past. The authority's provisional estimate for 1947–48 was not unduly high but the authority was notified it could spend 10 per cent. more on food. The revised estimate showed a 20 per cent. higher level of salaries and wages, which is considerably above the amount spent by other authorities. The explanation was high man-hours of canteen staff. Even taking into account the peak period in the middle of the day we could not accept this estimate. For 1948–49 it was made clear that the Ministry would not cover in any regard such high staffing.
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A special visit was paid to Merthyr Tydfil canteens to discover what the particular difficulties were. The Ministry agreed as to the difficulty of the number of canteens, and, admitting that difficulty, we were prepared to cover a reasonable extra staffing. In co-operation with that point of view the authority decided that it would make adjustments. The revised estimate showed a continuing high level of expenditure on salaries and wages in spite of the adjustment made in certain particulars, and the authority offered no explanation for the small reduction made. They have now economised, and those economies have taken effect since May of this year. We welcome this, but at the same time I must tell my hon. Friend that we still think the actual staffing in 1948–49 was too high.
Mr. Davies: The Ministry want part-time labour.
Mr. Hardman: There is no question about it; we expect the use of part-time labour at the peak period and we have the experience of authorities all over the country employing part-time labour at these peak periods. I must convince my hon. Friend that we have got the experience among all the other authorities, and all but six of them raised no difficulties whatever over staffing. In the case of those six they have been prepared to make reasonable adjustments. I cannot see why this excellent school meals service at Merthyr Tydfil cannot be maintained with the reasonable adjustment we require, following the practice in all the other administrative areas of the country.
I am not going into the prospect of the school meals service in Merthyr Tydfil in the years that lie ahead, but I am convinced that we have the co-operation of the local education committee and their officers. We are convinced they are prepared to co-operate and maintain the salaries and wages estimates at a reasonable level.
Mr. Davies: They have always been prepared to do so.
Mr. Hardman: They have always been prepared to do so, and surely it is not unreasonable that we at the Ministry should indicate where certain adjustments can be made. We have made suggestions

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and in some instances they have agreed to co-operate.
Mr. Davies: They have been forced to.
Mr. Hardman: Not forced; it has been a friendly adjustment on both sides, and we believe, in spite of the suggestion of the hon. Gentleman that we are spoiling the school meals service in Merthyr Tydfil, that co-operation will continue, and we shall arrive at a formula satisfactory to both sides.
Lieut.-Commander Gurney Braithwaite: Could the Parliamentary Secretary tell the House whether in Merthyr Tydfil there are a number of sittings every day for the midday meal thereby making it necessary to employ large staffs?
Mr. Davies: That does happen because we have had to improvise so many of our canteens in the old schools.
Mr. Hardman: It is unfortunate we have this double sitting in many parts of the country. We do not look upon it as an ideal situation in Merthyr or elsewhere. It means we have to have the staff at peak hours.
Mr. G. Thomas: Can my hon. Friend give me an assurance that they are doing their best to provide adequate assistance? Merthyr seems to have its share but other authorities are understaffed.
Adjourned accordingly at Eleven Minutes past Two o'Clock a.m..

  CONSCIENTIOUS OBJECTORS
  CONSCIENTIOUS OBJECTORS
  EMPLOYMENT (EX-SERVICE MEN)
  EMPLOYMENT (EX-SERVICE MEN)
EDUCATION
  Grammar School Places, Wolverhampton
  Grammar School Places, Wolverhampton
  Closed School, Alston Moor
  Closed School, Alston Moor
  General Certificate
  General Certificate
  New School Places
  New School Places
  CARPENTERS' PENCILS
  CARPENTERS' PENCILS
AGRICULTURE
  Wool Clip (Prices)
  Wool Clip (Prices)
  Ministry's Wool Section
  Ministry's Wool Section
  SCOTLAND (BRORA MINE)
  SCOTLAND (BRORA MINE)
  BAHAMAS (REGISTERED ELECTORS)
  BAHAMAS (REGISTERED ELECTORS)
  PORTSMOUTH HARBOUR (TIDAL MODEL)
  PORTSMOUTH HARBOUR (TIDAL MODEL)
  STOWAWAYS (CONVICTIONS)
  STOWAWAYS (CONVICTIONS)
  INCOME TAX (P.A.Y.E.)
  INCOME TAX (P.A.Y.E.)
MALAYA AND SINGAPORE
  Detentions (Advisory Committees)
  Detentions (Advisory Committees)
  Detained Persons
  Detained Persons
  SUGAR INDUSTRY, BRITISH GUIANA
  SUGAR INDUSTRY, BRITISH GUIANA
  ADEN (HOUSING)
  ADEN (HOUSING)
NATIONAL HEALTH SERVICE
  Specialists' Fees
  Specialists' Fees
  Sight Testing and Spectacles
  Sight Testing and Spectacles
  Hearing Aids
  Hearing Aids
  Specialists (Patients' Appointments)
  Specialists (Patients' Appointments)
  Hospital Contributory Schemes (Staff)
  Hospital Contributory Schemes (Staff)
  AGED PERSONS' HOMES (REGISTRATION)
  AGED PERSONS' HOMES (REGISTRATION)
HOUSING
  Kettering Rural District
  Kettering Rural District
  Waiting Lists
  Waiting Lists
  Statistics
  Statistics
  PECKHAM HEALTH CENTRE
  PECKHAM HEALTH CENTRE
Preamble
The House met at three of the clock, The VISCOUNT SIMON on the Woolsack.
Prayers
  BRITISH TRANSPORT COMMISSION BILL
  Read 2a and committed: the Committee to be proposed by the Committee of Selection.
TEIGNMOUTH AND SHALDON BRIDGE BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

AGRICULTURAL HOLDINGS (SCOTLAND) BILL [H.L.]
3.5 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF WORKS (LORD MORRISON): My Lords, I beg leave to introduce a Bill to consolidate the Agricultural Holdings (Scotland) Act, 1923, Part II of the Small Landholders and Agricultural Holdings (Scotland) Act. 1931, Part I of the Agriculture (Scotland) Act, 1948, and certain other enactments relating to agricultural holdings, save, with respect to rights to compensation, in their application to certain cases determined by past events. I beg to move that the Bill be read a first time.
Moved, That the Bill be now read 1a.—(Lord Morrison.)
On Question, Bill read 1a; and to be printed.

IRON AND STEEL BILL
3.6 p.m.
Order of the Day for the House to be put into Committee read.
THE LORD PRIVY SEAL (VISCOUNT ADDISON): My Lords, I beg to move that the House do now resolve itself into Committee.
Moved, That the House do now resolve itself into Committee.—(Viscount Addison.)
LORD MILVERTON: My Lords, I ask for your indulgence in order that I may make a personal statement con-
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cerning this Bill. My intervention will be of the briefest nature. I cannot claim to any expert knowledge of the iron and steel industry and in the circumstances it might be asked why in that case I cannot maintain silence—especially since, as I say, I have no special knowledge to contribute. My reason is that a great deal more than iron and steel is destined for this particular furnace. I have for some time felt, with growing apprehension, that for lovers of freedom this Bill marks the parting of the ways. For the first time the State is to take over a key productive and competitive industry. There are principles involved which make it impossible for an honest dissentient to remain silent. I was born free, and I have spent the bulk of my life in teaching what freedom means to somewhat reluctant pupils in backward countries. I am very loath at my time of life to reverse this process and to help in selling the advantages of slavery to people who were once free.
Perhaps it is because my own experience in administration has shown me how unrestricted bureaucracy can strangle enterprise that I feel some doubts about the widening circles of Government controls. I have learnt much during recent months about the lack of administrative foresight and the destructive defects in administration of the National Health scheme and other nationalisation measures whose principles and purposes I accepted. There is, it seems to me, a wider gap than the dollar gap which threatens our national stability, and that is the gap between principles and performance in these schemes. If that were all, I might have kept silence, while regretting the decision to add still further to the national indigestion. But as I have listened to speeches in the debate upon this Bill I have grown more certain of three things: that this Bill is not necessary at the present time, if ever that it jeopardises the efficiency of our most vital industry; and, lastly, that the urgency with which it is pressed strengthens the apprehension of those who fear that control of this industry is itself the end and not the means to an end.
We have here, naked and unashamed, the time-dishonoured principle that they should take who have the power. The craving to be able to say "L'Etat, c'est moi" springs to life again whenever the desert soul of man is watered by power.

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I suppose that is why the price of liberty is said to be eternal vigilance. And it is because I feel that even the present control over the whole of our national life, which is at present legally in the hands of Government, has reached dangerous proportions, especially if that Government itself is ever controlled by irresponsible, malicious or revolutionary persons—and, after all, the possibility of that looms only twelve months ahead—it is because I fear that, that I cannot acquiesce by silence in the passage of a Bill whose credentials are so dubious and whose effect on our national life will be so far-reaching and so unpredictable.
My Lords, like the ghost in Hamlet this Bill comes in such a questionable shape that it excites misgivings about its real cause. I have been told that I knew the Labour programme when I joined the Labour Party. That is true. I knew it in outline; but I did not, in joining, sign away my right to think; nor did I anæsthetise my conscience or my principles; nor, I hope, did I lose the power to learn. I had certain aims and ideals, and I thought that the Labour Party could, in vulgar parlance, "deliver the goods." I am now appalled at the type of goods which are being delivered under a false trade label—the national interest. I thought I was participating in a crusade, and I found myself a camp follower in a "rake's progress." I am one of a large number of people of independent minds who saw the merit of the Labour Party programme of social justice, but who are now beginning to feel uneasy about the lengths to which the rest of that programme is taking them. I have listened to the arguments in this House and I have read what has been said elsewhere on this Bill. I cannot find that a case has been made out for it.
In resigning from the Labour Party, I feel it my duty to make my protest in public, especially as I know there are many others of the Party who share my views. The road on which we are travelling leads to a precipice, at the foot of which clearly emerges the totalitarian State. We have heard at Blackpool a prominent Cabinet Minister bewailing the fact that the moral stature of the people has not proved equal to carrying out the measures introduced by this Government—in simple words, that human nature had not seen fit to change itself at his
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behest. It is at least permissible to ask in reverse whether the moral stature of the Cabinet has proved worthy of the principles they proclaim. I suggest that the Iron and Steel Bill provides a ready answer in the negative.
The Minister of Health, in his new rôle as the moral leader of the Labour Party, has two aspects. I cannot regard either the intemperate and provocative language of the politician or the emotional appeal of the synthetic evangelist as a suitable substitute for the clear thinking and the calm judgment which the national interest demands. I speak for thousands of independent thinkers who voted Labour at the last election and who have a keen desire to see social justice, but who now begin to fear, as I do, that such measures as the Iron and Steel Bill will destroy the only possible basis of social justice, which is surely a prosperous and united nation. My Lords, in this House at least there is no excuse for failing to speak when conscience so dictates. I have no morbid desire to be a martyr and. I find it extremely difficult having to make a public confession that one has made a mistake, but I am unwilling to be a silent passenger on this sinister journey and I will certainly not betray the principles of freedom which have made this country great, nor will I help to forge a weapon which, in later and less worthy hands, may strike those principles dead. I therefore declare my opposition to this Bill and my resignation from the Party which supports it.
On Question, Motion agreed to.
House in Committee accordingly:
[THE EARL OF DROGHEDA in the Chair]
Clause 1:
The Iron and Steel Corporation of Great Britain
(2) The Corporation shall consist of a chairman and not less than six nor more than ten other members, and the chairman and all other members shall be appointed by the Minister from amongst persons appearing to him to be persons who have had wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers.
(3) Every member of the Corporation shall hold and vacate his office in accordance with the terms of his appointment and shall, on ceasing to be a member, be eligible for reappointment:
Provided that any member may at any time by notice in writing to the Minister resign his office.
(6) A member of the Corporation who is in any way directly or indirectly interested in a contract made or proposed to be made by the Corporation, or in any contract made or proposed to be made by a subsidiary of the Corporation which is brought up for consideration by the Corporation, shall, as soon as possible after the relevant circumstances have come to his knowledge, disclose the nature of his interest at a meeting of the Corporation; and the disclosure shall be recorded in the minutes of the Corporation, and the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract.
(8) The Corporation—

(a) shall pay to their members such remuneration (whether by way of salaries or fees) and such allowances as the Minister may, with the approval of the Treasury, determine; and

(b) on the retirement or death of any of their members as to whom the Minister may, with the approval of the Treasury, determine that such provision should be made, shall pay to or in respect of them such pensions as he may so determine.

3.24 p.m.
LORD TEYNHAM LORD TEYNHAM moved, in subsection (2) after "matters" to insert "industrial or commercial." The noble Lord said: This Amendment raises the question of the composition and membership of the Corporation, and it is really designed to exclude from membership of the Corporation such people whose experience in administration, for instance, has been gained entirely outside industry and commerce. At first sight this Amendment would perhaps appear to debar the appointment of a civil servant or officer of the Services, but that is not so at all. It does permit the appointment of a civil servant or officer of the Services who has, in fact, had industrial experience, perhaps in the course of his career. One example would be service in a royal ordnance factory, or perhaps in a naval dockyard.
I have nothing but praise for the Civil Service as a whole, but Civil Service training is designed to ensure that mistakes are not made, and it is very difficult for civil servants to take risks. I would suggest that in the majority of cases the appointment of a civil servant as a member of the Corporation would not be a suitable one. The only purpose of the Amendment is to ensure that really
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suitable people with wide experience of industry and commerce shall in fact be appointed to the Corporation. A similar Amendment was moved in another place and it was argued by the Minister that it would exclude the choice of a large range of civil servants and officers of the Services whose appointment would be helpful to the national interest. I would point out, however, that that is not so at all. The Amendment does not at all rule out the appointment of a civil servant or officer of the Services who has had industrial or commercial experience during the course of his career. I beg to move.
Amendment moved—
Page 2, line 7, after ("matters") insert ("industrial or commercial").—(Lord Teynham.)
LORD ROCHDALE: I would like to support my noble friend on this Amendment, and first I wish to underline most wholeheartedly what he said—namely, that this was in no way an attack either on civil servants as such or on officers of the Services. Obviously, we all have the highest regard for both those types of servants in their proper spheres, but, as my noble friend has pointed out, the Amendment is not aimed at them. I would go rather further than what has been said, because I feel that this is not a matter merely of detail; I believe that the principle underlying this Amendment is fundamental. The question is this: Are productive industries, such as iron and steel, when nationalised, to be regarded as one more Government Department and therefore, to a large extent, immune from natural industrial competition; or are they to be regarded, as of course they ought to be, as industries that are still liable to competition from all spheres, both overseas and at home? If that is the criterion, then I am quite sure that when members are appointed to these higher positions in the Corporation, no possible suspicion should be allowed to arise that the appointment is made either in recognition of past services elsewhere or as a means of providing promotion to some individual in whose particular department the channels may be blocked.
My noble friend has pointed out certain instances where individuals such as those we are considering—eminent civil servants and officers of the Services—would not necessarily be debarred. But I would go a stage further and say that, as this

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Amendment is now drafted, there would be nothing to prevent any senior civil servant or other person from being appointed to some lower position in the Corporation or the companies if it was thought that he would be valuable there; and then, if in the course of years he showed that he had the administrative sk ill to be able to compete in an industrial concern, he could, having proved himself, be eligible to be appointed to the Corporation itself. Of course, I admit that in certain cases that might mean that some of them would have to eat a certain amount of humble pie, as they would in a sense be reduced in position, but it would overcome the objection which the Minister made in Standing Committee in another place, when he said that this sort of Amendment would entirely debar many distinguished people from helping the country in the iron and steel industry. I do not think that that is necessarily so, but it means that they will have to serve an apprenticeship in a lower position in the industry before they can be actually appointed to the Corporation itself.
VISCOUNT ADDISON: This is an interesting Amendment. It had been in my mind that all the four Amendments on the first page of the Order Paper really relate to the same consideration, and I was going to address some remarks, if I must do so, comprehensively to the general idea which lies behind them so as not to repeat myself if and when the other Amendments are moved.
VISCOUNT SWINTON: If I may intervene, may I say that it would, of course, be very convenient to have the Leader of the House express his general ideas, but, with great respect, the three Amendments raise entirely different points. One point is whether people should have had administrative experience, apart from the Civil Service. Then there is an Amendment dealing with how many members there should be having knowledge of steel. I submit that that is a wholly different proposition which must be dealt with on its merits. After that we come to the question of whether there should be on this body, as there has always been—and with very valuable results—on the Steel Board, a consumer of steel. That again is quite a different proposition. The noble Viscount, I am sure, would not wish in any way to curtail the debate, and of
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course it will be interesting to hear his general ideas.
VISCOUNT ADDISON: I welcome the intervention of the noble Viscount, and I think it would be appropriate that I should express my general ideas on the whole subject. What these Amendments do—including the one which has now been moved—is, so to speak, to prescribe to a certain extent the personnel of this Board. They are intended to do so, and they are intended to limit the freedom of action or of choice of the Minister as that is set out in Cause 1 (2) at the top of page 2, of which I will remind the House before I say any more. This subsection sets out that: "members shall be appointed by the Minister from amongst persons appearing to him to be persons who have had wide knowledge." Remember that: they must have had wide knowledge. The subsection also says that they must:
"have had wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers."
THE EARL OF DUDLEY: Will the noble Viscount allow me to point out a slight error which he has made? He has used the words "wide knowledge." The word "knowledge" does not appear in the subsection. It is not provided that these people should have knowledge of the industry.
VISCOUNT ADDISON: I see that the word "knowledge" does not actually appear, but how can a person have shown capacity in the production of iron ore or iron or steel and all the rest of it, unless he has some knowledge? That is just a foolish observation. Of course, he has to have knowledge.
THE EARL OF DUDLEY: It is possible to have experience but not a lot of knowledge.
VISCOUNT ADDISON: I am not going to give way to the noble Earl on this. The subsection is designed so that when the Minister constitutes the Board he shall be enabled to appoint people who have capacity in these matters; and that is so stated. The purpose of this Amendment—indeed of this group of Amendments—is to prescribe that the selection should be limited to this or that, or shall exclude this or that. This particular

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Amendment says the Board shall not be this or that. As the Amendment stands, it would mean that the Minister would not be able to appoint to the Board anyone who he could not say had had
"wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers."
As the noble Lord confessed, it is intended to exclude from the possibility of choice by the Minister a large number of people who have rendered eminent and distinguished service, in the Civil Service, in other Services of the Crown and in various other ways. For instance, a man like Sir John Anderson would be ruled out. Large numbers of people like him would be ruled out, because before he was appointed Chairman of the Port of London Authority—a post which I am sure he fills extraordinarily well—he did not come within this proposed definition and would have been excluded by this provision. Mr. Churchill, too, would certainly be ruled out. So would Sir Arthur Salter, Sir Arthur Street, Sir Henry Sell and many others. There was, in fact, a distinguished civil servant on the Iron and Steel Board—Sir Alan Barlow. He would be ruled out. If he is to be ruled out from serving on this Corporation, why should he not be barred from serving on the Iron and Steel Board?
There are a number of noble Lords in this House—I see some in front of me now—who have been made directors of corporations because they have distinguished themselves in some branch of the public service. Some, for example, have served with distinction in the Army. It is right that they should receive these appointments—I am not complaining in the least. But if a private corporation which conducts business is entitled to look for men in the Civil Service, or anywhere else in the Services, why should the Steel Corporation be prevented from so doing? I want to use only Parliamentary expressions, but really I consider that this is a fatuous idea. Why should the Minister be excluded from doing this, for that would be the effect of the Amendment? I think it is a very mistaken Amendment. I will not pass to the other Amendments, if noble Lords would prefer that I should not do so, but I am sure that the right way to constitute a Corporation of this kind is to prescribe, as the Bill does, the
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type of person who has shown capacity in this, that or the other, and then leave it to the Minister who is responsible to Parliament to make the best choice he can. To prescribe that the person chosen shall definitely be this or that will limit the choice of the Minister. And it will do something else which is much worse.
I am afraid that I must refer to the principle which is embodied in the Amendment which appears at the bottom of the first page of the Marshalled List. This sets out that
"… appointments shall be so made as to secure the inclusion of at least one person appearing to the Minister to have been engaged in the production of iron or steel otherwise than as ….
"a director or officer of a publicly-owned company or of any subsidiary of a publicly-owned company; or
"a director or officer of a company specified in the Third Schedule.…"
If you specify that particular persons who having been in this or that particular concern are to be on this Corporation then they become representative and not independent directors. What you want are independent-minded people, not people who are to represent an interest or a group of interests. It would be a wrong consideration to entertain, and I am sorry that we cannot accept any of these four Amendments.
VISCOUNT SWINTON: I would address one or two observations to the Committee first on the general idea and then on particular matters. I think, however, that it will be more convenient if I reserve what I have to say on some points to the time when we are discussing and, if necessary, voting upon specific propositions. First, with regard to the general proposition. The noble Viscount, Lord Addison, seemed to assume that the Corporation must necessarily be selected (I will come to the merits or demerits of civil servants in this connection in a moment) from people having particular kinds of experience of administration, descriptions of which he read out. There was, he suggested, to be one with this experience, and another with that experience and so on. Now that is not what the clause, as drafted, says. It is true that the clause sets out a list of qualities. It says
"…wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers."

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But—I speak subject to correction on this point—although the Minister could not appoint a person who had no sort of experience of one or other of these things, he is not in the least bound to give all that experience which is referred to representation on the Board. Provided he can bring the appointment within the letter of the collective words, he can appoint a Corporation entirely of people who know about administration, and he need not have anybody who knows anything about steel. That is so—well, I hope the noble Viscount will take legal advice on that. I may have been given the wrong legal advice, but that is the advice I have been given. It is very important that before we come to a decision on this Amendment we should know the true legal construction, and no doubt some legal members of the Government will tell us what it is. I am advised that the Minister would in fact be complying with the letter of the clause if he appointed a Corporation entirely of people who are experienced in financial matters or in administration or in the organisation of workers. I am supported in this view by an ex-Lord Chancellor, the noble and learned Viscount, Lord Maugham. I am very glad we have cleared this up, and the noble Viscount the Leader of the House has shown us that when he made his very interesting general observations he was under a misapprehension about the legal position.
VISCOUNT ADDISON: My Lords, I am under no misapprehension whatever. I am advised that the noble Viscount's interpretation is entirely incorrect. If the Minister were to do what the noble Viscount suggests he would not then have appointed a Corporation of
"persons who have had wide experience of, and shown capacity in, the production of …iron or steel."
VISCOUNT SWINTON: This is very important. After I have made my observations I am giving way to the noble and learned Viscount, Lord Maugham, and there are other noble and learned Lords in the House who may speak—another has arrived, I am glad to say. None of us should proceed under a misapprehension as to the meaning of the clause we are discussing. At present I am bound to say I proceed on the assumption that the noble Viscount the Leader of the House is wrong, and the noble and learned ex-Lord Chancellor is right. We
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have two conflicting legal constructions. Whatever the House will say, at least there is a possibility that the noble and learned ex-Lord Chancellor might be right in law, and the noble Viscount the Leader of the House might be wrong. It is better so to draft the Bill that we have the matter clear. I am going to proceed on the assumption that the noble and learned ex-Lord Chancellor is right, and this means that the Milister could appoint a Corporation which contained not one single man who had knowledge or experience (and the two are not the same) of iron and steel. If that be so, it seems to me of great importance that we should insert an Amendment, or a series of Amendments, which will ensure that there will be representation on this Board—"membership," if you please; the noble and learned Viscount the Leader of the House dislikes the word "representation"—which reflects experience in the great monopoly they are called upon to conduct.
That does not fetter the Minister's choice—at least, it does not fetter the Minister's choice any more than the Minister's choice ought to be fettered. I say, most emphatically, that a direction should be given to the Minister that he should appoint a certain number of people who have knowledge or experience of iron and steel. We may as well speak frankly about this. I am not happy about some of the appointments that have been made to some of the Boards of nationalised industries, and I do not think the Government are; because there have been a series of resignations, in some cases by people who would much rather have stayed there but did not think that the thing would work, and in others because it was apparently mutually convenient that resignation should take place. I do not think it can be said that in every appointment which has been made, although I am sure it has been made in the best possible faith, the best people have been selected for the job. Therefore, I say that, with that experience behind us, it is perfectly reasonable that we shall lay down certain broad rules that the Minister will follow; and we should say that he should appoint at least one or two people who have this kind of experience. It will leave him a fairly wide choice: it will leave him with the whole of the steel industry from

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which to pick. I do not think that is an unreasonable limitation to put upon the Minister.
Let me add that we are not dealing here with the boards of the ninety-six companies. When we come to them, I think a good deal will have to be said. I am not going to say it now, but I am very worried about the risk of centralisation and that the people on these ninety-six boards will not be independent. It is difficult to see how they can be given independence, but I am sure it is vital that they should be given it. What we are doing here is to appoint the Board of the complete monopoly, the people who are going to forge the policy of not only the whole steel industry of this country but also of dozens and dozens of other activities which are now swept into the net of this nationalised complex. It seems to me that Parliament will not be fettering the Minister's discretion and will not be doing its duty by the nation unless it makes sure, by whatever are the appropriate words, that people of real, essential experience are put into this position.
I come to the specific Amendment. It is true that this Amendment would not permit the Minister to appoint someone of administrative experience unless that administrative experience had been connected with business—not necessarily with the steel industry, but with business. That is the effect of the clause, and I think it cuts both ways. We may find a soldier or a public servant (and I can think of both) who, without having actually had business administrative experience, has proved himself to be an extraordinarily competent business administrator on entering into business. Frankly, I should be sorry to cut out such a person. On the other hand, Civil Service training, of which I have the highest possible regard, does not fit a man for business. I have worked with civil servants as a Minister, on and off, for thirty years, and have even been a civil servant myself, and I think they are second to none on their job; but that job is not, and ought not to be, the running of a business. They have an utterly different training, and I would go so far as to say that they ought to have an entirely different training and a different mentality.
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From time to time you will get a man of such universal ability that he is equally good in almost any job into which you put him. The noble Viscount cited Sir John Anderson; I could cite others. But I can think of a large number of civil servants who have been very good civil servants but who, put into the direction of a business, were wholly unsuited for that purpose, and it would have been better if they had returned to the Civil Service where they would do magnificent work. Frankly, if I were involved in the appointments to this Corporation, which is to comprise not more than ten and not less than six persons, and I had to take the choice between the possibility of excluding some very good soldier or civil servant who would make a first-class business administrator, or take the risk of having a number of civil servants, all admirable in their own job, put into the direction of this vital industrial monopoly, then I am bound to say that I think the balance would come down in favour of exclusion rather than inclusion.
3.51 p.m.
LORD HAWKE: There are, I think, two strong points which have not yet been made on behalf of this Amendment. By and large it excludes from this Board almost all civil servants. I submit that there are at least three very strong reasons why civil servants, by and large, should be kept off this Corporation and any other of these public boards. In the first place, I do not believe their duty lies there. Their duty lies in their Departments, which to-day are heavily understaffed, and where their training best suits them to do their work. A further and very cogent reason, I believe, is that there should be no suspicion that a civil servant should ever be in a position to give advice as to nationalisation of an industry in which he may afterwards find an exalted post. At the moment, as regards the first two considerations, the whole of the Civil Service is suffering from overwork. The life of a senior civil servant is a dog's life: he works himself to death, or else he sees an accumulation of files growing ever larger on his desk. The temptation is to take any possible relief. But getting out means that he is going away from his duty, and he brings nearer the day when administration may break down. I would like this temptation to be kept firmly out

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of his reach. The other point is that I believe it is utterly wrong, constitutionally, that a senior civil servant should be in a position to advise a Minister about what should or should not be included in a nationalisation proposal, and afterwards step into the job of running that nationalised industry. That is a principle which is so strong that I feel we ought to insert this Amendment into this and every other nationalisation Bill.
VISCOUNT ADDISON: I am advised that, owing to the fact that the word "or" occurs three times, the Minister, if he were so crazy, could in fact, by taking advantage of all those words, do just what the noble Viscount has suggested. Therefore, I will not contest that point; I agree that the noble Viscount is correct there. I would, however, add this. Clearly, all these things are put into the clause in order to indicate the kind of people the Minister should select. I cannot imagine that any Minister who is fit to be a Minister, or who is fit to be outside a lunatic asylum, would appoint a Corporation consisting exclusively of people who have been civil servants.
VISCOUNT MAUGHAM: I am glad the noble Viscount has said what he has, because I should be loath to be at issue with him, even on a question of law. May I also say that I do not like to be referred to in a matter of this sort as an ex-Lord Chancellor, because I have known—in the past, of course—Lord Chancellors whose occupation of that position was due rather to political eminence than to a knowledge of the law? For my part, if I have any claim to tell your Lordships my opinion on the meaning of this clause, it is that I have spent a life at the Bar and on the Bench, and my opinion has nothing to do with politics at all. I have on various occasions expressed my opinion as to the construction of a difficult clause in an Act of Parliament, and so far as I can remember I have never yet been corrected either by a Lord Chancellor or by any other lawyer. In my opinion what this means is that the persons among whom the selection is to be made by the Minister are
"persons who have had wide experience of, and shown capacity in"—
and all the different things are subject to those words—
"the production of iron ore or iron or steel,"
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and, secondly,
"industrial, commercial or financial matters …"
I would observe there that possibly the Chancellor of the Exchequer, whose name has been bandied backwards and forwards as a person who would be excluded by these words, is, in my opinion, a person who has shown capacity—though I do not ask noble Lords on opposite Benches to take the same view—in a financial matter. He has made speeches which I should have thought would persuade most people.
VISCOUNT ADDISON: It does not say "financial." It is "industrial or commercial."
SEVERAL NOBLE LORDS: "Or financial."
VISCOUNT MAUGHAM: The words are there. Taking the whole lot one by one, it says:
"… wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters "—
that is where I think my friend the ex-Chancellor would come in.
Then it is suggested that the words "industrial or commercial" should be added to qualify the word "administration" which follows, and rule out whether rightly or wrongly, the Admirals or Generals, most of whom have had great experience of one kind of administration. Then the subsection ends with the words:
"or the organisation of workers."
Those things, I think, are separate, and they are all things which the Minister may look at one by one to see whether a particular person he wishes to appoint to this Corporation is within one or the other category. Obviously the person in question need not be an expert in all these matters, but he has to be an expert in one of them. That being so, I feel there is no great difficulty, because the word "or" is a word which w ill cover every one of these separate matters, and the Minister can choose.
I am not going to inflict a long speech upon your Lordships, but perhaps I may say one word and throw out a suggestion to the noble Viscount who leads the House. Does not this clause make rather a mistake in referring, as a sort of definite rule, to every one of the members of the Corporation? Would it not carry out the intention of both sides of

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the House if, when we consider the appointment of a chairman and six, or not more than ten, other members, this clause were to make it clear that under all ordinary circumstances the majority of the members of the Board would be people who are iron and steel experts, or experts in one of the other matters which are mentioned in the last couple of lines? For my part, I would not be shocked if there were six experts and two persons who had a large experience in some other branch of human economy. I personally should be quite content, but I do not presume to do more than to throw out a suggestion for the consideration of the Government.
THE EARL OF DUDLEY: I hope that your Lordships will insist on this Amendment, because it is a matter of considerable importance. As I told your Lordships during the Second Reading debate, my experience in business has always been that a business succeeds or fails largely on the question of control. In these Amendments we are discussing the constitution of the Corporation which will control—if it ever comes into existence, which I sincerely hope it never will—the whole of this vast and complex industry, the most important industry in our national life; therefore this matter is of very great importance. It is the hand at the helm that counts. I am not going to pursue the question of the civil servant, which has been ably dealt with by the noble Viscount, Lord Swinton, and the noble Lord, Lord Hawke, but I think almost all your Lordships will agree that by and large—of course, there are exceptions—the civil servant is not the type of person who is fitted to run an important business like the combined nationalised iron and steel industry. I may say that I yield to nobody in my admiration of the Civil Service as a body. The noble Viscount the Leader of the House said just now that he considered it fatuous, childish and ridiculous (I think they were his words) to prevent persons with no knowledge whatever of administration in financial business going on the Corporation—
VISCOUNT ADDISON: I did not say anything of the kind.
THE EARL OF DUDLEY: —when there were a great many such persons serying on the boards of private companies and
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joint stock companies. That is what the noble Viscount said. He said that there were many such persons on the boards of private companies, and why should they not serve on the Steel Corporation. There is all the difference in the world. There are a great many admirals and generals, and persons who have had no previous business experience, serving on the boards of private companies. Some of them gain experience and do extremely well; some of them are complete passengers, because they have had no previous experience and knowledge. But you would not dream of putting those people on the executive of a large company of this sort. I speak from experience. We have a great many such persons on the boards of private companies in the iron and steel industry, but we do not select them when we are making up the personnel of the executive committee of the Iron and Steel Federation. We put on that committee the men of wide experience and knowledge. We select them, and we would not dream of putting on that executive committee a man who had no previous business knowledge. Surely, exactly the same principle applies to the Steel Board. I am not going to stress the matter further, but I am sure your Lordships will take a very strong view in this matter and will press the Amendment to a Division.
LORD TEYNHAM: I am sorry that the noble Viscount in charge of the Bill feels that he is unable to accept the Amendment, but his refusal to do so makes the following Amendments on the Order Paper all the more important. I would suggest that if appointments are to be made contrary to the provisions of this Amendment—I speak merely to the Amendment which I have moved—perhaps the Minister concerned will consider the suggestion made by the noble Lord, Lord Rochdale, and the noble Earl, Lord Dudley: that the appointments in the first place should be made lower down the scale; then, when the members had proved themselves, they might perhaps rise to executive positions. In view of the important Amendments to follow, I do not propose to press this Amendment and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
4.7 p.m.
LORD RENNELL LORD RENNELL moved, to add to subsection (2):
"The initial and subsequent appointments shall be so made as to secure the inclusion of

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at least three persons appearing to the Minister to have had wide experience of and shown capacity in the production of iron ore or iron or steel."
The noble Lord said: This Amendment is considerably more important than it was before, the first Amendment having been refused. I moved a similar Amendment in the course of the recent Bill on the coal industry, and the noble Viscount the Leader of the House said on that occasion that he did not like it; and he was good enough to warn me that he did not like this one. I may say that I find a curious reluctance on the part of Ministers in the present Government to be obliged to include experts on these boards. I had precisely the same argument with the noble Lord, Lord Macdonald, on the Coal Industry Bill. I wonder what is at the back of this antagonism to being obliged to include experts on a Board which requires expert knowledge?
VISCOUNT ADDISON: There is no antagonism.
LORD RENNELL: This clause says—I take it that we are now agreed upon what the wording of the clause really says—that the Minister need not appoint anybody with any knowledge of either iron or steel. We claim that at least three of the Corporation should have knowledge of iron and steel, and we claim that in particular for the following reason. The noble Viscount, Lord Addison, in speaking to the last Amendment, referred very rightly to the sort of composition that he and his friends had in mind for this sort of Board. He said, if I followed him rightly, that he did not want to have a functional Board in which one director took one subject and another director took another, but that the Board as a whole should control the operations of the group as a whole. With that sentiment I personally could have no quarrel at all, and I doubt whether any noble Lord on this side of the House could have any quarrel with it.
Let us examine for a moment what the position will be if the Minister chooses to appoint, in a Corporation consisting of not less than six or more than ten members, one from each of the categories that are described in the clause. If he were minded to appoint one each from people with knowledge and experience and capacity in "the production of iron ore or iron or steel, industrial, commercial
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or financial matters, administration or the organisation of workers," you would get precisely what may be called a functional Board, with one director of each sort who would inevitably have "put on his plate" at the meetings of that Board the particular subject with which he was supposed to be familiar. In other words, if you had only one expert director in iron and steel, all matters of technical importance in the manufacture of iron and steel would inevitably come to him more than they would to any other member of the Board. One of the principal vices of the present Railway Executive is that it is a functional board, and that is one of the reasons why I think a great many disappointing and unfortunate developments are going to take place.
It is in order to avoid having one of each class on the Corporation that we have said that it should consist of not less than three directors having a knowledge of iron and steel in order that no one of them should have all the technical matters "put on his plate." I am all the more surprised at the advance information that the Leader of the House has given us about his attitude to the Amendment because it has been one of the more frequent and ignorant gibes by members of the Party forming the Government, that at the present moment the boards of very many of our principal industrial companies do not contain experts in that particular industry. As a matter of fact, that happens not to be true, but it: is frequently said—not, of course, by the noble Lord the Leader of the House, who knows very much better. But if there is this feeling abroad amongst the members of the Labour Party that there are not enough experts on the boards of many of our industrial companies, why should there be antagonism to an obligation to put a number of experts on a Board of this sort? It is for that reason, and in order to safeguard the technical direction of this industry in matters of iron and steel, that we are of the opinion (and I am very strongly of the opinion) that not less than three members should have had experience of and shown capacity in that industry.
For those reasons I beg: to move the Amendment which stands in my name.
Amendment moved—
Page 2, line 8, at end insert the said words.—(Lord Rennell.)
4.13 p.m.
LORD HAWKE: I particularly commend to your Lordships the argument of my noble friend, Lord Rennell, on the way a functional board develops. That particular line of thought had not occurred to me, but I am absolutely certain he is quite correct, and the one thing we have to avoid is a functional board such as those which are killing the coal and transport industries to-day, and possibly other industries also. Your Lordships might think that the noble Lord and myself, in putting down this Amendment, are turning towards syndicalism; but even though that was rather fashionable, I believe, at Black-pool, we are not yet converts to the creed. In putting down our Amendment providing that these people should be experienced in iron and coal, we do not mean that people should be taken from the bottom, without any administrative and managerial experience, and be put on the Corporation, which is, in effect, what syndicalism would demand. We maintain that this Amendment would provide and ensure that there is a proper ladder from the bottom to the top, so that a young man may go into the steel industry, after we have amended this Bill, knowing that if he shows enough initiative and hard work he can perhaps become one of these three people on the board at the top. If we do not put this Amendment in the Bill, the only way he can be certain of getting to the top is by becoming a trade union official and making his living by his tongue rather than by hard work and initiative. We believe it is essential that this Amendment should go to the vote.
VISCOUNT ADDISON: I shall not make a long speech, because, as the noble Lord who moved the Amendment anticipated, I hope you will not put this Amendment in the Bill. The noble Lord who spoke last said at the beginning of his speech that he had not given sufficient thought to something or other; well, he has not given sufficient thought to the life of an average trade union official. If he saw the way those men work he would modify his opinion. However, we will pass from that and I will come to the main argument. If this Amendment were inserted, persons who at present hold important positions would not be able to take appointments
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on the Corporation. I have in mind Sir Andrew Duncan, who is the President of the Iron and Steel Federation. He was, I think, a solicitor.
A NOBLE LORD: He had a very wide business experience, for all that.
VISCOUNT ADDISON: We could not have said that he was a person of experience of steel or of commercial experience.
VISCOUNT SIMON: Is not a solicitor a person who is experienced in commercial matters?
VISCOUNT ADDISON: That is not what the words say. It is "industrial or commercial administration."
VISCOUNT SIMON: No, it is not; you are not reading it properly. It is "commercial matters."
VISCOUNT ADDISON: However that may be, I find that a number of our distinguished Treasury officials, for example, would not qualify, nor would, for instance, the Chairman of the Prudential. The point I am making is, Why should a person such as that be in a worse position than any others?
VISCOUNT SWINTON: He is experienced in financial matters.
VISCOUNT ADDISON: But not in commercial administration.
VISCOUNT SWINTON: It is "financial matters."
VISCOUNT ADDISON: But the purport of the speeches was, quite frankly, to exclude people of that kind because they had not been properly instructed. However, the only point with which I am dealing is, Why should this Corporation be in a worse position than the others? I come to the point of the Amendment I am sure that neither the mover nor I would suggest for a moment that any sensible Minister would dream of appointing a Corporation for this purpose that had not at least three people on it with knowledge of the iron and steel industry. I should think myself that the chances are that the number would be larger. I am objecting to its insertion, however, because once you begin to put in this particular classification I should be committed to the other Amendments which make further classifications, and so at the end of it the poor Minister would

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have been left with no freedom of choice at all. That is not the right thing to do. I object to the principle of classifying this or that, apart from the general instructions which the clause enjoins upon the Minister: that the members should be people who have experience of and show capacity in this, that, or the other, and iron ore or iron or steel. I think it is a wrong principle entirely to fetter the Minister by specifying, as these Amendments would (and this is the first of them and the best of them, I agree) that a certain number should be this or that. I am quite sure that there will be certainly three who have had that experience and the number will probably be more; but, for all that, I think it is wrong to specify the composition of the Corporation in the clause itself. I hope therefore that the House will not proceed with this Amendment.
4.19 p.m.
THE MARQUESS OF SALISBURY: I am sorry to hear the speech just delivered by the Leader of the House. With regard to the first Amendment which was before your Lordships' House I think a certain argument could be made. It could have been said that the Amendment we proposed might unduly limit the choice of the Minister. I do not know that I would hold that view, but at any rate I see that a colourable argument could be advanced to that effect, and it was partly for that reason that we did not press that Amendment. But my Lords, surely this Amendment is harmless, and might be adopted. What is it that the Government are in fact refusing? They are refusing to agree that Parliament should lay down that three members out of a board of ten should have some knowledge of the subject with which they have to deal—the Leader of the House shakes his head, but that is what he said. After all, we in Parliament have a responsibility. We are constantly told that it is no longer a matter of private interests, that we are the shareholders now, and that we are the people who have to decide. Well, we want to decide. And we want to see that we have on this Corporation competent and not incompetent people. The noble Viscount is always fobbing us off with what he would have us believe to be the perfection and omniscience of Ministers. I do not trust Ministers at all. I think there are at present some very capable and experienced Ministers in His
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Majesty's Government and some extremely incompetent Ministers—that is so of most Governments. But a Minister may be biased, and he may be definitely incapable. We have had a case recently of a Minister who said that everybody who did not agree with him was "vermin." It is not to be supposed that he would put "vermin" on the Board. That might exclude some of the most important experts—including, perhaps, most of the people who know anything about the subject!
For these reasons and because I think Parliament has a definite responsibility I would beg the Government to think again. Surely this is not a very extreme proposal, that three people out of the ten on this Corporation should know something about the subject—or, in the words of the Amendment should:
"…have had wide experience of and shown capacity in the production of iron ore or iron and steel."
Surely, three members of the Corporation ought to have that knowledge, and if that is so I cannot see why it cannot be provided in the Act. I suggest to the Government that they are on very weak ground here. What they are trying to do, apparently, is to keep the power of the Minister completely unfettered. But we do not want the power of the Minister unfettered. We think Parliament ought not to do this. Parliament should see that this Corporation represents the interests of the nation and contains experts on the subject with which the Corporation have to deal. I do not thank we can fail to divide on this Amendment. We believe it to be an important one; we think the Government's attitude is completely indefensible, and we must press the matter to a Division.
VISCOUNT ADDISON: Before the Division I want to correct one point in the noble Marquess's speech. He must not represent me, or the Minister, or the Government, as objecting in the least to the idea that there should be on the Corporation three persons who have a knowledge of the industry. As a matter of fact, it is more than likely that there will be considerably more than three. What I am objecting to is specifying in a series of Amendments the ingredients of the Corporation.
THE MARQUESS OF SALISBURY: If that is the view of the noble Viscount he should accept this Amendment.
VISCOUNT ADDISON: No.
THE MARQUESS OF SALISBURY: Yes, because the argument the noble Viscount used just now is an argument for and not against the Amendment.
VISCOUNT SWINTON: If the noble Viscount is really right, that he objects to this Amendment because it fetters the Minister's discretion, why have we this clause about qualifications at all? Why

Resolved in the affirmative, and Amendment agreed to accordingly.

does not the Bill say, in effect, that the ten people the Minister appoints shall be whomsoever he likes?
LORD RENNELL: I do not intend to withdraw the Amendment. If this industry is going to be nationalised I for my part do not want to risk seeing a repetition of the creation of a functional board, such as we see at present mismanaging the railways of this country.
On Question, Whether the proposed words shall be there inserted?
Their Lordships divided: Contents, 98; Not-Contents, 21.

CONTENTS

Richmond and Gordon, D.

Monsell, V.

Hatherton, L.

Ridley, V.

Hawke, L.

Aberdeen and Temair, M.

Samuel, V.

Hindlip, L.

Cholmondeley, M.

Simon, V.

Hutchison of Montrose, L.

Exeter, M.

Swinton, V.

Kenilworth, L.

Reading, M.

Layton, L.

Salisbury, M.

St. Edmundsbury and Ipswich, L. Bp.

Llewellin, L.

Townshend, M.

Lloyd, L.

Willingdon, M. [Teller.]

Mancroft, L.

Amherst of Hackney, L.

Mendip, L. (V. Clifden.)

Buckinghamshire, E.

Ashton of Hyde, L.

Middleton, L.

De La Warr, E.

Baden-Powell, L.

Milverton, L.

Dudley, E.

Balfour of Burleigh, L.

Monk Bretton, L.

Fortescue, E. [Teller.]

Balfour of Inchrye, L.

Monkswell, L.

Gainsborough, E.

Beveridge, L.

Moyne, L.

Howe, E.

Brassey of Apethorpe, L.

Polwarth, L.

Iddesleigh, E.

Carrington, L.

Rennell, L.

Lindsay, E.

Cherwell, L.

Ritchie of Dundee, L.

Munster, E.

Clanwilliam, L. (E. Clanwilliam.)

Rochdale, L.

Onslow, E.

Roche, L.

Perth, E.

Clydesmuir, L.

Rotherwick, L.

Radnor, E.

Courtauld-Thomson, L.

Sandhurst, L.

Selborne, E.

Cromwell, L.

Sherwood, L.

De L'Isle and Dudley, L.

Somers, L.

Allenby, V.

Digby, L.

Stamp, L.

Bridgeman, V.

Ellenborough, L.

Stanmore, L.

Buckmaster, V.

Forester. L.

Strathcarron, L.

Cowdray, V.

Foxford, L. (E. Limerick.)

Strathcona and Mount Royal, L.

Davidson, V.

Gage, L. (V. Gage.)

Falmouth, V.

Gifford, L.

Templemore, L.

FitzAlan of Derwent, V.

Grantley, L.

Teviot, L.

Harcourt, V.

Grenfell, L.

Teynham, L.

Lambert, V.

Hankey, L.

Tweedsmuir, L.

Long, V.

Hardinge of Penshurst, L.

Wardington, L.

Margesson, V.

Harlech, L.

Wolverton, L.

Maugham, V.

NOT-CONTENTS

Jowitt, V. (L. Chancellor.)

Ammon. L.

Lucas of Chilworth, L. [Teller.]

Chorley, L.

Macdonald of Gwaenysgor, L.

Addison, V. (L. Privy Seal.)

Crook, L.

Morrison, L. [Teller.]

Darwen, L.

Nathan, L.

Hall, V.

Foley, L.

Pakenham, L.

St. Davids, V.

Henderson, L.

Shepherd, L.

Holden, L.

Strabolgi, L.

Adams, L.

Kershaw, L.

Winster, L.

4.33 p.m.
LORD TEYNHAM LORD TEYNHAM moved to add to subsection (2):
"The initial and subsequent appointments shall be so made as to secure the inclusion of at least one person appearing to the Minister to have had wide experience as a consumer of iron or steel for industrial purposes."
The noble Lord said: The object of this Amendment is to ensure that at least one member of the Corporation shall have had experience of consumer problems. It is true that every effort has been made in the Bill, as your Lordships will see, to render effective the Consumers' Council which is to be set up, but it is obvious that this Council can operate only after the event has occurred. But this event may adversely affect the consumers. I would suggest that it is essential that the consumers' interests should be safeguarded at the policy level. What is the policy level? It must be at Corporation level. An Amendment was moved in another place seeking to provide that the Minister should include the nominee of the principal steel-using organisations. It was argued by the Minister that he did not wish members of the Corporation to represent sectional interests. I would point out that my Amendment leaves in the hands of the Minister concerned the choice of the individuals. It does not imply that the persons so appointed should represent the consumers; it provides merely that at least one member of the Corporation shall be experienced in the problems of the steel consumers.
We have already had instances of the importance of this. There was an instance where the National Coal Board took action without any regard to the consumer. For example, to take one case, without prior consultation of any kind the price of coal was raised—I believe, by 6d. a ton. I think it is true to say that experience has already shown that redress in matters of this kind cannot be obtained through the Consumers' Council. I suggest that it is absolutely essential that the consumers' interests should be considered at policy level, and that must be at Corporation level. I do not think it can be Cone in any other way. There must be on the Corporation a member who has had experience as a consumer of steel for industrial purposes. I beg to move.
Amendment moved—
Page 2, line 8, at end insert the said words.—(Lord Teynham.)
VISCOUNT ADDISON: The House will be acquainted with the reasons for which I object to this Amendment. It is another of the "ingredient" type of Amendment which is thoroughly bad. A Consumers' Council is set up with great elaboration—we shall come to that presently. I cannot imagine that any Corporation manufacturing iron and steel will not take account of the advantageous sale of its products, the needs of its consumers or the kind of price fiat they can pay. What in the world else are they going to do? That is their business. So that to ignore the interests of the consumers, as the noble Lord seems to suggest will be the case, would be far removed from the policy of this body. In any case, in order to safeguard the whole position the Bill sets up with considerable elaboration the Consumers" Council, to which we shall come presently. I am sure that that will be a much more effective body in representing the interests of the consumers than one person out of ten on the Corporation. But, apart from that, and for the reasons I have already given, we object to this Amendment.
VISCOUNT SWINTON: One way of conducting a case is to pronounce judgment before the case has been argued. That is what the noble Viscount did at an early stage in the proceedings. The more we argued, the more he remained of his opinion, although I think he now understands what his own clause means, because when he was denouncing us and giving judgment against us he was doing so upon a complete misinterpretation of his own clause. However, let him be under no misunderstanding as to what this provision is, although he has entirely misconceived the purpose of it. He thinks that this is in order that some consumer may go and make a complaint—
VISCOUNT ADDISON: Not at all.
VISCOUNT SWINTON: Then what else is it? What is the point of bringing in the argument about the Consumers' Council. The Consumers' Council is to be set up. So far, I do not think that the Consumers' Councils have been very effective bodies. In the coal industry, where we persuaded the Government to

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agree to having two Consumers' Councils—one industrial—they have not been of the least use. The price of coal has gone steadily up, by 5s. a ton in one jump, and 4s. in another; and without consultation. The Industrial Consumers' Council was not consulted over that. And what is the good of making a complaint after that has been done? Again, without any consultation, I believe there is an example where the price of coal was raised to a particular industrial consumer (one of these steel companies) by two or three shillings a ton, as against its ordinary competitors. I suppose that the company could have gone to the Consumers' Council. I do not know whether they did, probably they did not, because they no doubt thought it would not be any good. What the Coal Board would say is "Look at the losses we are making. The losses get larger and larger, and our only alternative is to put up the price." The noble Viscount asked us to be practical. We are being practical. Many steel companies have found it invaluable to have on their boards a man who is not there as a complaining consumer, but as a representative of one of the great steel-consuming industries, in order to give advice as to how the company can best meet the requirements of its consumers.
Against the Iron and Steel Board, which worked admirably, there has never been a complaint, and we shall presently come to an Amendment which I hope the House will carry for re-establishing the Prices Board. But what was found essential on that? No doubt the Leader of the House is not aware that on the Iron and Steel Board it was found essential to have a consumer representative—he was one of the great shipbuilders. He was there in the policy-price fixing body. The noble Viscount's own Government continued it. They felt it essential to have that representation on the Steel Board. Why are we not to have it here?
VISCOUNT ADDISON: It does not say we are not.
VISCOUNT SWINTON: It does not say that, but all the arguments that have been advanced are to the effect that the Minister might appoint somebody. We want to be sure that he does. But listening, to the arguments of the noble Viscount to-day the betting seems to be very much
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against his doing this, because the noble Viscount himself said "I cannot see that this is the right place to have a consumer. The right place to have a consumer is on the Consumers' Council." If that is the way in which the matter is to be arranged I do not think there is much chance of the Minister taking the view we think he should take. I suppose the Minister has some idea of the sort of Corporation he is going to set up. Perhaps we might be taken into these secrets. It would be of interest to the Committee, in debating this clause, to know. But if we are not to be allowed to know, then it is the duty of Parliament to make sure that it is within his very wide range of choice.
There is no question of a nominee here; the Minister can take anybody who has this knowledge, and put him on the Corporation. It is on the Corporation, the policy-making Board, that the practical steel consumer ought to be represented when policy is framed. It is no good coming with complaints afterwards. I think it was absolutely necessary to have the last Amendment, to ensure that people who knew about the steel industry were there. I believe it to be so on the proved evidence of the experience of the steel companies and, above all, of the Government's own acceptance of the need for them on the Steel Board. We are told that the Steel Prices Board is now unnecessary, that we need not have one because this is the Corporation which will fix the price, which is to be so wise, which will have everybody's interest at heart, and which, with the assistance of the Minister, we are to trust. If the Corporation is going to take the place of the Steel Board then it ought to have the same sort of constitution as the Steel Board, and it certainly ought to have this representative consumer. I hope that my noble friend will divide the House.
VISCOUNT RIDLEY: I think there is one point about this Amendment which is of the greatest importance—namely, that in the case of this industry the term "consumer" does not necessarily mean the person who buys the finished product. It is not the case of a person who uses transport, or consumes electricity or gas, or even who buys coal. A large number of consumers are people who buy steel products, processed to a certain stage, which they themselves

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must process further. A large section of the finishing part of the industry is left out of the Bill, and many of the decisions taken on the type of plant to be installed by the steel-making industry itself, and on the type of products to be rolled and so on, would have a great effect on the part of the industry that is left out. It seems to me entirely proper that the decisions taken on the planning and organisation of production of these products should be done with the help of someone who knows intimately the needs and requirements of the next stage of the processing of these products.
Similarly, it has always been noticeable, as the noble Viscount has said, that most steel companies have on their board somebody who is intimately connected with one of the large steel-consuming industries, either shipbuilding or engineering, or similar industries. That, I think, is done for a definite purpose—namely, that the steel companies themselves should have a close and intimate knowledge net only of the ordinary commercial arrangements under which they sell steel in different forms to the consumer. Through this kind of relationship, having an experienced person on the board, the companies are able to keep fairly close contact with the general lines of policy behind the consuming industries. It is important that we should see that that policy is continued under this system.
We have a difficult arrangement to look forward to under this Bill, when we consider the relationship between the Corporation and the companies themselves. It would be very useful if, so far as is possible, we could see that the type of membership of the boards of the companies is largely repeated in this Corporation—that is to say, that there are on the Corporation, as the responsible members, people who have the same kind of outlook and experience as the directors of the companies that they are to own, and with whom they have to have working arrangements. If the Bill is to work, the relationship between the Corporation and the companies must be flexible, sensible and friendly, deriving from mutual understanding. There is no mechanism in the Bill (and I do not see how there could be) to set up any direct chain of responsibility or control as between the Corporation itself and
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the companies which it owns. That relationship must depend on mutual good will, understanding and the intention to work together, so that the more it is ensured that the Corporation consists of people who are familiar with the same kind of problems, and who approach things in the same kind of way, the better chance there is of the industry being successful.
4.50 p.m.
THE EARL OF DUDLEY: I am afraid that members of the Labour Party appear to be so distrustful and suspicious of each other that they do net understand that it is possible for men of diverse interests to sit together on the board of a company and work together in harmony for the common weal of that company. This is what the Minister said about this matter during the Committee stage in another place:
"It seems to me inevitable that if a man is called a representative of the users or is nominated by the users, in point of fact he will feel hound to work on the Corporation for the people who have nominated him…I am wholly against having anyone on the Corporation who has a divided loyalty and who feels that he is there either wholly or partly to represent some special interest. As my hon. Friend said yesterday, if we do that, we get away from the team spirit, and if a representative of one side raises a case, there is bound to be a representative on the other side who has an equally good case, and I think that we shall get a bad sort of Corporation."
That, really, if I may say so, is a dreadful representation of human nature. As the noble Viscount has; said, on nearly all steel boards at the present time there are representatives of the consuming interests—of the interests which consume the products which we fabricate. I happen to be a director of Richard Thomas and Baldwins Limited, and on the board of that concern we have two very large consumers, Sir Robert Barlow, chairman of the Metal Box Company Limited, and Sir Andrew Agnew, managing director of the Shell Transport and Trading Company Limited. The concerns with which these eminent gentlemen are connected are very big users of our product—namely, tinplate—and the contributions which these gentlemen make to the policy and welfare of Richard Thomas and Baldwins is invaluable. They do not look to their own sectional interests. Their knowledge of the consuming side of the industry is invaluable to us in

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making up our policy, deciding on sales and so on.
I hope the noble Viscount the Leader of the House will not allow this Corporation to fall into the difficulties which face the National Coal Board. We are anxious to avoid the difficulties which have arisen between the Coal Board and its consumers. Problems have cropped up which could easily have been avoided if matters connected with the consuming side had been more closely considered, and if there had been someone on the Board who thoroughly understood them. Some of these difficulties, it is only right to say, have been subsequently put right as the result of representations by consuming interests. But they have left a nasty taste in the mouths of consumers. There have been such matters as sending unsuitable and costly coal to important consumers over great distances without previous consultation. Other instances of what has happened have been given by the noble Lord who moved this Amendment. Now we are faced with an administrative service charge, which varies all over the country and which is really nothing more than a means of "raising the wind" further without putting up the price of coal. I hope that if this Corporation is to be brought into being it will be an effective one. I trust that the Committee will support this Amendment.
VISCOUNT ADDISON: I desire to interject only a few remarks with regard to one matter which the noble Viscount seemed to have in mind. I recognise the great importance, indeed the vital importance, of the Corporation, in their deliberations, having before them information as to the needs of consumers. Suggestions from great consumers of the Corporation's product may well be of immense value. All I am saying is that I object to the specification of particular sets of persons in the Bill because it will thereby inhibit the freedom of the Minister to secure the best people. It is the principle of which I am speaking, because this is one of a serious of Amendments to which the principle applies. I have not the least objection to the kind of knowledge and experience which has been mentioned being represented on the Corporation, and I have no doubt that it will be, for we must believe that the Minister will have some sense.
VISCOUNT SWINTON: No, with great respect I cannot say that I altogether believe that. As I have already said, judging by appointments which have been made to Boards in other nationalised industries I have no reason to trust the great knowledge of Ministers. This argument which is used by the noble Viscount is extremely embarrassing—tot homines, and so on. It is extremely embarrassing to the Committee for him to say: "Look at my eminent colleague. Do you think that he is altogether a—well, a not very adequate Minister?" That is not at all a good argument. I do not mean that some Ministers are not better than others, but that is not the way to legislate or to legislate for all time. What you ought to put into an Act of Parliament, if you are to have an Act of Parliament, is what you think ought to be done. You really only strengthen the case for doing that when you get up and say: "No one who is not a complete fool would do anything except what is proposed." If that is so, had we not better ensure, if we can, that if by any mischance we had someone who was a fool, of more or less completeness, he did not do what the Leader of the House says it would be very unfortunate if he did do. The issue between us is quite simple. Apparently, we both think it is the right thing to do to have this representation. There can be no question of limitation of choice. On both sides of the Committee, we think that this representation ought to be on the Corporation. Our view is that if we think so, it is our duty to say so in the Act of Parliament. The Leader of the House says: "If that is your view then it is your duty to refrain from saying so in the Act of Parliament." I leave it at that, and I will add only that I strongly counsel your Lordships to take steps to make effective what you believe to be right.
LORD TEYNHAM: I am afraid that I cannot feel I am in any way satisfied by what has been said on this matter by the noble Viscount who is in charge of the Bill. I think the noble Viscount, Lord Ridley, made a very important point which perhaps I did not make, and I would like to emphasise it again. Lord Ridley said that some companies have on their boards directors who have knowledge of consumers' interests, such as shipbuilding and engineering. I am sure it is right that a similar association

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should be continued by this Corporation. Surely it is better that consumers' interests should be considered at Corporation level, and that there should not be delay until some event which is adverse to the consumers has occurred and is left to be dealt with by the Consumers Council. Consideration of consumers'
Resolved in the affirmative, and Amendment agreed to accordingly.
5.7 p.m.
LORD TEYNHAM LORD TEYNHAM moved, at the end of subsection (2), to insert:
"The initial and subsequent appointments shall he so made as to secure the inclusion of at least one person appearing to the Minister to have been engaged in the production of iron or steel otherwise than as:—

(i)a member or officer of the Corporation;

problems should start at Corporation level. I feel that I must press this Amendment.
On Question, Whether the proposed words shall be there inserted?
Their Lordships divided: Contents, 93; Not-Contents, 21.

CONTENTS

Aberdeen and Temair, M.

Margesson, V.

Harlech, L.

Cholmondeley, M.

Maugham, V.

Hatherton, L.

Exeter, M.

Monsell, V.

Hawke, L.

Reading, M.

Ridley, V.

Hindlip, L.

Salisbury, M.

Samuel, V.

Kenilworth, L.

Townshend, M.

Simon, V.

Layton, L.

Willingdon, M.

Swinton, V.

Llewellin, L.

Trenchard, V.

Lloyd, L.

Bessborough, E.

Mancroft, L.

Buckinghamshire, E.

Amherst of Hackney, L.

Mendip, L. (V. Clifden.)

De La Warr, E.

Ashton of Hyde, L.

Middleton, L.

Doncaster, E. (D. Buccleuch and Queensberry.)

Baden-Powell, L.

Milverton, L.

Balfour of Inchrye, L.

Monk Bretron, L.

Dudley, E.

Barnby, L.

Moyne, L.

Dundonald, E.

Belstead, L.

Polwarth, L.

Fortescue, E. [Teller.]

Blackford, L.

Rennell, L.

Howe, E.

Brassey of Apethorpe, L.

Ritchie of Dundee, L.

Iddesleigh, E.

Carrington, L. [Teller.]

Rochdale, L.

Lindsay, E.

Cherwell, L.

Rockley, L.

Munster, E.

Clanwilliam, L. (E. Clanwilliam.)

Sandhurst, L.

Onslow, E.

Somers, L.

Radnor, E.

Clydesmuir, L.

Stamp, L.

Rothes, E.

Cromwell, L.

Stanmore, L.

Selborne, E.

De L'Isle and Dudley, L.

Strathcarren, L.

Stanhope, E.

Digby, L.

Strathcona and Mount Royal, L.

Ellenborough, L.

Allenby, V.

Forester, L.

Templemore, L.

Bridgeman, V.

Foxford, L. (E. Limerick.)

Teviot, L.

Buckmaster, V.

Gage, L. (V. Gage.)

Teynham, L.

Davidson. V.

Gifford, L.

Tweedsmuir, L.

Falmouth, V.

Grantley, L.

Waleran, L.

Harcourt, V.

Grenfell, L.

Wardington, L.

Lambert, V.

Hankey, L.

Wolverton, L.

NOT-CONTENTS

Jowitt, V. (L. Chancellor.)

Ammon, L.

Macdonald of Gwaonysgor, L.

Chorley, L. [Teller.]

Marley, L.

Addison, V. (L. Privy Seal.)

Crook, L.

Morrison, L.

Foley, L.

Nathan, L.

Hall, V.

Henderson. L.

Pakenham, L,

St. Davids, V.

Holden, L.

Shepherd, L.

Kershaw, L.

Strabolgi, L.

Adams, L.

Lucas of Chilworth, L. [Teller.]

Winster, L.

(ii) a director or officer of a publicly-owned company or of any subsidiary of a publicly-owned company; or

(iii) a director or officer of a company specified in the Third Schedule to this Act or of a subsidiary of a company so specified."

The noble Lord said: The object of this Amendment is to ensure the inclusion in the Corporation of a member drawn from the independent steel-producing undertakings which, of course, are not to be nationalised. There are a considerable

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number of them. I suggest that it is important that the Corporation should include someone experienced in the problems of the small firms who will be outside the Corporation, particularly those who will be operating under licence, as laid down in the Bill. It should be remembered that nearly 400 firms are not to be taken over, and of these some fifty will be subject to licence. I think it is essential to have someone on the Corporation to safeguard their interests at the policy-forming stage; and again that stage must be at Corporation level. I should like to draw the attention of your Lordships to the fact that outside the Corporation and their subsidiaries there will be independent production of such articles as bright steel bars, steel castings, steel forgings and steel wire in excess—and I particularly stress this—of the production of the Corporation on the basis of their present activities. Therefore, I suggest that it is of the utmost importance that these large independent interests should be represented at Corporation level.
Again, in the case of light sections and bars, steel tubes and fittings there will still be independent production of those articles, but not by any means as great by the Corporation and its subsidiaries. But I feel sure your Lordships will feel that an important minority such as this should be safeguarded. This Amendment would ensure that the independent units of production which I have already mentioned, which will be outside the Corporation, will be represented at Corporation level. I beg to move.
Amendment moved—
Page 2, line 8, at end insert the said words.—(Lord Teynham.)
LORD ROCHDALE: In supporting my noble friend on this Amendment I do not want to stray unduly into Clause 3, but I feel that this Amendment must take note of a subsequent Amendment that is to be moved to that clause. Your Lordships will no doubt have noticed that Clause 3 lays upon the Corporation the duty of promoting the efficient and economical supply of certain products. But that duty relates only to the Second Schedule products. It goes without saying, I think, that in practice this duty will have to be exercised with regard to all the principal activities of the publicly-owned com-
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panies. That is what the subsequent Amendment to which I have referred seeks to ensure. If that is so, it seems to me, coming back to the present Amendment, that the position will require the most careful and thorough deliberation by the Corporation when they are considering the policy for these other principal activities, as my noble friend pointed out. All this simple Amendment seeks to do is to see that when the Corporation are settling their broad policy there shall be somebody with them who can speak with first-hand experience from the point of view of these smaller firms, who are responsible for such a high proportion of activities other than those mentioned in the Second Schedule.
VISCOUNT ADDISON: I do not want to weary the Committee with a long discourse. The same principles apply here as to the earlier Amendments, but this is rather more absurd than the others. The noble Lord urged that large interests should be represented at Corporation level. There, if I may say so, he gives away his case. We want this Corporation to be composed of independently-minded people who do their best for consumers, the users of iron ore, and so forth. They will not be there as representing any particular outside interest; that is the wrong way to constitute a Board of this sort, vet that would be the cumulative result of the last two and other similar Amendments. Why should we specify that the Minister should be compelled to go outside the general sensible instructions of subsection (2), to see that he chooses persons who represent large interests outside at Corporation level—to use the noble Lord's own words. It is entirely wrong, and I hope the Committee will not divide on this Amendment. If they do, we can only insert it. All I have to say is that it will be discreditable to the Committee to do so.
THE EARL OF DUDLEY: The noble Viscount describes this Amendment as absurd. I think it is disgraceful that the Government should have such a lack of sympathy and understanding that they deny representation to a minority of firms who will be entirely under the thumb of this Steel Board.
VISCOUNT ADDISON: I hesitate to interrupt the noble Earl, but we are not denying representation to anybody who

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will bring to bear on the subject a disinterested mind and experience. We do say, however, that the Board should not be constituted of people who are frankly on it to represent large interests outside.
THE EARL OF DUDLEY: I cannot follow the noble Viscount's method of reasoning. We insist, if something is right, that it should be put in the Bill; and this is something which we feel is right and justified. The Third Schedule to this Bill has been drafted in such a curious way that there will be an independent majority of production by certain sections of the industry, with a strong publicly-owned minority; and, conversely, a strong independent minority in other sections, which otherwise are owned by the Government. For example, there will be an independent majority, but a publicly-owned minority, in the following products: bright steel bars, steel shaftings, steel forgings, wire, wrought iron, and iron castings. And there will be a strong independent minority in light sections and bars, alloyed bars and sheets, cold rolled strip, steel tubes, pipes and fittings. It is important in regard to all those sections that they should work together and in harmony. That cannot be achieved unless they have a representative on the Corporation in close moment-to-moment touch with the policy that is being framed. The Corporation will be in the position to dictate and enforce all prices. Therefore, in that respect the independent minority will be entirely tinder their heel. It is only fair and businesslike that these independent firms should have representation and some say in such matters as price policy, wages, hours of work and so on. Otherwise, unfair conditions will be imposed. Indeed, in view of the fact that there is this curious difference, of independent minorities in some cases and independent majorities in other cases, the firms remaining as an independent majority might, if they were not working harmoniously with the Corporation, create conditions which were very disadvantageous and inconvenient to the Corporation. Therefore, in the interests of the Corporation it is most essential that they should work together. I hope the noble Viscount will give more thought to this, and will agree that it is important that these independent people should be represented on the Corporation.
THE MARQUESS SALISBURY: I imagine that it was no great surprise to any of us that the Leader of the House did not see his way fit to accept this Amendment, for the Government seem quite to have made up their minds that Parliament is to place no limitations to the powers of the Minister under this new scheme. I am sorry that is so. I think that from their own point of view they would have been wise to give it more serious consideration. It is not, after all, an unreasonable thing that there should be on the Corporation some representative to look after the interests of these smaller firms, who be faced with great competition from this immense new monopoly which is being created. Indeed, one would have thought that even from the point of view of general principle there was something to be said for representation of minorities. In this case the argument is a stronger one because, as my noble friend Lord Dudley has pointed out, in certain products which he mentioned these smaller firms are in fact producing the majority of the total products of the country. Therefore, it is particularly important that a fair balance should be ensured between their interests and the interests of this immense new Corporation that is being created.
It is generally admitted as being important—in fact, it is a general principle of British law—that not only should justice be done, but that justice should be seen to have been done. One would have thought that anything which ensured that, and was a reassurance to the general public that such a thing was happening, was of advantage—even from the point of view of the Government, in recommending the scheme to the British population which is by no means convinced that it is a desirable innovation. I am not going to advise my friends to divide on this Amendment. We have divided on two which we believe to be of great importance—arid I expect we shall have to divide on others—and perhaps there are limitations which we must set ourselves. But I regret, and I believe that the Government will ultimately regret it, that they are determined to bring in this scheme which I do not believe has the support of the majority of the people of this country. The least they can do is to see that it appears to be a completely equitable one. As I say, I cannot advise

195
my noble friend Lord Teynham to press the Amendment, but I regret deeply that the Government could not see their way to accept it.
LORD TEYNHAM: I, too, am sorry that the noble Viscount in charge of the Bill cannot accept the Amendment, but in view of the arguments which have been put forward from this side, and especially by the Leader of the Opposition, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.22 p.m.
LORD WOLVERTON LORD WOLVERTON moved, in subsection (2), to omit all words from the beginning to the proviso and to insert:
"The term of office of the Chairman of the Corporation shall be five years and the term of office of the other members of the Corporation shall be three years and one third of the members, or where the total number of the members is not divisible by three, such number as represents one third of the highest number less than the total number of members which is divisible by three shall retire in each year on the anniversary of the constitution of the Corporation excepting that in each third year all such members as have held office for three years since their last appointment shall retire on the said anniversary:
Provided that of the first members of the Corporation one third of their number, or if such number shall not be divisible by three, one third of the highest number less than the total number of the members which is divisible by three, shall be appointed for one year until the first anniversary of the constitution of the Corporation and shall then retire, one third of such number as aforesaid shall be appointed for two years until the second anniversary of the constitution of the Corporation and shall then retire, and the remaining members of the Corporation shall be appointed for three years until the third anniversary of the constitution of the Corporation and shall then retire.
A person who has held the office of Chairman or member of the Corporation shall be eligible for re-appointment to that office or for appointment to the other of those offices."
The noble Lord said: This Amendment is an important one. Its object is to ensure that a system of rotation of membership of the proposed Iron and Steel Corporation takes place. In the Amendment I have been careful to ensure that there should be continuity of management, which I am sure your Lordships will feel is necessary. As the Bill is now drafted, no rotation system is provided for, although after the Amendment which was moved in another place and negatived, the Minister, resisting the Amendment, said that his objection to it was that it
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did not give sufficient continuity of management. He said that he would look into the question that members should not serve longer than five years, but nothing to that effect appears in the Bill as it is now presented to your Lordships' House.
The Amendment now before your Lordships has been modelled on the Bank of England Act, 1946. Under the Second Schedule of that Act—which was accepted by your Lordships' House in 1946—the Governor and Deputy Governor of the Bank of England are appointed for five years, and the other sixteen directors rotate on a four-year cycle, four retiring every year. Under this proposed Bill there is to be a chairman and not less than six nor more than ten members. In this Amendment, which is rather complicated to explain, we have attempted, I think with success, to put a cycle of three. It will not quite work out at a cycle of three if the full number of ten are appointed May I give your Lordships one example, because I think it is very important? The chairman will remain for five years, and if there are a chairman and ten members it will work out on this basis: after the first year, three members out of ten retire and are eligible for re-election: after the second year, three members of the remaining seven of the first appointments go and are also eligible for re-election after the third year the number has to be made one more, four, and they also are eligible for re-election.
If it is decided to appoint only a chairman and six members, it would work out on the rotation of one-third. The chairman would be appointed for five years. After the first year two members would retire, eligible for re-election, two more the next year and two more the third year, By that means I think we have met the objection which the Minister had to the Amendment moved in another place, that there was not sufficient continuity of management. We feel that this is a very important Amendment, because in all big public companies directors come up for re-election after two, three or four years, according to the Articles of Association, and we feel that the Minister should have that provision and that members should not be there indefinitely. By this method, which is rather complicated, there will

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be complete continuity of management. I beg to move.
Amendment moved—
Page 2, leave out lines 9 to 12 and insert the said new words.—(Lord Wolverton.)
LORD GIFFORD: This Amendment has been fully explained by my noble friend Lord Wolverton, and I will add very little. It seems to be a sensible and reasonable arrangement, and one which is almost universal in companies and banks; that is to say, that the directors or members of the Corporation should retire after stated periods—in this case three years for the ordinary members—and at the same time be eligible for re-election. I think it is a desirable safeguard against the Corporation being saddled for a prolonged period with some member who has not been a success. I think it is also right, as is proposed in the Amendment, that the chairman should be given a longer period, because obviously you do not want to change your chairman too freequently if you can possibly avoid it. I hope the noble Lord opposite will accept the Amendment because I think it is a very desirable and sensible one.
LORD HAWKE: Unless this Amendment is accepted, if my reading of the Bill is correct, there will be no limitation whatsoever upon the term for which the Minister can appoint the members of the Corporation. In all the other nationalisation Bills which I remember, I think there was some sort of limitation put in. At any rate, His Majesty's Government, when they bring these nationalisation Bills before us, are extraordinarily careful to make provision that where directors of private undertakings enter into long contracts for themselves or their employees which might be considered to be imprudent, the Government can repudiate them when they take over the industry. We are merely giving tit for tat. We are proposing that where possibilities exist of the Minister appointing people to this Corporation for a longer term than we feel would be justified, a limit should be put on his power. For that reason, I think we ought to support this Amendment.
VISCOUNT DAVIDSON: I hope the Government will accept this Amendment. It is not only reasonable but, from some angles, very necessary that an opportunity should be available to remove the mem-
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bers of the Corporation if it became desirable. If this Bill ever reaches the Statute Book, iron and steel is going to be a nationalised industry. Changes of Government do occur and I think that that alone is a reason for accepting this Amendment. I suggest that Governments of all complexions would probably wish to make changes, if appointments are on political grounds, as they have sometimes been in the present nationalised industries.
LORD MORRISON: This is a long Amendment and the noble Lord, Lord Wolverton, who moved it, has argued very reasonably that members should be appointed for a reasonable period and should retire in rotation. With the spirit of that proposal the Government are in agreement, but unfortunately I am not in a position to accept the Amendment because the Government take the attitude that there should not be any statutory rigidity in this matter and there must be room for flexibility in the length of the appointments. I do not think that the noble Lord, Lord Hawke, was being as reasonable as he usually is when he suggested that Ministers might appoint people for life.
LORD HAWKE: I did not say "for life," I said "for rather longer terms than we would like."
LORD MORRISON: I think you went further than that, and that is why I am endeavouring to add my small contribution to this discussion. Let us, so far as this discussion is concerned, try and keep perfectly calm, because we are in danger outside in the country of starting an era of wham. I call "bladder and stick" speech—speeches which make a loud noise but are a little remote from the facts. I therefore start by telling the noble Lord, Lord Wolverton, that, whilst we agree with the spirit, we regret that we are unable to accept his Amendment because the Government cannot accept any statutory rigidity in the matter. There must be room for flexibility in the length of the appointment. One of the main reasons for establishing independent boards is to ensure that the industry for which they are responsible can be planned on a basis of the steady pursuit of a longterm policy, and this might well require that the normal run of full-time appointments should be for a longer period than

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three years—for most nationalised boards the normal period is five years.
I must add that I think the second paragraph of the Amendment is completely unsatisfactory. It proposes that a fixed number shall retire each year. In making the appointments any Minister is bound to try to get a sufficient "stagger" to avoid a complete reappointment in five years. The older men normally would be appointed for a lesser period. I suggest also that some of the people whom the Minister would wish to attract from the Corporation (and this point has not been mentioned) might not be willing to accept full-time appointments for so short a period as three years if that meant severing their connections with their existing business at the age of fifty and finding, say, in the middle fifties, that they were no longer required on the Corporation and had reached the age at which their services would not be sought after in other directions. If that argument is sound, and I think it is, to ask, as the Amendment does, that one-third should be appointed for one year and one-third for two years seems to me to be going a little too far. I cannot conceive that any responsible person invited to accept an important appointment like this, and realising that he might not be reappointed at the end of one year, would be prepared to give up all his important interests to take up this post.
LORD WOLVERTON: May I interrupt? They are all subject to reelection, and if they are satisfactory after one year and are re-elected they go on for three years.
LORD MORRISON: But the noble Lord knows it is not very satisfactory to have only one year's service on a task of this sort. In any case, I regret for the reasons I have given that I am unable to accept the Amendment.
LORD RENNELL: I do not understand what the noble Lord who has just sat down has in mind. He talks about "statutory rigidity" but it does not seem to have any bearing at all on the Amendment proposed by Lord Wolverton. This is the commonest of all provisions in appointing and electing directors to statutory companies: a person who retires by rotation is subject to re-election
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if he is suitable. If there is no question of statutory rigidity about a man being appointed for five years and then having to resign, a fortiori there is none in regard to a man appointed for one year and then having to submit to re-election. The purpose of this Amendment is to secure that certain gentlemen who have been appointed to the Board shall retire in such a manner that there will always be a certain number retiring each year and, if they are willing to go on, offering themselves for re-election, and being re-elected if they are suitable. That has nothing to do with statutory rigidity. It is entirely the opposite. There is no statutory rigidity at all. On the contrary this gives the maximum possible flexibility.
Moreover, this Amendment enables the Minister or the Government, without causing a row and asking for somebody's resignation or sacking him from the Board, to drop a person who either has not proved his worth or has proved that he is not so good as somebody else who subsequently comes along. It is the most convenient of all methods of effecting a change without having a row in the newspapers and other difficulties, a great many of which have already come across the path of various Ministers in His Majesty's Government. In their own interests I must beg the noble Lord to reconsider this Amendment. If he will look back over appointments made in the last few years, he will see how much more convenient it would have been to have a certain gentleman retiring by rotation and to ask him not to offer himself for re-election, than to say, "Look here, old chap, you have got to go," and have every newspaper in the country kicking up a row and saying "So and so is being asked by the Government to go."
I must ask the Minister to reconsider this proposal because it is the simplest, most practical and most efficient form of securing the rotation to which the Minister referred in speaking of staggering the retirements. He said he wanted the appointments made for such a period as would avoid all the people retiring or coming to the end of their appointment at one time. What we are seeking to do in this Amendment is to do precisely what the Minister said he wanted to do but which he is unwilling to bind himself to do; that is to say, he is unwilling to bind

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himself that people shall retire by rotation so that he can re-elect them if he wishes.
The Amendment gives everybody complete freedom. It gives the director who does not agree with the policy of the company freedom to go without embarrassing the Government. There are a great many public-spirited people who feel that a policy decided by their Corporations is not one with which they are in agreement, but they do not want to embarrass the Government by resigning and have every newspaper in the country saying, "Why did you not go on? Did not you agree with the policy?" It is simpler to say, "I have come to the end of my three years," or six or nine years, and fade out of the picture. I hope it is not because it is an Amendment proposed on this side of the House that the Minister is unwilling to hind himself. This is an Amendment entirely in the Government's own interest, and it seems to me entirely in the spirit of what the Minister said in Standing Committee.
LORD BALFOUR OF INCHRYE: I hope that the noble Lord will reconsider his rejection of this Amendment. He took refuge behind a smokescreen of statutory rigidity—those were the words he used. As I understand it, he means that the Government (and perhaps he will correct me if I am wrong) are unwilling to accept fixed terms of office and fixed terms of rotation for the chairman and for the other directors. That is as I understand it.
LORD MORRISON: The Government desire that there should be some flexibility, for the reason, among others, that some would be part-time and some would be full-time.
LORD BALFOUR OF INCHRYE: But this dislike of a fixed term and retirement by rotation does not bear examination. If noble Lords will refer to the Second Schedule of the Bank of England Act—a product of this Administration—they will see that it lays down almost exactly what this Amendment is proposing to do. It says:
"1. The term of office Governor and of the Deputy-Governor shall be five years.
2. The term of office of the directors shall be four years, and four of them shall retire each year on the anniversary of the appointed day.…"
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I feel that the noble Lord ought to come with a better defence for the rejection of this Amendment than to say that the statutory rigidity of the Government is such that they now reject something which they have accepted in another of their own nationalisation measures. I hope that between now and the Report stage the Minister will undertake to consider what his own Government have done in other nationalisation measures and that at a later stage he may be able to put down an Amendment on the lines of that moved by my noble friend to-day.
LORD MORRISON: I do not know that I can add anything to what I have said. I know that the term of office, so far as the National Coal Board is concerned, is five years and that that is also the period for the Transport Commission—that is for a full-timer. The term for a part-timer is three years, and in the British Electricity Authority, two years. I know that the term in the Bank of England is five years for a Governor, and four years for the other directors, a quarter of whom retire annually. What I said, or meant to say, to the noble Lord was that the Government, while agreeing with the spirit underlying the Amendment, desire that members should be appointed for a reasonable period and should retire in rotation. The Government find themselves in agreement with that, but are unable to accept this Amendment. I endeavoured to explain that, in the opinion of the Government, the Amendment is unduly rigid. Three methods have been adopted in the appointment of the boards of nationalised concerns. First, by a provision in the Statute itself; secondly, by regulations made under the Act; and thirdly by specification in the letter of appointment. That was the method adopted in the Transport Act. The Government are of the opinion that this would perhaps be the better method. I am sorry that I am unable to respond to the request of the noble Lord, but I have no instructions to do so and must leave the matter there.
THE MARQUESS OF SALISBURY: I think we all understand the difficulty in which the noble Lord, Lord Morrison finds himself, and in which everybody must find himself who is not speaking for his own office and has not therefore the elasticity which is sometimes so necessary. But he did say at one stage that

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he thought that three years was too short. A man might respond to an invitation to give up ordinary employment to take on a job for three years and find himself at the end of that time obliged to leave, the job having come to an end. He may be in a position of great difficulty. I think we all appreciate that sort of position. We are not tied down to the terms of this Amendment. If the Government and ourselves are in favour of the spirit of the Amendment it does not seem impossible that some compromise may be found. I suggest to the Government that if we agree not to press this Amendment to-day they might, without committing themselves in any way, consider the matter a little further in consultation with the Minister before the Report stage. If at that point they find that they cannot meet us we can then see what we shall have to do. But I do not think that in this instance, when we are so near together in spirit, we on this side should go to extreme lengths. Therefore I suggest to my noble friend Lord Wolverton that he may desire not to press this Amendment at the present stage, on the understanding that Lord Morrison will discuss the matter with the Minister and let us know the result of the discussions. We can then put down an Amendment again on Report stage if that appears to be the appropriate course.
LORD MORRISON: In response to the noble Marquess, I have no objection to the conversations he suggests, and I will certainly take part in them in the hope of seeing whether it is possible to devise any words that will meet what we want. At the same time the noble Marquess will appreciate that I am not in a position to undertake any commitments.
THE MARQUESS OF SALISBURY: I do not want that.
LORD MORRISON: I appreciate that the noble Marquess has with his unerring instinct put his finger on a difficulty. There must be some elasticity. But I must ask the noble Marquess to understand clearly that I am not entering into any definite commitments. On that understanding I must leave the matter.
LORD WOLVERTON: I thank the noble Lord for what he has said, and in
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view of his remarks I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved to add to subsection (2):
"Provided also that if the Minister is satisfied that a member:—

(a) being a whole time member holds another office of profit; or

(b) becomes bankrupt or makes any arrangement or composition with his creditors generally; or

(c) has made a personal profit out of any contract entered into by the Corporation; or

(d) holds a financial or other interest prejudicial to the exercise or performance by him of his functions as a member of the Corporation; or

(e) has acted in a manner contrary to the provisions of subsection (6) of this section; or

(f) is convicted of an indictable offence; or

(g) becomes of unsound mind; or

(h) has for more than six months been absent without permission of the Corporation from meetings of the Corporation held during that period; or

(i) has acted in breach of any of the terms of his appointment,

the Minister may declare his office as a member of the Corporation to be vacant and shall notify the fact in such manner as the Minister thinks fit; and thereupon the office shall become vacant."
The noble Viscount said: This Amendment has a good deal in common with the last one, the principal feature of the similarity being this. We on this side are concerned to see that where there are provisions which apply to ordinary companies—provisions that have stood the test of time and have been incorporated in the Companies Act—we should follow the same procedure in regard to the nationalised Corporations. I think that is a very good principle, and I do not believe that the noble Lord opposite will disagree with me. We now come to another case. As your Lordships know Table A is the model Articles of Association under the Companies Acts. It contains a standard clause under which it is possible to get rid of a director if he does things which are not usually considered creditable in business and would not be considered creditable in nationalised Corporations—such as becoming, bankrupt or of unsound mind, and so forth. This is an ordinary provision in Table A and we seek in this Amendment

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to apply its provisions to Clause 1, subsections (5) and (6), so as to provide that a member of a Corporation shall vacate his office for contravention of those provisions which deal with disclosure of interest, a matter which is referred to in Clause 1.
There are one or two reasons why we put this forward. I hope that if the noble Lord, Lord Morrison, has no instructions to accept this Amendment, he will nevertheless perhaps stretch a point and look at this in connection with the last Amendment, because it is closely connected with it. I should like to sum up the case for this Amendment on three grounds. First that it has its parallel in the Companies Act, and is therefore something which for nearly 100 years has been found a suitable and necessary provision in the Articles of Association of companies. Secondly, there are similar provisions in the Bank of England Act and the Civil Aviation Act. I ought to say here that in the Coal Act and the Gas Act, as the noble Lord opposite probably knows, the matter is dealt with by regulation. But we think that the counterpart of Table A is the right thing to have here. Thirdly, I believe I am right in saying that on the Committee stage in another place an undertaking was given that this matter would be looked at before the Report stage there, although I do not think that anything emerged from that. The guillotine fell and there was no time for discussion. So we brine forward this point now. We do not think that there is any real difference in spirit. We suggest that this is the right way to handle it. I hope that the noble Lord opposite will think that this is a reasonable and sensible way to deal with the matter. I beg to move.
Amendment moved—
Page 2, line 14, at end insert the said proviso.—(Viscount Bridgeman.)
LORD LLOYD: I should like briefly to support the Amendment moved by my noble friend, because I think it is essentially a reasonable Amendment. All it asks is that the rules (if I may call them that) which apply to every company in this country—I do not think there is any company which does not have provisions of this kind in its Memorandum and Articles of Association—shall apply to the Corporation. I am going to add only one word to what has been said. The
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Government, as the noble Lord pointed out, started off, as so many of us do in life, with good intentions—that is to say, they wrote such provisions into their first nationalisation Bills. Since then I think they have been slipping a little. First, they compromised by putting these provisions in regulations, and then in more recent Acts they did not bother to do it at all. I feel it is important in this particular instance because in this Bill, more than in any other, we are for the first time dealing with an industry that has been split, where there is private enterprise and public enterprise—at least we hope it is "enterprise." I feel that what is sauce for the goose must be sauce for the gander. I do not see any reason why, if an ordinary company has this provision in its Memorandum and Articles of Association, the Corporation should not have a similar kind of provision. I hope the noble Lord will not consider this a "bladder and stick" speech but as a reasonable point to make, and that he will accept the Amendment.
LORD MORRISON: I can assure the noble Lord that I carefully avoid making "bladder and stick" speeches, and I hope I always shall. A similar Amendment was discussed in another place and, so far as I could gather, the debate became much more confused than it usually does here. It is true that recent precedents have dealt with the termination of appointments in three entirely different ways. In paragraph 4 of the Second Schedule to the Bank of England Act, reasons for disqualification include the fact of being an alien; and in the Civil Aviation Act in the First Schedule, paragraph 5 disqualifications include:
"is otherwise unable or unfit to discharge the functions of a member."
In the Coal, Gas and Electricity Acts the matter was dealt with by regulations, as the noble Lord said. Then in the Transport Act, as in this Bill, it is dealt with by specification in the letter of appointment. I suggest to the noble Lord that experience may have shown that the earliest precedents involved rather too great rigidity, and that if the disqualifications are embodied in the Statute itself, it is difficult to amend them in changing circumstances. Embodiment in regulations loosens the position a bit, but it is strongly felt that the sensible means is to embody in the letter of appointment the circumstances which, at the date when

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the appointment is made, would be regarded as disqualifications.
Noble Lords who have supported this Amendment seem to be aware that there is something in this point by including in their Amendment sub-paragraph (i):
"has acted in breach of any of the terms of his appointment."
This is a kind of sweeping-up provision which clearly renders the previous eight paragraphs unnecessary, because it includes the whole of them. I am aware that they correspond in some respects to the provisions of the Companies Act, 1948, but applied to this Bill they are far from water-tight. For example, under paragraph (a) a full-time member of the Corporation who made a contract with, say, the B.B.C. to appear in "Twenty Questions" or to give a series of talks on his hobby—and in neither case was there any interference with his duties as a member of the Corporation—would apparently lose his job if he accepted the usual fee of a few guineas. One could give other examples but, to sum up my short point: Any catalogue of disqualifications—and this is a catalogue of disqualifications—must inevitably be lengthy; alternatively, it must contain an "escape" provision such as that in paragraph (i) which renders the remainder meaningless. In this Bill, the Government wish to improve upon former precedents, and a careful letter from the Minister to those he desires to appoint should meet the circumstances as between sensible people. The potential appointee will know what the conditions are, and it is up to him to make his choice whether or not he accepts.
VISCOUNT RIDLEY: There is one point in connection with that which might be referred to—that is, that this Corporation is not really a parallel of any of the earlier nationalised undertakings, because, according to its description in the Bill, it is in essence a holding company, although capable of certain operations of research and organisation and so on; and it has to deal directly with operations carried out by other companies. The people in charge of the other companies are subject to the various provisions of the new Companies Act, including the Table A referred to. I think it is certainly in the interests of the members of the Corporation that the directors of the publicly-
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owned companies should realise, and it should be openly known, that the people responsible for giving them their instructions and working with them are subject to the same kind of regulation or control. As to the particular point mentioned, I think there is no doubt that there should be some discussion as to how these regulations should be worded, or whether in this case there should not be some alteration. In view of the relationship of the Corporation with the publicly-owned companies and the rather undefined machinery for co-operation between the two, it is important that there should be confidence established between them. It would help if it were clearly known and understood that they were both expected, and known to be expected, to conform to certain standards of conduct. It is possible for the Minister, in his letter of appointment, to lay down conditions which would be reasonable and proper. In the special circumstances of this Bill compared with earlier Acts, it seems to be important not only that they should be so laid down, but also that it should be publicly known what they are. And the Bill seems to be the best place to have them.
THE EARL OF DUDLEY: There seems to be an extraordinary idea that you cannot catalogue by Statute all the crimes for which a man can be sacked, but that you can catalogue them in a private letter when you invite him to join. The Minister of Supply in another place said the same thing:
"It is impossible to put in statutory form all the conditions under which a Minister might properly desire to sack a member. The sensible thing to do—it was done in the Transport Act—is to leave the conditions to the Minister to set out in his letter of appointment to the individual. If the individual does not like the conditions, he will say, 'you must find someone else. I will not accept those conditions.' The individual is not compelled to accept them."
I do not quite know how the letter would set out all these "crimes." Would it say Dear Johnny, How about your joining the Steel Corporation? But I must warn you, that if you go 'nuts,' get drunk and disorderly, go bankrupt, go to 'quod,' become a 'bookie,' go absent without leave or in any way misbehave yourself, you will get the sack." I should have thought it would have been much better, in the ordinary businesslike way, to write into the Constitution of the

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Corporation the list of offences of which a member must keep clear. It is done in ordinary everyday business. Why not write it into the Constitution of the Corporation and have the thing clear and concise? I hope the Minister will accept this Amendment.
LORD RENNELL: I think the noble Lord is under a misapprehension here. He said it provided under paragraph (a) that if a certain person entered into a contract with the B.B.C. for a few guineas to take part in "Twenty Questions" he would be disqualified. But that is not what the Amendment says. The Amendment says:
"Provided also that if the Minister is satisfied that a member:

(a) being a whole time member holds another office of profit; or

(d) holds a financial or other interest prejudicial to the exercise or performance by him of his function as a member of the Corporation

the Minister may declare his office as a member of the Corporation to be vacant."
But it does not follow that he shall. If the member accepted a fee to broadcast about matters concerning the steel industry I should think the Minister would declare his office vacant. But it does not say the Minister must; it says he may. As to the cataloguing of all these vices of which the noble Earl has spoken, I wonder how many people in the acquaintance of the noble Lord or of the noble Viscount would accept any appointment if the Minister wrote to them and said, "You can have this appointment, subject to. …" Let us bring a little reality into this discussion. How on earth is the Minister going to get anybody appointed if he says, "If you go to prison you get the sack." The thing is positively absurd. This question will arise again, and my friends and I on this side of the House will try to relate the operation of this Bill to the practice of the new Companies Act that this Government were responsible, and rightly responsible, for introducing into the commercial world. Let us use the Companies Act so far as it is applicable to this Corporation, and not depart from it in order to make a special code consisting of writing rude letters to prospective appointees.
VISCOUNT SWINTON: May I ask the Minister two questions on this matter?
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Frankly, I entirely agree with what has been said by the two previous speakers in regard to listing into the letter offences which you know no decent man is going to commit, and I ask the Minister how he proposes in those letters to set out these things for which the appointee will vacate his office. That is a perfectly easy question to answer. The second question I would ask is: Are the conditions which are to be laid down in the letter to be uniform for each member of the Board, subject to this: that if a man is a whole-time member the conditions would vary from those for a part-time member—I am speaking of the condition that he must give the whole of his tine to the business of the Corporation. Subject to that, are the conditions to be identical for every appointee? If not, why not? It is going to be rather curious if certain favoured people are to receive one set of conditions and other less favoured people are to receive another. Or are you going to say that certain people will require more strict ministerial supervision, for fear that they should do things which one or two members of some boards have, I believe done?
These are not just hypothetical questions. They are really very practical questions to which I am sure the noble Lord can give an answer, and I hope he will give an answer. If he cannot give a definite answer, then he renders himself or leaves his Minister open to all sorts of misunderstandings and misinterpretations. I would respectfully submit that if the Minister says that if a man is to be bound by conditions, those conditions must be in the letter, then his answer must be: "We are going to put into the letter all the conditions on which he will vacate his appointment." If his answer is also, as I hope and trust it must be, that the conditions for all whole-time members will be uniform, and the conditions for part-time members will also be uniform, then let him tell us what those conditions are.
If there is to be that simplicity and uniformity, would it not be much less embarrassing to the Minister and to those he approaches if the more obvious and glaring cases were set out in the Bill? We who are directors of companies do not engage in all these odd practices. Under the present disposition some of us may be lucky not to go bankrupt, but the other things I hope we shall avoid

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doing. We do not regard it as an insult that the Companies Act lays down that if we offend against the "Ten Commandments" we shall vacate our posts as directors of companies. We think that a very reasonable provision. But if my noble friend, Lord Dudley, wishing me to accept an appointment, wrote me a letter of this kind, I know what my answer would be. The Minister has had plenty of time to consider this matter, and I hope he will give us an answer to these questions.
LORD MORRISON: The noble Viscount is having a most enjoyable time and I am a little envious of him because I am in rather a quandary in my own mind. For two days I sat through the Second Reading debate in this House and heard the speeches. Every speaker on the other side of the House said that this was by far and away the worst Bill that this Government had introduced—and that was saying a lot! They said it was quite impossible to amend this Bill or to make it better; that it was a thoroughly bad Bill. I am in difficulties at the moment in that I am trying to puzzle out in my somewhat poor way, whether noble Lords opposite are now trying to amend a Bill which is so bad that it could not possibly be amended, or whether they are attempting what I ventured to say on Second Reading—namely, to destroy it by the "death by a thousand cuts." The noble Viscount has put questions to me: I put that one to him. Is this series of Amendments an attempt to amend the Bill? Only the other day the noble Viscount, who is one of the Leaders of the Conservative Party, made a speech in which he said that if his Party were returned at the next election, they would see that this Bill did not come into force. If it had been passed and was on the Statute Book, they would repeal it. What I am endeavouring to find out, and what it would be helpful to us to know—after all if we are going to start a questionnaire on this business it is as well that questions should come from both sides—is whether the Opposition, in this long series of speeches which has now begun and in this long series of Amendments which is being put forward, are really trying to make the Bill into a Bill which will work—I do not hear any response.
VISCOUNT SWINTON: I am waiting for the noble Lord to sit down. He will certainly get a response when he does.
LORD MORRISON: It will be interesting to know whether the Opposition are trying to amend this Bill in such a way as to make it into a workable measure, or are trying to make it absolutely unworkable.
To come to the particular point which the noble Viscount has raised, I made it clear, I hope, that there had been three different methods for determination of appointments—by Statute as in some of the earlier nationalisation Acts by regulations, under some later ones—coal, gas, and electricity—and by specification in the letter of appointment. The last applies under the Transport Act, and now similar provision is made in this Bill because experience up to now has suggested that earlier precedents embodying conditions for termination of employment under Statute or Regulation involve a certain amount of rigidity and that if the disqualifications are embodied in the Statute itself it is difficult to amend them in changing circumstances. When important Bills are passed, the House cannot always be engaged in making amendments whenever the rapidly-changing circumstances of the twentieth century make that necessary. That is what I endeavoured to explain, and that is the position which I still take up. The noble Viscount, of course, can make great play with what I have said, as if it were something entirely new for a Minister to write to someone offering him a post and outlining the terms. I do not think that there is anything very original or new in that. I am sorry I am not able to add any more, because I have no authority, either in the way of taking this matter back or accepting the Amendment. If noble Lords are dissatisfied with my reply or my attitude, they must do what they think wise and prudent.
6.13 p.m.
VISCOUNT SWINTON: I should not have intervened but for the extraordinary speech which we have just heard from the Minister who is temporarily in charge of this part of the Bill. I can give him a perfectly plain answer. I should have thought that as a popular and respected member of your Lordships' House he knew the answer quite well, without ask, ing for it. The answer is this: this is a

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bad Bill, and it is a Bill which we say has never been submitted to the people of this country. We shall presently come—I do not want to anticipate the debate now—to an Amendment which will ensure, if your Lordships carry it, that the Bill will not be brought into effect until the people of this country have had an opinion of expressing their opinion upon it. If the Bill were to pass and we were returned, as I trust and believe we shall he, at another Election, we should certainly repeal it. We are not in the habit of giving thoughtless pledges before an Election, and that is a pledge to which every leader of the Party to which I belong is fully committed and in which everyone in the Party which is associated with us on this measure would concur.
We have an equally clear duty, a duty which in the Second Reading debate the noble Viscount the Leader of the House impressed upon your Lordships, when he said that the most careful consideration should be given to the provisions of this Bill. This House has a duty—it is a duty which I am certain your Lordships will discharge—and although, in principle, we think that this is a bad Bill, yet if it is to go on the Statute Book it is essential that it should go on in a form which, if the principle of it is accepted by the country, will yet make it a workable measure. I am answering the question which the noble Lord, Lord Morrison, put to the House. Perhaps he will do me the courtesy of listening to my reply. I have been closely associated with my noble friends in the preparation of these Amendments, and I deeply resent the suggestion made by the noble Lord—if it came from some quarters I should not care about it, but I regret it coming from hint—that these Amendments are put down frivolously. I have had the privilege of acting as Leader of the Opposition in this House on all nationalisation Bills which have come forward. I have received the tribute of the Leader of the House and of the Lord Chancellor that the whole of that business has been conducted thoroughly, conscientiously and with dispatch. There is not an Amendment which stands on the Order Paper to-day 'which is not worthy of discussion.
And I say this—it will not make much difference whether the noble Lord is 'present in the House or not, but I give him this first firm assurance—every Amendment which stands on the Order
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Paper will be fully and fearlessly discussed on its merits in this House. We shall not unduly prolong debate. If we receive a satisfactory answer we shall accept that answer as satisfactory. We have never dealt unfairly with the Government in that respect. If we do not receive a satisfactory answer or if, as unfortunately appears to be the case now, we fail to get an answer at all to perfectly legitimate questions which are conscientiously put, we shall take such action as seems right to us. Because someone makes a joke that does not mean that he is not perfectly scrims and sincere in what he puts forward. I know that on the other side of the Border certain views are held as to the sense of humour of Southerners, and that people on this side have ideas about the Scots sense of humour. Personally I have always bad a rather better appreciation of what Scots consider to be their sense of humour. I think it has its funny side now and again, but the noble Lord really must not think that because a speaker may speak in a slightly humorous way he is not regarding his subject seriously. The noble Lord took us to task on this Amendment, and I felt it necessary to say what I have just said. The speech of the noble Lord to which we have listened is one which I am sure that he, on reflection, will regret. I trust that that is the last time we shall have that kind of speech in this debate.
I come now to the Amendment which I hope he is going to treat seriously, because it is seriously put forward by us. What is proposed here is to put in this Act an exact provision taken out of the Companies Act, a measure which was dealt with very thoroughly in your Lordships' House, and of which the Lord Chancellor said, in commending it to another place, that it was one of the most perfect pieces of legislation ever carried through and an example of what this House as a model of legislative Assembly could do. We carefully revised the Companies Act to insert these clauses, which are applicable to all companies. We have repeatedly been told, in connection with these nationalisation Bills, that it is the intention of the Government that these Corporations shall conform in all respects to the best company practice. It may be the wisest thing to apply to these Corporations many of the provisions of the Companies Act, but the Government, in

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their wisdom, have not so done in the structure of these Bills. We accept that, but where it is convenient, surely it is the right thing to write into the Bill, either by reference or directly, these provisions of the Companies Act? Is not the sensible thing to do what has been found wise in respect of every other company? The noble Lord himself said the Government were feeling their way, and that there were various ways of doing this—by including it in the Bill or by regulation. I think the latter is a suggestion well worth considering. If it were considered possible to do it by regulation, we would accept that, and I would not press this Amendment. I agree that we cannot provide for everything, but that is not a reason for not providing for anything.
I feel that the noble Lord has not studied the matter, because the last provision here is that the Minister shall be able to add such other conditions as may be appropriate. This is exceedingly important and I beg the noble Lord to treat it seriously. I dislike nationalisation and he likes it, but whether we like nationalisation or not, it is very important that what is done by the Minister in charge of a nationalised industry, or by the Corporation running it, should be open and above board. I am not saying that the Minister is going to do wrong things, but if we hedge him all round with letters written to this man and something else sent to that one, we shall only make trouble for ourselves. It would be much easier for the Minister to reconsider the Bill. If he thinks it wiser that this should be done by regulation, we will not insist on having it in the Bill. I am sure it would be wiser to reconsider this matter, and we can come back to it again on the Report stage. It may be that the right compromise will be to do this by regulation, but merely to leave it to the Minister to write a letter leaves it open to every possible objection that can be raised.
LORD MORRISON: The noble Viscount must understand that I have no authority to accept this Amendment in its present form.
VISCOUNT SWINTON: I agree.
LORD MORRISON: Secondly, as to whether it could be accepted in the modi-
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fied form the noble Viscount now suggests, I can say only that I am not able to commit the Government even to that modified form. But, of course, if an Amendment in the modified form now suggested should appear on the Order Paper on Report stage it would naturally receive the consideration of the Government. I am afraid that is as far as I can go.
THE MARQUESS OF SALISBURY: Would it not be possible for the Government to go a little further, and consider this with us between now and Report stage? We can put down an Amendment in a modified form in Report stage, but surely it is better, if there is any chance of agreement, for us to discuss it before Report stage; then if we reach no agreement it will still be possible for us to put down our Amendment and press it or not, as we think best.
LORD MORRISON: If the noble Marquess means that when we have got through the Committee stage our relations will be such that it will still be possible for us to indulge in what I call back stage conversations, and reach some kind of agreement before coming back to the Floor of the House, I would say, "Yes, certainly."
THE EARL OF DUDLEY: I would remind the noble Lord that on Committee stage in another place, the Minister was impressed by the arguments of the Opposition, and said he would give consideration to them before the next stage of the Bill. But he did not do so. I hope the same thing will not happen in your Lordships' House.
LORD MORRISON: There is no guillotine in your Lordships' House.
VISCOUNT BRIDGEMAN: Nearly half an hour ago, when I first moved this Amendment, I made an appeal to the noble Lord opposite to consider this matter in the light of the arguments I produced. I am glad to find that at long last he has done so. Before I withdraw my Amendment on the understanding we have reached, I would like to say one or two things. First of all, my name was put to this Amendment and I would not have put my name to an Amendment which is of a somewhat technical character if it had been made in a frivolous and reckless frame of mind. I ask the noble Lord to accept that.

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Secondly, I am still puzzled as to why one Department of the Government—the Ministry of Supply—sought to improve on the very good precedent which another Department of the Government—the Board of Trade—inserted in the Companies Act. However that may be, I think we shall find it possible to reach a compromise on the lines suggested by my noble friend, Viscount Swinton, and that that arrangement will be very much better. The terms contained in this Amendment are common terms, and a great number of companies have them. I myself, and many noble Lords, have worked under conditions of this sort, and we have found they are perfectly workable. I hope there is no need for me to say more. On the understanding that discussions will take place on the lines that I think the noble Lord opposite agreed with my noble friend, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
6.28 p.m.
LORD LLOYD LORD LLOYD moved, in subsection (6) to leave out "the disclosure" (where those words occur a second time) and insert "the relevant circumstances have come to his knowledge." The noble Lord said: Perhaps I had better begin by saying that this is a serious Amendment. It is meant to make the subsection do what we all would wish to see it do. The object of the subsection is to ensure that a member of the Corporation should not take part in deliberations on an occasion when a contract in which he had an interest is being discussed—a very proper provision with which your Lordships will all agree. But when we look at line 40, we see that the member is only debarred from taking part in those deliberations after the disclosure of his interest. My noble friends and I consider it would be better to make it an obligation that the member should not take part in the deliberations as soon as it comes to his knowledge that he has an interest in the contract. This is little more than a drafting Amendment and I cannot understand why the Minister made such a fuss about it in another place, but he did. He said it would have most dangerous legal consequences and was impracticable. We have not been told what the dangerous legal consequences will be, and if there are dangerous legal consequences, perhaps the noble Lord
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will explain them now. This seems to me to be a very reasonable drafting Amendment and I hope noble Lords will accept it. I beg to move.
Amendment moved—
Page 2, line 40, leave out ("the disclosure") and insert the said new words.—(Lord Lloyd.)
6.30 p.m.
VISCOUNT MAUGHAM: I would like to add a few words on this matter. Really I think this is only a drafting question. The middle part of subsection (6) relates to an obligation that a person directly or indirectly interested in a contract should
"as soon as possible after the relevant circumstances have come to his knowledge disclose the nature of his interest. …"
That recognises the fact, which all of us know, that with the complications of modern finance, ale may become interested in a particular contract and yet not know it. There are any number of big companies in which people do not really know their interests. If I may mention what happens in the Law Courts, I would point out that a judge is not entitled to try a case if he is interested in the business concerned. But again and again you find judges rising, after a case is opened, and saying that they are not quite certain whether, owing to their holdings in a particular company, they are interested in the subject matter of the action, and therefore they think they should disclose that possible interest. I mention that only to show that one does not always know until some later date that one is interested.
The end of the subsection contains these words:
"and the disclosure—
which the member has to make—
"shall be recorded in the minutes of the Corporation, and the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract."
The suggestion is that he is not to take any part in deliberations of the Corporation, as the subsection says, "after the disclosure." But he must know it. Therefore, the words that my noble friends Lord Lloyd and Lord Hawke want to put in here are:
"after the relevant circumstances have come to his knowledge."
In that case he knows that he is interested, and then his mouth is closed. It cannot be closed before he knows that

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he is a person who must close his mouth. Whether this Amendment meets the ideas of a scrupulous company law draftsman, I do not know. It may be that what is sought to be achieved here could be done in a simpler way. I do not say whether that is so or not, but I do say that there is a necessity for not making a man close his mouth altogether on a particular matter before he knows that he ought so to close it by facts being brought to his attention which show that he is really an interested party.
LORD HAWKE: Curiously enough, I was going to suggest to your Lordships that you would probably like to hear the views of my noble and learned friend Lord Maugham on a problem I was going to put before the Committee arising out of this Amendment, but not the one with which he has just dealt. It looks to me as if our intentions are precisely the same as those of His Majesty's Government: we all want to secure completely disinterested members of the Board at all times. It seems to me that there has been a flaw in the drafting in some way. As I read it, the members of the Corporation, who in many cases will be full-time members fulfilling a day-to-day function, may somehow or other become interested in some contract, whereupon they are to declare that interest at the next meeting of the Corporation. Meanwhile, they are continuing their executive functions and possibly making decisions, and so on, in a matter in which they are not disinterested. I wonder whether the Government are aware of this and, if so, whether they would not accept something like the Amendment that we have put down. It may well be that I have misread the legal position, and that "deliberation" may be an act that can be performed only by a full Board. But, as a layman reads the clause, at the moment it would be perfectly possible for an executive member of this Corporation to act and make a decision eventually binding the Corporation on a contract in which he was still an interested party.
LORD MORRISON: As the noble Lord, Lord Lloyd, said, this is a serious Amendment. The noble Lord quoted something that the Minister said in another place. I am advised that since the Minister said that, he has had important legal consultations, with the result that
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my advice is that if this Amendment were accepted important legal complications might arise. The position is that the Amendment cannot be accepted, because it might give rise to an irregularity in the proceedings of the Corporation. Noble Lords will understand that I am making a strictly legal reply in regard to this Amendment. Subsection (6) provides for members of the Corporation disclosing their interest in certain contracts, and it goes on to say that
"the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract."
In effect, the interest of a member of the Corporation in a particular item of business amounts to a temporary disqualification so far as the business is concerned, but it ought not to invalidate the proceedings of the Corporation affecting, that business. This is secured by subsection (6) as drafted, because the disqualification will arise only after the disclosure of the member's interest. If the proposed Amendment were adopted, and the member failed to disclose his interest—not necessarily in bad faith—doubt about the validity of the Corporation's proceedings would arise. An honest man will, of course, disclose his interest at the first opportunity, and the rest will follow. If, however, a man is prepared to evade the duty of disclosure, he will be equally prepared to evade the duty of not taking part in the proceedings. That is the legal information I have received, but I would desire to say this. In view of the opinion expressed by the noble and learned Viscount, Lord Maugham, with his great legal knowledge, which I followed as closely as I could, I am quite prepared that some further examination of this matter should be made.
VISCOUNT SWINTON: I feel it is very desirable that it should be looked at further. I do not think there is any difference between us. On the other hand, there are three things of which we want to make sure. First we want to make sure that there is a disclosure by a member of the Board who has an interest. That should be a duty put upon the member of the Board. That is a duty which is, of course, cast upon the ordinary director of a company by the Articles of Association of every company—indeed, I think that is so by a clause in the Companies Act; I think it is in whatever is the equivalent to

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Table A. However, as the Companies Act does not apply automatically to this Corporation, we have, I suppose, to put some provision into the Bill which imposes on the directors of the Corporation the same duty, or an analogous duty, as that imposed by the Companies Act and by the Articles of Association of a company upon a director of a company. That is the first thing which has to be done: the duty of disclosure has to be put upon the person.
While saying that, as the noble and learned Viscount, Lord Maugham, pointed out, you have to safeguard the member of the Board against an absolute duty which he may fail to discharge, not by any neglect but because he just does not know about it. Therefore, it seems to me that you have to introduce words which, while imposing the duty of disclosure upon him, will yet say that that duty of disclosure shall be exercised as soon as the facts come to his knowledge. If you have done that, you have made the thing just and fair, vis-à-vis the member of the Board. But are you, in fact, doing that under the clause as it stands? Are you not putting upon him, either directly or by implication, an absolute duty of disclosure as soon as the fact arises? The way it would come up would be this. The Corporation is meeting, a contract or proposal comes up for consideration and the member has an interest. It is then his duty to disclose that interest at once and say: "I take no further part in the discussion," and his disclosure is recorded in the Minutes. But what happens if he does not know, and only realises later on that he has this interest? I am not sure that you have in fact safeguarded him in that respect, and I think it should be looked at from the point of view of the member of the Board.
It is then said that you must look at it from the point of view of the party with whom the contract is made. Obviously, we are not dealing here with what I may call a corrupt case, the sort of case at which the original provision of the Companies Act was directed, that a director shall not take part in a discussion about a contract which is going to benefit himself personally or some company in which he is directly interested. What is in fact the legal position? I am not very clear about this. When a contract, not so much
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directly affecting a director, but a contract in which he has some remote interest, comes up for consideration—he may merely be a shareholder in the company—a most extraordinary situation arises as between these great Corporations. Suppose you are buying coal, and the director happens once to have had a share in a coal mine and has some stock—"Hyndley's" I suppose it is called on the Stock Exchange—and the poor fellow, not having received a dividend, has forgotten all about it and does not disclose an interest. I am not sure that an extraordinary situation may not arise, where a number of people happen to have this Government stock and there will be only about two members of the Board who can deliberate about coal. And as there is only one company from whom you can buy coal, it cannot be obtained in any other way. But as it is between two friendly Government companies, I presume you would not have a row about a matter like that!
This, however, is a case where third party interests are affected. It is said that if the man failed to make his disclosure the contract could be upset. It would not automatically be upset, because who could upset it? The third party ought to have a right to upset it if the thing is being done to his disadvantage. On the other hand, I do not think the contract would come automatically to an end, because it could only come to an end if either the law makes the contract completely frustrated or because one party seeks to set aside the contract. If the party has been damnified, I should have thought he ought to have a right to set aside the contract. If, on the other hand, he would be damnified if the contract were set aside, then the setting aside of the contract would have to be set on foot by the Corporation themselves, and surely they would not be in a position to take advantage of a third party merely because a member of the Corporation had failed to disclose his interest. I speak with a good deal of hesitation about this legal aspect, but I doubt whether there is that danger and risk to the third party. I would like to know what is the case in an ordinary company where a director has inadvertently failed to disclose an interest and yet a contract is made.
VISCOUNT MAUGHAM: May I help my noble friend there? There is a special

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section, either in the Act of Parliament or in the Articles of Association, which deals with that precise point, so no question arises in the case of an ordinary company if a director has inadvertently voted on the proposal before the board and yet was a person interested.
VISCOUNT SWINTON: I am much obliged; I thought that was so. But if that is so, how is it that where the contract is made by the Steel Corporation under this Bill, there is great legal danger and the contract becomes vitiated and goes by the board, whereas it does not do so in a contract made by an ordinary company?
VISCOUNT MAUGHAM: May I interrupt again? I think the point which the noble Viscount has made—although it does not arise in the case of an ordinary company—may well arise in the case of this Corporation, and the matter ought to be looked into before the Report stage.
VISCOUNT SWINTON: I will not pursue it, but I think I have said enough to show that we have uncovered a very curious legal anomaly as between these nationalised Corporations and ordinary corporations. I do not know whether it can be done in this Bill, but I would have thought that should be set right, because the whole idea was that a nationalised Corporation should have both the rights and duties of an ordinary public company. If its directors are, by inadvertence, put into a wholly different position from that of the directors of ordinary companies, then I think the whole matter wants looking at from the point of view of the directors, of the Steel Corporation and of everybody interested in it.
LORD LLOYD: I am grateful to the noble Lord for his assurance. I think we are trying to cover the same point, and on that understanding I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.50 p.m.
LORD RENNELL LORD RENNELL moved to add to subsection (8),
"Provided that the provisions of Section 38 of the Finance Act, 1948 shall apply in respect of allowances paid to members of the Corporation under the provisions of this Act."
The noble Lord said: This Amendment is in some ways analogous to the last one, and Lord Morrison's remarks earlier have some application. In this Amendment the Companies Act is not affected as it was in the case of the other two. Here it is a question of another Act, the Finance Act. The object of the Amendment is fairly clear, and I do not think it needs much explanation. It is to ensure that members of the Corporation shall furnish to the Inland Revenue the same proofs of their allowances as an ordinary company director would have to do in the ordinary course of his duties. The proviso which I am moving fits in with the clause dealing with the remuneration of members by way of salaries or fees and the provisions for their pension on retirement that the Minister may, with the approval of the Treasury, decide should be made.
As we have been told by the noble Viscount, Lord Addison, and the other spokesman of the Government that it is the Government's desire that the national Corporations should be treated in the same way as other companies (although they do not come under the Companies Act) it seems only fair that provision of this sort should be inserted. I do not think there is very much difference of opinion on this, because the Chancellor of the Exchequer, in reply to a question in another place, said that the officials of nationalised industries would be dealt with in exactly the same way as directors and employees of ordinary public companies. If that is so, I imagine that the Amendment proposed will probably be accepted from the Government Benches. I think it is desirable in the public interest, and also from the Government's own point of view, that it should be down in black and white, so that people will have no feelings that a different régime is going to govern. I beg to move.
Amendment moved—
Page 3, line 5, at end insert the said proviso.—[Lord Rennell.]
LORD WOLVERTON: My name appears in support of the Amendment which has been ably moved by my noble friend Lord Rennell, and I would like to say a few words on it. I feel certain that as His Majesty's Government have said they wish nationalised industries to be model employers they would wish to have this in the Bill and treat the people

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in no different way than public companies are treated under the Companies Act. I hope His Majesty's Government will see fit to accept this Amendment and so bring the Steel Corporation into line with public companies.
LORD MORRISON: The noble Lord who has moved this Amendment says that it is perfectly clear. His purpose is to ensure that any expense allowance made to members of the Corporation shall be subject to the same scrutiny by the Inland Revenue as the allowance made to directors of ordinary business concerns. My reply, briefly, is that I am advised that this Amendment is unnecessary, because it is already covered by Section 38 of the Finance Act, 1948, which provides that any sums paid by a body corporate to any of its directors, or to employees earning more than £2,000 a year, are to be treated as taxable remuneration, subject to any deduction which may be due under Rule 9 of Schedule E of the Income Tax Act, 1918, for expenses incurred "wholly, exclusively and necessarily" in performing the duties of the office or employment.
Perhaps the noble Lord put down his Amendment rather because he wanted the public to know, and wanted assurances given, that the expenses paid to members of the Iron and Steel Corporation will be dealt with by the Inland Revenue in the same way as the expenses of ordinary business undertakings. This assurance I am authorised to give—indeed, it was given in another place, if the noble Lord will allow me to quote what happened. On Clause 37 of the Finance (No. 2) Bill, 1948, which is now Section 38 of the Finance Act, 1948, the right honourable gentleman, Mr. Stanley, said this:
"We on this side would like to have a categorical answer by the right honourable gentleman that all directors and employees of nationalised industries will be treated in exactly the same way as he has laid down for those engaged in private industry."
My right honourable friend the Chancellor of the Exchequer replied:
"I hope to meet the right honourable gentleman's desire for information by saying that all nationalised industries will be dealt with under Rule 9."
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As recently as January 18, this year, Mr. Norman Bower asked the Chancellor of the Exchequer why officials of nationalised industries are not called upon to make detailed justifications of their expense allowances to the Inland Revenue authorities in the same way as employees of private firms. Sir Stafford Cripps replied:
"The honourable Member is misinformed. Officials of the nationalised industries will be dealt with in the same with as directors and employees generally."
When Mr. Bower asked:
"Will they have to make individual returns of their expenses in exactly the same way as employees of private concerns?",
Sir Stafford Cripps replied:
"In exactly the same way."
I hope that that assurance will satisfy the noble Lord.
LORD RENNELL: I am obliged to the noble Lord for his clear statement, and I would like to ask only one question—though the answer is perhaps implicit in what he has said: Do "bodies corporate" which are referred to in Section 38 of the Finance Act include the Iron and Steel Corporation?
LORD MORRISON: Certainly.
LORD RENNELL: In those circumstances, I beg leave withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
House resumed.

CIVIL AVIATION BILL [H.L.]
6.59 p.m.
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I beg leave to introduce a Bill to consolidate the enactments relating to civil aviation other than the Carriage by Air Act, 1932, and other than the enactments relating to the constitution and functions of the Airways Corporation. I beg to move that the Bill be read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

VEHICLES (EXCISE) BILL [H.L.]
THE LORD CHANCELLOR: My Lords, I beg leave to introduce a Bill to consolidate certain enactments relating to excise duties on mechanically-propelled vehicles, and to the licensing and registration of such vehicles, with such corrections and improvements as may be authorised under the Consolidation of Enactments (Procedure) Act, 1949; and to ask that it be read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.
[The Sitting was suspended at seven o'clock, and resumed at a quarter past eight o'clock.]

IRON AND STEEL BILL
8.15 p.m.
House again in Committee.
LORD TEYNHAM LORD TEYNHAM moved, after Clause 1, to insert the following new clause:
Powers of subsidiaries of the Corporation
".—(1) No company being a subsidiary of the Corporation shall, notwithstanding any provision of its Memorandum of Association or its charter of incorporation or other charter carry on directly or indirectly any activities except:—

(a) activities specified in the first column of the Second Schedule to this Act;

(b) activities which that company was in fact carrying on immediately before the general date of transfer.

(c) activities which for technical reasons ought, in the opinion of the Minister, to be 'carried on by that company with a view to the better carrying on by any such company of its activities under paragraph (a) or paragraph (b) hereof and which are specified in an order of the Minister;

(d) such other activities as shall have been approved by resolution of each House of Parliament;

and the Memorandum of Association or Charter of that company shall be deemed to be limited accordingly.
(2) A copy of any such order as aforesaid shall be delivered by the Corporation to the Registrar of Companies."
The noble Lord said: In the absence of the noble Viscount, Lord Swinton, I beg to move this Amendment. It has not been set down for the purpose of hamstringing the subsidiaries of the Corporations. On the contrary, it is designed to give a guiding principle for the operations of the subsidiaries in accordance
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with the purposes of the Bill as outlined by the noble Lord who introduced it. But, as the Bill is drawn, the powers of the subsidiaries are much greater than are required for these purposes. Surely Parliament should have some limiting control on the operations of the subsidiaries. If there is to be no limitation, why did not His Majesty's Government merely bring in a Bill in plain words to authorise subsidiaries to undertake any business they choose and control any interest they wish? I suggest that that would have been far more appropriate than the hole-and-corner method proposed in the Bill.
As the Bill is drafted, it is clear that the Corporations and the subsidiaries could obtain a footing in practically any industrial or commercial activity in the country; and this Amendment in no way precludes the subsidiaries from carrying on an activity which they were carrying on before the general date of transfer. I maintain that Parliament ought not to be asked to accept, in a Bill of this nature, a clause which gives no limitation at all. It may be argued that the Corporation and its subsidiaries have no intention of exercising these powers. But we are legislating not only for the present but for the future; and who can say what a future Government might do with the powers available in the Bill? I implore His Majesty's Government to consider the future and also the great reasonableness of this Amendment which, if accepted, would in no way fetter the proper powers of the Corporation or the subsidiaries. In any case it will be open to them to come to Parliament for any further powers they may require. The noble Viscount, Lord Swinton, will explain to your Lordships certain suggestions that have been put forward with regard to coming to Parliament by negative Resolution. I suggest that this Amendment is upholding democratic government and the proper rights of Parliament, and I hope His Majesty's Government will accept it. I beg to move.
Amendment moved—
After Clause 1 insert the said new Clause.—(Lord Teynham.)
THE CHAIRMAN OF COMMITTEES: I understand there is an Amendment of the Amendment.
VISCOUNT SWINTON: I am obliged to my noble friend for having filled the gap for a moment. The young are very

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quick off the mark! Even with the limitations proposed in this Amendment, this Bill goes far beyond anything that was contemplated in the nationalisation of iron and steel. The Government's intention, as they announced it in the Motion in another place in May, 1948, was a recommendation "to nationalise appropriate sections of the iron and steel industry." No one could have anticipated from that a Bill to nationalise great engineering undertakings such as bridge-building, the making of locomotives, floating docks and barges, printing machines, sugar machinery, pumps—or, what is even more odd, rubber goods and tennis racquets. And yet these and many other singularly inappropriate sections of the industry will be acquired by the Corporation and its subsidiaries, and the subsidiaries will have the power to continue their manufacture.
But, unless an Amendment such as we propose, is carried, the Corporation or its subsidiaries will have the power not only to do all that but to do anything which is included in the Memorandum and Articles of any of the subsidiary companies. As your Lordships are well aware, the ordinary Memorandum of a limited company is drawn in the widest terms. First, it sets out the things they are going to do. If they are going to run an iron and steel industry, it sets out the provisions that they will establish blast furnaces, rolling mills and so on, and then it goes on through all the letters of the alphabet—and sometimes they are even repeated in double letters—to specify everything which anybody can conceivably think of.
Let me take a typical case. I have here the Memorandum of the Steel Company of Wales. It begins with all the ordinary things one would expect a steel company to do, and then, when it reaches letter (J), it goes on to say this:
"To carry on in addition to the said trades and businesses any other trade, business or employment, manufacturing or otherwise which may seem to the Company capable of being conveniently carried on either in connection with or in addition to any business hereby authorised or otherwise calculated directly or indirectly to enhance the value of or render profitable any of the Companies' property, rights or business for the time being."
I do not think that anybody could devise a much wider clause than that, but in case anything has been left out, it goes on to put in every other kind of imagin-
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able object. Then there comes this interesting provision under (S). This is one of the things which, under this Bill, the Corporation and its subsidiaries will be able to do.
"To subscribe or guarantee money for any national, political, charitable, benevolent, public, general or useful object or for any exhibition. …"
I draw your Lordships' attention to the nice distinction there.
VISCOUNT ADDISON: Would the noble Viscount give me the date of that?
VISCOUNT SWINTON: The company was incorporated on May 1, 1947. The noble Viscount is going to say "in anticipation of this Bill." Your Lordships will see the nice distinction which is drawn between a political and a useful object. I do not know that that is a very good Article to have, but it would be interesting to know whether it is one of the things which ought to be taken over and done. I know that a compulsory levy is a useful if not a popular adjunct, but I really wonder whether that is a wise thing to entrust to a nationalised Corporation. I understand there is a cartoon in Punch this week showing what the nationalised undertaking is like. Possibly the worshippers would see in that the feet of clay.
Therefore, there could be an unlimited extension of the Corporation's activities into every field of manufacture or trade without any Parliamentary approval. That was never contemplated. I do not care what pamphlet or manifesto of the Labour Party you read, I say that that was never contemplated by anybody and that it would be highly dangerous. If that claim is made, why was not the claim made to nationalise everything in the whole country, or, indeed, outside it, because that would be the power which would be obtained by this curious Bill. It is said—and I have no doubt the Leader of the House 'kill repeat the argument—that if these companies had these powers under free enterprise, why should they not retain them when they become part of a vast State monopoly? That is one argument which is advanced and, as it is thought not likely to be very convincing, we have the other one to which the noble Viscount the Leader of the House is rather more attached, or which at any rate he uses rather more frequently—indeed, this argument has now received

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its due meed of Parliamentary approbation, to use the words of Mr. Disraeli—that no Minister or Corporation would be so unreasonable as to do any of these things. Well, appetite grows with eating. We have always been told in the past that private monopolies, which are pigmies compared to this power, have greedy appetites; but they are as nothing to the totalitarian monopolies with their unwholesome appetites.
Observe that this vast monopoly, which is not even subject to the Monopolies Act, is a very different thing from ninety-six competing companies. After all, it is in the variety of the finished articles that competition is, and indeed should he, keenest. But this Corporation, with its virtual monoply of steel-making, would be in a position to subsidise their own companies at the expense of its competitors. It may be said that that would not be done. If the noble Viscount says it is not going to be done until the General Election, whether it is in the Autumn or in the Spring, I daresay that is true. But if this Bill goes through it is a Bill for all time, and when a nationalised enterprise finds itself in difficulties, when it finds, with its vast overhead charges, that it is not competent to compete on equal terms with much smaller engineering firms, unless Parliament safeguards this position adequately I do not believe for one moment that we shall be safe from having concealed subsidies or open subsidies given to nationalised competitors. It is a perfectly easy thing to do.
Under this Bill, while the Government take over in part a number of undertakings which go into competition with non-nationalised undertakings over an enormous range of endeavour and industry, they also take over the great bulk of the basic steel-making industry of the country. In fact, it is going to be the sole supplier of the raw material on which all the industries—the finishing industries, the free industries and the nationalised industries—depend. All that is put into this Bill—we shall come to these provisions later—is that this Corporation, the primary job of which is making steel, and which is also to own ninety-six subsidiaries, all competing with other enterprises in the country, is to make a profit, or to refrain from making a loss, on its over-all activities.
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What could it do with the greatest ease? It could put up the price of steel, which would be much the easiest way of avoiding losing money. We have seen that in the case of the Coal Board. How does the Coal Board avoid losing money? By putting up the price of coal every six or nine months. And it can do it because it has a monopoly. It is the only undertaking producing coal in this country. When it finds itself in competition in overseas markets, and has to reduce prices in competition with Polish and other coal, we shall find, I am afraid, that prices for the industrial consumers of coal will go up still further. That is easily done, and it is an obvious way of preventing a loss. It would be an extremely easy thing, if the Corporation wanted its subsidiaries in the finishing industries to make money and to be able to undersell their competitors, though not by merit, to put up the price of steel. The competitor can get his steel only from the monopoly. If the price of ingot steel is raised by 10s. he has to pay it, because he cannot get his ingot steel anywhere else. "Quite true," you say, "but I will not give an undue preference to my own subsidiaries. I will charge my subsidiaries the same price for the steel." That may be done, but it is only a bookkeeping entry so far as the subsidiary is concerned.
This monopoly will sell to the consumers of steel in this country vast quantities of steel—14,000,000 or 15,000,000 tons of it. Having created an artificial price for steel, having put up the price all round, it is simple for the Corporation to say: "There is no loss in the industry, if I proceed to sell from my finishing companies and undersell my competitors." That is an easy transaction, and it would be a legitimate transaction to carry out under this Bill as it stands. The Corporation would be breaking no letter of the law in doing that. It would not be giving preference because it would be overcharging everyone alike. But it would, of course, be using the profit made out of selling steel to its competitors to enable its own subsidiaries to undersell the competitors. That being so there should be strict limitation and effective Parliamentary control—and by "Parliamentary control," I mean control. It is no good saying the Minister may report something to Parliament after it has been done and

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"if you can stage a debate, then you can have a debate." That is not what is meant by control. That is not what the Government mean when they put on control. What do they mean by control? They mean that they have the power to prevent things being done. That is what Parliament ought to have in this instance; Parliament ought to have effective power to prevent a thing being done if it is regarded as wrong. This Amendment would give the subsidiaries power to carry on all the activities which they are carrying on at the date of transfer, and those are wide enough.
The Amendment goes on to specify two classes of possible further activities. Paragraph (c) specifies:
"activities which for technical reasons ought, in the opinion of the Minister, to be carried on by that company with a view to the better carrying on by any such company of its activities under paragraph (a) or paragraph (b) hereof"—
that is primarily steel or Second Schedule activities—
"and which are specified in an order of the Minister."
Then I have set out in (d):
"such other activities as shall have been approved by resolution of each House of Parliament."
I am sure that Parliamentary controls must be maintained, but at the same time I do not think it would be reasonable, if the country finally decided that the Corporation should be established, to hold up the Corporation or the Minister in the reasonable development of the business. I think it would be reasonable that Parliament should express positive approval in the case of a major extension of activity, but I agree that there may be minor cases which may not come strictly within paragraph (c), and with which Parliament would not wish to interfere or, indeed, would readily approve.
I have given careful consideration since I put down this Amendment to whether we can give to the Corporation and the Minister reasonable latitude and, at the same time, maintain effective Parliamentary control. I have come to the conclusion, which I venture to submit to your Lordships, that Parliamentary control would be adequately met if the new activities, under both paragraphs (c) and (d) were authorised by a ministerial
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order which would be subject to negative Resolution procedure in either House of Parliament. There is no difficulty about making an order. The Bill itself contemplates that the Minister will publish all these approved extensions. It is only a case of writing it out in one form against another, of writing out a notification and lodging it with the Registrar of Companies or of writing a ministerial order. That has to be done, even under the Government's proposal.
I do not think the Government need shy at making orders. After all, they make thousands of them every year, and as they like orders they ought to welcome the opportunity of making a few more. In this way Parliament would know of any extensions which the, Minister proposes and would be able to take action if they thought fit. Reasonable extension would not be challenged. Where an extension was clearly reasonable, nobody would want to have a debate about it or to put down a Prayer. But there should be the opportunity to challenge, and if need be reject, new incursions into the very wide field of industry and trade which would lie open to the Corporation and its subsidiaries. If the Minister decided upon such an incursion it would be up to him to justify it.
I should prefer to have this Amendment in a slightly different form from that in which it stands on the Order Paper. There would be no alteration down to the end of paragraph (c), but I would substitute for paragraph (d), which reads,
"such other activities as shall have been approved by resolution of each House of Parliament;"
the words (of which I have given the Minister a copy):
"such other activities as shall he specified in an order of the Minister;"
The Amendment would continue exactly as on the Marshalled List, with the words:
"and the Memorandum of Association or Charter of that company shall be deemed to be limited accordingly."
Then there would follow—and there is no difference between us and the Government on this—subsection (2) as it stands, which says:
"A copy of any such order as aforesaid shall be delivered by the Corporation to the Registrar of Companies"

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I would then add—and this is new:
"(3) An order made under this section shall be subject to annulment in pursuance of a Resolution of either House of Parliament."
That, I submit, is entirely fair as between this Corporation and its subsidiaries and the Minister and Parliament. It does not make the Minister come to Parliament for a positive affirmation of anything he seeks to do. It does make him—and this is common ground between us—notify Parliament of any extension of which he approves. Parliament would then have the right to look at it. The order would then go ahead, and if either House of Parliament thought that the order required justification it would be able, by the simple and short process of a Prayer, to call the Minister to account. If the Minister justified it, the order would go through; if he failed to justify it, then it would be annulled. I suggest that that is a practical way in this unique case of maintaining effective control by Parliament and at the same time giving all the reasonable freedom which either the Minister of the Corporation can demand. I ask leave to withdraw the original Amendment and to move it in its new form.
Amendment, by leave, withdrawn.
Amendment moved—
After Clause 1, insert the following new clause—
Powers of subsidiaries of the Corporation
(".—(1) No company being a subsidiary of the Corporation shall, notwithstanding any provision of its Memorandum of Association or its charter of incorporation or other charter, carry on directly or indirectly any activities except:—

(a) activities specified in the first column of the Second Schedule to this Act;

(b) activities which that company was in fact carrying on immediately before the general date of transfer;

(c) activities which for technical reasons ought, in the opinion of the Minister, to be carried on by that company with a view to the better carrying on by any such company of its activities under paragraph (a) or paragraph (b) hereof and which are specified in an order of the Minister;

(d) such other activities as shall be specified in an order of the Minister;

and the Memorandum of Association or Charter of that company shall be deemed to be limited accordingly.
(2) A copy of any such order as aforesaid shall be delivered by the Corporation to the Registrar of Companies.
(3) An order made under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.")—(Viscount Swinton.)
LORD RENNELL: I support this Amendment, but even in its present form it goes rather further than I would normally like to go. In this the noble Viscount, Lord Swinton, is perhaps more liberal than I am. I do not like the Bill in any form, but if we are to have the Bill and it is to become an Act, I submit to your Lordships that it should become an Act for the purpose of doing what the responsible Ministers have intended the Act to do, and no more. It has been everywhere stated that the purpose of this Bill is to bring the major part of the manufacture of iron and steel under a nationally-owned Corporation. The noble Viscount, Lord Hall, in moving the Second Reading of this Bill referred to the purposes of this Corporation as being those activities defined in the Second Schedule. You will find that in column 986 of Hansard. If we are to have this Bill, I claim that it should do precisely that, and no more.
In fact, as the noble Viscount, Lord Swinton, has said, a large number of the companies that are scheduled to be taken over indulge in a great many of the other activities. I would meet the noble Viscount, Lord Swinton, in permitting the subsidiaries of the Corporation to go on manufacturing those things other than iron and steel which they now manufacture, but only on the condition that no such further activities are added to the activities of the subsidiaries of the Corporation. The reason for this limitation to the present scale of activities resides in the difficulties that I foresee if the subsidiary companies are allowed to do all those things which are enumerated in the Memoranda of Association of a number of the companies of which your Lordships have heard something from Lord Swinton. My reason for wishing to limit them to their present activities is that if they are not so limited I see no end to anything the existing subsidiaries, let alone new subsidiaries, could indulge in.
I am fortified in my objection to this by the answers which I have received from questions asked of authoritative persons (who, I believe, favour this Bill) regarding this liberty which the subsidiaries of the Corporation would have

237
if they were not limited by the Amendment which the noble Viscount is moving. I would like to take one example, which is not a wild dream, because it is a particular question which I have put and is one which might face one of these subsidiaries in the steel industry almost from one day to another. It will be known to some of your Lordships that recent discoveries of iron ore in certain parts of the world have been closely associated with nickel. I have asked the specific question whether, if the Corporation started smelting ores of this sort for the purpose of making iron and converting it into steel, and found that they then wished to go into the manufacture of nickel, was it the intention that the Corporation should go into the manufacture of nickel; and the answer. I have received to that question is, "Yes."
If that is so, that goes beyond the purposes of this Bill as stated by members of His Majesty's Government and, indeed, by the noble Viscount, Lord Hall, in moving the Second Reading, when he referred to the purposes of the Corporation as being those defined in Schedule II of the Bill. Whether it be right or whether it be wrong for the Iron and Steel Corporation, if it comes into existence, to go into the manufacture of nickel, copper or chemicals beyond the degree in which many of these companies are already engaged in that manufacture, is a matter for Parliament, and only Parliament, to decide. It is not a matter for the Minister, the Corporation or anybody else to say: "We propose, without restriction, to go into the manufacture of copper, or tobacco or anything else." In other words, in supporting this Amendment, I do so for the purpose of limiting the activities of the Corporation to those activities which the spokesmen of His Majesty's Government have said were envisaged in creating this Corporation. The Government surely cannot argue that they will not agree with this Amendment because it is their intention to go beyond the activities which they have stated is the purpose of the Corporation. If they do, that is a question of malafides. I will not attribute that to anybody, least of all to any members of your Lordships' House. But if anyone says to me: "We want these powers in order to do these things," I can only conclude
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that they wish to go beyond what they have announced to the general public as their intentions. It is for that reason that I support this Amendment.
A second point arises here. This Amendment deals with the activities of subsidiary companies. We shall come very shortly to an Amendment which stands in my name on the purpose and form of the Corporation itself. There again—and I must give notice of this, because it has a bearing on this Amendment—I am opposed to the Corporation doing what the subsidiaries do not do and cannot do if this Amendment is passed. Moreover, I wish to hold the Ministers in charge of this Bill to what they have said—namely, that the Corporation is to be a holding company and not in itself a manufacturing company. That has a bearing on the matter because this is an Amendment which deals with the powers of subsidiaries. But those limitations imposed on subsidiaries are a fortiori imposed on the activities of the Corporation itself. I will develop that when we come to the Amendment which stands in my name. I regard this, Amendment as important, and especially the principle underlying it—namely, that the Corporation shall do that which the companies are doing now, and no more; that is to say, manufacturing steel and certain subsidiary activities which they still carry on, and which I would like to see restricted, although I would meet Lord Swinton on that point and not restrict them entirely. To ask for an extension of powers to go beyond that is, I think, to ask for something which has not been avowedly stated as yet, and, if it is avowedly stated, this should not be called an Iron and Steel Bill but should be called a Bill for carrying on industry in this country in any particular sphere which it pleases the Minister so to do.
VISCOUNT ADDISON: We have listened, as usual, to a very picturesque and rather fascinating speech from the noble Viscount, Lord Swinton. I confess that I rather felt a bit envious of his ability to roam into the realms of fantasy with the facility that he displayed. However, let me say at once that we have no sort of intention at all of going beyond the genuine intention of the Bill as stated in the reference to which the noble Viscount has referred. I confess to being a simple-minded person, but the question did cross my mind: Why is it that if, in

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the Articles of Association of a private company, it is right and proper to have powers to do this that or the other, it should be wicked when in a national Corporation?
LORD RENNELL: Because they have shareholders in these companies.
VISCOUNT ADDISON: The noble Lord has had his turn, I hope he will let me have mine. What I cannot understand, as I have said—and I am asking myself all the time as a simple-minded person—is why it should be a virtue in a private company and a crime in the public Corporation. I must confess that in the noble Viscount's observations I have not found the answer.
VISCOUNT SWINTON: We have heard the answer now, at any rate.
VISCOUNT ADDISON: My own conclusion is that it is a crime in the case of the public Corporation because noble Lords opposite do not like the Bill. If that is so, that is not a reason; it is a mere expression of prejudice. However, I will put that on one side. The noble Viscount produced the Articles of Association of the Steel Company of Wales. That looked to me to be a very extensive document, with a very wide range. Among the powers of this private company was one to subscribe to political associations. I must confess that that interested me, but I feel certain about one thing—that that Company would never subscribe to the Labour Party.
VISCOUNT SWINTON: Not until you get control of it.
VISCOUNT ADDISON: I want to assure the noble Viscount that we have no intention whatever of trying to do those strange and fantastic things which have no reality whatsoever to the purposes of this Bill. However, I confess with astonishment that my question remains completely unanswerable. I have not been able to discover from any of the speeches to which we have listened why it is wrong for a public company and a virtue for a private company. We have no intention or desire to go beyond the genuinely-expressed intention of this Bill, and I feel a little wishful that the noble Lord, Lord Rennell, could get out of the habit of attributing malafides to his politi-
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cal opponents. The other day something was, according to him, a disaster; now it is our malafides. We are not a set of criminals; we are quite decent people; and there is no reason why the noble Lord should introduce that note into his speeches. I wish he would develop the habit of leaving it out, for it does not help.
VISCOUNT SWINTON: If I may interrupt for one moment, the House would be extremely grateful if the noble Viscount would explain to us what is the genuine or general intention of the Bill—he has repeated that phrase a number of times. I have quoted the words of the Bill, which indicate power to do anything; but the noble Viscount stresses the distinction between the powers stated in the Bill and what he calls the "genuine or general intention" of the Government. It would be interesting to know what is the general intention of the Government. If we could know that, we should see how far it is carried out by the Bill.
VISCOUNT ADDISON: I was referring to a quotation, which is in general terms, which the noble Lord made from one of my colleagues in the other place.
VISCOUNT SWINTON: "Nationalising the appropriate sections."
VISCOUNT ADDISON: Whatever the actual words were, I was referring to that and I wish to adhere to it in spirit and fact. That is the only thing to which I was referring. The noble Viscount is also aware that, after consultation with the Minister, I told him and the noble Marquess beside him that we recognise that it would be desirable that we should try to come to an understanding to put something into the Bill that reasonably carries out our intention. I am sure that the Minister would never give his consent to the fantastic things which are enumerated in the Articles of Association which the noble Viscount has read out; and I am sure the Corporation will be pulled up if they wish to subscribe even to the Conservative Party, respectable as it is. However, I think it is reasonable that we might try to reach some understanding on this question, and we are prepared to try to do so.
With regard to the first two paragraphs of the noble Viscount's Amendment, paragraphs (a) and (b), I think that we can arrive at an understanding. It is not

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the intention of the Government that either the Corporation or its subsidiaries should engage in all kinds of enterprises and businesses quite unrelated to the main purpose of the Bill. My right honourable friend is willing that we should limit the activities of the bodies to those which they were carrying on before or to such activities as are substantially of that character. With regard to extensions beyond that general group of activities in existence at the time of transfer, my noble friend would require that the Corporation should make a written application to him and they would require his specific sanction. If noble Lords opposite wish, we are willing to discuss it between now and Report stage, to consider an Amendment which would give effect to undertakings of that type.
VISCOUNT SWINTON: But would that submit the point to the decision of Parliament, or would Parliament merely know and be able just to raise it in a matter of debate? The whole issue here is that of Parliamentary control. If the Minister has given his approval, will Parliament be able to say, by a negative Resolution: "You ought not to have done so"? That is the sole issue—where the control is.
VISCOUNT ADDISON: I was coming to that.
VISCOUNT SWINTON: I beg the noble Viscount's pardon.
VISCOUNT ADDISON: Paragraph (c) would be set out in modified words—the general intention. One does not quite know what a "technical process" or a "technical application" may be, but we could easily find suitable words. It means that the activities are substantially of the same order as those being pursued at the time of transfer. But my right honourable friend is not prepared—and I entirely agree with him—to agree to a condition that every alteration that he sanctions should be subject to a specific Parliamentary sanction. That would be completely unbusinesslike. It would be administratively impossible, because one could well imagine that in the manifold activities that would be embraced in these companies, it would be quite a common thing for this, that, or the other modification to be reasonable, proper and necessary. You could not expect that, in a responsible case, the Minister should
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not be in a position on the application of the Corporation to sanction extensions of that sort.
VISCOUNT SWINTON: I am sorry to keep interrupting. I hope the Leader of the House will not object to my clarifying this point, because he is making a proposition to us now, and it is most important that we should understand it. He has said that it would be unreasonable that the Minister should not have the right to sanction a thing but would have to wait. Under my Amendment, as I have moved it, he could sanction it; he would not have to wait. His order would have effect. But if Parliament, having knowledge of that order, thought it was a wrong thing to do, then either House of Parliament would be able to take exception to it and move to annul the order. That would not hold up anything; it would merely give Parliament the right to reject it if it thought proper.
VISCOUNT ADDISON: The noble Viscount is aware, of course, that the consideration which I have been able to give to this matter was in the main in the light of the terms of the Amendment as printed on the Order Paper. As a matter of fact, it was only this afternoon that I saw the modified form, which is a considerable and very acceptable modification which he himself has suggested, because I think that it recognises that it would not be reasonable or practicable to expect the Minister in every individual case either to receive the sanction of Parliament or to make a separate and independent report. If the Minister is to be in charge of these things, he will, of necessity, under the Bill have to report to Parliament on them. We must trust him to exercise some common sense and ordinary judgment in these matters. Without a little further examination, I cannot pronounce an opinion as to whether the procedure indicated by the noble Viscount could be made workable. We have no wish to Burke it, but I quite understand that it would be completely impossible and administratively impracticable for every individual alteration of this sort to be subject either to an order or to a separate communication. But, subject to that qualification, I am quite prepared to look with good will into the means whereby Parliament would be informed of what went on. I think the words of the noble Viscount's Amendment could

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be subject to substantial improvement and some modification. If the noble Viscount and the noble Marquess wish to discuss this matter with us between now and Report stage I will do my best in good faith to arrive at an understanding, but I cannot go further than that to-night. With that, I hope the noble Viscount will be prepared not to press the Amendment. I cannot accept it at the moment in the form in which it is framed.
9.6 p.m.
THE MARQUESS OF SALISBURY: I think we have all listened with great interest to the speech that has been made by the Leader of the House. I have listened to it, too, with some bewilderment, because he seemed to zig-zag about in a way that in this House is unusual. His argument was of what I may call a tortuous character.
VISCOUNT ADDISON: I was following the thread of the argument.
THE MARQUESS OF SALISBURY: As I understood the noble Viscount, he began by saying that the Government had no intention that these companies should go beyond the functions which are laid down in the Second Schedule of the Bill. I was delighted to hear that, but I do not think that statement was entirely borne out by the remainder of his speech. He made considerable play of the fact that in the past private companies have had certain powers which, it was suggested, should be denied to the nationalised company—I think I am stating his case fairly. I think there is a simple answer to the point we have been making, and about which he said he found difficulty. It is that in the case of private companies they are responsible to somebody for their activities, or for any extension of their activities: they are responsible to their shareholders.
VISCOUNT ADDISON: The Minister is responsible to Parliament.
THE MARQUESS OF SALISBURY: If the noble Viscount will allow me to continue, that was the point I was going to make. The directors of private companies are responsible to their shareholders, and the shareholders are always in a position to examine and watch the activities of the executive; and they can control it or remove the directors if they go beyond
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what is thought proper. As the noble Viscount has so properly remarked just now, the shareholders of a nationalised company are, in effect, Parliament, which represents the community. Control ought, therefore, ultimately to rest in Parliament for any extension of their activities; and if that control is taken from Parliament and left entirely to the executive, then there is no control at all, and the parallel to the private company is entirely lost. I am grateful to the noble Viscount for his interruption, because he enabled me to expose the main burden of our case. If it were proposed that the shareholders of a private company should have no control at all over the directors I am sure noble Lords opposite would have been deeply shocked, and yet that is exactly what they are now proposing to do.
The noble Leader of the House made a proposition to us—what I think he called a basis for further discussion. I listened to it with the greatest care and, as I understand it, there would be under this provision a limitation on the Corporation to certain basic activities. But the proposition contained a proviso, which was, in effect, that the Corporation could carry on any other activity whatsoever which the Minister authorised or recommended. There was in the noble Viscount's proposal no limitation at all of the activities of this great body so far as I could make out. All that was needed was that the Minister should authorise it. Parliament had nothing whatever to do with it. Parliament—the shareholders—was never to be consulted. That is my understanding. If the noble Viscount says that I am wrong, I hope that he will explain what is the exact position under his proposal. My noble friend Lord Swinton has suggested that where any extension of the activities of the Corporation was required there should be a negative Resolution before either House of Parliament. That is a very moderate proposal. All that would happen is that the Minister would lay on the Table of Parliament an order showing what was intended to be done, and unless Parliament prayed against that order it would automatically go through. That procedure is adopted in thousands of cases every year as a result of the activities of one Department or another. Parliament is a sensible body, and Members do not pray unless they have some

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real objection. That is all we suggest, in the modified Amendment of which my noble friend has given notice to the noble Viscount the Leader of the House. I suggest to the Government that that is the right course to follow. If they continue in their present line—which in effect gives the Minister absolute authority to authorise whatever extension of the Corporation's activities he likes, without Parliamentary control—then they are on a very dangerous line indeed, and one in which I believe they will not have the support of the majority of the people of this country.
The noble Viscount the Leader of the House has suggested that further discussion should take place between now and the Report stage. I need hardly say that we are open, and we always have been open, to enter into discussions, but in our view it is not the slightest good having these discussions except with some possibility of compromise ahead. I would therefore ask the noble Viscount the Leader of the House whether, in any discussions into which the Government enter, they will insist that ultimately the question of any extension of the activities of the Corporation must be left entirely to the Minister, without any control from Parliament. If that is the position which they are going to maintain, then I do not think it is worth while entering into discussions. If the Government are willing to consider some such modified proposal as is put forward by my noble friend Lord Swinton then we might profitably have discussions. Unless the Government are so willing, I do not think there is anything to be done but to carry the matter to a Division. I am not anxious to go to a Division. All of us in this House, on the whole, would infinitely prefer to settle things by compromise agreement, but unless we have a basis for discussion, it would be a hollow sham to go into it.
VISCOUNT ADDISON: I think that what I said provided a fair basis for discussion. At the moment, without having had the opportunity of examining what the noble Viscount has proposed, I cannot say any more. But the noble Marquess knows well that we do not play any tricks. It may be that if we have discussions we can arrive at an understanding. If we cannot, then we cannot.
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Apart from that I have nothing more to say.
THE MARQUESS OF SALISBURY: We must have this clear.. I ask the noble Viscount a very simple question, and I think it is clearly one to which he ought to be able to give an answer. We talked it over with him yesterday, and he knows the point perfectly well. Is the final decision as to any extension of the activities of the Corporation to be left to the Minister, or is Parliament to have any control?
VISCOUNT ADDISON: The noble Viscount knows perfectly well that I cannot answer a question of that kind in that form. The activities of the Minister will be reported to Parliament—that is in the Bill. The question which we were discussing yesterday, about which we did not arrive at an understanding and which is approached by the modified Amendment of the noble Viscount, concerns how and when Parliament is to become informed of what the Minister is doing. I cannot go any further than I have said as to the machinery of dealing with that matter. As to the general understanding on the limitation of the activities of a company to those they were pursuing at vesting date except with express sanction, I do not think there is any real difference between us and I do not think it would be difficult to arrive at an agreed form. I cannot say anything at the moment about what will happen after that. If the noble Viscount wants to put his Amendment in, let him put it in; but on that basis it makes it impossible to arrive at an understanding.
VISCOUNT SWINTON: The issue is crystal clear. The difficulty is not to see that a company do the things they are already doing and nothing else without the approval of the Minister. That is obvious; but what happens after that? I told the noble Viscount yesterday that I was prepared to accept a negative Resolution instead of a positive one. I thought there was good reason in that. The issue is perfectly clear and simple and can be stated in two sentences. The noble Viscount says the Minister will report to Parliament. That means merely that Parliament will know What the Minister has done. That is not the point. The point is: What power is Parliament going to have when it knows what the Minister has done? The noble Viscount

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proposes that we can raise a debate if we get an opportunity—but that is nothing; that is mere talk. The only effective way in which a ministerial decision can be challenged is either by a vote of censure, which is a ridiculous proposition in regard to this matter, or by the ordinary practical way of a statutory instrument, which is the way the Government themselves use. They lay before the House 3,000 of these instruments in a year and we have about three Prayers on them—one per thousand, which is even better than the death rate ! Are we or are we not going to have the right to challenge a statutory instrument by a negative Resolution, if we disapprove of it. If the Government are open to that proposal and will take that as a basis on which we can go into conference, it seems to me that there is a basis for discussion; but anything short of that is really another way of saying, that Parliament is not to have any authority or control.
THE MARQUESS OF SALISBURY: We want to get a settlement of this matter if we can, and I should like to put one further question to the noble Viscount. Is the proposition which has been put forward by my noble friend ruled out of the discussions between now and Report stage?
VISCOUNT ADDISON: The proposition stated by the noble Viscount amounts to this. If we have a statutory instrument, it means that every detailed transaction of a Minister would have to be reported separately, and that would make the whole thing an administrative impossibility. It is something to which I would never consent. I have said that I am willing to enter into a discussion on the terms indicated. I cannot go any further and I refuse utterly to do so at the present moment.
THE MARQUESS OF SALISBURY: Are we to understand from that that the proposition
of the noble Viscount, Lord Swinton, is not ruled out of the discussion? I am not asking the Leader of the House to say that he will accept the proposition, but I am asking him whether Lord Swinton's proposition can come into the discussion. We will come in with this proposition and see if we can find a middle line. If it is ruled out from the start, there is not much use our discussing it.
VISCOUNT ADDISON: As the noble Marquess well knows, I never rule anything out. However, I do say that, in our view, anything which involves the kind of thing which I have described—namely, a separate report by the Minister on every alteration he makes—is completely impracticable. The noble Viscount can suggest it, but I am not going to deceive anybody into believing that we think it is a practical proposition. Short of that, I shall be glad for the noble Marquess to bring forward any subject he likes. I am sure he will see when we discuss it that this is not a practical proposition.
THE MARQUESS OF SALISBURY: I think the Leader of the House will realise that I have been anxious to find a ground for discussion. He really has slammed the door in our face. I do not say he has done it on his own; he may be acting for a Minister whom he cannot control. The fact remains, however, that he has slammed the door in our face. He could have said: "We are quite willing to consider your proposition, but we do it with an absolutely open mind. You must not regard us as committed." The noble Viscount could have safeguarded himself in a number of ways, but in effect he has slammed the door in our face and we have no option but to divide.
On Question, Whether the proposed new clause shall be there inserted?
Their Lordships divided: Contents, 66; Not-Contents, 19.

CONTENTS

Richmond and Gordon, D.

Albemarle, E.

Lindsay, E.

Beatty, E.

Munster, E.

Aberdeen and Temair, M.

Buckinghamshire, E.

Onslow, E.

Cholmondeley, M.

De La Warr, E.

Rothes, E.

Exeter, M.

Dudley, E.

Reading, M.

Fortescue, E. [Teller.]

Allenby, V.

Salisbury, M.

Gainsborough, E.

Bridgeman, V.

Townshend, M.

Howe, E.

Buckmaster, V.

Willingdon, M. [Teller.]

Iddesleigh, E.

Elibank, V.

Falmouth, V.

Cranworth, L.

Moyne, L.

FitzAlan of Derwent, V.

De L'Isle and Dudley, L.

Polwarth, L.

Harcourt, V.

Forester, L.

Remnant, L.

Ridley, V.

Gage, L. (V. Gage.)

Rennell, L.

Simon, V.

Gifford, L.

Ritchie of Dundee, L.

Swinton, V.

Hatherton, L.

Rochdale, L.

Hawke, L.

Roche, L.

Ashton of Hyde, L.

Hindlip, L.

Sandhurst, L.

Balfour of Inchrye, L.

Kenilworth, L.

Stanmore, L.

Barnby, L.

Layton, L.

Strathcarron, L.

Belstead, L.

Lyle of Westbourne, L.

Teynham, L.

Carrington, L.

Mendip, L. (V. Clifden.)

Waleran, L.

Cherwell, L.

Middleton, L.

Wardington, L.

Clydesmuir, L.

Milverton, L.

Wolverton, L.

NOT-CONTENTS

Addison, V. (L. Privy Seal.)

Crook, L.

Macdonald of Gwaenysgor, L.

Darwen, L.

Marley, L.

Hall, V.

Douglas of Kirtleside, L.

Morrison, L. [Teller.]

Stansgate, V.

Hare, L. (E. Listowel.)

Pakenham, L.

Holden, L.

Pethick-Lawrence, L.

Ammon, L.

Kershaw, L.

Piercey, L.

Chorley, L.

Lucas of Chilworth, L.

Shepherd, L. [Teller.]

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
9.29 p.m.
Clause 2:
Powers of the Corporation
(2) The Corporation shall have power—

(a) to conduct research into any matters affecting the activities which any publicly-owned company is for the time being authorised as aforesaid to carry on, and to assist other persons conducting such research;

(b) to provide for the publicly-owned corn-panics, or for any group of such companies, any services which in the opinion of the Corporation can conveniently be provided as common services for those companies or that group thereof.

(3) The Corporation shall have power, with the consent in writing of the Minister, to carry on any other activities which, at the time when the consent is given, any publicly-owned company is authorised as aforesaid to carry on.
(4) The Corporation shall have power to do any thing or to enter into any transaction (whether or not involving the expenditure, the borrowing in accordance with the provisions of this Act or the lending of money, the acquisition of any property or rights or the disposal of any property or rights) which in their opinion is calculated to facilitate the proper carrying on of their activities or the proper exercise of their powers under the preceding provisions of this section.
(5) Any reference in this section to interests in a company includes a reference to rights in respect of money lent to the company or guarantees given for the benefit of the company.
VISCOUNT SWINTON: I think the first of these Amendments is consequential on the clause that we have just inserted,
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and the next two are consequential on the first consequential Amendment. I do not think I need argue them. If the last Amendment is right, then this Amendment is right. If the last Amendment is wrong, then this would not be right. I beg to move.
Amendment moved—
Page 3, line 26, leave oat from ("any") to the end of line 30, and insert ("subsidiary of the Corporation is authorised to carry on and is not by any provision of this Act prohibited from carrying on").—(Viscount Swinton.)
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): agree that the first Amendment to page 3, line 26, is consequential; and the Amendment to page 3, line 33, is also consequential. We do not propose to divide on those two Amendments, but it should be understood that in the event of the new clause which has just been voted upon being voted out in another place, these two consequential Amendments will suffer the same fate. May I also refer to the Amendment to page 3, line 32, to leave out the words "sole or main"? We accept that Amendment.
Amendment moved—
Page 3, line 32, leave out ("sole or main"),—(Viscount Swinton.)
Amendment moved—
Page 3, line 33, leave out from the second ("any") to ("or") in line 35, and insert ("subsidiary of the Corporation is authorised to carry on and is not by any provision of this Act prohibited from carrying on").—(Viscount Swinton.)
LORD TEYNHAM LORD TEYNHAM moved, in subsection (2) after "power" to insert:
"with the consent of the Minister to be signified by order."
The noble Lord said: This Amendment is a very simple one and I feel sure His Majesty's Government will not have any great difficulty in accepting it. Its object is to require the Corporation to obtain the Minister's consent before they set up new machinery for research and common services. There is already very comprehensive machinery in existence for research and common services, and surely it would be a great mistake and quite unnecessary to duplicate this machinery.
On the other hand, if the present machinery proved inadequate for the purposes of the Corporation and its subsidiaries, they could come to the Minister for consent to alter or perhaps enlarge it. And the Minister concerned, I am sure, intends to keep a watchful eye on the wellbeing of the companies which will not come under public ownership. Those companies will require the research and common services already provided. Therefore, surely, it is for the Minister to determine if such research and services are adequate to meet the wishes not only of the Corporation but also of those other companies outside. I hope His Majesty's Government will accept this very reasonable and necessary Amendment. I beg to move.
Amendment moved—
Page 4 line 8, at end insert the said words.—(Lord Teynham.)
VISCOUNT HALL: I am afraid we cannot treat this Amendment as a simple one. It is a very important Amendment, because it would have the effect of restricting the Corporation to conducting research and providing common services only if the Minister had consented by order. We all appreciate the excellent work in research which has been done by the Iron and Steel Federation, and the amount of work which is done by various companies in relation to common services, such as the import of raw materials and so on. There is no doubt that these organisations will continue until the Corporation has considered with them how they can best be worked into the organisation as a whole. But the Government cannot accept a position in which
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the Corporation's powers on such essential but non-controversial matters as research, now mainly carried on by the British Iron and Steel Federation, and common services, should always be subject to the Minister or to both Houses of Parliament. The Corporation must be free to exercise its powers in these directions. These functions are obviously necessary if the industry is to be efficient and enterprising. It would be unsound to make the Corporation dependent on the Minister in this matter and in the matter of the provision of common services and research which are now being carried on by the companies which are to be publicly owned. The value of centralisation of research and common services has been proved and there is no reason why they should not be carried on as efficiently under the Corporation as they have been carried on under the organisation which is now responsible for them. I regret that we cannot accept the Amendment.
LORD TEYNHAM: In view of the explanation given by the noble Lord, I do not propose to press this Amendment; but we may have to consider it again, perhaps in another form, at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.39 p.m.
LORD RENNELL LORD RENNELL had given notice of an Amendment to leave out subsection (3) and to insert:
"(3) The Corporation shall have power to carry on such other activities as shall have been approved by resolution of each House of Parliament."
The noble Lord said: This Amendment is of importance, and raises a matter of principle, but having regard to the amendment of the new clause inserted after Clause 1 the text of this Amendment, as presented in the Marshalled List, will require appropriate modifications. The Amendment should now, I think, read:
"The Corporation shall have power to carry on such other activities as shall have been specified in an order of the Minister, such order being subject to annulment in pursuance of a Resolution in either House of Parliament."
That follows from the addition to the new clause after Clause 1. With your Lordships' permission, I should like to move my Amendment in that amended form.
The purpose of the Amendment is to clarify what was discussed on Second Reading; namely, the Corporation's functions and purpose—I do not mean "purpose" in the form of manufacture, which has been the subject of an Amendment recently discussed, but the form which the Corporation is to take. Your Lordships will remember that in the course of the Second Reading debate the Corporation was described by the noble Viscount, Lord Hall. I refer to the OFFICIAL REPORT of May 24, Column 987. The noble Viscount was there discussing the powers of the Corporation in the form in which they were originally drafted when the Bill was presented in another place. He stated, in this context:
"As the clause originally stood, the Corporation would have had the sum of all the powers contained in the Memoranda of all the publicly-owned companies."
He went on to say—and this is the material point:
"It was never the Government's intention that the Corporation itself would be actively engaged in the manufacture of iron and steel; the intention was that the Corporation should be a holding company, controlling the policy of the underlying companies through its shareholdings in them. Following discussion in Committee, it appeared that this intention could be more clearly expressed, and the clause now represents a substantial advance to meet the views of the Opposition."
In the course of the Second Reading debate, I asked specifically, because in spite of what the noble Viscount, Lord Hall, had said, it was not clear to me, if it really was the Government's intention that the Corporation should be a holding company and nothing more. I asked the noble Viscount, Lord Addison, the question, and in the course of the debate on the next day May 25, at Column 1140 of the OFFICIAL REPORT, the noble Viscount said:
"Now I will come to one or two items in the Bill. The noble Lord, Lord Rennell, asked me a very proper question as to whether the Corporation would be a holding corporation or an operating corporation. It will be a holding corporation … It cannot be an operating corporation"—
I have skipped some words—
"without the specific consent of the Minister."
Lord Hall's explanation of what the Corporation was intended to be in the way of a holding company is perfectly clear. It also follows from other statements that have been made from time to time, and it follows to some extent from the set-up
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of the Corporation as a holding company holding shares in the subsidiary companies which are actually carrying on the manufacturing activities.
A great deal of doubt was, however, raised in my mind by that last sentence of the noble Viscount, Lord Addison. Referring to the Corporation he said:
"It cannot be an operating corporation without the specific consent of the Minister."
Therefore, it follows that, with the specific consent of the Minister, the Corporation can become something else than a holding company. The purpose of this Amendment is to ensure that the Corporation is restricted to being a holding company and shall indulge in other activities—direct manufacturing activities—only on the order of the Minister, following on the new clause inserted after Clause 1, the order of the Minister being subject to a Prayer for annulment in either House of Parliament. That is very important. It is fundamental to what we understand to be the structure of this nationalised industry. As I see it, as the Bill is drafted, it appears to be the intention, but in this point as in so many other points, the intentions are obscured, and to some extent vitiated, by those permissive rights.
As I say, it appears to be the intention that there should be a holding company with a very limited personnel—a board of directors, or a body, comprising a chairman and six to ten members. They will have certain secretarial services and premises, and so on. The noble Viscount, Lord Addison, will tell me if I am wrong in this, but it appears that they will not have a large staff, because the actual manufacturing, the operation of the steel industry, will be in the hands of the constituent companies which are taken over. Here is raised a very important point. A holding company cart and ought not to have machinery other than that which is required to give directions of policy at the highest level. It should not be concerned with any technical matters. It might be concerned with such major issues as the fuelling or heating of open-hearth furnaces by oil rather than coal, or vice versa. But it should not be concerned with particular applications of particular processes; nor should it be concerned with the individual products, innumerable as they are in the Schedule which we have seen. It should not be

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concerned with whether Company A manufactures this rather than that; whether Company B ceases to manufacture sections of certain sizes and turns over that production to another company, unless that production is a very important element in that part of steel output or manufacture. I believe that that is the intention and, if it is, I think this Amendment will be acceptable. But I want to elaborate for a moment what the alternative might be if that was not the intention.
The alternative is that the central board of a holding company, instead of being concerned only with policy-making, directing the subsidiary companies at the highest possible level and without interference with their individual activities, might easily become a technical board of directors engaged in manufacture, either directly—by owning bits of plant for which it could get powers from the Minister by a written consent and without an order which can be prayed against in Parliament—or, by the acquisition of power and staff, by taking away from the individual companies the direction which appertains to the board of each individual company. The latter, in my view, would be a highly undesirable development, because it would lead to that particular form of centralisation which is the main subject of criticism of the coal industry, and probably also the transport industry. If that were to happen, the individual initiative, not only of boards but of the staff of individual companies, would be frustrated and lost, and more and more work would be piled on to an organisation which was essentially devised as a holding company organisation giving directions at the highest level.
It is for the purpose of safeguarding that position, which I believe to be the intention of the Minister, that I move this Amendment in the form which I have read out. I cannot think that anybody looking at this industry, composed as it is, can have any other view about what the purpose of the Corporation should be. Therefore, I cannot see why anyone should object to the change of its functions from being a holding company to a manufacturing company being accompanied by at least the formality of an order which can be prayed against. In other words, the Corporation's function should not be altered by such an
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easy method as a letter from the Minister, saying, for instance: "Go right ahead, put up a blast furnace and so on, and see what you can do." Putting it another way, the maximum amount of publicity and formality consistent with business should surround any modification of the holding company aspect of the Corporation which was intended and indeed was announced by several responsible Ministers, including the noble Viscount, Lord Hall, himself. I beg to move.
Amendment moved—
Page 4, line 18, leave out subsection (3) and insert—
("(3) The Corporation shall have power to carry on such other activities as shall have been specified in an order of the Minister. Such order being subject to annulment in pursuance of a Resolution of either House of Parliament.")—(Lord Rennell.)
LORD TEYNHAM: I should like to add my support to this very important Amendment. One of the principal lessons His Majesty's Government might have learnt from previous nationalisation measures is that it is essential to provide for as much decentralisation as possible. Yet here, in subsection (3) of this clause, is a power given to the Corporation, with the consent of the Minister, to embark on any activity which can already be carried on by any of the publicly owned companies. It could, for example, set up a pilot plant. Surely, that could be done by one of the subsidiaries of the Corporation. There would be no difficulty about it. Let us go further and suppose that the Corporation wish to undertake some completely new process. It is said that it may be for some reason impracticable to use one of the subsidiaries. I find that impossible to believe. It surely could be done by one of the subsidiaries. In any case, the Corporation have power to form a new company to do such things. Any extension of powers not set out in the Bill should certainly be a matter for Parliament to decide, as has been so clearly explained by my noble friend Lord Rennell.
VISCOUNT HALL: I was going, to treat this Amendment as consequential upon the new, clause which was voted into the Bill, because there is a similarity in it. I was going to treat it with the qualification which I applied to the other two Amendments which I think the Committee agreed were consequential. The noble Lord, Lord Rennell has again quoted

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from Hansard remarks which I made in my speech during the Second Reading debate. I was pleased to note that he was much more accurate in his quotation on this occasion than he was when he quoted me a short time ago. At that time he completely misquoted what I said. Indeed, if he had accepted my description of the powers of the Bill, he would not have spoken in favour of the Amendment nor would he have voted for it. I do not wish to enter into any controversy with the noble Lord but I think he was a little unfair in attributing certain "disqualities" to certain Ministers and others. His mistake—I say this in quite a friendly spirit—was not a deliberate mistake. I will read to the Committee what I said. If the noble Lord had taken the trouble to read just ten lines above the portion of my speech which he quoted he would not have made the quotation. This is what I said in the course of my speech:
"The main purpose of the Bill is to transfer to public ownership the companies specified in the Third Schedule. This will be done by transferring their securities from the present holders to a public Corporation which will be known as the Iron and Steel Corporation of Great Britain. It will own all securities of the major companies in the sections of the industry responsible for the production of iron ore, pig iron, ingot steel, or the hot rolling of steel. These are the activities defined in the Second Schedule."
I think the noble Lord will see that he was rather unfair in making that quotation in the form in which he made it. With regard to the Amendment, I stand by the quotation which I made. There are certain qualifications, but I am not going into that now, because I do not want to take up the time of your Lordships' House in view of the fact that I think the Amendment is consequential and we are treating it as such, with the same qualifications as applied to the two previous Amendments which were regarded as consequential.
THE MARQUESS OF SALISBURY: I am grateful to the noble Viscount for what he has said. I gather he regards this Amendment as consequential, and on that basis the Government are accepting it. I do not think there is any further need for discussion.
LORD RENNELL: I am grateful to the noble Viscount for accepting my Amendment, which I think makes the
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matter clearer. The noble Viscount spoke about the quotation I made, but I do not think I was being unfair. I do not think I quoted the words out of their context. I was not quoting the method of transferring subsidiaries of the old companies, but the object which the Corporation as a whole was intended to carry out—namely, the manufacture of iron and steel, the activities found in the Second Schedule. If the noble Viscount thinks I was unfair, I very much regret it, as I did not intend to be. I picked up his words because they were in line with the argument I was making—namely, that the Corporation should make iron and steel and not anything else.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved, in subsection (4) to omit "which is their opinion" and to insert:
"as to which the Minister is satisfied that it"
The noble Viscount said: We have just finished dealing with subsection (2), and the noble Viscount has accepted the Amendment of the noble Lord, Lord Rennell. Now we conic to subsection (4), which is very wide indeed. It says:
"The Corporation shall have power to do any thing or to enter into any transaction (whether or not involving the expenditure, the borrowing in accordance with the provisions of this Act, or the lending of money, the acquisition of any property or rights of the disposal of any property or rights) which in their opinion is calculated to facilitate the proper carrying on of their activities.…"
Several times to-day we have had it put to us by noble Lords opposite that they are anxious to avoid unduly fettering the Corporation. In this subsection they have certainly succeeded with a vengeance! What they have done is to arrange matters so that the Corporation are sole judges in their own cause. I am not at all sure whether in the subsection as drafted there is any responsibility to Parliament at all, or whether the Corporation can do anything they like, and the Minister, if challenged in Parliament, can say: "Under the Act this is entirely a matter for the Corporation, and therefore it cannot be questioned." If that is a right interpretation of the subsection—and I am not at all certain that it is—then it goes certainly much further than we want it to go, and probably further than the Government really want to go, in view of the attitude they have taken over the last two Amendments.
The Amendment standing in my name and that of my two noble friends seeks to bring this subsection into line with our wishes on the other two subsections; that is to say, to place the responsibility not on the Corporation but on the Minister to satisfy himself what they wish to do and whether the sweeping powers are to be exercised in a way calculated to facilitate the proper carrying on of their activities. In other words, if there is to be any empire building, do not let the Corporation build their own empire. Let the Minister decide whether it is right or wrong, and let him be answerable to Parliament. That is what we think should happen. I may have misunderstood the meaning of this subsection. It is so widely drafted that it might mean almost anything. If I have misunderstood it. I know that the noble Lord opposite will forgive me. In anticipation of a clear explanation of what is intended under this subsection, I beg to move.
Amendment moved—
Page 4, line 27, leave out ("which in their opinion") and insert the said new words.—(Viscount Bridgeman.)
VISCOUNT HALL: On paper this Amendment looks quite simple, but it is not so simple as it looks. This subsection gives the Corporation the necessary general powers to carry on their activities, and to exercise particular powers under subsections (1), (2) and (3). The subsection is completely in line with provisions in the Coal, Gas, Electricity and Transport Acts. The Government believe that there should be a minimum interference by the Minister in management by the Corporation of the affairs of the publicly owned industry. If he is to follow the example of Ministers who are charged with the responsibility for other nationalised industries, then he will interfere as little as they have interfered. If the Amendment were accepted, the Corporation would be required frequently to consult the Minister on matters arising in their day-to-day work. It is difficult to believe that anyone would seriously wish to establish this position. It would mean that the Corporation would become virtually a Government department, and I am sure that is not the intention of noble Lords opposite. I am just warning them against their own work. I cannot accept this Amendment, because I think
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it would to a very large extent hamstring the work of the Corporation.
LORD HAWKE: I wonder whether my noble friends and I have worded the Amendment a little wide. Nevertheless, I feel that on principle something of the kind should be in the Bill. We are doing our utmost to circumscribe the actions of the Corporation in going into trade, and we have made them subject to orders by the Minister for the approval of Parliament. Here the subsection gives the Corporation the wherewithal to plunge into trade if they wish to do so, and we are providing a degree less in safeguard than in the other case, because we are saying here that they should get permission from the Minister. The Minister does not have to come to Parliament. I admit, and I think my noble friend would admit, that in certain cases it is possible that the Corporation would have to go to the Minister unnecessarily. On the other hand, I can see no reason why the Minister should not give them, in writing, blanket instructions that they can do certain things in connection with activities which he has approved.
We are guarding against a tendency which we have learnt to expect from other nationalisation measures, whereby the centre aggrandises itself at the expense both of the periphery and the community in general. The noble Viscount said that there was no provision like this Amendment in other nationalisation measures. If there had been, I wonder whether we should have seen half the stately homes of England now in the occupation of Electricity Boards, Coal Boards and so on. We feel that amendment of some kind to this power to acquire property ad libitum is necessary in order to prevent the Corporation breaking away from the type of holding company which we feel it is absolutely essential it should remain.
LORD GIFFORD: I feel that this Amendment must be looked at to some extent in connection with the previous Amendment which was accepted by the noble Lord, because, if you leave subsection (4) as it is worded at present, it does give the Corporation extremely wide powers. We ought to bear in mind that this Corporation is not identical in function to some of the other Corporations, like the Coal and Transport Boards. As has been admitted, it is almost entirely

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a holding company. Although we may not have quite the right wording in this Amendment, I feel that as the subsection is worded at present it opens the door far too widely.
VISCOUNT HALL: I want to emphasise that this subsection is completely in line with provisions in the Gas, Coal, Electricity and Transport Acts. It is a common form provision found in all the nationalisation Acts, dealing with ancillary machinery, powers such as in contracts, buying land, borrowing money and so on. It does not enable new activities by the Corporation at all. As that is so, I really feel that there is some misunderstanding amongst noble Lords opposite as to what the purpose of this subsection is.
VISCOUNT BRIDGEMAN: I am grateful to the noble Viscount opposite for having given that explanation. This subsection, as it is drafted, is, I think, capable of being read in two ways. Either it can be read in the way in which I understood the noble Viscount meant it to be read, as providing the machinery to implement the powers in the preceding subsections, or else it can be read—and it can be read like this as it is drafted—as being an omnibus clause giving additional and wider powers. If it is only a question of providing the machinery, then I admit that there is a great deal to be said for the noble Viscount's point of view that machinery must be provided. I am bound to say that I should have thought that it could be provided without drawing the clause in such a way as to give such extremely wide powers. However, this is not an Amendment to which we attach quite the same importance as some others that we have discussed and shall discuss. Therefore, in the light of the noble Viscount's explanation of the meaning of the subsection, I think the right course now is to beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
10.12 p.m.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved to leave out subsection (5). The noble Viscount said: We have put down this Amendment in order to give the Committee an opportunity of learning a bit more about what the Government intend to do under this subsection. If your Lordships look at page 3 of the Bill you
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will see that the Corporation have various powers. They have ere power to hold such interests in companies as vest in them, they have power to acquire by agreement and to hold interests in any company whose activities, including the activities of any subsidiary of the company, consist wholly or mainly of activities defined; and then they have power to exercise their rights. That is all very well, but here again it is hard to know exactly what the Government mean to do and what is likely to happen if this Bill becomes law.
Let us come back to Clause 2, to subsection (5). Your Lordships will see that there are two things included in the reference to "interests." First of all there is a reference to
"rights in respect of money lent to the company"
and secondly there is a reference to
"guarantees given"
by somebody or other
"for the benefit of the company."
I am not sure what is to happen to the people who have already lent money to the companies before they vested in the Corporation. I take it that those loans which the draftsman of the Bill had in mind were loans from banks, secured by debentures and so forth. They may be short-term loans, they may be any kind of loans, but all those loans have been given on certain terms, and those terms must have been satisfactory to the lender when the companies were privately held by the shareholders. It does not at all follow that the lenders will wish to continue those loans once the companies vest.
Here is the first question I would like to ask the noble Viscount opposite: Does the subsection as drafted imply that there will be any compulsory alteration in the terms under which loans were given? Is there any intention of altering the terms under which the lender can call in the loan, whatever those terms were? Secondly, whit regard to the guarantees, it appears a little more difficult because just as a loan would be given in particular circumstances so a guarantee would have been given by a guarantor, and the guarantor, I imagine, would have given the guarantee on the strength of his faith in the

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running of the company as it was operated under private enterprise. It does not necessarily follow that he will have the same faith in the company and will wish to continue his guarantee if the company is operated under this Bill. I can imagine, when one sees the figures of losses and small profits by the National Coal Board, and larger losses in Civil Aviation, that guarantors might take a slightly different view of the soundness of their guarantee from that which they took when they gave the guarantee to a private enterprise company. I hope the noble Viscount opposite will be able to assure us that the rights of the lenders of the loans which were made before the vesting date will not be affected prejudicially, and also that the guarantors will not be placed in a position which they never expected in the days when they gave guarantees before this Bill was thought of. I beg to move.
Amendment moved—
Page 4, line 30, leave out subsection (5).—(Viscount Bridgeman.)
VISCOUNT HALL: I could give a short answer to all the noble Viscount's questions by saying that the answer is in the negative. I do not want to do that, but I would like to assure him, and anyone who holds the opinions which he has expressed, that it is not the intention of the Corporation or the Minister that the terms of any such loans shall be altered. I would that noble Lords opposite had a little confidence in the thought that the Corporation which will be appointed to look after this industry will be composed of honest men, ready to make their full contribution not only to this industry but to the national economy. I again want to assure the noble Viscount that there is absolutely no fear of anything, such as he suggested.
VISCOUNT BRIDGEMAN: I think that everything that has happened so far in this debate has justified our probing every clause of this Bill as deeply as we can. But I am bound to say that in this case, at any rate, the noble Viscount has given an answer which entirely satisfies me. I should like to repeat my question. I take it that there is no intention on the part of the Government to alter, through the medium of this subsection, any of the terms on which loans were made to a
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company which is to vest in the Corporation or of any guarantees given to such lenders.
VISCOUNT HALL: I know of no such intention.
VISCOUNT BRIDGEMAN: In the light of that assurance I beg leave to withdraw my Amendment, at the same time thanking the noble Viscount for the assurance.
Amendment, by leave, withdrawn.
Clause 2, as amended, agreed to.
Clause 3:
General duty of the Corporation
3. It shall be the general duty of the Corporation so to exercise their powers as—

(a) to promote the efficient and economical supply of the products of the activities specified in the first column of the Second Schedule to this Act, and to secure that those products are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and to further the public interest in all respects; and

(b) to avoid showing undue preference to, and exercising unfair discrimination against, any such persons or any class thereof in the supply and price of those products, but without prejudice to such variations in the terms and conditions on which those products are supplied as may arise from ordinary commercial considerations or from the public interest.

10.18 p.m.
LORD CLYDESMUIR LORD CLYDESMUIR moved, in paragraph (a) to omit "activities specified in the first column of the Second Schedule to this Act" and to insert:
"principal activities of the Corporation and of the publicly-owned companies."
The noble Lord said: At this rather late hour we turn to a new subject, the consideration of the duties of the Corporation. Up to now we have been dealing with the composition and powers of the Corporation. These powers are very wide indeed, and the Government have shown a disinclination to allow any limit to be placed on them. When we reach the duties of the Corporation we come to a curious anomaly. The general duties are closely circumscribed in the Bill. Clause 3 lays down four main duties for the Corporation: first, to promote efficient and economical production; secondly, to promote the production of enough to satisfy consumers' reasonable

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demands; thirdly, to promote supply at reasonable prices; and, fourthly, to avoid exercising undue preference or unfair discrimination.
As the clause is drawn, these duties apply only to production and supply, and to what are known as "Second Schedule products." These comprise: iron ore, pig iron and ferro-alloys, steel ingots, and hot rolled steel products. They do not apply to finished steel products, such as galvanized sheets, tinplates and tubes, cold rolled strip, or bright steel bars, wire or bolts and nuts, the combined production of which is as much as 3,000,000 tons a year. Note this: that the Corporation and its companies, while they have not a monopoly in all those products that I have mentioned, have a substantial share of that trade. I have it here that of the tube trades they have 68 per cent.; of the cold rolled strip they have 73 per cent.; of the bright steel bars they have 24 per cent.; and of wire 49 per cent. Therefore, I submit to your Lordships that, where the Corporation will have this large and important share of the trade in these products, it is right that the duties laid upon the Corporation should cover those products also. So my Amendment is submitted with a view to extending the duties laid on the Corporation by this clause to cover activities beyond the Second Schedule activities to which they are at present limited. I cannot see why the Government have produced this anomaly by giving wide powers and yet few duties. Possibly, we shall have an explanation which will make it clearer to us, but I find it difficult to understand.
Have regard for a moment to the list of these duties.
"Avoid exercising undue preference or unfair discrimination."
Surely, it is most important that over the important range of finished articles which the Corporation and its companies will produce the Corporation should be specifically charged by Parliament to pay regard to avoiding undue preference or unfair discrimination. That seems essential. I observe that when this question was discussed in another place the Minister felt unable, on various grounds, to accept the Amendment. He said there was no need for it because the Consumers' Council was established to deal with that very point. The argument that the complaints about undue preference
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can come up through the Consumers' Council is just as applicable to Second Schedule products and to the extraneous products as sauce for the goose is sauce for the gander. I cannot for the world understand why the duty to avoid undue preference should not be laid on the Corporation in regard to the range of principal products which their companies make. At this late hour, I will not enlarge upon the dangers which might be created by the Corporation's exercising undue preference. Your Lordships will be well aware of them and can imagine them for yourselves. We should like to hear from the Government a justification of the attitude which they have taken up in regard to the general duties. I hope that this Amendment will be accepted.
Amendment moved—
Page 4, line 43, leave out from the first ("the") to ("and") in line 44, and insert the said new words.—(Lord Clydesmuir.)
LORD LUCAS OF CHILWORTH: As the noble Lord has just said, at this late hour we come on to a new subject. Also, we have two new actors in this drama. The noble Lord has set me a good example which I intend to follow. He was brief, and I intend to be brief. He has stated the position quite clearly. There is a statutory duty upon the Corporation in all the things he mentioned in connection with Second Schedule products. That statutory duty is imposed upon the Corporation because the Corporation has a monopoly in Second Schedule products. That is the reason for the statutory duty. In the end products, the ancillary products, which the noble Lord has mentioned, in that market which is free and unrestricted of entry, the Corporation has no monopoly, as the noble Lord rightly said. He quoted some figures but I cannot see—perhaps the noble Lord will be able to tell me—how one can place a statutory duty upon the Corporation to do all these things in a market where it is subjected to competition.
My figures are slightly different from those given by the noble Lord, but in some things—such as bright steel bars, steel forgings, and others—the Corporation may inherit as much as 60 per cent. of the production in some cases, or as little as 15 per cent. in others. In my ignorance I do not know how this

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Amendment can possibly work. How are you to impose this statutory obligation upon the Corporation when the Corporation has not the monopoly or the control? If the noble Lord will follow me perhaps he will give me the answers to these questions. I will cite the last case to the noble Lord. Let us take the current production of steel wire, which is somewhere in the region of 600,000 tons per annum. The Corporation will inherit 60 per cent., so it will produce 360,000 tons per annum. Supposing the market remains stable, what is the duty of the Corporation under the noble Lord's Amendment? Is it to go on producing 360,000 tons? If the demand goes up, what is the duty of the Corporation? Supposing it goes down, what is the duty of the Corporation? Supposing it sinks right down to 360,000 tons, is the Corporation to produce the lot, none at all, or 60 per cent.? I recognise that the noble Lord has a problem but I do not see how a statutory duty can be placed upon the Corporation in respect of these end products such as can be put on them in regard to the Second Schedule products, where the Corporation has a monopoly. I suggest that the solution lies in the Clause 6 procedure—the Consumers' Council which, if there is a difficulty, can make representations to the Minister, who in turn can make representations to the Corporation. But my difficulty in this is to see how it works. I tell the noble Lord quite frankly that it cannot and will not work, that it is impossible, and I ask him to withdraw his Amendment.
VISCOUNT SWINTON: We have indeed a new actor on the scene, and we have a new theme. It is a triple play Bill and this is a completely new theme. I am not sure whether it is a comedy or a tragedy or a mixture of the two which is being unfolded to us, because the noble Lord in his agreeable speech has taken an utterly and entirely different line from that which his leaders or his colleagues have been expounding to us. It is a most extraordinary story. Why is this industry being nationalised? It is said that it is in the public interest. We all said originally that this was a fantastic Bill because it did not take over the appropriate sections of iron and steel. It took over some; it left others in private hands; but what it did do was to march far out-
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side the range of the appropriate sections of iron and steel and take great gobbets of the engineering industry and the finishing industry in this country, in some cases up to 60 per cent. and in other cases down to 40 per cent. Of course we have not been told the real reason. One might speculate upon the real reason. The simplest explanation is that the Ministers, having announced that they were going to nationalise, subsequently found it quite an impracticable thing to do unless the appetite grew with eating and they went a great deal further. Of course, it would not have done to say, "What we told the country we were going to do was quite impracticable. We had never thought it out. The planners had no plan, and we find we have to do something else."
They then advanced and took over these great sections of the engineering industry. The excuse put forward was that it was in the public interest so to do. There are the formulae which the noble Viscount, the Leader of the House, has recited to us from time to time in this debate. It was said that these sections were appropriate to take over, because it was necessary in the public interest that these things should come under public control. What is the public interest? They have, I agree, defined public interest in this subsection. It is:
"… to secure that those products are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and to further the public interest in all respects.…"
Surely, if it is right that the Corporation should have that duty imposed upon them in regard to the Second Schedule products which, we may say, are genuine steel-making, then if they go further into nationalisation is it not their duty to serve the public interest in whatever they nationalise and to supply in sufficient quantities at reasonable prices? There can be no other justification for nationalisation except to do that. The Government have nationalised the gas industry. Surely they are not going to say: "We are going to do this in a reasonable way in Manchester, but not reasonably somewhere else where the industry is a little smaller." I really cannot see why they should not have this

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obligation put upon them. They say: "Because we have not got it all, we are not going to be under any duty to the public. We are going into the rough and tumble of the fight." And no doubt they might do so with the advantage of being subsidised through the steel prices. Certainly no one has ever suggested before in respect of these nationalised activities that they are not going to be subject to the duties which they have imposed on others, in respect of the other half of their activities.
Then it is said: "But you could go to the Consumers' Council." It is a pretty dreary outlook which is then envisaged. It is assumed that they will not be doing their duty. Indeed they will not be doing their duty, because Parliament has not imposed a duty upon them. Consider the prospect if there were legal proceedings. When you assert there is a particular duty upon the Corporation in respect of certain products, and refuse to put any duty on them in respect of other products, of course the Corporation would say: "We have no duty in respect of the other products." What would happen if they were taken into court? If an action lay as to statutory duty, the court would at once ask, "What is the statutory duty?" The answer would be: "There is no statutory duty. There is a statutory duty for Second Schedule products but none as regards these products." The Minister himself, in his maiden speech in this new adventure, boasted that there cannot be and should not be any duty. One certainly could not sustain an action in the courts. Assume that you go to the Consumers' Council, because you say you have not had a square deal from this nationalised Corporation—which, be it remembered, in one case cited possesses 73 per cent. of these undertakings and in another 60 per cent.—
LORD LUCAS OF CHILWORTH: And in another 15 per cent.
VISCOUNT SWINTON: I daresay. But we must not let the noble Lord get away with the case of 15 per cent. I think that where he owns 15 per cent. he will have to mind his own business, because there will be some competition and other people will see to it that his work is efficient.
LORD LUCAS OF CHILWORTH: That is the case.
VISCOUNT SWINTON: Where he has only 15 per cent., I am not afraid of him. Where he has 73 per cent. I am afraid of him, because I know that the dead hand of nationalisation and bureaucracy will come down. In the old clays, when we argued about effective control, it was not a case of having 100 per cent. 30 per cent. or 40 per cent. was enough for effective control. Take the Government's own Monopolies Act. We do not need 70 have 73 per cent. of all the industry of the country in order to come under the Act. On the contrary, if we have one-third, and not over the whole country but in a substantial area, we have created a monopoly which can be subject to investigation. I do not complain about that. I thought it was right and reasonable that the Bill should be passed. But the Government have been careful to see that while the Monopolies Act deals with monopolies of merely one-third, producing in one-third of the area of the country, and makes them subject to investigation, the great State monopolies, although they may incorporate 73 per cent. of the whole of the undertakings of the country, are not to be subject to any investigation at all.
Now that the noble Lord has come on the scene, perhaps he will propose an Amendment to make this subject to investigation by the monopolies tribunal. We will ill gladly accept that Amendment. I can tell him, here and now, that if he likes to put down a manuscript Amendment at this moment, or to put in an Amendment at any stage, it will be accepted with enthusiasm. But of course he is not going to do anything of the sort. Although on his own showing this is three times, or (if we multiply area by quantity) nine times as great a monopoly as those he subjects to inquiry by the monopolies tribunal, the noble Lord says, "Go to the Consumers' Council." But what is going to be the complaint before the Consumers' Council? The noble Lord may think this is extremely entertaining, but, believe me, there are people who consume these 73 per cent. of commodities who, when ':hey find it extremely difficult to sell their products in competition with their world competitors in a falling market to-day, are gravely anxious about how they are to be treated. That was the reason that led the noble Lord, Lord Milverton, to cross the floor of the House to-day after a statement

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which I think will ring round this country.
When we go to the Consumers' Council, what right have we to complain? I ask the noble Lord, how is the complaint to be lodged? The complaint will be because the Corporation or their subsidiaries have failed to do their duty. Well, but what duty? There is no duty. You have denied that there is a duty. The Corporation are, in the words of the Bill, to have a free hand to go as they please. All the old vices of private enterprise combined into a monopoly are enlarged. There will be no case for the Consumers' Council to entertain because there will be no duty imposed upon the Corporation. On the contrary, when the Consumers' Council is asked to entertain a case, the representative of the Corporation sitting upon it will say, "What is the complaint? The Bill in terms gives the Corporation a free hand to do as they please in these matters. You have no more right to bring me here than you have to bring a co-operative society or any independent enterprise." Of course, there would be no right.
The noble Lord says that it might be a little difficult to fulfil one of these particular duties. It is not always easy to do one's duty, but that is no reason for saying that duties should not be laid down. This Government are far too ready to claim rights and to deny duties. Their only right for having this or any other Bill is justification by works—the way they discharge the duty to the people. Most certainly there should be laid down in this Bill a duty upon the Corporation, in fairness of prices, in reasonableness of supply—in fact, the duty should be laid upon them to do their best for their customers. The Government have no right to ask for the nationalisation of these great sections of the engineering industry unless they accept, in the terms which they themselves have laid down in the Second Schedule of this Bill, the duty to do their best by the people of this country. If some particular refinement is required on this Amendment, in order to make it more workable and more practicable, let the Government produce their refinement. But I sincerely hope we shall hold out for the rights of the public in this matter, and that we shall hold out for a duty being put on the Corporation
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to do what is right, where they own up to 73 per cent. of the commodities.
LORD LUCAS OF CHILWORTH: I think I had better reply to one or two of the points the noble Viscount has made, if only in the interests of accuracy. First of all, I have said that we do not see how one could put a statutory obligation upon the Corporation to carry those things set out in Clause 3 in a field where they had not a monopoly. We said we could not see how to work it. I invited the noble Lord who moved the Amendment to explain to me how it could be done. He has not done so, and neither has the noble Viscount, Lord Swinton. I said that we recognise that the interests of these people should be safeguarded, but that the machinery set up in Clause 6 was the appropriate machinery. The noble Viscount, Lord Swinton, has not addressed himself to Clause 6 with that thoroughness which is characteristic of him on these Bills which come to your Lordships' House. Clause 6 specifically states that the principal activities, which are those affected by this Amendment, can be covered by the Consumers' Council, and that the Council shall discharge the duty of considering any matter affecting the interest of consumers, including prices, being a matter which is the subject of a representation made to them by any of the consumers or which appears to the Council to be a matter for consideration. Let us be quite frank about it. I joined issue with the noble Viscount on some things on the Transport Act. One of the great arguments he raised on the Transport Act was that there was only one way to test the efficiency of the nationalised service, and that was to have the fair wind and fair breath of competition. That was his plea all the way, and that is why the Government listened to him and removed the restriction on the "C" licences. But is he now afraid of the competition of the Corporation in this field of end products?
VISCOUNT SWINTON: I am afraid of its inefficiency to the consumer.
LORD LUCAS OF CHILWORTH: If it is inefficient to the consumer, then there is nothing to be afraid of.
VISCOUNT SWINTON: I really must protest. I am here not to speak for a few producers—I am here to speak for the consumer.
LORD LUCAS OF CHILWORTH: But here you have private enterprise to fulfil the market which the noble Viscount is afraid that, through its inefficiency, the Corporation cannot fulfil. If the Corporation can produce better articles at, cheaper prices it will do so. If it cannot, then what have you to be afraid of?
LORD CHERWELL: That we go short.
LORD LUCAS OF CHILWORTH: I will read them out. These are the products which the noble Lord gave: cold rolled strip, 72 per cent.; bright steel bars, 41 per cent.; steel forgings, 45 per cent.; drop forgings, 15 per cent.; tubes, 67 per cent., and steel wire, 60 per cent.
LORD CLYDESMUIR: Mine differ slightly.
Lord LUCAS OF CHILWORTH: In substance they are the same. At a rough arithmetical sum, it is about 50 per cent. Are you afraid of the competition? You have the protection of Clause 6 machinery where, if the Corporation is not doing what it should and is harmful, then there is that machinery for the complainants to go direct to the Minister. But surely noble Lords cannot stand up one day and say: "What we want to test the nationalised industry is the fair wind of private enterprise," and then say: "What we are afraid of is competition."
VISCOUNT SWINTON: Nobody has said it.
LORD LUCAS OF CHILWORTH: But you are saying it now.
VISCOUNT SWINTON: I am delighted that the noble Lord should make any speech he pleases, but if he is attempting to answer the case I made, I did not make a case about the interests of the private competitors of this Corporation who, I am sure, will continue to do their best, but who, in one case, will have only 27 per cent. of the plant. I am talking for the consumer, and in these Bills I never talk for anybody else. He is the person who is forgotten by the Government. In the interests of the consumer I want to see this duty placed upon the Corporation. I wish the noble Lord would answer that.
LORD LUCAS OF CHILWORTH: I am answering it. I should have thought
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that if private enterprise could fulfil the needs of the consumer, because there is no restriction whatsoever, that would suit the noble Viscount. As the inefficiency, or hoped-for inefficiency of the nationalised industry goes up, so the interests of the independent producer to supply the market will increase. I have looked at this, and I have genuinely failed to see how you can pit a statutory duty upon the Corporation to satisfy the demands of a market in which it holds, let us say, only 50 per cent. of the production. What are you going to do, and how are you going to do it? What is the Corporation's duty? Will some noble Lord opposite tell me? In the case of steel wire, or anything else, we say it is impossible. We recognise the difficulties of the noble Lord, Lord Clydesmuir, and we say that there should be a medium of complaint if the Corporation does not do what is considered to be its duty. But that should be through Clause 6, and we cannot find a way of working this. For that reason—because it is impracticable in our view—I ask noble Lords to reject the Amendment.
LORD CLYDESMUIR: I fail to see the noble Lord's difficulty, and I think a number of your Lordships must have had the same experience. It is not necessary to own the whole, of a trade in order to promote efficient and economical production; you need not own the whole of a trade in order to promote supply at reasonable prices; you certainly need not own the whole of a trade to avoid exercising undue preferences or discrimination. On one point only I think I appreciate the noble Lord's difficulty, and that is, that the production of enough to satisfy the consumers' demands is a difficult thing to do if you do not own the whole of the trade. On that one point I see an opportunity perhaps for an understanding or a compromise, to modify it to that extent; but will the noble Lord then give us the Amendment subject to that modification? Because I do not think he has made out a case for omitting the other duties. I find it impossible to see that he has.
Now let me come to his contention that complaints of preference are wholly met by the existence of the Consumers' Council. He will notice the words I have used:
"principal activities of the Corporation and of the publicly-owned companies."

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"Principal activities" is used elsewhere in the Bill. It is used in Clause 6 on page 7, and the wording in my Amendment makes Clause 3 comparable with Clause 6. It seems logical that there should be this exact conformity, and I submit that it is illogical that the duties of the Corporation should not extend to all the products on which the Corporation may be challenged by consumers in the Consumers' Council. The very procedure which the Minister has set up would seem to be stultified unless at the same time the Corporation carry a duty
Resolved in the negative, and Amendment agreed to accordingly.
House resumed.

ALEXANDER SCOTT'S HOSPITAL ORDER CONFIRMATION BILL

  ROYAL BANK OF SCOTLAND OFFICERS' WIDOWS' FUND ORDER CONFIRMATION BILL
  11.4 p.m.
  Brought from the Commons; read 1a, and to be printed; and (pursuant to the Private Legislation Procedure (Scotland) Act, 1936) deemed to have been read 2aand reported from the Committee.
  as regards all their principal products. I do not think your Lordships will wish me to argue these points at greater length, and if the noble Lord will give us an assurance on that one point—on which I see his difficulty—and if it could be fairly met, perhaps we might come to an understanding. Otherwise I hope your Lordships will feel able to support this Amendment.
  On Question, Whether the words proposed to be left out shall stand part of the Bill?
  Their Lordships divided: Contents, 17; Not-Contents, 57.

  CONTENTS

  Jowitt, V. (L. Chancellor.)

  Ammon, L.

  Lucas of Chilworth, L.

  Chorley, L. [Teller.]

  Macdonald of Gwaenysgor, L.

  Addison, V. (L. Privy Seal.)

  Crook, L.

  Marley, L.

  Henderson, L.

  Morrison, L. [Teller.]

  Hall, V.

  Holden, L.

  Pakenham, L.

  Stansgate, V.

  Kershaw, L.

  Pethick-Lawrence, L.

  Piercy, L.

  NOT-CONTENTS

  Aberdeen and Temair, M.

  Allenby, V.

  Gage. L. (V. Gage.)

  Cholmondeley, M.

  Bridgeman, V.

  Gifford, L.

  Exeter, M.

  Buckmaster, V.

  Hatherton, L. [Teller.]

  Reading, M.

  Davidson, V.

  Layton, L.

  Salisbury, M.

  Elibank, V.

  Lloyd, L.

  Townshend, M.

  Falmouth, V.

  Lyle of Westbourne, L.

  Willingdon, M.

  FitzAlan of Derwent, V.

  Middleton, L.

  Harcourt, V.

  Milverton, L.

  Albemarle, E.

  Long, V.

  Moyne, L.

  Beatty, E.

  Ridley, V.

  Polwarth, L.

  Buckinghamshire, E.

  Swinton, V.

  Remnant, L.

  De La Warr, E.

  Rennell, L.

  Dudley, E.

  Balfour of Inchrye, L.

  Ritchie of Dundee, L.

  Fortescue, E.

  Belstead, L.

  Rochdale, L.

  Gainsborough, E.

  Carrington, L. [Teller.]

  Roche, L.

  Grey, E.

  Cherwell, L.

  Strathcarron, L.

  Howe, E.

  Clydesmuir, L.

  Teynham, L.

  Iddesleigh, E.

  De L'IsIe and Dudley, L.

  Waleran, L.

  Onslow, E.

  Fairfax of Cameron, L.

  Wolverton, L.

  Rothes, E.

  Forester, L.

  URMSTON URBAN DISTRICT COUNCIL BILL
  Brought from the Commons; read 1a; and referred to the Examiners.
  THE NUREMBERG TRIALS
  THE NUREMBERG TRIALS