Sitting of 3 July 1950

Preamble
The House met at Half past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  RUNCORN—WIDNES BRIDGE BILL [Lords]
    TYNE IMPROVEMENT BILL [Lords]
    Read the Third time, and passed, without Amendment.
    CARLISLE EXTENSION BILL [Lords]
    As amended, considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  MINISTRY OF SUPPLY

    Research Staffs (Communists)
    Mr. Boyd-Carpenterasked the Minister of Supply what steps are taken by him to secure that persons employed by him on work on or in connection with atomic research have not at any time been members of the Communist Party and of organisations associated therewith.
    The Minister of Supply: I would refer the hon. Member to the reply which I gave to the hon. Member for Epping (Mr. Nigel Davies) on 22nd May.
    Mr. Boyd-Carpenter: As that reply merely amounted to a refusal to give the information asked for, can the right hon. Gentleman at least state that he takes steps to secure the exclusion from these vital plants of the people referred to in the Question?
    Mr. Strauss: I said in that reply the other day that everybody who works on any secret defence project of the Government is carefully examined to make sure of his reliability.
    Mr. Donner: Will the right hon. Gentleman, while he is about it, also have a look at the Communists destined for the Aldermaston atomic plant?
    Mr. Boyd-Carpenter: Can the right hon. Gentleman say whether he excludes under that procedure, on the grounds of unreliability, the people referred to in the Question?
    Mr. Strauss: Everybody is considered from the point of view of possible unreliability. Their past is considered, their political associations—every aspect is considered.

    Atomic Energy (Research)
    Mr. Hector Hughesasked the Minister of Supply what progress has been made in British national research stations with the problem of harnessing atomic energy for industries, travel and other peaceful development purposes; and when it is likely to be available for use for such purposes.
    Mr. G. R. Strauss: During the last four years considerable progress has been made in preliminary planning of nuclear

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    reactors for use as power units. New high voltage machines and other facilities required for investigating components and materials which may be used in such reactors have been completed at Harwell and are being used to determine whether the various systems which have been planned are practicable. A programme for the construction of the first experimental power reactors is now being prepared. Until some experience has been gained in the operation of such experimental reactors, it would be premature to estimate their prospects. Deliveries of radioactive isotopes from Harwell for medical, scientific and industrial use are meeting all home and export demands.
    Mr. Hughes: While thanking the Minister for that rather exhaustive reply, may I ask him whether, as it is well over five years since atomic energy was first used for destructive purposes, he can say what is the cause of the delay in its use now for constructive purposes? Will my right hon. Friend give us an assurance that the delay is due not to political but to scientific causes?
    Mr. Strauss: A great deal of energy is being put into this work, but the problems are enormous.
    Mr. Somerville Hastings: Will my right hon. Friend, at the same time, make investigations to ensure that the use of atomic energy for these purposes has no deleterious effect on the people who are working on it?
    Mr. Strauss: That is an aspect which is most closely watched.
    Mr. Emrys Hughes: Can the Minister tell us whether as much energy is devoted to atomic research for peace purposes as for war purposes?
    Mr. Strauss: It would be difficult to say exactly, but the basic work on atomic energy is, of course, connected with both war and peace purposes.

    Steel-making Plants, Monk Bridge and Paisley
    Sir George Harvie-Wattasked the Minister of Supply the reasons for the decision to close down the two steel-making plants at Monk Bridge and Paisley respectively.
    Mr. G. R. Strauss: The plant at Monk Bridge was bought and that at Paisley
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    erected to meet special needs during the war, and were continued in operation to reduce the severe post-war shortage of crude steel, although it was known from the outset that they would be producing at a loss. In view of the overall increase in steel output, it would no longer be justifiable to continue the operation of these uneconomic plants. I am glad of this opportunity of emphasising the valuable contribution which all those working in these plants have made over a critical period.
    Sir G. Harvie-Watt: Am I to understand from what the Minister says that those plants have been worked at a loss ever since they have been in operation?
    Mr. Strauss: Without looking it up, I do not think they have ever done anything but work at a loss.
    Sir William Darling: Can the Minister say what steps are being taken to supply some alternative industry for these valuable factories?
    Mr. Strauss: Yes; the matter is being considered by the Board of Trade, and they have already let part of one of the factories for some other industrial purposes.

    Official Cars (Chauffeurs)
    Captain Waterhouseasked the Minister of Supply if he has any further statement to make on the subject of the chauffeurs of official cars who waited all night at the House on Thursday, 15th June.
    Mr. G. R. Strauss: I have nothing to add to the reply which I gave to the right hon. and gallant Member on 26th June.
    Captain Waterhouse: Is it not a fact that some of these chauffeurs were released so late, and had to be there so early, that they were unable to return to their homes and slept in their motor cars? Does it not make it worse when a man has to stop there all night and gets no pay for it and does the Minister think that is a proper use of manpower?
    Mr. Strauss: All the chauffeurs, as the right hon. and gallant Member is aware, were dismissed at the latest by two o'clock or half-past. I understand that some of them remained in the House all night or in the cars or in the rest room

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    before coming on duty the next morning, but I have not had any complaints from any of the chauffeurs involved.
    Captain Waterhouse: While not suggesting that any complaint has been made, I am asking whether the Minister thinks it is reasonable that men who were kept here until half-past two should be told to be back here at half-past six and should get no pay for it?
    Mr. Strauss: It is one of the consequences of having an all-night Sitting. I gathered that a previous Question by the right hon. and gallant Member was directed to the suggestion that they were being paid all this time. In point of fact they were not, because they went off duty.

    Military Aircraft (Information)
    Mr. Harold Macmillanasked the Minister of Supply whether he has now completed his discussions with the Press regarding the release of technical information concerning new types of military aircraft; and what changes in procedure will be made.
    Mr. G. R. Strauss: There are standing arrangements, agreed with the Press, which govern the publication of technical information about new types of military aircraft at various stages of their development and production. Last year, the publication of more information about aircraft which were nearing the end of maker's trials was permitted, but care was taken to ensure that no information of operational value should be disclosed. When the first articles were published under these revised arrangements, it was felt that they enabled rather more to be disclosed than was intended, although I am satisfied that nothing of operational value was then disclosed. A review of the arrangements was, therefore, immediately undertaken, and a fresh agreement has now been reached with the Press, limiting the amount of information which can be published at this stage of production to features which are externally obvious.
    Mr. Macmillan: Would the Minister define what he means by "operational value"? Does he regard information on technical details as having an operational value? It certainly saves a great deal of
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    research than would otherwise be necessary.
    Mr. Strauss: I suppose some technical details would have an operational value which would be interesting to a potential enemy, but I understand that the Royal Air Force are satisfied, as we are, that no information of any importance was disclosed, even on this occasion.
    Mr. Macmillan: Arising out of that further reply, for which I am grateful, may I ask the right hon. Gentleman whether he will take into account the importance of external details which can only be useful if seen at close range? Does his answer imply that no further information will be given about wing sections, angles, sweep back, and the rest, which would only be valuable if seen at close range?
    Mr. Strauss: We are really going back to the old procedure which was agreed by the Royal Air Force and ourselves as covering the necessities of the case. I do not think the right hon. Gentleman need worry that we are disclosing any information which might be of importance to anyone else.
    Air-Commodore Harvey: When the right hon. Gentleman says "the old procedure," does he mean the prohibition of detailed drawings, from which anyone can deduce the range and many other operational details of aircraft? Also, what is the point of prohibiting spectators from inspecting aircraft closely if they can read all about them in a technical paper?
    Mr. Strauss: The regulations which were relaxed have now been revised and brought back to what they were before. This has been done by agreement with the Press. No one need fear that on the occasion which called for comment, anything was disclosed which should not have been disclosed, or that it will be disclosed in future.

  MINISTRY OF WORKS

    Richmond Park (Closed Area)
    Mr. Boyd-Carpenterasked the Minister of Works what is the acreage in Richmond Park to which the public are still denied access; for what purpose or

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    purposes this closed area is now used; and when he intends to permit the use of this area to the public.
    The Minister of Works (Mr. Stokes): The area of Richmond Park now closed to the public is about 564 acres. Of this just over 500 acres are under cultivation, the remainder being camp or gun sites. I hope that the whole area will be restored to the public at varying dates between the autumn of 1950 and that of 1951, with the exception of 48 acres occupied by the Kingston Gate Camp.
    Sir G. Harvie-Watt: Is it the intention of the right hon. Gentleman's Department to return the camp that is there now for the Royal Signals or to take it down as soon as possible? Is it the intention to allow the park to, continue to be used for rather large-scale agricultural development?
    Mr. Stokes: As I have already explained, agriculture will shortly come to an end—within a measurable time as defined in my answer—[Laughter]—in Richmond Park. As soon as other accommodation can be found the camp will be cleared. As the hon. and learned Gentleman knows, I have already declared my intention to clean up the parks as soon as possible.
    Captain Crookshank: Clean them up?
    Mr. Stokes: Well, they want it sometimes.

    Building Industry (Report)
    Sir Waldron Smithersasked the Minister of Works what steps he is taking to implement the recommendations on pages 50 to 53 and of Appendix J of the Phillips Report of the Working Party in the Building Industry.
    Mr. Stokes: I would refer the hon. Member to my reply of 19th June to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith). Appendix J of the report is a copy of a memorandum issued to local authorities by my right hon. Friend the Minister of Health. It does not require any action on my part as it relates to direct labour employed by local authorities.
    Sir W. Smithers: Will the Minister ask all members of the Government to read the outspoken remarks of Sir Thomas Phillips and his Committee? It
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    would do them a bit of good. Will he also tell me if it is true that the Government are trying for all they are worth to pigeon-hole this Report?
    Mr. Stokes: No, that is absolutely untrue. It is my responsibility to see that the action required by the Report is carried out, and I can assure the hon. Gentleman that I am pursuing the matter with the utmost vigour.

    Building Scheme, Witham
    Mr. Dribergasked the Minister of Works if, in view of the intention of the Witham Urban District Council, as part of their development plan, to provide a civic centre at The Grove, Witham, with a library and other appropriate buildings on the opposite side of the road, he will modify his proposal to build Inland Revenue offices at this site.
    Mr. Stokes: No, Sir. This temporary office building is urgently required, but the site is held on a 21-years' lease only, and I shall be willing to consider the question further with the urban district council when the time comes for the development of the civic centre.
    Mr. Driberg: While thanking my right hon. Friend for that reply, may I ask whether he is reasonably satisfied that he will be able to clear these temporary buildings out of the way before the council wish to proceed with their plan?
    Mr. Stokes: I am not sure that I shall be here. [HON. MEMBERS: "Hear, hear."] Well, the scheme is not included in the local authority's programme for another 20 years. It seems to me probable, therefore, that we shall be able to manage all right.

    Cement
    Mr. Geoffrey Cooperasked the Minister of Works the proposed quantity and value of imports of cement and cement clinker for which sanction to the cement trade has recently been given; and from what countries are these imports of cement to be obtained.
    Mr. Stokes: Detailed arrangements have been discussed with the cement industry for the import of 60,000 tons of cement and 20,000 tons of cement clinker from Belgium and Germany, at a total

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    f.o.b. cost of approximately £312,000. Licences have been issued to other importers, but I do not know how far they will, in fact, be used.
    Mr. Cooper: Has my right hon. Friend had brought to his attention the fact that certain schemes in various parts of the country, including Tees-side, are being held up because of the shortage of cement? Will this temporary arrangement fill the gap, and is this a further example of monopoly capitalism failing to expand sufficiently to cover the public demand?
    Mr. Stokes: Yes, Sir; I have heard quite a lot about it. I have been in consultation with the industry and they assure me that by the end of July the steps which have now been taken should meet all the necessary requirements. I am watching the situation very closely, however, and we shall take other steps if that does not prove to be the case.
    Mr. Dribergasked the Minister of Works if he is aware of the delays and irregularities in the delivery of cement in rural Essex; if he has considered the further representations on this matter forwarded to him; and if he will make a statement.
    Mr. Stokes: I am aware of difficulties in this area. Deliveries in Essex have been substantially increased since these difficulties first arose, and I am satisfied that Essex is now receiving a fair share of total supplies. The rate at which Continental cement is being imported, has been doubled. I hope that the effect of this will be felt very shortly in Essex and elsewhere.
    Mr. Driberg: How soon does my right hon. Friend anticipate that there will no longer be any risk of housing schemes being delayed by non-delivery of cement? Incidentally, has my right hon. Friend yet discovered, as he had not on a previous occasion, that Essex is not part of East Anglia?
    Mr. Stokes: I will not enter into a geographical quarrel with my hon. Friend, but I am satisfied that the steps which we have now taken, as advised by the trade, should be sufficient to fill the gap. I have asked them to give the very highest priority to all house-building schemes.
    Captain Duncan: Who allocates the imported cement? Is it done by the Department of the right hon. Gentleman, or by which other Department?
    Mr. Stokes: It is entirely done by the trade.
    Mr. Braine: Is the right hon. Gentleman aware that despite the assurances which he has given now and previously, the position is rapidly worsening in Essex, and will he look into the matter again and deal with any correspondence which is sent to him?
    Mr. Stokes: I have taken the best available advice. I do not distribute or manufacture cement, and I am surprised to hear the repeated shouts from the Opposition for the nationalisation of the cement industry.

    Sports Ground Stands (Repair)
    Mr. J. P. W. Mallalieuasked the Minister of Works whether he will now grant more licences for the repair of cricket and football stands.
    Mr. Stokes: I can now allow a few small schemes for work to clubs and places of entertainment, including the reinstatement of damaged stands, provided that no scarce materials, particularly softwood, are required, the cost is not great, and my officers are satisfied that the grant of the licence will not have an adverse effect on the local housing programme. While the need to restrict the amount of miscellaneous work remains it will still be necessary for me to reject any such schemes which involve substantial expenditure.
    Mr. Mallalieu: Is the Minister aware that this decision, provided that it does not interfere with housing, will give pleasure to a lot of people, and that that pleasure will be doubled if he will at once grant a licence to Huddersfield Town?
    Sir W. Wakefield: Can the right hon. Gentleman say whether this easement will mean that many clubs will now be able to obtain dressing room accommodation for their players and accommodation for their groundsmen also, because such licences have been refused in the past and it would be very helpful if the statement made by the Minister were to include these facilities?
    Mr. Stokes: I do not wish to be too specific today. There are a very large number of small applications and I have only a limited amount of funds available, but I will certainly bear in mind what the hon. Member has said.

    Assistance Board Office, West Hartlepool
    Mr. David Jonesasked the Minister of Works whether he is aware that Fern Villa, West Hartlepool, is urgently required for the purpose for which it was purchased in 1946; and whether he will secure alternative temporary accommodation for the local office of the Assistance Board.
    Mr. Stokes: Yes, Sir. My Ministry have been trying for a long time to find alternative accommodation for the National Assistance Board, but as premises cannot be found arrangements are being made to build a new office. Meanwhile, the search for temporary accommodation will continue.
    Mr. Jones: Will my right hon. Friend ask his local officers to consult the officials of the local authority, who will probably be able to give him the addresses of two or three suitable premises which are at present empty?
    Mr. Stokes: I should have thought that they certainly would have done so. If my hon. Friend has those addresses, perhaps he will be so good as to send them to me.

    Softwood
    Mr. Marplesasked the Minister of Works whether he is satisfied that the stocks of softwood are sufficient to avoid dislocation in the building industry in the next few months; and for distribution purposes what is the lowest stock of softwood required to keep our present building programme supplied with softwood.
    Mr. Stokes: I would refer the hon. Member to my reply of 22nd May, to which I have nothing to add.
    Mr. Marples: Does the right hon. Gentleman not realise that a certain amount of dislocation in the building industry is already taking place? Is he aware that in the case of some Merseyside building contractors, who received an order for 311 dwellings requiring 500 standards of timber, the licensing control granted a licence for only 60 standards
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    and the contractors cannot purchase any timber at all even against the licence for 60 standards? Does not the right hon. Gentleman consider that that is dislocation?
    Mr. Stokes: I can only call the attention of the hon. Gentleman to the fact that recent arrangements have been made for the importation of quite a large supply of timber from Russia. This is a matter for my right hon. Friend the President of the Board of Trade, and I will certainly call his attention to the case to which the hon. Member refers.

    Building Labour Force (Alloction)
    Mr. Keelingasked the Minister of Works the estimated number of men at present employed on building Government offices and other Government buildings excluding quarters for the fighting or other services; and what is the estimated number engaged in building new houses.
    Mr. Stokes: The latest figures are for the end of April. At that date, about 5,000 men were employed on buildings intended for use as Government offices, about 20,000 men were estimated to be employed on various other Government buildings and about 260,000 on new houses.
    Mr. Keeling: Will the Minister give an assurance that in future Government Departments which want new offices will be required to stand second in the queue to the miserable families who are waiting for houses?
    Mr. Stokes: That always is the case. The Government have licensed up to the full the construction of houses in accordance with their programme, and offices very much take second place.

    Golf Course, Aberdeen
    Mr. Hector Hughesasked the Minister of Works if he is aware that a substantial part of Kings Links Corporation Golf Course, Aberdeen, though no longer used by the military authorities, is still under their control; that it is used by four clubs with a combined membership of over 2,000 and hundreds of unattached players; that it is encumbered by military huts and by barbed wire; that open golf tournaments are planned there for this and next year; and if he will have

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    it cleared and restored to its former condition suitable for golf championships this Summer.
    Mr. Stokes: No part of the main golf course is occupied by any Government Department, but seven acres of the adjoining six-hole course are held on requisition by my Department. This area will be released as soon as alternative accommodation can be found for the various bodies using the huts on this site and my Department are taking active steps in that direction. Statutory compensation will be paid when the site is released but the restoration of the land will be a matter for the corporation.
    Mr. Hughes: Is my right hon. Friend aware that both these links are required for the tournaments this year and that Aberdeen, as a seaside resort, is greatly prejudiced by one of them being occupied as it is at present? Will my right hon. Friend do what he can to expedite its release?
    Mr. Stokes: I did not know that people played tournaments on six-hole courses, but I will do what I can. There is not the slightest chance of getting the links released in time for this summer, but we will hurry it along.

    Shops (Living Accommodation)
    Mr. Redmayneasked the Minister of Works how many licences for the addition of living accommodation to lock-up shops were granted in 1949; and what total he is prepared to grant in 1950.
    Mr. Stokes: I regret that the information for 1949 is not available and could not be provided without an unjustifiable diversion of staff from their normal duties. I cannot set a figure for 1950, but such applications will continue to be considered on their merits.
    Mr. Redmayne: Is it the policy of the Minister that these licences should be granted only on new housing estates, as is being stated by his regional officers to be his policy?
    Mr. Stokes: I should require to have notice of that question.

    Requisitioned Property, Cardiff
    Mr. Llewellynasked the Minister of Works how many hotels and houses in Cardiff have been derequisitioned by
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    Government Departments since 1st March, 1950; and whether he will publish a list of locations of all house and hotel property at present occupied by Government Departments in Cardiff.
    Mr. Stokes: There were no hotels held on requisition in Cardiff on 1st March, 1950. No houses have been derequisitioned since that date. With regard to the second part of the Question, there are 66 houses and a part of one hotel in occupation by Government Departments in Cardiff, of which 53 are leased and 13 requisitioned. I do not think any useful purpose would be served by publishing a long list of the addresses of these premises, as the accommodation occupied by particular Departments can readily be ascertained locally. If the hon. Member has any particular question in mind I will try to give him the necessary information.
    Mr. Llewellyn: In view of the very serious housing shortage in Cardiff, will the Minister try to get these premises de-requisitioned as soon as possible?
    Mr. Stokes: I have already given instructions to that effect, but it depends upon the rate of construction of new buildings.

  FUEL AND POWER

    Local Offices
    Brigadier Raynerasked the Minister of Fuel and Power how many fuel offices in the country are in requisitioned houses; and how many of these offices have been closed or removed from such houses since the end of 1945.
    The Minister of Fuel and Power (Mr. Philip Noel-Baker): If, as I assume, the hon. and gallant Member refers to local fuel offices, my Department are not responsible for the provision of the premises which they require. This is a matter for the local authorities, and I regret therefore, that I am unable to give the information which he desires.

    Electricity Undertakers (Compensation)
    Mr. Blackasked the Minister of Fuel and Power when he will publish the regulations governing the payment to local authorities who were formerly electricity undertakers of the amounts they are to receive as compensation for loss on severance.
    Mr. P. Noel-Baker: The regulations laying down the principles on which compensation for severance of their electricity undertakings will be paid to local authorities are now being prepared. They will be published as soon as possible. I understand from the British Electricity Authority that compensation should be paid to local authorities shortly after the regulations are made.
    Mr. Black: What does the right hon. Gentleman mean by "very shortly"?
    Mr. Noel-Baker: Within a few weeks, I hope.

    Statistical Digest
    Colonel Clarkeasked the Minister of Fuel and Power when his Department's Statistical Digest for 1948–49 will be published.
    Mr. P. Noel-Baker: I hope that my Ministry's Statistical Digest for 1948 and 1949 will be published in September.
    Colonel Clarke: Does the Minister realise that this is quite a valuable publication and that the last edition, that for 1947, came out a year ago last November? The present one is nearly 14 months overdue and a good deal of telephoning to his statistical department would be saved if it were issued earlier than September.
    Mr. Noel-Baker: Yes, but I am sure the hon. and gallant Member will realise that after nationalisation a great many changes had to be made in the form of information. It is now much more useful than it was before and it has taken longer to come forward. In future we shall publish a digest year by year, and it will be published much sooner.

    Electricity Industry (Capital)
    Mr. Donnerasked the Minister of Fuel and Power by what amount reductions have been made in the capital available to the electricity supply industry in the current financial year; and what percentage this cut constitutes.
    Mr. P. Noel-Baker: An investment programme is approved for the calendar year. The amount originally sanctioned for electricity supply in 1950 was £113,000,000; but, after devaluation, it was decided to reduce the rate of expenditure to £102,000,000 a year. As
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    this reduction could not be made immediately effective, I regret that it is not yet possible to say what the actual saving in 1950 may turn out to be.
    Mr. Donner: Is the right hon. Gentleman aware that, as a result of this policy, a number of my constituents are deprived of electricity even for lighting purposes? Will he take steps to improve the situation?
    Mr. Noel-Baker: I want to improve the situation and I regretted the cuts, but I remember that the Opposition wanted much greater cuts than were actually made.

    Hydro-Electricity Schemes, Wales (Model)
    Mr. Vosperasked the Minister of Fuel and Power what arrangements he is able to make for the display of the model of the North Wales hydro-electric schemes, originally intended for the Library.
    Mr. P. Noel-Baker: My right hon. Friend the Minister of Works has been good enough to arrange that the model will be on view in Westminster Hall during the week which begins on 10th July. I am much obliged to the hon. Member and to other hon. Members who have taken an interest in this important matter.

  COAL INDUSTRY

    Coke
    Mr. Bossomasked the Minister of Fuel and Power, in view of the fact that coke has been decontrolled, why users are still requested by his Department to fill up forms, giving information as to their requirements and use.
    Mr. P. Noel-Baker: Although the supply of coke is generally adequate to meet the demand, it is still necessary to keep a watch on distribution, in order that the needs of essential industries, which require particular qualities or sizes, can be met. For this reason large consumers are still being asked to furnish returns showing their consumption and their stocks. Arrangements are being made however to dispense with these returns from the smaller consumers (who use less than 100 tons of coke and coal

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    in the year). But these arrangements will not apply to the small consumers in the iron and steel industry.
    Mr. Bossom: Will the Minister look at the forms now being sent out to see whether it is necessary to ask for all the ridiculous information for which they ask?
    Mr. Noel-Baker: The information may seem ridiculous to the hon. Member, but it is most desirable that these people who want specialised qualities and sizes should get what they want. The producers have to have this information to enable them to meet this demand.
    Mr. Peter Thorneycroft: Could they not get what they want simply by ordering it, when the producers would see what was required?
    Mr. Noel-Baker: But they might order it and find that it is not there. [HON. MEMBERS: "Oh!"] Yes, of course, but with the arrangements which we make it is there; that is the difference.
    Mr. Bossom: Does the Minister think it necessary to ask in what type of conveyance the coke is to be brought to the factory?

    Opencast Mining
    Mr. Nabarroasked the Minister of Fuel and Power the nature and contents of communications received from the National Union of Mineworkers, protesting against the continuance of opencast coal mining.
    Mr. P. Noel-Baker: I have had no such communication from the National Union of Mineworkers.
    Mr. Nabarro: In view of that reply, can the Minister say what justification he had two weeks ago last Saturday, when, addressing 20,000 miners at Rotherham, he was reported to have said that the farmers hate opencast coal mining, the miners hate it, and the Government hate it most of all? Why did he say that the miners hate it?
    Mr. Noel-Baker: Because, just as I sometimes have private conversations with the hon. Member, so I have private conversations with miners, who tell me that they do not like opencast mining but realise, unlike the hon. Member, that we have to have the coal.

    Consumption
    Colonel Crosthwaite-Eyreasked the Minister of Fuel and Power since, in the first 23 weeks of this year, coal consumption has exceeded production to the order of 5,000,000 tons, what steps he is taking to limit sales.
    Mr. P. Noel-Baker: During the winter the consumption of coal is greater than in the summer; the excess of consumption over production is met by drawing on stocks. The amount withdrawn from stocks in the first 23 weeks of 1950 was greater than in 1949, but the re-building of stocks for next winter has, of course, begun, and it is so far doing well.

    Productivity
    Sir G. Harvie-Wattasked the Minister of Fuel and Power what lines of action he has approved under Section (3) of the Coal Mines Act, 1946, with a view to educating workers in accepting new tasks or the reassessment of tasks in order to improve productivity of coal.
    Mr. P. Noel-Baker: The acceptance of new tasks, or the reassessment of tasks, in the coal industry are matters which fall to be dealt with by the conciliation machinery set up under the requirements of the Act of 1946. The Question which the hon. and learned Baronet has put to me does not, therefore, arise.

    Short Deliveries
    Mr. Niall Macphersonasked the Minister of Fuel and Power whether he is aware that, taken over a period of time, short delivery of coal to merchants represents an increasingly serious loss; and what steps he is taking, in consultation with the Minister of Transport, to ensure that merchants shall receive on the average the quantity of coal allocated to them.
    Mr. P. Noel-Baker: This is a matter of the National Coal Board's day-to-day administration; if the hon. Member will read paragraphs 292–294 of their Annual Report for 1948, he will find an account of what is being done.
    Mr. Macpherson: Is the right hon. Gentleman aware that stereotyped replies are being sent out when letters are written complaining of regular shortages of something like half a hundredweight in the

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    ton and that the reply simply says that this is not regarded as excessive? Does the right hon. Gentleman share that view and, if not, what is he going to do about it?
    Mr. Noel-Baker: I am not sure whether I am in order in adding to my original answer, but the Coal Board have had discussions with the coal distributors and the Railway Executive about what they can do and they are shortly to examine with the distributors the results of their discussions with the Railway Executive, with a view to improving matters.
    Sir Herbert Williams: What has the Railway Executive to do with the matter when a coal merchant does not send the proper amount of coal?
    Mr. Noel-Baker: It is because a lot is lost in transit on the railways.
    Sir H. Williams: What has that to do with giving short weight?
    Mr. Noel-Baker: It is short weight on arrival. It has always been true, long before nationalisation—this is a very old question—that there have been difficulties about short weight deliveries.

  DIVORCED PARENTS' CHILDREN
  Lieut.-Colonel Liptonasked the Attorney-General how far he proposes to carry out the recommendations of the Denning Committee Report relating to the welfare of children of divorced parents.
  The Attorney-General (Sir Hartley Shawcross): Arrangements have now been made whereby the judges of the Divorce Division may refer to a probation officer for an inquiry and report as to the welfare of the children concerned in any application for custody or access heard in London. If these arrangements prove successful, it will no doubt be possible to consider their application to cases heard in the provinces.
  Lieut.-Colonel Lipton: Is my right hon. and learned Friend aware that his reply will give great satisfaction to those who have been waiting for some time to see the recommendations of the Committee put into effect?

  LAW OF LIBEL
  Brigadier Medlicottasked the Attorney-General when he will introduce legislation to carry into effect the recommendations of the Porter Committee on the law of libel.
  The Attorney-General: I am unable to say when it will be possible to introduce legislation to deal with the recommendations of this Committee.
  Mr. Driberg: In expediting this legislation as much as he can, would my right hon. and learned Friend also consider, in consultation with the Lord President of the Council, the setting up of the Press Council, since the two proposals are to some extent complementary?
  The Attorney-General: Certainly, Sir. The establishment of a Press Council which will ensure that the greater liberty and latitude to the Press which would follow on the proposed amendment to the law of libel was not allowed to develop into licence, for which there was no redress, would greatly assist those who, like myself, would like to see the law of libel amended in favour of the Press.
  Mr. Harrison: Would my right hon. and learned Friend say whether there are any special difficulties in introducing legislation to meet the recommendations of this Committee?
  The Attorney-General: It is to some extent a complicated and, in some ways, controversial matter.

  FOOD SUPPLIES

    Eggs
    Mr. Nabarroasked the Minister of Food whether he will make a statement upon future distribution arrangements for home produced eggs.
    The Parliamentary Secretary to the Ministry of Food (Mr. Frederick Willey): I am satisfied that the present system of distribution gets the eggs into the shops as rapidly as possible and I do not propose to change it. I have not had many complaints, but if the hon. Member has any suggestions for improvements I shall be very pleased to consider them.
    Mr. Nabarro: Is the hon. Gentleman aware that the present nationalised distribution arrangements always result in

    21
    eggs arriving in grocers' shops in an aged, musty and squiffy condition? Will he consider allowing distribution to revert to private distributors with the proper safeguards of national marking as in pre-war days, which would ensure that the eggs were fresh?
    Mr. Willey: The hon. Member is misinformed. Perhaps he will await my reply to a later Question.
    Mr. Bossomasked the Minister of Food how many Polish eggs are now being stored by his Department in the apple cold-storage plants in Kent; and if these will all be removed in time for the plants to receive the Kentish crop of apples.
    Mr. F. Willey: It is not in the public interest to disclose the stocks of eggs held by my Department, but the fruit cold storage space will certainly be cleared before the apple harvest.
    Mr. Bossom: Is it a fact that all the farmers there are having more eggs put into their plant? Can I give them an assurance that their plant will not be occupied when they want to put their apples into it?
    Mr. Willey: The hon. Member can refer the farmers to the reply which I have just given.
    Mr. Crouchasked the Minister of Food what is the average time which elapses between the collection of an egg from the farm and its arrival at the retailer's shop.
    Mr. F. Willey: An investigation which was recently carried out indicated that a fair average time between collection of eggs from a farm and their receipt at a retailer's shop would be from seven to nine days.

    Ham
    Mr. De la Bèreasked the Minister of Food whether unrationed tinned hams can be made available immediately to the public?
    Mr. F. Willey: I would refer the hon. Member to the reply given by my right hon. Friend to my hon. Friend the Member for Battersea, South (Mrs. Ganley) on 19th June.
    Mr. De la Bère: Is the hon. Gentleman aware that that reply did not carry
    22
    us very far? Could we not have ham derationed and let the public have the full benefit of what is available? What is the cause of this restriction?
    Mr. Willey: As the House will know, some quantities of ham are now available.

    Sugar
    Mr. De la Bèreasked the Minister of Food whether, in view of the predicted glut in the world supplies of sugar, the Government can give an assurance that they will de-ration sugar before the end of 1950.
    Mr. F. Willey: I would refer the hon. Member to the reply given by my right hon. Friend to the hon. and gallant Member for Wembley, North (Wing-Commander Bullus) and the hon. Member for Devizes (Mr. Hollis) on 19th June.
    Mr. De la Bère: How comes it that with an abundant supply of sugar in the world we cannot have sugar in this country—not more than one miserable pound? Let us have more sugar and get rid of Socialism.

    Egg Substitute
    Mr. De la Bèreasked the Minister of Food whether, in view of the fact that dried animal blood plasma, imported from European slaughter houses, is being used as a substitute for eggs in cakes and confectionery sold in Great Britain, the Government will gave an assurance that steps will be taken to prohibit the sale of this plasma for use as a substitute for eggs, with special regard to the fact that the supply of eggs is more than adequate for all purposes throughout the country.
    Mr. F. Willey: No, Sir. Bakers are still short of egg products and animal blood plasma is a valuable and harmless supplement to their present supplies.
    Mr. De la Bère: Are we to understand that with all the abundant supply of eggs we cannot have wholesome eggs in our cakes? Why has this blood plasma to be used? Why cannot we have the fresh eggs and sugar we used to get instead of blood plasma without sugar? We do not want Socialism and blood plasma; we want sugar and eggs.
    Mr. Willey: As I have already said, bakers are still short of egg products.
    Mr. De la Bère: With great respect, I think the hon. Member is wrong.
    Mrs. Castle: In view of the fact that the spring abundance of eggs is falling off will my hon. Friend do nothing to divert supplies from the domestic ration to the manufacturers?
    Mr. Willey: As my right hon. Friend has said on several occasions, the domestic ration has first priority.
    Mr. Walter Fletcher: To protect the public against deception should there not be a label "Blood puddings"?

    Food Parcels
    Brigadier Medlicottasked the Minister of Food if, in view of the ending of the points rationing scheme, he will now consider increasing the proportion of unrationed foods allowed to be included in food parcels sent abroad.
    Brigadier Clarkeasked the Minister of Food if, in view of the limited quantity of foods that are now rationed, he will revise the rules governing food parcels to Germany, so as to reduce the proportion of rationed to unrationed food that may be sent in a parcel.
    Mr. F. Willey: I would refer the hon. and gallant Gentlemen to the reply given to my hon. Friend the Member for Willesden, East (Mr. Orbach) on 28th June.

    Payment Certificates (Printed Slip)
    Mr. John Grimstonasked the Minister of Food why the Hertfordshire and Bedfordshire Co-operative Bacon Factory, Limited, is allowed to affix to official Ministry of Food payment certificates a printed slip which suggests that owners of pigs should join this co-operative society.
    Mr. F. Willey: The slips were affixed without my authority, and I have told the company to stop using them.

    Livestock Grading
    Mr. Higgsasked the Minister of Food whether, with a view to meeting the complaints of some farmers about the unfair grading of cattle at the only collecting centres available to them, he
    24
    will take steps under Section 3 of the Livestock (Sales) Order, 1949, to extend the present areas from which livestock may be collected from any collecting centre, so that they overlap to some extent and thus provide the farmer with a choice of more than one centre.
    Mr. F. Willey: This would not be a satisfactory method of dealing with complaints about livestock grading. The results of the work of the grading panels are examined by my Department and, in addition, the livestock inspectors supervise this work on their visits to the collecting centres. If the hon. Member would let me have details of any complaints about grading I will have inquiries made.

    London Meat Distribution (Strike)
    Commander Nobleasked the Minister of Food what is the position with regard to London's meat ration this week.
    Mr. F. Willey: I regret that the strike of transport workers has now extended to the manual staff at the cold stores and at Smithfield. It is hoped that with the aid of Service personnel we shall be able to distribute the full carcase meat ration of 1s. 4d. this week, but we cannot be certain about this and retail butchers should not, therefore, serve their customers with more than 1s. worth of meat for each ration book in the early part of the week. It is not proposed to distribute any canned corned beef in London this week. The House will be kept informed of any further developments.
    Commander Noble: Will the Minister do everything possible to make carcase meat available this week, as I am sure he will understand that the people of London do not want another week of corned beef? Will he, at the same time, consider, when carcase meat is available, making up the ration which was missed last?
    Mr. Willey: Yes, Sir, on both points. Every step is being taken to ensure that housewives receive their rations. Every step will be taken later to see that the ration is distributed evenly over a period.
    Mr. McCorquodale: Seeing that this unofficial strike is obviously designed to cause the greatest possible degree of hardship to the general public and to housewives in particular at this time, is the

    25
    hon. Gentleman aware of any close connection between those behind this strike and those who were behind the recent troubles in the London docks?
    Mr. Willey: Perhaps the hon. Gentleman will put down a Question to the Minister of Labour.
    Colonel Gomme-Duncan: Can the Parliamentary Secretary say who are the employers of the transport workers involved in the stoppage?
    Mr. Willey: Yes, the Meat Transport Organisation.
    Sir H. Williams: That is the Government.

    SOAP
    Mr. Nabarroasked the Minister of Food whether he can now make a statement in regard to the derationing of soap.
    Mr. F. Willey: I cannot yet add anything to the reply which my right hon. Friend gave on 14th June to my hon. Friend the Member for Nottingham, East (Mr. Harrison).
    Mr. Nabarro: Is it not a fact that every soap manufacturer in the country has abundant supplies of raw materials for soap and detergent production and will his right hon. Friend, therefore, in the vernacular, "come clean"?
    Sir H. Williams: Would the Parliamentary Secretary say why the Government are not de-rationing soap, having regard to the fact that the big soap manufacturers are spending about £2 million at the moment in advertising alternatives?
    Mr. Willey: I have nothing to add to my reply.

    CABINET COMMITTEES
    Mr. Geoffrey Cooperasked the Prime Minister if he will consider publishing a list of the various Cabinet Committees so to enable there to be a more intelligent understanding of our machinery of government.
    The Prime Minister (Mr. Attlee): No, Sir. Ministers in charge of Departments are separately responsible to Parliament for the policy and administration of their Departments, and the procedure by which
    26
    the Cabinet discharges its collective responsibility is a matter for the Cabinet itself.
    Mr. Cooper: Does my right hon. Friend believe that this secrecy is really helpful? Would he, in particular, consider issuing a statement about the committee on the machinery of government which has been sitting—how frequently it has met and Whether it is still in existence?
    The Prime Minister: No, Sir. I have already explained in my answer why that attitude is taken up.

    HOUSE OF COMMONS

      AMENITIES
      Sir H. Williamsasked the Lord President of the Council if he will consider in the next Session the setting up of a new Select Committee to consider and from time to time to recommend improvements in the amenities of hon. Members and of the servants of the House.
      The Lord President of the Council (Mr. Herbert Morrison): There are pros and cons about the proposal and I will bear the hon. Member's suggestion in mind; but I should have thought that it might be best to see first how we get on in our new Chamber.
      Mr. Martin Lindsay: Will the Lord President tell us what the cons are?
      Mr. Morrison: No, Sir.

      MINORCA VICE-CONSULATE)
      Mr. Follickasked the Secretary of State for Foreign Affairs if, in deference to the wishes of the people of Minorca, he will consider the re-establishment of an honorary Vice-Consulate at Mahon.
      The Under-Secretary of State for Foreign Affairs (Mr. Ernest Davies): The Vice-Consulate at Port Mahon, Minorca, was closed in 1946 as the importance of the post had declined and the cost of its maintenance was no longer justified. It is not proposed to re-open the post at present.
      Mr. Follick: Is my hon. Friend aware that there is a very strong pro-British community in Minorca, and that they feel

      27
      hurt at the closing of this Vice-Consulate, especially as it would cost the Treasury nothing to re-establish it?
      Mr. Davies: I regret it if the very small British community at Port Mahon feel hurt about this matter. It is a very small Colony indeed. We do not feel justified in having an honorary Vice-Consul there, which does involve us in certain administrative expenses.
      Mr. Follick: I did not say "British Colony" I said "pro-British community."

      SHANGHAI (CONSUL-GENERAL)
      Mr. W. Fletcherasked the Secretary of State for Foreign Affairs why the present Consul-General in Shanghai is being relieved.
      Mr. Ernest Davies: Mr. Urquhart, His Majesty's Consul-General at Shanghai is being relieved as a matter of routine and also for personal reasons. It is hoped to replace him by a senior consular officer.
      Mr. Fletcher: Is Mr. Urquhart being relieved at his own request? Will the hon. Gentleman also state whether he will be able to replace Mr. Urquhart by an officer of the same repute and experience, who will be very difficult to, find?
      Mr. Davies: We have every intention and hope or replacing him by an officer of equal rank. He is being removed partially at his own request. It is a matter of routine and personal reasons.
      Mr. Fletcher: Will the Under-Secretary give a clear answer, which he has not done? Is Mr. Urquhart being relieved at his own request, and is he being replaced by an officer not of equal length of service but of equal repute and experience?
      Mr. Davies: It is our intention to replace him by someone of equal repute. As regards his being removed at his request, there is a combination of reasons. When a person is changed from place to place, all matters are taken into account. His own personal affairs are one matter and the fact that he has been there for a certain length of time is another.

      ANGLO-SOVIET RELATIONS (DOCUMENTS)
      Sir H. Williamsasked the Secretary of State for Foreign Affairs if he will arrange to place in the Library a translation of the proceedings of the recent meeting of the Supreme Soviet held at Moscow including in particular such passages as dealt with the relations of the Union of Soviet Socialist Republics and the United Kingdom.
      Mr. Ernest Davies: I would refer the hon. Member to the "Soviet News," of 12th-22nd June and to the "Soviet Monitor," of 11th–21st June, which he will find in the Library.

      CIVIL COMPENSATION CLAIMS
      Commander Nobleasked the Secretary of State for Foreign Affairs what action is being taken to provide for a settlement of civilian compensation claims registered with his Department but not eligible for the United Kingdom Personal Injuries (Civilians) Scheme.
      Mr. Ernest Davies: His Majesty's Government have endeavoured to obtain compensation from foreign Governments in individual cases by diplomatic representations. Where foreign legislation is known to exist, providing compensation for civilian war injuries sustained in the territory of the State concerned, His Majesty's Government have sought to obtain for British nationals treatment not less favourable than the treatment acorded to nationals of that State. Negotiations for that purpose are now in progress.
      Commander Noble: Is the Minister aware that those who suffered great hardship in the Philippines have been waiting a long time? Will he continue to press for those cases to be covered by the peace treaty with Japan? Will he also continue his negotiations with the Philippines war damage committee, which has just reported or is about to report, to Congress?
      Mr. Davies: When the peace treaty with Japan is being considered, this matter will, of course, be taken into consideration. I will look into the question of the Philippines.

    ROADS

      Basingstoke
      Mr. Donnerasked the Minister of Transport whether he will now make a grant towards the cost of £1,655 to widen the dangerous length of road in Oakley Lane, near Basingstoke, on the lines approved by the Hampshire County Council, and in view of the willingness of the council to bear their share of the cost.
      The Minister of Transport (Mr. Barnes): I regret that I am unable to make a grant towards this scheme at the present time.
      Mr. Donner: In view of the danger to children using this road is the Minister aware that in refusing to make any grant he is accepting a very great personal responsibility?
      Mr. Barnes: That applies to a good many road schemes. As hon. Members are probably aware, the resources of the Road Fund are not sufficient at present to meet difficulties of this kind; there are many other schemes of far greater importance.

      Perth—Aberdeen Road
      Captain Duncanasked the Minister of Transport whether, in view of the narrowness of the bridge and the number of accidents which have occurred, he will give immediate authority for the construction of a new stretch of road to replace the Castleton bridge on the main Perth—Forfar—Aberdeen road.
      Mr. Barnes: I am sorry that this is not possible. The limited resources at present available for road improvements are required for works of even greater urgency.
      Captain Duncan: Does the right hon. Gentleman realise that this is making nonsense of the "Safety First" campaign? Dangerous corners do not cost very much to put right. Will the right hon. Gentleman include this for certain in his programme for next year?
      Mr. Barnes: I agree that if we had sufficient funds to remove many of these danger spots it would aid the road safety campaign. On the other hand, it is still desirable to carry on that campaign. I cannot give an undertaking that this will be included in the programme for next year.

      Park Lane, London
      Mr. Gammansasked the Minister of Transport if he will investigate to what extent there has been a speeding up of traffic between Hyde Park Corner and Marble Arch since Park Lane has temporarily been made a one-way street; and if he will consider making permanent the present arrangement.
      Mr. Barnes: I am satisfied that a one-way scheme between Hyde Park Corner and Marble Arch does speed up the flow of vehicles. There is a long-term scheme for the improvement of traffic conditions between Hyde Park Corner and Marble Arch, but this cannot be undertaken at present and I cannot make the present arrangements permanent, as the road inside the Park is not strong enough to carry, for any length of time, the heavier bus traffic without reconstruction.
      Mr. Gammans: As this is one of the worst traffic jams in London, can the Minister say if it would be possible even to widen Park Lane, or when he expects the scheme he has mentioned actually to be ready?
      Mr. Barnes: No, Sir. The cost of widening Park Lane would be so great that it would be better to proceed with the new scheme, which is an excellent proposal. I hope that before long it may be possible to produce a model showing the improvement, but I do not think that, in the meantime, we could undertake the cost which the hon. Member suggested.
      Brigadier Head: As this is such a congested area, was it wise to have both Hyde Park and Marble Arch up during this summer?
      Mr. Barnes: This matter was considered very carefully by the Westminster City Council, who were anxious to do as many road repairs as possible this year in order to ease their programme next year during the Festival of Britain.

      Durham
      Mr. Greyasked the Minister of Transport the points of difference that exist between city and county councils in respect of the through road through Durham.
      Mr. Barnes: There was a difference of opinion between the two councils as to the level on which the new road should be

      31
      constructed. I hope, however, that the consultations to which I referred in my answer of 26th June will lead to agreement.
      Mr. Grey: Is the Minister aware of the great anxiety felt in Durham about the whole position? Will he set up an independent inquiry into the reasons for the delay in putting forward the proposal?
      Mr. Barnes: I have already instituted one inquiry, and I am now anxious to get results. I do not think it would expedite matters for me to establish another inquiry.

      Signposts
      Mr. Gammansasked the Minister of Transport if he is aware of the inadequacy of signposts in inner London; and what steps he proposes to remedy the position before the Festival of Britain brings increased numbers of tourists to this country.
      Mr. Barnes: Yes, Sir. Steps are being taken with a view to improving London signposting in time for the Festival.
      Mr. Gammans: Does the hon. Gentleman realise that it is not a question of improvement, but a question of starting from scratch? If he does not do something London will be full of penniless visitors with cars who simply cannot find their way home at all?
      Mr. Barnes: That scheme has made considerable progress; and I would remind hon. Members that a Conservative Government was in power for many years and did nothing.
      Mr. William Teeling: Can the right hon. Gentleman tell the House what names of towns he proposes to put on the signposts going out of London? Strangers driving cars to the south coast to such places as Eastbourne and Brighton, simply cannot find their way owing to the vast numbers of cars on the roads.
      Mr. Barnes: I think we had better wait until the hon. Member for Hornsey (Mr. Gammans) and myself make that journey. and then we will be able to give the hon. Gentleman that information.
      Mr. Gammans: It will be a very long journey.

    TRANSPORT

      Public Vehicles (Speedometers)
      Sir W. Smithersasked the Minister of Transport if he will introduce legislation to compel all public road vehicles to be provided with speedometers.
      Mr. Barnes: All public service vehicles other than those registered before 1st October, 1937, and used only as stage or contract carriages are required by the existing regulations to be fitted with a speed indicator. It would not in my view be reasonable at the present time to impose a regulation that vehicles registered before 1st October, 1937, should be so fitted.
      Sir W. Smithers: In the event of a motor driver not being able to get a speedometer, is it fair to prosecute him for exceeding the speed limit? Will the Minister do his best to secure the provision of speedometers with reflectors on the back of the car so that the speed can be read by the people following?
      Mr. Barnes: It is not a question of the availability of speedometers; it is the age of the car. It is fairly obvious that in a year or two this problem will solve itself. It might have done so before now, if there had been more vehicles available for the home market.

      Area Schemes
      Mr. A. Edward Daviesasked the Minister of Transport what progress has been made with area schemes for the acquisition of passenger transport as provided for under the Transport Act, 1947; and what further steps are contemplated.
      Mr. Barnes: In accordance with the procedure prescribed in the Eighth Schedule to the Transport Act, 1947, I have returned to the British Transport Commission with my observations the scheme submitted by them relating to the northern area of England. The preparation of schemes under the Act is a matter for the Commission.
      Mr. Davies: Has not sufficient time elapsed for more tangible results to be evident? At this rate of progress we shall not get anywhere during the next 10 years.

      NEWSPRINT SUPPLIES
      Mr. Pickthornasked the President of the Board of Trade if he will now say what are the prospects and plans for maintaining the supply of newsprint.
      The Secretary for Overseas Trade (Mr. Bottomley): Imports from soft currency countries are freely allowed and we have provided dollars for the importation of 25,000 tons from Canada this year. As was stated on 29th June in reply to my hon. Friend the Member for Bristol, Central (Mr. Awbery) we have also authorised the provision of dollars for the importation of 37,500 tons of Canadian newsprint in the first six months of next year. There may, however, be some fall in the present stock level before Canadian supplies can begin to arrive.
      Mr. Pickthorn: Can the hon. Gentleman tell the House whether the stock levels are public knowledge, and, if so, what the level is now?
      Mr. Bottomley: The level at the moment is such that we must make provision for a drop in the next half year due to holidays and other factors. I cannot state the exact amount.
      Air-Commodore Harvey: Can the hon. Gentleman say whether stocks of newsprint will permit newspapers to resume their full size after the cut this month?
      Mr. Bottomley: I cannot answer that. We are hopeful for an improvement in the stocks and then we can consider that question.

      FESTIVAL OF BRITAIN (HOTEL ACCOMMODATION)
      Mr. Donnerasked the President of the Board of Trade what arrangements have been made by His Majesty's Government to ensure that adequate accommodation will be available to overseas and foreign visitors to the British Festival in view of the considerable difficulties of securing hotel accommodation in London even at the present time.
      Mr. Bottomley: I would refer the hon. Member to the answer given to the hon. Member for Solihull (Mr. M. Lindsay) on 18th May last.
      Mr. Teeling: Will the right hon. Gentleman also bear in mind, in finding hotel accommodation for visitors next year, that there are towns outside London, including those in my constituency? Will he see that railway trains run there late at night?

      TRAFFIC, LONDON (OVERTAKING)
      The following Question stood upon the Order Paper in the name of Sir HERBERT WILLIAMS:
      68.To ask the Secretary of State for the Home Department whether his attention has been drawn to the growing habit in London of vehicles overtaking other vehicles on the wrong side; and what prosecutions have taken place recently for this offence.
      Sir H. Williams: Before asking this Question, Mr. Speaker, may I ask whether a record has been achieved by all the Oral Questions down for answer on one day being answered in an hour?
      Hon. Members: It is not a record.
      The Under-Secretary of State for the Home Department (Mr. Geoffrey de Freitas): Overtaking other vehicles or, the near side is not in itself an offence, but it may be a factor to be taken into consideration in prosecutions for dangerous or careless driving, particularly as the Highway Code advises drivers, with certain exceptions, to overtake on the right. No figures are available as to the number of such prosecutions in which overtaking on the wrong side was a feature.

      KOREAN REPUBLIC (INVASION)
      Mr. Eden(by Private Notice) asked the Prime Minister whether he has any further statement to make on the situation in Korea.
      The Prime Minister: Hon. Members will probably have learnt by now with gratification that the Australian Government in response to the Security Council resolution have placed a fighter squadron in Japan at the service of the United Nations through the United States authorities in addition to their naval vessels in

      35
      Far Eastern waters. This fighter squadron has been in action. The withdrawal of Australian Occupation Forces from Japan is now definitely in abeyance.
      The New Zealand Government have now sent naval units to Hong Kong for use in Korean waters.
      The Government of India have announced their acceptance of the Security Council resolution recommending member nations to furnish assistance to the Korean Republic.
      The Government of South Africa have announced their readiness to give sympathetic consideration to any appeal for assistance in dire need received from the United Nations or those western countries which associate themselves with the Security Council resolution, and are most directly concerned.
      The Government of Pakistan have announced that they will give their full support to any measures proposed by the Security Council to deal with the situation.
      Mr. Eden: Can the right hon. Gentleman tell us whether there is any truth in the reports appearing the Press that the Royal Navy has been in action?
      The Prime Minister: I have no information to that effect.

    WAGES (GOVERNMENT POLICY)
    Mr. Gibson(by Private Notice) asked the Chancellor of the Exchequer what alteration there has been in the policy of His Majesty's Government as regards wages since his Budget Statement.
    The Chancellor of the Exchequer (Sir Stafford Cripps): I have no doubt that my hon. Friend has in mind the statement recently issued by the Trades Union Congress. I welcome the realistic account which this document gives of our present economic situation.
    In my Budget speech I pointed out that it was not possible to continue indefinitely the rigidity of the policy in regard to personal incomes which was initiated immediately after the devaluation of sterling last autumn and that some degree of relaxation would be called for. At the
    36
    same time, I remarked that it was necessary that we should try and secure that any relaxation was brought about by some orderly method which paid full regard to the continuing dangers of inflation. The policy of restraint hitherto exercised, which was intensified after devaluation, has had a striking degree of success and thanks to the co-operation of all sections of the community has contributed greatly towards the improvement in our affairs which has taken place since this time last year.
    Although therefore our economic situation appears more favourable today than it was, there is still a great need for continued restraint in the matter of personal incomes, as is pointed out in the statement issued by the T.U.C. We cannot at present afford anything but a limited degree of relaxation of the very rigid standards laid down after devaluation, and I therefore hope that all those concerned with the fixing or negotiation of personal incomes will bear in mind the principles set out in the White Paper and the continued need for a large measure of restraint so that we may not lose the benefits earned by our efforts during and since the war, and particularly since devaluation. If we were now to abandon this policy we should set in motion a wave of inflation which could do the utmost damage to our economy with very great harm to the living standards of the workers.
    Mr. John Cooper: Will my right hon. and learned Friend say whether, in view of the changed circumstances, he contemplates issuing a further White Paper?
    Sir S. Cripps: No, Sir. I think the original White Paper stands in its full force, but not as reinforced after devaluation.
    Sir H. Williams: Does the Chancellor propose to send a copy of that statement to the employees of the State who are now refusing to transport meat in London?
    Mr. A. Fenner Brockway: Does my right hon. and learned Friend now see a hope of the amount available for wage increases being given in the first instance to the lower paid workers?
    Sir S. Cripps: If my hon. Friend will look at the White Paper to which I have referred, he will see the answer.
    Mr. Godfrey Nicholson: Is the Chancellor aware that the progressive rise in the cost of living bears very heavily on the lower paid workers? What steps does he propose to take to check the rise in the cost of living?
    Sir S. Cripps: The steps we have taken are well known.
    Mr.Osborne: The Chancellor has said that increases in wages could only come out of increased productivity. Could he tell the House by how much national productivity has increased since his Budget Statement?
    Sir S. Cripps: That is another question.
    Sir W. Smithers: Is not the real cause of the trouble the fact that the purchasing power of the pound has gone down because the Socialist Government have ruined our credit?

BUSINESS OF THE HOUSE (FINANCE BILL)
Motion made, and Question proposed,
That the Finance Bill, as amended, may be considered immediately after the re-committal of the Bill and report thereof, notwithstanding the practice of the House as to the interval between the various stages of such a Bill.—[Sir S. Cripps.]
Captain Crookshank: We expected the Leader of the House to say something on this Motion because it is an unusual one. Last year—and the year before—a similar Motion appeared on the Order Paper and, as will be seen from the OFFICIAL REPORT of 6th July, I specifically asked him to tell us why it was being done in this way in view of the fact that there are well regulated stages of procedure for dealing with the Finance Bill, laid down largely as a result of what is called the Bowles Act. To interpose a re-committal stage and then go on with the Report stage certainly is not envisaged in that procedure. Last year I asked the Lord President to express the view that this was something quite out of the ordinary. He said
"We fully recognise that this is an exceptional instance and we would not wish the House to regard it as a precedent."—[OFFICIAL REPORT, 6th July, 1949; Vol. 466, c. 2166.]
As he said that last year on a similar Motion, I should like, on behalf of my
38
hon. Friends, to hear from him this year why our well-established procedure is not being followed.
The Chancellor of the Exchequer (Sir Stafford Cripps): This is really rather a technical point. Under one of the promises made during the Committee stage, about an adjustment of one of the rather complex Clauses dealing with the husband and wife legislation as regards Income Tax, it has been found that it is not possible to make the alteration promised unless the Bill is re-committed first and goes back to the Committee stage so that the alteration can be made. Then it could be dealt with on Report. It was obviously desirable that we should deal with it in that way. I am sure that the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank) will appreciate that there are exceptional occasions when, owing to the rather rigid regulations governing the necessity for re-committal, this has to be done. We ask him, therefore, to say that this is a suitable occasion.
Captain Crookshank: That is the speech which I expected would be made on the re-committal Motion, when I intended to raise the substance of that point. On this Motion I have asked why the normal procedure of the House was being abandoned. I thought that was a matter for the Lord President of the Council, though I accept the explanation of the Chancellor. If I have anything further to say, I will say it on the Motion to recommit the Bill, but I still invite the Lord President to tell us why this Motion is put forward. The right hon. Gentleman did say that this was not to be regarded as a precedent. I now ask whether the Lord President is establishing this as a precedent if it turns out in the course of the Committee stage of a Finance Bill that some alteration has to be made—the precedent being that the stages should be taken on the same day. There is no harm at all if the re-committal is on another day.
The Lord President of the Council (Mr. Herbert Morrison): There is no question of furthering a precedent by this Motion, as far as I know. I gather that the main purpose of the Motion is to enable the Chancellor to carry out undertakings given to the Opposition during the Committee stage. That is

39
something they want, and I am bound to say that I cannot see what the argument is about. I gather that this ought to be in accordance with the wishes of the Opposition.
Mr. Eden: Does not the Lord President realise that though this is in accordance with the wishes of the Opposition, that does not answer the point about the departure from procedure in taking the Report stage on the same day?
Mr. Morrison: This matter gets more mysterious than ever. If the purpose of the Motion is, on the whole, to meet the request of the Opposition, I really cannot see why there should be any grumbling about it, whether it is on the same day or another day.
Mr. Charles Williams: Is not it a rather curious position that the only way in which we can get the Chancellor to carry out pledges is by having a special Motion of this kind to change the rules of procedure of the House? I congratulate the Government on having found a method to enable the Chancellor to do this—I am sure that we all welcome it—but it is very bad that, year after year, we should deliberately break the regulations which were made to protect the interests of the House, especially those of the Private Member who has not got the information which is at the disposal of the Chancellor.
Question put, and agreed to.

ORDERS OF THE DAY

  FINANCE BILL
  Order for consideration, as amended, read.
  Motion made, and Question proposed,
  That the Bill be re-committed to a Committee of the whole House in respect of the Amendments to Clause 29, page 27, lines 7 and 15, and the new Clause (Right of husband to disclaim liability for tax on deceased wife's income) standing on the Notice Paper in the name of Mr. Chancellor of the Exchequer.—[Sir S. Cripps.]
  3.40 p.m.
  Captain Crookshank: It was on this Motion that I expected the Chancellor to give us the explanation which he has already given on the Business Motion, and for which I am very grateful. I understand that this is rather a technical point, and I do not suppose that he or probably anybody else could explain exactly what the technicality is, because, so far as the first two Amendments are concerned, it is simply a case of taking out of the Bill the right of certain people to require the Commissioners to do certain things. How this can have a financial effect which would involve re-committal of the Bill is entirely beyond my imagination. I should like to know, if anybody else does know, but we are always bound, on these legal and technical matters, to accept the advice which the Government give us and let them proceed with the Business.
  We can, however, recognise the new Clause as something which will be welcomed in all parts of the House, but if the right hon. and learned Gentleman or the learned Solicitor-General can explain what it is that requires re-committal, it would help us in future, but we hope that this is not going to be a regular practice, in spite of the obtuseness of the Lord President this afternoon in refusing to understand the point that was put to him.
  The Solicitor-General (Sir Frank Soskice): The reason why the two Amendments involve a re-committal of the Bill is this. It paves the way for a new Clause, one of the provisions of which is to allow assessments to be made directly upon a wife's executors, instead of having to be made in the first instance by a notice given by the husband. Inasmuch

  41
  as the effect of the new Clause is to provide that assessments can be made upon the wife, it is theoretically possible that an interest charge might arise. For technical reasons, it is possible that the new Clause, for which the Amendment paves the way, creates a charge, and therefore re-committal is necessary.
  Question put, and agreed to.
  Bill immediately considered in Committee.
  [Major MILNER in the Chair]

  FINANCE BILL

    Clause 29.—(COLLECTION FROM WIFE OF TAX ASSESSED ON HUSBAND ATTRIBUTABLE TO HER INCOME.)
    The Solicitor-General: I beg to move, in page 27, line 7, to leave out subsection (6).
    The object of the Amendment is to pave the way for the new Clause standing in the name of my right hon. and learned Friend and immediately below on the Order Paper—(Right of husband to disclaim liability for tax on deceased wife's income). The new Clause is 'designed to meet an argument advanced by hon. Members opposite when dealing with the provisions respecting husband and wife in the Bill as it stood, and the point is this.
    The Commissioners, by Clause 29, are given the right to serve a notice upon a wife, in respect of income which is really hers, if the husband declines to pay the amount of the assessment. By an Amendment of the original Bill which was made in Subsection (6) of Clause 29, the husband was given the right to require the Commissioners to serve that notice, it having previously been a matter in their discretion whether they exercised it or not. When that Amendment was being discussed, hon. Members opposite said that, whenever a wife died, if the husband had the right to require that a notice be served upon her executors, they would be placed in a position of considerable embarrassment unless the husband was required to serve that notice within some specific time. It was represented that, if they did not know whether they were to be served with a notice or not, the executors might be prevented from winding up the wife's estate, and, therefore, some term should be placed upon the period in which the husband could require the notice to be served.
    42
    3.45 p.m.
    The new Clause puts that term upon it, and requires a notice to be served by the husband within two months from the granting of probate or letters of administration; that is, it puts a term upon the period within which the husband has to make up his mind whether to require the notice to be served or not. The new Clause will go a long way, not only to meet the point of view advanced by hon. Gentlemen opposite, but also towards relieving the executors and personal representatives of a wife from the embarrassment in which they might otherwise find themselves.
    The new Clause also, as a matter of logical consistency, contains a reference to other provisions which are to this effect. If a notice is served at the instance of the husband upon the wife's executors, subsequent assessments in respect of any income, instead of being made in the first place upon the husband, have to be made upon the wife's executors, and it was to this assessment that I was referring a moment ago, when I said that an interest charge might be attracted and that that was the reason why the new Clause involved us in re-commital of the Bill
    If the husband has disclaimed liability from Income Tax because the income is really that of his deceased wife, it is a sensible arrangement that every assessment that might be necessary in respect of a wife's income should be made direct upon the wife's executors, instead of being made, in the first place, upon the husband and then transferred to his wife's estate by means of a notice. In the case of an assessment being made upon the executors, the usual time limit will apply, and any assessment which can be made under this new Clause will therefore have to be made within three years.
    I suggest that this proposal not only meets the point put forward by hon. Members opposite, because it goes rather further in the direction in which they wanted it to go, in placing a term within which the husband can serve a notice, but, secondly, it places a time limit upon further assessments that can be made in consequence of that notice having been served.
    Mr. Manningham Buller: The right hon. and learned Gentleman has done a great deal to meet the point raised by my hon. Friends on

    43
    this side during the Committee stage. In fact, the new Clause does completely meet that point, whereas the Clause as it originally stood might, as the Solicitor-General now agrees, have led to very considerable delay in the winding-up of estates.
    I am a little bit alarmed, however, with regard to the second part of the new Clause, in which it states that, over a period of three years after service of the first assessment upon the executors, it will be possible for further assessments to be served. If I understood the right hon. and learned Gentleman correctly, that would appear to mean that the winding-up of an estate might be prolonged for that period, in which case it might involve hardship and difficulty to the beneficiaries, but perhaps I have misunderstood what the right hon. and learned Gentleman said. At least, I would ask him to say that he will do everything he can to secure that that time limit of three years is cut down to the greatest possible degree. If the executors are left uncertain and feel under a disability, it does seem to imply that they will have to delay the distribution of the estate, and, while I am grateful for the way in which he has met the points raised from this side of the House, I should like him to deal further with that matter.
    The Solicitor-General: The three-year time limit to which I was referring was the ordinary time limit fixed by Section 29 (3) of the Finance Act, 1923, namely, three years from the end of the year in which the wife dies. In point of fact, we are considerably abbreviating the time in which the wife's estate can be called upon to pay tax because, without this new Clause, the assessment could, as before, have been made on the husband within any time during the normal six-year period, and during that period the husband could have required notice to be given to the wife's executors. We are now abbreviating that period to three years, and therefore we are greatly assisting the executors of the wife's estate.
    Amendment agreed to.
    Further Amendment made: In page 27, line 15, after "under," insert "subsection (1) of."
    Clause, as amended, ordered to stand part of the Bill.

    New Clause.—(RIGHT OF HUSBAND TO DISCLAIM LIABILITY FOR TAX ON DECEASED WIFE'S INCOME.)
    (1) Where a woman dies who, at any time before her death, was a married woman living with her husband, he or, if he is dead, his executors or administrators may, not later than two months from the date of the grant of probate or letters of administration in respect of her estate or, with the consent of her executors or administrators, at any later date, serve on her executors or administrators and on the surveyor a notice in writing declaring that, to the extent permitted by this section, he or they disclaims or disclaim responsibility for unpaid income tax in respect of all income of hers for any year of assessment or part of a year of assessment during which he was her husband and she was living with him:
    Provided that a notice under this section shall not be deemed to be validly served on the surveyor unless it specifies the names and addresses of the woman's executors or administrators.
    (2) Where such a notice has been duly served on a woman's executors or administrators and on the surveyor—

    (a) it shall be the duty of the Commissioners of Inland Revenue and the Special Commissioners to exercise such powers as they may then or thereafter be entitled to exercise under section twenty-nine of this Act in connection with any assessment made on or before the date when the service of the said notice is completed, being an assessment in respect of any of the income to which the said notice relates; and

    (b) the assessments (if any), whether to income tax other than surtax or to surtax, which may be made after that date shall, in all respects and in particular as respects the persons assessable and the tax payable, be the assessments which would have fallen to be made if—

    (i) an application for separate assessment under Rule 17 of the General Rules or under subsection (9) of section forty-two of the Finance Act, 1927, as the case may be, had been in force in respect of the year of assessment in question; and

    (ii) all assessments previously made had been made accordingly.

    (3) Any notice under this section may be served by post.
    (4) In this section, the expression "the surveyor" means, in relation to a notice, any surveyor who might reasonably be considered by the person serving the notice to be likely to be concerned with the subject-matter thereof or who declares himself ready to accept service of the notice.
    (5) In the application of this section to Scotland, the reference to the date of the grant of probate or letters of administration shall be construed as a reference to the date of confirmation.—[The Solicitor-General.]
    Brought up, and read the First time.
    The Solicitor-General: I beg to move, "That the Clause be read a Second time."
    I have already given the reasons for introducing this new Clause. It simply carries out what I said when moving the Amendments to Clause 29.
    Dr. King: Can my right hon. and learned Friend say why the first two lines of subsection (1) of this Clause should not read:
    "Where a married woman dies, her husband, or, if he is dead, his executors or administrators…."
    and so on?
    The Solicitor-General: The reason is that it only applies in a case of a married woman who was living with her husband in the circumstances described in another Clause of the Bill. It only applies to certain married women, that is, married women living with their husbands.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.
    Bill reported with Amendments; as amended (in the Committee, and on re-committal) considered.

    New Clause.—(EXTENSION OF S. 1 (3) OF FINANCE ACT, 1935.)
    (1) In subsection (3) of section one of the Finance Act, 1935 (which provides for reduced rates of entertainments duty in the case of stage plays, &c.), after the words "variety entertainment," there shall be inserted the words "a puppet or marionette show."
    (2) The entertainments chargeable with entertainments duty at reduced rates by virtue of the said subsection (3) shall include any entertainment which would be exempt from entertainments duty by virtue of section eleven of the Finance Act, 1923 (which relates to exhibitions provided by non-profit making societies), but for the fact that it consists partly of items not falling within paragraph (b) of subsection (1) of that section, if those items are items which fall within the said subsection (3) and in which all the performers whose words or actions constitute the item are actually present and performing.
    (3) This section shall apply to entertainments held after the fifth day of August, nineteen hundred and fifty; and where entertainments duty has been charged on any payment made before the passing of this Act, and by virtue of this section the duty should have been charged at a lower rate than that at which it was in fact charged, the person by whom the duty was paid shall be entitled to repayment of the amount of the overcharge.—[Mr. Jay.]
    Brought up, and read the First time.
    The Financial Secretary to the Treasury (Mr. Douglas Jay): I beg to move, "That the Clause be read a Second time."
    This Clause does two things. First, it honours the undertaking which I gave on the Committee stage to apply the reduced rate of Entertainments Duty to puppets and marionette shows. Secondly, it applies the reduced rate to flower shows and certain other similar exhibitions which would themselves be exempted from Duty if they were held on their own; it applies the reduced rate when they are accompanied by other types of entertainment. Subsection (1) quite simply gives the concession on puppet and marionette shows. Subsection (2) applies the reduced rate to other types of exhibition.
    The difficulty with regard to flower shows was that they were exempt from duty when provided by a non-profit making society if shown on their own account. It had always been assumed that if they were combined with sports or other forms of entertainment, to which the reduced rate applied, the whole performance would be subject to the reduced rate. It has come to light, however, that though that is, we think, reasonable practice, it was doubtful whether it was fully covered by the law. What this Clause does, therefore, is to bring the law into accord with what has been the practice up to now, and what we think is reasonable, that is to say, that the reduced rate should apply to the combined type of show, such as, for instance, a municipal fete. Subsection (3) ensures that in the case of advanced booking before 6th August, the date when this Clause comes into effect, the additional Duty shall not be charged.
    Lieut.-Commander Clark Hutchison: I do not wish to delay the proceedings, but I think it would be discourteous if I did not thank the Financial Secretary for putting this new Clause on the Order Paper. So far as I can see, it meets very adequately the case which I put forward during the Committee stage, and it will bring relief to puppet and marionette shows. I am very glad that this matter has been settled in so amicable and satisfactory a fashion, and I welcome the new Clause.
    Mr. Charles Williams: I wish to thank the Chancellor of the Exchequer for the second concession, that is, as far as flower shows are concerned. This has been a matter of some concern

    47
    to a good many people in the past, and I am glad that we have been able to get this concession. I make no apology for saying a few words because I was one of those who were very interested in this matter. While thanking the right hon. and learned Gentleman for his earlier courteous interruption, may I, having obtained that great courtesy, hope he will follow my usual courteous habit for the rest of the day?
    Mr. Leslie Hale: It would be ungracious if we on this side also did not express our thanks for this very useful concession, and for the way which it has been granted.
    Mr. Ian L. Orr-Ewing: Can the Financial Secretary say why it is possible to reduce the Entertainments Duty on puppet shows and, at the same time, not include speedway racing? Is the one a more popular form of entertainment than the other?
    Captain Crookshank: I do not want to intervene in this chorus of praise of what the Government have done, but while it is perfectly clear what subsection (1) does, I do not think that the Financial Secretary's explanation about the flower show part of it was at all clear. Is my understanding right that if there is a flower show held in conjunction with any other entertainment, the duty to be attracted will be at the lower rate? The hon. Gentleman mentioned municipal fetes, but nothing else. Of course, municipal fetes are a minority of the kind of occasions on which there are flower shows. It is generally the village agricultural show running up even as high as the big county show, and the Royal Flower Show. I was not at all clear, and I do not know whether he can make it a little clearer.
    Mr. Jay: The duty will be charged at the lower rate if the other type of entertainment with which it is being combined is chargeable at that lower rate.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(REMISSION IN CERTAIN CASES OF INTEREST ON TAX IN ARREAR BY REASON OF EXCHANGE RESTRICTIONS.)
    (1) The provisions of this section shall have effect where the Commissioners of Inland Revenue are satisfied as respects any tax
    48
    carrying interest under section eight of the Finance (No. 2) Act, 1947,—

    (a) that the tax is in respect of profits or income arising in a country outside the United Kingdom; and

    (b) that, as the result of action of the government of that country, it is impossible for the profits or income to be remitted to the United Kingdom; and

    (c) that having regard to the matters aforesaid and to all the other circumstances of the case it is reasonable that the tax should for the time being remain uncollected,

    and the Commissioners allow the tax to remain uncollected accordingly.
    (2) Interest of the said tax shall, subject to the provisions of subsection (3) of this section, cease to run under the said section eight as from the date on which the Commissioners of Inland Revenue were first in possession of the information necessary to enable them to be satisfied as aforesaid, and, if the said date is not later than three months from the time when the tax became due and payable, the interest thereon under the said section eight in respect of the period before the said date shall be remitted.
    (3) Where, under subsection (2) of this section, interest has ceased to run on any tax and thereafter demand is made by the collector or other proper officer for payment of all or any of that tax, interest under the said section eight shall again begin to run from the date of the demand in respect of the amount demanded:
    Provided that where all or any part of the amount demanded is paid not later than three months from the date of the demand, the interest under the said section eight on the amount so paid running from the date of the demand shall be remitted.
    (4) This section shall apply in relation to all assessments made whether before or after the passing of this Act and, in relation to any assessment made before the passing of this Act, shall be deemed always to have had effect:
    Provided that no sum actually paid before the twenty-seventh day of June, nineteen hundred and fifty, in respect of any interest shall be repaid by virtue of the provisions of this section.—[The Solicitor-General.]
    Brought up and read the First time.
    The Solicitor-General: I beg to move, "That the Clause be read a Second time."
    This new Clause is designed to carry out an undertaking which I gave when a previous Clause was being discussed. That Clause, which had been put down by hon. Members opposite, proposed that no interest charge should be made on tax on foreign income which was frozen. I deployed various reasons which seemed to us to make it impracticable to accept that proposal, and I offered to put down a Clause on the Report stage which would have the effect of providing that if the

    49
    Commissioners did not, according to their ordinary practice, call for payment of the tax on the frozen income, interest should not run upon that tax so long as they did not call for it to be paid.
    4.0 p.m.
    This Clause implements that undertaking. If the Commissioners, when they make assessments in respect of foreign income, find the foreign income is frozen and they are satisfied that it would mean a hardship upon the taxpayer to call upon him to pay tax upon that foreign income, they then allow the tax normally to stand over. As the law stands at present, notwithstanding that they may, in the exercise of their discretion, allow payment of the tax to stand over, it is, nevertheless, obligatory to charge interest upon that tax, because the 1947 Act so provides by Section 8.
    What this new Clause does is to say that when the Commissioners decide not to require payment of tax, but allow it to stand over, the interest charged shall not run. That implements the offer which I made during our previous discussion. It was then thought inadequate, and the Committee proceeded to discuss a Clause put down to provide that the interest charge should not arise, in any circumstances, on foreign frozen income. The Committee voted on that Clause and decided to reject it. I have put down this Clause, which goes part of the way to meet the difficulties hon. Members had in mind. It does not go all the way, but it goes as far as we feel it is practicable to go. For those reasons, I hope the House will feel it should be added to the Bill.
    Mr. Manningham-Buller: By this new Clause the right hon. and learned Gentleman has completely implemented the undertaking or offer, whichever is the correct description, which he made on the Committee stage. Indeed, it is doing no more than correcting to some degree some of the hardship and injustice created by the 1947 Act, for which hon. Gentlemen opposite are, of course, responsible. We welcome this Clause, to the extent it goes. It does not meet, of course, the case put forward so very strongly and persuasively by my hon. Friend the Member for Barnet (Mr. Maudling) in Committee. I apprehend that if I proceed to discuss the respects in which it does not meet that case I shall have your eye upon me, Sir Charles.
    50
    Possibly, I should be called to order if I decide to reveal the reasons we advanced on that occasion for a wider Clause.
    It is still the position, unfortunately, that despite the new Clause persons who-earn income overseas and find that that income is blocked, will remain liable to tax upon that money and will have to pay interest, in many cases, on tax which they cannot remit to this country without breaking the law of a foreign country or a country overseas. That still appears to-us a very considerable hardship, but this Clause may go a little way to alleviate the situation, in some cases; and, to the extent that it does that, we welcome it.
    Lieut.-Commander Gurney Braithwaite: Upon the Report stage of a Finance Bill we generally find ourselves in a situation in which a number of half loaves pass across the table as being preferable to no bread. As the right hon. and learned Gentleman said, quite properly, a few minutes ago, he came part of the way to meet us and as far as practicable. I hope this matter will be considered again before another Budget is presented, from whatever section of the House it may come. This is something which might have been completely cleaned up without any serious loss to the Revenue or administrative difficulties. My hon. and learned Friend the Member for Northants, South (Mr. Manningham-Buller) pointed out the injustice which remains. Here is income. which cannot be drawn but upon which interest on Income Tax has to be paid if one is in arrears.
    There is another objection to the course taken in not meeting us completely in this matter. It is that we are living in an age when there are exchange fluctuations, devaluation and sometimes revaluations and alterations of exchange values. What assurance can the Government give us that in these cases, when the thaw sets in and the money becomes unfrozen, the interest charge on Income. Tax derived from money which has not been passed to this country, will prove in fact to have been excessive when tax income is eventually paid in devalued currency. This is a point to which the Government should pay attention.
    Mr. Maudling: I am sorry that the Government cannot go the whole way. They are giving the Commissioners

    51
    discretion to waive payment of interest in cases where they deem that hardship exists. I hope that that discretion will be used as widely and as generously as possible. To be asked to pay tax on money one cannot receive or use is, in any event, inevitably a hardship.
    Mr. Selwyn Lloyd: Arising out of what my hon. Friend the Member for Barnet (Mr. Maudling) has just said, I hope that subsection (2) will be administered leniently. A time limit is set out there. It seems there may be circumstances in which the subsection might involve hardship. I hope that that will be taken into account.
    The Chancellor of the Exchequer (Sir Stafford Cripps)The Chancellor of the Exchequer (Sir Stafford Cripps) indicated assent.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause—(RELAXATION OF CONDITIONS FOR GRANT OF "AGE RELIEF" UNDER THE FINANCE ACT, 1925, SECTION 15 (2).
    In subsection (2) of section fifteen of the Finance Act, 1925 (which provides, in certain cases, for a relief from income tax for a person who proves that, at the commencement of the year of assessment, he or his wife living with him had attained the age of sixty-five years), for the words "at the commencement of the year of assessment," there shall be substituted the words "at any time during the year of assessment."—[The Solicitor-General.]
    Brought up, and read the First time.
    The Solicitor-General: I beg to move "That the Clause be read a Second time."
    This new Clause is again to implement an undertaking T gave during the Committee stage, when the Committee was discussing a new Clause moved by the hon. Member for Mitcham (Mr. Carr). This is to carry out the effect of his proposal, which is to give age relief in respect of the year in which either the taxpayer or his wife reached the requisite age limit. As the law stands at present, the age relief is only available in respect of a year at the beginning of which either the taxpayer or his wife reach that age. We are now substituting the provision that if at any time during the year either the taxpayer or his wife reaches the requisite age then age relief is available.
    Mr. Vaughan-Morgan: I am sure that everyone on this side of the
    52
    House would like to thank the Chancellor for the concession he has made in this matter. I am sure my hon. Friend the Member for Mitcham (Mr. Carr) is to be congratulated upon having found the melting point of the Iron Chancellor in this matter so early in his Parliamentary career. There is one anomaly left in this part of the Finance Bill. That is the question of definition by the State of when old age begins, particularly for spinsters and widows. Where old age allowance for Income Tax is concerned, old age begins at the age of 65, or rather at the beginning of the year in which the person reaches the age of 65, whereas for widows and spinsters old age begins at 60 to obtain pensions or post-war credits. There is, therefore, an anomaly between the different forms of payment. While we have no hope for this year, I hope the Chancellor will be able to leave a note in the pigeon hole for his successor next year.
    Captain Crookshank: I hope to make clear that what my hon. Friend is talking about is statutory old age. I do not want it to go out from this House that we think all women of 60 are necessarily antiques.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(PARLIAMENTARY SETTLED ESTATES.)
    (1) Where land or chattels are so settled, whether by Act of Parliament or royal grant, that no one of the persons successively in possession thereof is capable of alienating the same, then notwithstanding anything in subsection (3) of section twenty-eight of the Finance Act 1949 (which directs that the estate duty law shall apply to land and chattels so settled in the same way as to other settled property), on the death of a tenant in tail of the property comprised in the settlement estate duty shall not be chargeable as respects any part of that property in the case of which he has disposed of his personal interest to or for the benefit of the person who may from time to time be his successor and in the case of which the conditions of the next following subsection are satisfied.
    (2) The conditions to be satisfied are—

    (a) that the disposition of the tenant in tail's personal interest was bona fide effected five years before his death;

    (b) that bona fide possession and enjoyment of the property was assumed immediately after the disposition by the tenant in tail' successor and thenceforward retained to the entire exclusion of the tenant in tail

    53
    and of any benefit to him by contract or otherwise or (bona fide possession and enjoyment of the property having been so assumed) the property was enjoyed to the entire exclusion as aforesaid for the five years before the tenant in tail's death;

    (c) that there is not (by reason of any subsequent disposition of the tenant in tail's personal interest or otherwise) any change on the tenant in tail's death in the person beneficially entitled to possession of the property or the income arising there from:

    Provided that for the purposes of paragraph (b) of this subsection, subsection (2) of section thirty-eight of this Act shall apply in relation to any disposition of a tenant in tail's personal interest as it applies for the purposes of the enactments therein mentioned in relation to a disposition of an interest limited to cease on a death.
    (3) For the purpose of paragraph (c) of the last foregoing subsection there shall not be deemed to be a change on a tenant in tail's death in the person beneficially entitled to the income arising from any property by reason only that a jointure or other annuity payable out of that income arises on the tenant in tail's death under the settlement comprising the property or ceases on the tenant in tail's death, but nothing in this section shall affect the duty chargeable on any property on the tenant in tail's death by reason of some other person's having or having had in that property an interest limited to cease on that death.
    (4) In this section the expression "tenant in tail" means tenant in tail in possession within the meaning of the Settled Land Act, 1925, and references to a tenant in tail of any property include one of two or more tenants in tail in common or tenants in tail in co-parcenery of that property; and in relation to any tenant in tail of property—

    (a) the expression "personal interest" means his right as tenant in tail to possession of the property or the income arising there-from or a share thereof during his life; and

    (b) the expression "successor" means the person who, if the tenant in tail were dead, would be tenant in tail in his place, whether as heir under the entail or as tenant in tail in remainder.—[The Solicitor-General.]

    Brought up, and read the First time.
    The Solicitor-General: I beg to move, "That the Clause be read a Second time."
    In Committee, when we discussed the Clauses relating to disposition of life interests, the hon. Member for Hendon, South (Sir H. Lucas-Tooth) pointed out that tenants in tail of estates settled by Act of Parliament or Royal grant might be in a position of considerable hardship as compared with the ordinary life tenant of settled land. The life tenant of settled land has certain protection given to him by Section 43 (2) of the Finance Act, 1940, and under the provisions of that Section, if he disposes of the life interest to the remainder man more than five years
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    before his death and does not retain any benefit to himself, Death Duty is not payable.
    It was pointed out that in the case of a tenant in tail, who is the possessor of an estate settled by Act of Parliament or Royal grant, that protection will not apply inasmuch as he cannot by statute of grant divest himself of the estate, although in point of fact he may have entirely divested himself of all beneficial enjoyment of it—that is to say, actual possession of it and the enjoyment of the rents. It was represented by the hon. Gentleman that there was really no reason for that disparity in the situation between such a tenant in tail and a tenant for life of ordinarily settled land.
    As I intimated then, we felt that there was considerable force in this argument, and this new Clause is designed to have the effect of putting a tenant in tail of such land on a par with regard to the protection given to him with the ordinary life tenant of settled land. It provides, in effect, that notwithstanding that he cannot part with the estate, nevertheless if he has parted with the beneficial enjoyment of it—that is to say, if he has parted with the possession and does not draw the rents—subject to certain conditions which are similar to those laid down in Section 43 (2) of the 1940 Act, the tenant in tail of this kind of settled estate enjoys the some protection. Death Duty will not be payable in relation to that estate when he dies. In other words, he is put on an exact par with an ordinary tenant for life of settled land. That is what the Clause does. Subsection (2) sets out the conditions which have to be complied with, and if hon. Members will compare those with the conditions set out in Section 43 (2) of the 1940 Act they will see that, broadly speaking, they are entirely analogous, subject to certain necessary changes which do not alter the substance.
    4.15 p.m.
    Mr. Leslie Hale: I am sorry to introduce a note of dubiety into this fairly harmonious afternoon, but I think that this explanation which has been given by the Solicitor-General is not quite a sufficient explanation of this, to me at all events, rather surprising Clause. Mr. G. K. Chesterton in one of his most wild extravaganzas once portrayed a Conservative Prime Minister frustrating his Radical opponents by rather cleverly

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    nationalising the land and then giving over the whole of their estates to the ducal and noble owners and paying them a salary for maintaining their estates and living on them. If we couple this Clause with the Gower Report it seems that under a Socialist Government we are getting something like that.
    As I understand of the argument of the Solicitor-General, it is that we are merely applying to "Tantivy Towers" in the shires the same procedure as we apply to "Chez Nous" and "Mon Repose" in Peckham; but they are very rarely settled in tail or, indeed, settled for life at all, or the subject of life estates. If that were the case, I would not object to everyone being treated alike, but a glance at the law in this matter shows that people are not being treated alike.
    To start with, there is no similarity of treatment even with regard to all estates in tail which are settled by Parliamentary grant or Royal grant. There is a differentiation in the law for estates which are given for services rendered and those which are not given for services rendered. Those which are given for winning a battle are regarded as being given for services rendered, and those which are granted because someone became the mother on the distaff side of young prince-lings are not regarded judicially as given for services rendered. It may be that on the biological ground the services are regarded as rendered to the recipient and not by the recipient. But there is a differentiation, and Section 82 of the Settled Land Act applies to some and not to all.
    Furthermore, we have the surprising fact that the Finance Act, 1894, gives substantial Estate Duty concessions to estates in tail, and the matter was never challenged until last year. In Section 28 (3) of the Finance Act, 1949, estates tail for the first time were dealt with on the same basis as most estates; in other words, Estate Duty was payable on the capital value of the estate rather than on the proportion of the capital value which was regarded as the value of the acquisition of the property to the remainder man in tail. It is as recent as 1949 that we introduced what was virtually penal taxation on estates tail, in the sense that we were increasing liability to Estate Duty.
    I want to put one simple proposition. I am not trying to make a party point.
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    I am not in the least allergic to dukes, possibly because, as far as I know, I have not met one, but an estate tail is in a very special position. There is the home for the owner of the estate. There is normally the home for the remainder man in tail. There is, of course, the family solicitor who is probably doing fairly well out of it, and there are the estate agents who are collecting the rents and are doing exceeding well out of it. In general, the whole thing is being administered mechanically in terms of accounts being rendered at the bank and taxes being paid in respect of amounts going in repairs and so on.
    If the Duke of Omnium, on the advice of the family solicitor, makes an assignment to the remainder man in tail, Lord Tomnoddy, during his lifetime, by any three of the methods open to him, and if he lives in the ducal hall and Lord Tomnoddy lives on the estate in the same way, and if the rents are collected by the estate agent, and the only thing that has happened is that the estate agents have crossed out "The Duke of Omnium" from the top of their monthly accounts and put instead "Lord Tomnoddy," does Estate Duty cease to be payable on the hereditament?
    The Solicitor-General The Solicitor-General indicated dissent.
    Mr. Hale: The Solicitor-General shakes his head. I would refer him to the case of The Attorney-General v. Seccombe in 1911. As far as I know, the matter has not been raised since then. In that case the owner of a farm, by deed of gift in 1897 in consideration of natural life and affection, conveyed a farm to his great nephew who resided there and who had in the previous year taken over the management of the farm. The owner of the farm continued to live exactly where he was. The question arose whether he had divested himself of the title in such a way as made the case come within the provisions of this class of Clause; in other words, whether Estate Duty was payable on the death of the owner in 1906. The court said "No." They said that the estate need not pay Estate Duty. The court said that, indeed, one had to establish that in the case I have quoted one would have to retain a contractual liability to oneself in order not to come within the Clause.

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    In those circumstances I venture respectfully to submit to the Solicitor-General that the Clause as drafted really means that in the case of any Parliamentary grant or Royal grant of estates in tail—and some are very substantial—for services rendered, it is only necessary for the present owner to execute a form of release in favour of the remainder man in tail and to continue to live precisely as he has done, and to continue to act precisely as he has acted, for the whole of the estates to be relieved of Estate Duty
    Mr. Donovan: I am sorry to interrupt my hon. Friend, but is not that the case with every owner, whether the estate is in tail or not? Does not that follow from the case of the Attorney-General v. Seccombe, which my hon. Friend has quoted?
    Mr. Hale: I am grateful to my hon. and learned Friend for that reinforcement of the point I was making. The case I was making was that it is, of course, very simple, in the instance of the estate I have mentioned, for the whole family to go on exactly as before. One cannot do that in the case of "Chez Nous" in Peckham or of "Mon Repos" because there is not that community of interest, that succession of interest and that organisation which makes it practicable without very grave effects on the person signing the grant. That is precisely the difference I was making; it is a very substantial difference and I think it is a matter which deserves consideration
    The Solicitor-General: We have put these Parliamentary estates on the same footing—
    Mr. Speaker: The right hon. and learned Gentleman can speak now only by leave of the House. We are on Report now and hon. Members can speak only once
    The Solicitor-General: I am sorry that I spoke without asking permission. I was under a misapprehension. I thought that the Minister in charge of a Bill could speak twice. May I have the permission of the House? [HON. MEMBERS: "Yes"] We put this type of estate on the same footing as ordinary settled estates but we found in so doing that, by Section 28 of the 1949 Act, we placed possessors of
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    this type of estate under a disability from which others did not suffer. My hon. Friend the Member for Oldham, West (Mr. Leslie Hale), referred to the case of the Attorney-General v. Seccombe. First of all, that was a case which was decided on very special facts applicable to that case. Other learned judges have from time to time referred to the reasoning in that case.
    In the case of the noble Lord mentioned by my hon. Friend the Member for Oldham, West—I forget the name of the noble Lord—
    Mr. Leslie Hale: The Duke of Omnium.
    The Solicitor-General: If the Duke of Omnium disposed of his estate to the remainder man, in the case of an estate of this sort settled under Act of Parliament, and yet remained there, then if he were to remain in circumstances in which the dicta of the Attorney-General v. Seccombe would apply—under a kind of contractual agreement between him and the person to whom he disposed of the estate—he would be in the same situation as any other tenant for life who had disposed of his life interest. The test is whether it could be said in those circumstances that Subsection (2, b) had been complied with and that, in dispossessing himself of his personal interest, he had entirely divested himself of all interest in the matter. If that could be said, then Estate Duty would not be payable. On the other hand, if he retained any kind of interest, Estate Duty would be payable. In practice this works out perfectly satisfactorily
    In order to escape the incidence of Estate Duty within the meaning of the Attorney-General v. Seccombe, the tenant in tail of this land, as in the case of a life tenant of all other types of land, has entirely to divest himself of all rights to enjoy the property or any benefit from it. I think that is a perfectly reasonable situation. It places such people on the same footing as tenants for life of other kinds of land. Whatever can be said, there cannot be very much reason for placing them in a much worse position when our object, under Section 28 of the Finance Act, 1949, was to assimilate, for purposes of Estate Duty this kind of settled land with ordinary settled land.
    Mr.Selwyn Lloyd: This matter was raised originally by my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth) in Committee. He is unfortunately prevented by his duties on the Select Committee on Estimates from being here today and he has asked me to thank the Solicitor-General for moving this new Clause, which meets the point that my hon. Friend put forward. The Clause appears to benefit a very limited class and to iron out an anomaly. For those reasons, we welcome it.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(REDUCTION OF FULL RATES OF ENTERTAINMENTS DUTY)
    (1) Section six of the Finance Act, 1943, shall have effect as if for the rates of duty set out in Part II of the Fifth Schedule to that Act (which sets out the full rates of entertainments duty) there were substituted the rates of duty set out in the Schedule (Entertainments—Full Rates of Duty) to this Act.
    (2) This section shall have effect as respects payments for admission to entertainments held on or after the appointed day, and where entertainments duty has been charged on any payment made before that day, and by virtue of this section the duty should have been charged at a lower rate than at which it was in fact charged, the person by whom the duty was paid shall be entitled to repayment of the amount of the overcharge.
    (3) In this section the expression "the appointed day" means such day as the Treasury may appoint by order made by statutory instrument.—[Sir S. Cripps]
    Brought up, and read the First time
    The President of the Board of Trade (Mr. Harold Wilson): I beg to move "That the Clause be read a Second time." This Clause gives effect to the undertaking which I gave earlier.
    Mr.Speaker: I think it would be convenient if we discussed, in conjunction with this Clause, the new Clause down later in the name of the hon. Member for Caithness and Sutherland (Sir D. Robertson)—(Duty on cinema entertainments.)
    Mr. Wilson: I am sure that would be for the convenience of the House. On Thursday I informed the House of an agreement which had been reached with the four principal associations in the film industry and I gave an assurance that the Government would put down a new Clause to alter the Schedule and the rates
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    of Entertainment Duty so as to make it possible for some changes to be made in the prices charged for admission to cinemas. This Clause, together with the Schedule relating to it, in fact does that.
    I do not think I need explain to the House that this Clause does not involve any change at all in the scope of Entertainments Duty in respect of those entertainments which pay duty on the reduced scale. The main effects are to reduce the rate of duty on the lower priced seats and at the same time to enable slightly higher charges—in fact, charges of Id. a seat more—to be made on the more expensive seats without running the exhibitor into a new and higher rate of Entertainments Duty.
    As the House already knows, and I do not think I need go into this part of the matter, the Clause is to facilitate an agreement under which payments are to be made by exhibitors out of their increased box-office revenue to a central pool, from which money will be paid to producers to a total of approximately £1½ million per annum. Of course, the producers will also benefit by the extent of their share of the addition to the net box-office revenue remaining in the hands of the exhibitors.
    The effect of lowering the rate of Entertainments Duty on the lower priced seats will, of course, be particularly to improve the position of the smaller cinemas, cinemas in country districts and cinemas which are facing heavy competition from the larger circuit cinemas and it will, we hope, enable the exhibitors in question in due course to improve the quality of the service which they offer to their patrons. I think I should be going very wide if I were to discuss today the agreement or the value of the agreement to the film industry. That matter was fully discussed on Thursday. It would, however, be impossible to work it without the change in the rates of Entertainments Duty in this Clause.
    4.30 p.m.
    Earl Winterton: As I was one of the originators of the proposed new Clause on the Committee Stage of the Bill, which provided for a reduction in the Entertainments Duty on this industry—of course I may refer to the Committee Stage only in parenthesis—and which, it will be recalled, was withdrawn by my hon. Friends and myself on the

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    statement by the Chancellor of the Exchequer that the matter was under discussion by him with the industry, it is perhaps appropriate that I should open the discussion although, like the President of the Board of Trade, I do not think I need say much on this occasion. Indeed, I think I ought to apologise to the House for occupying so much Parliamentary screen time by speeches and interpolations whenever the question of the cinema is under review, especially as I do not profess to have—if I may say so without disrespect—the box-office appeal of my right hon. Friend the Member for Aldershot (Mr. Lyttelton) sitting beside me, or of the President of the Board of Trade, who is—if I may say so without offence—so nostalgically reminiscent of another Harold so well known on the screen.
    The Government have been compelled—I must say "compelled": there is no other word that can be used—again tardily to make a reduction in the tax on the cinema industry—but a very meagre one—by a great weight of evidence including the views of two official Committees. I think it is fair to say—and I do not think it is being unduly conceited if I say—that it was my hon. Friends and I who forced the matter to an issue by our new Clause. I always feel—I have always felt since I first entered this House 46 years ago—that one in Opposition should not say, when a concession is made, that it is worthless. I think that is ungrateful, if a concession if of some value; and I will frankly admit that this concession is of some value. But it is much too meagre, and I should infinitely have preferred the proposals in the new Clause of my hon. Friend and myself.
    I think it will be in order if I give one or two examples of how, in my judgment, it is too meagre. I know how strictly curtailed we are on the Report stage of the Finance Bill, or indeed of any Bill. One cannot expound a subject as one can on Second Reading or in Committee; but I think it would be in order to draw attention to one or two examples of how still today—or tomorrow, or whenever this reduction comes into operation—how still the cinema will be at a great disadvantage in the matter of tax compared with the live theatre. I shall give only one or two examples.
    For instance, on the 1s seat the cinema pays 3d in tax and retains 9d.; the live
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    theatre pays nothing on that seat and retains the full 1s. I can give several other examples relating to seats of different prices, but I shall give only a few. The 1s. 10d. seat in the cinema will be taxed at 9d. and the cinema will retain 1s. 1d; and the live theatre on the same price seat will pay tax of 2d. and the amount retained will be 1s. 8d. The amount the cinema pays on a 2s. 4d. seat is 11d. and the amount retained 1s. 5d.; and in the live theatre the tax is 3d. and the amount retained 2s. ld.
    I fail to understand—although I recognise that this is not the occasion when one can go into details—I fail to understand why the cinema should still, under these arrangements, be put at a tax disadvantage compared with the live theatre. Of course, the live theatre is of some export value—in the case of some plays that are exceptionally successful, and in the case, for example, of a British company that is producing a Shakespearean play and may go to America and earn dollars; but when it comes to a question of financial comparison between the dollar earning or dollar paying by the live theatre and by the cinema, and what we have to pay for American films, the sums are infinitely greater in the case of the cinema than they can be in that of the live theatre. Therefore, it seems to me that the reasons for encouraging the cinema by a tax remission are greater than they would be in the case of the live theatre. Yet, as I have shown, the amount of tax paid by the live theatre is less.
    I have only two other points which I want to put. I wonder—of coarse, it would not be possible for the Government to give an answer—but I wonder what those who produced these two excellent Reports, the Report of the Working Party on Falling Production Costs, and the Command Paper on the Distribution and Exhibition of Cinematograph Films—I wonder what they, the members of those Committees, considering the points which they made, would say of this concession. I should like to read out what they said, because so far as I know it is a long time since any industry has had two separate official bodies—committees of inquiry or working parties—considering its position, and each report-

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    ing in favour of making a concession to it in the matter of taxation
    "British film producers"—
    says the Working Party's Report on page 6—
    "have always been faced with the competition of a vast import into this country of American films, the cost of whose production has been recovered by exhibition in the United States."
    That is the point I have just tried to make
    "These conditions have been greatly worsened by the heavy increase of Entertainments Duty which took place in the war years when attendances at cinemas reached peak figures."
    What does the other Committee say? They are equally strong on the subject, and they say:
    "Entertainments Duty at the existing rates is too great a burden."
    I have only one other remark to make before quoting to the House a statement, which is not confidential though I think it has not been made public, about the industry's attitude towards the reduction. The only other point I want to make is in case any hon. Gentleman is unfriendly to the cinema industry and may want to make the charge that has been made in previous Debates, namely: Why has the industry suddenly become so hot and bothered about the Entertainments Duty in the last year or so, and did not complain before then? Well, for one or two very good reasons. First, because it had the backing of the Reports of these two Committees to which I have referred, and the Reports showing that in their opinion the industry is too highly taxed; and secondly, it must never be forgotten that there was only a short time ago an ad valorem duty, which, however, created an entirely fictitious and temporary advantage of British in relation to imported films.
    It would be grossly out of order now to go into the extraordinary story which my right hon. Friend related in the previous Debate of the Government's handling of the industry during these past three or four years—of their changing from hot to cold, and boxing all around the compass. However, those are the reasons why the matter has become much more urgent in recent years; and also—which, I think, would be confirmed by anyone knowing anything about any
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    branch of the entertainments industry—there has been a falling off in the number of people going not only to the cinema but to other forms of entertainment. Therefore, as is shown by the opinions of these bodies, the tax is felt more today than it was a few years ago.
    I will now quote this statement which was made by the representatives of the industry who had discussions with the President of the Board of Trade. They issued a long statement, but the gist of it, so far as their attitude towards this amendment of the Duty is concerned, is contained at the end, and they say:
    "The Associations whose signatures are attached accept the agreement as a whole as an interim measure, and will do their very best to make it work to the best advantage of the industry, but at the same time they place on record their considered view that the agreement is not adequate to put the industry on a reasonably sound financial basis, and nothing in the agreement can be regarded as restricting the freedom of the associations and the industry to continue to bring to the notice of the people and Parliament their desire that the heavy burden of Entertainments Duty on the industry shall be reduced."
    That was signed by the British Film Producers' Association, the Cinematograph Exhibitors' Association, the Cinematograph Renters' Society, Ltd., and the Association of Specialised Film Producers.
    Therefore, it is the case that the industry accept this arrangement for the time being but will continue to bring to the notice of the House, when opportunity occurs, the fact that this industry, in the view of those who are engaged in it—we may be wrong, but there is a great weight of evidence on our side—is too heavily taxed, and is more heavily taxed than its competitors.
    Sir David Robertson: Like my noble Friend, I take the view that this relief is far too little. I feel that the Treasury have succeeded in negotiating a very clever agreement, which causes the Government to give up only £300,000 per annum out of the millions they receive from this industry, while by raising prices to the public the industry will benefit by £3 million. I wonder whether the Chancellor realises that the greatest urge from the exhibiting side has been that the diminishing takings, which must be well known to him, which have prevailed for some considerable time—
    The Chancellor of the Exchequer (Sir Stafford Cripps)The Chancellor of the Exchequer (Sir Stafford Cripps) indicated dissent
    Sir D. Robertson: The Chancellor seems not to agree. I would point out that in my constituency, which comprises two counties in the North of Scotland, there are only two cinemas that keep their doors open all the year round, and there is a grave danger that they will be shut in the very near future. One of them is losing money heavily and the other is just paying its way. Goodness knows, the duty imposed upon the industry before the war was heavy enough. It was increased during the war but the industry loyally put their backs into it and put their prices up only a little, although not enough to recover all the duty. Undoubtedly the increased turnover and the false prosperity which prevailed during the war enabled exhibitors to carry some part of the duty, and the sellers' market afterwards enabled it, I suppose, to be carried for a period longer.
    The fact is—and it can be borne out by evidence from all over the country—that the sufferer will be the smaller cinema, which is almost the only form of public entertainment in our country, for only a minority of towns have theatres or music-halls. The cinema is the people's entertainment, and in my opinion there is no hope at all of placing the burden of this £3 million on the backs of the people. I do not think they can stand it, and if they cannot stand it they will have to give up the cinema, or give up something else. Looking at the queues, where there are any, outside cinemas in London today one finds that people are queueing for the cheaper seats. Scottish Unionist Members were informed by a deputation who came to see them a month or two ago that because of the increased cost of living those people who once went into the dearer seats now go into the cheaper seats.
    I regret that the temptation to carry out a very clever agreement with this industry was succumbed to. The House has heard what my noble Friend said about the views of the industry. They regard this as a palliative for the time being, but have the greatest apprehension about their ability to continue to pay their way. When we recall that something like £36 million per annum is taken from this industry or from the public in the form of Entertainments Duty, it is shameful to think that a greater contri-
    66
    bution than £300,000 could not have been made. It may be a very short-sighted contribution. It may be that the diminishing returns will close cinemas and cause unemployment, so that instead of a gain to the State, a very heavy loss will be sustained.
    4.45 p.m.
    Mr. Oliver Lyttelton: I do not want to detain the house for more than a minute or two, because we expressed our criticism of the general situation relating to this industry—if that is the right appellation—only last Thursday, and my noble Friend has already explained why he does not consider these concessions to be enough. This really goes far beyond an expression of view of those engaged in the industry itself, because the Plant Committee, which was set up by the Government, proved conclusively in their Report that even after these concessions in Entertainments Duty there is still a certain loss to British producers on the average production costs. That is the first reason why we must regard this concession as only an interim measure. I do not think that it will prove to be enough unless accompanied by other measures. I think that the gap cannot be closed, not only on the opinion of the industry but on the opinion of an independent Report.
    The only other matter to which I want to refer—and I think I am in order in doing so—is the Schedule. I do not know whether I am quite wrong, but it seems to remove any suspicion of uniformity or plan in this. It appears to be a series of figures which have relation to one another because of reasons which are not at all apparent to anybody except the people who wrote them down. Would it not be much better to get a greatly simplified Schedule of these things and base the Entertainments Duty on an ad valorem duty, even if there were three separate rates? I suggest that the effect of the present Schedule is that, whenever an exhibitor thinks he can get another penny out of the public and not have falling attendances it is necessary for him to negotiate with the Treasury, otherwise these rather wayward and fitful rates of Entertainments Duty apply.
    I should be quite content if this afternoon the President of the Board of Trade would say that this subject is being examined with a view to reform. What I

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    think all desire is to see a great measure of autonomy—if that is the right word—given to the industry, so that they themselves can decide what the relative prices should be, and then the Treasury should take an ad valorem "rake off," even if the rates of Entertainments Duty apply in three different categories. It is extremely difficult for a layman—and I suspect even more difficult for the professionals—to understand the principle underlying all this. I do not want to detain the House any further but those two points are, I think, very germane to this subject.
    Mr. H. Wilson: I can reply only by leave of the House, but if the House will give me leave, I should like to take up one or two points that have been made. The main point, I think, made by the noble Lord and taken up by his right hon. and hon. Friends, was the suggestion that the amount of the concession is inadequate. If one looks at the different sides of the industry, I should think it would be possible to demonstrate that there is no ground for that belief. In the first place, taking exhibitors in general—I shall refer in a moment to the special cases mentioned—I should have thought that exhibitors had been doing pretty well for the last three or four years. Certainly there have been no signs of poverty or hardship over a wide section of the exhibiting side of the industry, and cinemas have been changing hands at a very profitable figure.
    As for the suggestion of the hon. Member for Caithness and Sutherland (Sir D. Robertson) about the falling attendances, I can tell him that box office revenue has been very fairly maintained over the past year or two. In fact, receipts from Entertainments Duty in the first five months of this year have been running at the rate of £3.3 million against £3.2 million in the same period of 1949.
    Mr. Maudling: While that is true of the global total, is it not the fact that the receipts from larger cinemas have been increasing while the receipts from the smaller cinemas are definitely lower?
    Mr. Wilson: If the hon. Gentleman had been following what I said, he would have heard me say that I wanted to come to that point in a moment, because it was the particular point made by the hon. Member for Caithness and Sutherland. It
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    is true that some of the smaller cinemas—some, but by no means all—have not done as well as the rest. The hon. Gentleman will have noted that in the new scales which we propose there is a definite gain for the benefit of the smaller cinemas which will enable them, without any change whatsoever in the prices charged for admission, to retain a bigger proportion of the box office receipts.
    If one looks at the other side of the industry, the producing side, it will be remembered that in this House we have spent many hours debating the difficult financial position with which the producer was faced. He is, in fact, the principal beneficiary in the agreement, to give effect to which is the main purpose of this new Clause. He gets something between 15 and 20 per cent. extra on his net revenue from the production, and, as the noble Lord implied, that is something which is definitely worth while even if the noble Lord feels it does not go as far as it ought to. The noble Lord always shows a dislike of too many references to a certain organisation with which he is connected, but if I may refer to the recently-published accounts of one large group in the industry—the Associated British Picture Corporation—which were published, I think, on the day that we had our Debate last week, they showed profits for the year ended 31st March, 1950, for exhibition, distribution and production of £2,206,000 compared with £2,039,000 in the previous year—an increase of 8 per cent.
    I do not know the full details, although I noticed that the City editor of "The Times" said that presumably the increase had come from the production side of the business. That may or may not be so; but it suggests that even on the present rates of Entertainments Duty it is possible to operate without making heavy losses. That particular company—and I agree with the hon. Member for Barnet (Mr. Maudling) that this company owns a number of large theatres—has been able to increase its profits even without the concessions of this new Clause.
    I should like to refer to the suggestion made by the right hon. Member for Aldershot (Mr. Lyttelton) in his remarks this afternoon. He made the same point in his speech a few days ago when he commented on the rigidities and difficulties of a form of Entertainments Duty

    69
    operating on this kind of scale, and he felt that an ad valorem duty ought to be put in its place.
    Mr. Lyttelton: Even if there were three rates.
    Mr. Wilson: That has been considered a number of times, although I can assure the right hon. Gentleman that we have had no official request or demand either from the organised representatives of the exhibitors or any other representative body in the trade for an ad valorem scale of duty or a series of ad valorem scales of duty. I do not feel that anyone would suggest that there should be a single ad valorem percentage applied, because the essence of the present scale is that it is not a proportionate system of taxation but a highly progressive one in the fiscal sense.
    In the new proposals which we have put before the House this afternoon, the percentage rises from 11 per cent. on the cheapest seats through 15, 25, 30, and 36 per cent. to a maximum value of about 46 per cent., and I am sure that the right hon. Gentleman would want to see that increasing proportion maintained by whatever system was introduced.
    Mr. Lyttelton: I can accept that, but my difficulty is concerned with the ls. 9d., seat, for instance, where it is necessary for the industry, if they want to charge the public more than Is. 9d., to negotiate with the Treasury, and I should like to see the scales operate more automatically and with less negotiations.
    Mr. Wilson: This question has been considered, and the trade have shown no real sense of wishing to do that. If a case were made out it could, of course, always be examined, but that has not been the predominant view of any responsible side of the trade. Up to now, if there were an ad valorem duty of that kind there might be a bigger increase in the seat prices than those occurring at the present time. I think it is no secret that a large section of the exhibitors want the Treasury to alter the Entertainments Duty scale in such a way that they can increase seat prices by very much more than a penny and maintain the whole, or a considerable part of the increased revenue themselves. If the right hon. Gentleman's suggestion were adopted—which we are not debating this afternoon—it would leave the exhibitors much
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    freer to put up their prices to the detriment of the consumers, whereas there is some element of protection for the consumers in the scale at present before the House.
    Earl Winterton: I have not heard it discussed before, but perhaps the right hon. Gentleman could tell me why there is such a disparity between the live theatre and the cinema.
    Mr. Wilson: I think that question has, been discussed on countless occasions in this House, and the House came to a decision about it. As the right hon. Gentleman knows, the proposals which we have put forward this afternoon are not related to the general question of the size of the Entertainments Duty; they are a by product of an agreement under which changes are being made in the Entertainments Duty and the distribution of box office revenue for a specific purpose—that is, to make film production more a paying proposition without losing a great amount of Government revenue to parts of the trade which do not really need it, particularly a large proportion of the exhibitors and the producers of foreign films.
    Lieut.-Colonel Sir Thomas Moore: I do not think that anyone on this side of the House denies that the Government have made a concession by this new Clause, but it seems to me that it is a very unwieldy, complicated and inadequate method of dealing with a very simple issue, namely, to reduce the duty on the most popular seats in the cinemas. In the country particularly, the most popular seats are the 1s. 9d. seats and below. Why, therefore, have this complicated process which does not even reveal what is to be left to the exhibitor? Why go through this complicated process to achieve so very little?
    Like my hon. Friends I know—although the President of the Board of Trade seems to deny it—that many of the single owned cinemas in my constituency are on the verge of bankruptcy. We must allow them to have money left in their tills, after they have paid expenses, to enable them to carry on. The method proposed by the hon. Member for Caithness and Sutherland (Sir D. Robertson) suggests a penny off the whole range of cheaper seats at a cost to the Treasury of something like £6 million, but that

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    £6 million would be bread on the waters, because I am sure that the increased revenue which would be gained by the Board of Trade as the result of this concession would far and away make up for whatever was given away in the current year.
    Therefore, I suggest that this matter will have to be dealt with again. The new Clause is only tinkering with the matter, and sooner or later we shall have to deal with the whole question of cinemas in a big way and recognise their needs and the needs of the British public, of which we are all members. Believe me, the right hon. Gentleman will benefit himself and the public if he sets his mind to seeing how this matter can be cleared up for the benefit of us all.
    Mr. Maclay: I want to take up what the hon. Member for Ayr (Sir T. Moore) said on the question of the near bankruptcy of many of the smaller cinemas from one special point of view. The thing which is worrying us particularly in Scotland is that smaller cinema owners, with their regular losses, are unable to keep their cinemas in good condition. It is extremely serious for the smaller cinemas even in the poorer parts of the big towns if their standard of maintenance goes down. I could give five examples, but I shall give only one. This one happens to be in my own constituency. The other four examples are scattered over the industrial belt of Scotland.
    This cinema lost over the year £1,500 and during that period the Entertainments Duty paid was £4,300. It seems fantastic that such figures should be allowed to go on. The President of the Board of Trade pointed out that special attention was being given to the cheaper seats in the smaller cinemas by the reduction proposed in the new Schedule, but they do not stand up to the figures which I have given. The other examples which I could quote are nearly as bad.
    I wonder if the authorities have really studied the Scottish problem as distinct from that in other parts of the United Kingdom, because even in the matter of cinema going Scotland is different. The climate particularly in the West of Scotland probably causes people to go more often to the cinemas than it does in other
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    parts of the country. People cannot afford to go now, and the rates are falling off as a result. The cinemas are having to face the fact that they now have smaller audiences, and unless they can get a greater return, then the position in regard to the maintenance of equipment, decorations and decent standards will be very serious indeed. I am sorry that the right hon. Gentleman and the Chancellor have not seen their way to go further to meet this urgent need.
    5.0 p.m.
    Mr. Maudling: All those Members who have in their constituencies, as I have, a substantial centre of film production will be glad to hear that the Government have introduced this scheme to assist the film production industry in its very great difficulties. This is a concession on the part of the Government, and we are grateful for it, but it is important we should realise its scale. At present, the total size of the Entertainments Duty is about £38 million to £39 million a year. This concession, as I understand it, is to cost the Government £300,000 a year, or less than I per cent. of the present rate of Entertainments Duty.
    It means that less than £1 of every £100 now collected in Entertainments Duty is all that the Government are prepared to concede. On the other hand, for every £1 coming from the Treasury, £9 is to be taken out of the cinema earnings. The total sum to go back to the production end of the industry is £3 million, that is, £300,000 from the Treasury and £2,700,000 from the consumer. I wish to make the point that in arranging, quite rightly, as the Government have done for a larger sum to flow back to the film production end of the industry to let it prosper, far too large a burden is being put on the consumer and far too little is being done by the Government.
    Mr. C. Williams: I welcome this concession, which may be helpful to the smaller film producers. I have had some controversy on this matter in correspondence with one of the Government officials. I should like to emphasise, however, that the complaints I have heard in regard to the smaller cinemas are more than justified. We have already heard details of the position in Scotland and of how difficult it is for the smaller cinemas to get the necessary repairs done.

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    These smaller cinemas are suffering very heavy losses. What has been said about Scotland could be repeated in the West Country and probably in places like Sussex. Although we welcome this concession, I do not think that the Government have met the position of the smaller cinemas, from whom we are perpetually receiving complaints that the burden of taxation they have to bear is out of all proportion.
    Mr. Pickthorn: I am wondering whether the Treasury Bench has the information to answer the question implied in most of the recent speeches from this side of the House, which I will try to put in a slightly different form. I do not think the distinction is so much between the small cinema and the large as between the provincial cinema and the metropolitan cinema, using the word "metropolitan" both in its fullest sense and in its almost fullest sense, of provincial capitals. I agree that the two things, small cinemas and provincial cinemas, tend to be the same—that you tend to get the small cinemas where there is only a thin population. The question I want to put is this. Can the Treasury tell us whether they have thought this out, or whether we have been deceived by the persons principally concerned in our constituencies—if so, after having deceived themselves—for I am sure any misleading of us is not deliberate?
    It is certainly true that in many provincial areas, including some where there is a considerable thickness of population, it is believed that this sort of concession will not be enough to enable them to pay their way. I ask whether that would not be considered to have very unfortunate social results. If the tendency is for the cinemas in London to prosper and the cinemas in the country not to prosper—and in the provinces rather those in the great towns than those on the outskirts of the big towns, or those in mining areas, for instance, where there is a considerable but not very great thickness of population—I wonder whether that is no socially highly undesirable. I should have thought that Members opposite would have considered that as undesirable as we do. I wish to ask the Treasury Bench whether they have information on this point.
    We have done all this business in rather an odd kind of way. When we first approached the question of the Entertain-
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    ments Duty we were told that less said the better, that cleverer chaps, persons better informed, officials in the Treasury and chaps making, or losing, money in the industry, were having conversations, and the less said in the House of Commons the better. I am not now arguing that that is not true—that the less said the better—perhaps it is generally true, and also that what is said should be said by the Front Benches.
    Then we had a Debate last Thursday in which I gather there was a good deal of information about taxing cinemas—not all of us, naturally, being present all the time—whereas today we have no indication from the Government what will be the effect of the change now proposed in the Finance Bill, either upon the money receivable by the Government, or upon the money collectable from the public by or through the industry. We have had no indication about that at all from Ministers, but we merely gather that there are these two figures of £300,000 to the industry and £3 million from the public.
    If we analyse the matter as between parts of the country, is it clear that the effect of these two figures is not to be an excessive burden upon the provincial cinema as against the London cinema, and inside the provinces an excessive burden upon the cinema not within, say, a two mile radius of the town hall? It may be that there is not sufficient information in the Board of Trade for the right hon. Gentleman to know the answer to that question, but the question ought to have been considered and if the answer is guessed ought to be given to us, for us to know whether the Clause proposed is the best possible. If the answer is available, then it should be fairly given now to the House.
    Mr. Eric Fletcher: No one will pretend that this is a very clever scheme, or that it is anything more than a temporary and makeshift expedient for dealing with the problem. The real criticism about it is that it does not really give the maximum relief where maximum relief is needed. The problem is this: The Treasury have been receiving something in the order of £38 million or £40 million a year by way of Entertainments Duty from the film industry. On the other hand, certain elements in the industry find themselves in need of relief. For a long time past there has been agitation

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    on the part of various sections of the industry to reduce Entertainments Duty or divert some of this money to those places where it is most needed to enable the industry to flourish.
    The solution proposed by the Government has several disadvantages and all the marks of being a very hasty and ill conceived expedient. It is far from being an ideal or satisfactory solution. It is well known that it has been received by every section of this industry with a good deal of lukewarmness and a good deal of reluctance. As hon. Members have pointed out, instead of the Treasury making a concession to the industry, what.they are really doing is foregoing some £300,000 a year—that figure is based upon a lot of assumptions—and making the consumers—that is the British taxpayer—face a burden of a further £2,700,000. That is one aspect of it.
    The other aspect is, where is that £3 million going to? We have not heard very much about it. This is the position. Of that £3 million, £1½ million is going directly to aid British producers (and the method of division will require careful examination). The other £1 1/2 million is being retained by exhibitors, subject to their existing contractual obligations for division between themselves, distributors and producers. This will mean in practice that the total of British exhibitors will retain approximately £900,000 of it, and the balance of approximately £600,000 will be divided between American producers and British producers in the proportion of roughly 75 per cent. to 25 per cent., with the result that some £450.000 of this additional money that the British taxpayer is being asked to find will go to the American companies.
    The extraordinary thing about it is that the President of the Board of Trade is at this very moment in the midst of negotiations with Mr. Eric Johnson to limit the amount of money, which the American companies can take out of this country year by year, because the existing Johnson Wilson agreement recently came to an end. These negotiations have been largely directed to fixing the total sum 'which the American companies will be able to take out of the country in dollars 'during the next few years. Whatever sum is fixed it will leave a certain amount of
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    surplus earnings to the American companies as "frozen" or "unremittable" sterling.
    One curious effect, therefore, of this particular method suggested in this Finance Bill of giving relief to the British producers and exhibitors is the payment by the British taxpayer of a sum of nearly £500,000 to the American producers, who are not allowed to take it out of the country. That is the most anomalous result. Why does that result occur? It is either, rightly or wrongly, because of the interpretation which is given by the Government to the Havana Agreement. It is high time we appreciated the implications of this Havana Agreement, both—
    Sir Herbert Williams: It is not ratified.
    Mr. Fletcher: The hon. Gentleman says it is not ratified.
    Mr. H. Wilson: It is not the Havana Agreement.
    Mr. Fletcher: My right hon. Friend says it is not the Havana Agreement.
    Mr. Wilson: That is an agreement which deals with tariffs and trade
    Sir H. Williams: It is the Geneva Agreement.
    Mr. Fletcher: I understand there is some dispute whether it is the Havana or Geneva Agreement and whether it is ratified or not, but, whatever it is, this international agreement stands in the way of the Government doing the direct sensible thing to solve this purely domestic British problem. The sensible course where the Government takes £40 million out of an industry, some sections of which are in the state approaching bankruptcy, and where the Government want to give help to those sections of the industry, would seem to be to give it to those sections of the industry which need it.
    Instead of doing that, we find this rather comic, very complicated, and I think quite speculative arrangement, which whatever merits it may have, involves the diverting of about £500,000 of the British taxpayers' money to people who do not want it, or if they do want it, by another action the President of the Board of Trade is taking, are not allowed to have it. That seems to me a perfectly absurd situation, which is only justified

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    by the argument that the Havana or Geneva Agreements—which either have or have not been ratified—prevent a more direct solution
    5.15 p.m.
    I am not sure how far those agreements are binding on His Majesty's Government, but if they are, then presumably they can be waived if necessary by any other interested party to the convention, and the only other party which can have any interest in this convention in this respect is the United States of America. Neither the French Government nor the Italian Government for example are interested to any large extent in the earnings of films shown in this country. The American Government is rightly and properly interested, and it is quite proper and natural that there should be negotiations between the British Government and America with regard to how much the Americans are to have from the earnings of their films in Britain, for the British industry is so largely dependent on them.
    Earl Winterton Earl Winterton rose—
    Mr. Fletcher: If I may, I should like to finish my sentence. If this convention stands in the way of the Government giving direct relief to the British industry out of the Entertainment Duty, then the Government ought to be able to negotiate with the Americans, with whom they are negotiating anyhow on this particular matter—
    Mr. Deputy Speaker (Major Milner): The hon. Gentleman is going far beyond the purview of this new Clause. I cannot see how these considerations could possibly arise out of it.
    Mr. Fletcher: I should have liked to develop the point, but in deference to your Ruling, Mr. Deputy-Speaker, I will not pursue the matter any further. I think perhaps I have said sufficient to indicate to the Government my suggestion. I promised that I would give way to the noble Lord, the Member for Horsham (Earl Winterton).
    Earl Winterton: I was going to say that we on this side of the House were going to raise these considerations on the Committee stage, but that we withdrew our new Clause in response to the Government's request.
    Lieut.-Commander Braithwaite: My right hon. Friend the noble Lord, the Member for Horsham (Earl Winterton) and other hon. Members have covered a very wide area in their plea for a more generous concession in this matter. I only rise to put a very narrow point, and to submit to the President of the Board of Trade an anomaly to which I think he may well have had his attention called. It is somewhat ironical that this anomaly arises from an attempt made by this Government in a previous Budget introduced by the right hon. Member for Bishop Auckland (Mr. Dalton), when he endeavoured to give relief to cinemas in the rural areas.
    The House will recall the efforts by the Government to deal with this matter, and the President of the Board of Trade will remember that there was some difficulty over the definition of what, in fact, comprised a rural area. It was eventually resolved by a population quota of 640 persons to the square mile. In this concession which we are now discussing on the taxation of cinemas, the anomaly which I have to submit to the right hon. Gentleman arises out of that one very narrow point. This example has been handed to me from the west country and concerns two resorts, both of which will be familiar to the House—Exmouth and Sidmouth. Sidmouth qualifies for the exemption because of its larger area and because it comes within the definition of a rural area, under which one of its cinemas gets relief under the previous concession.
    Mr. Deputy-Speaker: The hon. and gallant Gentleman must satisfy me that his remarks have some relation to this new Clause. At the moment quite frankly, I cannot see it.
    Lieut.-Commander Braithwaite: I will endeavour to assist your observation on the matter by respectfully pointing out that my hon. Friend the Member for Caithness and Sutherland (Sir D. Robertson) was allowed to discuss an Amendment and was enabled to put a case for the cinemas in the rural areas. I am merely endeavouring to point out one anomaly which has arisen, and I hope that I shall be able to satisfy you completely that the argument is within the area of the discussion now taking place. There is in Exmouth a group of four

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    cinemas. I find that they have contributed Entertainments Duty—
    Mr. Deputy-Speaker: I am sorry but the hon. and gallant Gentleman has not satisfied me that his remarks have any application to the proposed new Clause. There may be cinemas in Exmouth and elsewhere. Does the proposed new Clause affect them?
    Lieut.-Commander Braithwaite: With the greatest respect, Mr. Deputy Speaker, I am endeavouring to point out, in connection with a question of relief, that Mr. Speaker did kindly allow not only this new Clause but a new Clause in the name of my hon. Friend the Member for Caithness and Sutherland to be taken at the same time. The new Clause to which I refer is entitled:
    "Duty on cinema entertainments"
    Mr. Deputy-Speaker: I do not see that there is any reference to rural cinemas at Exmouth or elsewhere.
    Lieut-Commander Braithwaite: Am I not entitled to ask whether the relief being given to cinemas in rural areas is sufficient, and to argue by illustration what might be done to assist in this matter? Am I allowed briefly to submit that to the Chancellor of the Exchequer?
    Mr. Deputy-Speaker: I doubt whether the hon. and gallant Gentleman is so entitled. The new Clause refers to the criterion of gross takings, not rural or other areas.
    Lieut-Commander Braithwaite: If you rule that, Sir, I cannot proceed
    Mr. J. N. Browne: I rise to support arguments made on this side of the House in regard to items affecting Scottish exhibitors. I am sure hon. Members know that the trade agreed to the present arrangement with considerable reluctance. It was simply told, "Either this, or nothing" The concession does not go far enough, and I fear that the form of it will hasten the drift to the lower priced seats which is happening to the cinemas in my constituency. Hon. Members have used the word "concession," but the hon. Member for Islington, East (Mr. E. Fletcher) called it a comic arrangement. Is it a concession at all? Is it not a device whereby the Chancellor of the Exchequer kindly per-
    80
    mits cinemas to change their prices? I ask the President of the Board of Trade whether this pattern of concession is temporary or whether this new idea—it is a new idea—of tax relief is to be continued as a permanency? If it is, it may be a very great mistake for the trade to accept this principle of tax relief at all.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(REDUCTION IN RATE OF PURCHASE TAX.)
    Subsection (2) of section twenty of the Finance Act, 1948 (which provides that in Part I of the Eighth Schedule of that Act the words "First," "Second," and "Third" indicate the first, second and third rates of Purchase Tax which are respectively one third, two thirds and one hundred per cent. of the wholesale value of the goods), shall have effect as if the words "one quarter" were substituted for the words "one-third."—[Mr. Lyttelton.]
    Brought up, and read the First time.
    Mr. Lyttelton: I beg to move, "That the Clause be read a Second time."
    Let me at once reassure the House that I do not propose to recapitulate arguments which were used on this side when we moved a reduction of the Purchase Tax under three categories: 100 percent, two thirds and one third. The present Parliamentary procedure has very grave defects; I think that is agreed upon all sides. We have not yet discovered the right way of discussing this matter. If we had not had a discussion about Latin phrases I might say that we have not yet found a via media or an aurea mediocritas by which the House can keep proper control of taxation which is now placing £300 million into the hands of the Exchequer. I am entirely in agreement with my right hon. Friend the Member for Bristol, West (Mr. Stanley) who once said that if we were able to discuss every item of Purchase Tax the Debates on the Finance Bill would possibly be reduced to a farce—and a very long, tedious and exhausting farce at that.
    The present situation is very unsatisfactory. It involves lumping a case which is made out for continuing the tax with many others where it can be held that no such justification exists at all. Under the Clause such a criticism would be justified, but we are precluded from any more selective or discriminatory form of action. My hon. Friend the Member

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    for Croydon, East (Sir H. Williams) had a new Clause on the Order Paper, but it was not selected because it was out of order as possibly imposing a charge. It attempted to deal with the difficulty which is very real, and I should think that something on the lines which be suggested would be found to contain a solution. I cannot see any other sort of solution except that individual rates of taxation should be studied by an independent body and their conclusions submitted to this House.
    We have not, of course, had the benefit of hearing the views of hon. Members in other parts of the House upon my hon. Friend's suggestion, because his proposal was ruled out of order, so we are still labouring under the difficulty. I would ask the Government whether they are prepared to have this matter examined by an inter-party committee or meeting, but even if that is done some action is still necessary.
    I am not going to recapitulate the arguments I used, except in one respect. We are interested in the alleviation of the simple articles of everyday use in every household which at present fall to be taxed. They seem to us to fall outside the original purpose for which this tax was devised. The tax was ostensibly to prevent consumer-spending upon articles which we regarded as outside the category of necessities.
    The hon. Lady the Member for Blackburn, East (Mrs. Castle)—I am sorry for more reasons than one that she is not in her place—made great play with our proposal and some dialectical debating points of an agreeable nature, without understanding for one minute that we have to move the reduction of the tax en bloc. I interrupted her to suggest that we would be content, as a start, if Purchase Tax could be reduced to the extent of £15 million upon just those categories of household goods that are in the greatest use. This suggestion received no real reply at all, beyond driving the hon. Lady back towards the baseline and causing her to serve several double faults. Otherwise, it had no effect at all, and was not even referred to by the Financial Secretary to the Treasury. There was no response from the Government. If we had got this alleviation from the start I should have been content to withdraw the proposed new Clause.
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    5.30 p.m.
    So far, the Government's defence of taxing things like toothbrushes and soap is a simple one. It is, "We like the Revenue." There is no other reason at all, and the Government are not prepared to argue upon particular cases. I think they are screening themselves behind a very convenient Parliamentary barrier. It is very convenient because many of these cases are completely unarguable and indefensible. Have the Government any second thoughts about which to tell us now, and what form will they take?
    I do not want to prolong the discussion very much because we went into this fully on the Committee stage but I want to suggest that there is very considerable confusion over the anti-inflationary effects of taxation. None of us need be told that if, for example, taxation is levied upon the consumer, especially in a form which reduces his demand for unnecessary commodities, and if the money so raised is then invested in the purchase of plant or even spent in reducing debt, the general effect is anti inflationary. We knew that almost at school.
    Sir H. Williams: The word is "disinflationary."
    Mr. Lyttelton: I thank my hon. Friend. The word is "disinflationary," We must never say "deflationary," because that has memories associated with it.
    It is necessary to look a little further when we get taxation on a scale like this upon consumer goods. I suppose that some of the argument against inflation is that inflation reduces real wages and increases the pressure for increased wages, increases costs, makes the calculation of business risks almost impossible and favours the debtor at the expense of the creditor, and so forth; but in many instances Purchase Tax is acting in an inflationary direction by raising the cost of living and making those in receipt of wages and salaries increasingly insistent that the rising cost of living must be adjusted by an increase in wages and salaries. So I suggest that it is quite possible that a tax originally designed—perhaps even rightly designed—to reduce inflation ends by increasing it, and I submit that that is exactly what has happened in the case of the Purchase Tax.

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    I feel very insistent upon the need for making some reduction in the 33⅓ per cent. category, and I feel it more strongly even than when I moved the original Clause. I see that the hon. Lady the Member for Blackburn, East, is now in her place. Now that her most agreeable presence is with us, I repeat my demand that the Government should give us the £15 million for which she spoke in those rare moments when she was not attacking me. She spoke so eloquently in their favour that I feel that she may have—what is the the phrase?—"melted the Iron Chancellor" or caused the feet of clay to be a little more molten than they were. I hope that we may hear some concession about this group of common goods which are in great use in every household.
    Mr. Jenkins: I was surprised when the right hon. gentleman the Member for Aldershot (Mr. Lyttelton) said fairly early in his remarks that the original purpose of the Purchase Tax had now been abused and that it was never intended originally that a tax of this sort, designed to curb inflationary spending on articles of a luxury nature, should be applied to a wide range of household goods. I was surprised to hear him say that because I understood that when the tax was first introduced by Sir John Simon it covered a very much wider range of goods than it does now. It covered clothing of every sort, for there was no utility scheme. Therefore, certainly from the point of view of the criterion which the right hon. Gentleman has laid down this evening, the tax is now a far better tax with at least one abuse removed than when it was introduced by a Chancellor of the Exchequer of the party opposite.
    I am not sure whether the right hon. Gentleman intends to lead the Opposition into the Lobby in support of the Clause, because most of the arguments which he adduced were not arguments in favour of the Clause but arguments in favour of a proposal which he might or might not have put before the Committee in the event of the rules of order being somewhat different from what they were.
    Mr. Lyttelton: When the hon. Gentleman has been here long enough he will know that it is possible for the Treasury Bench to make concessions on these lines
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    and afterwards incorporate them in the Bill.
    Mr. Jenkins: Yes, but it is competent for us to note that a great number of consequences would flow from the carrying of the Clause in favour of which the right hon. Gentleman did not adduce arguments. Apparently he wanted some selective remission of the Purchase Tax and some relief on the household articles which are in greatest use. But the carrying of the Clause would not be particularly selective—
    Mr. Lyttelton: The hon. Gentleman has misunderstood the burden of my remarks, which was that we are precluded from putting down discriminatory Amendments and the only way in which these household articles can be relieved is by some concession being announced from the Treasury Bench. That is just the point.
    Mr. Jenkins: It seems to me that that might be a logical course of action if the intention of the right hon. Gentleman was to move his Clause to see if he could get a concession. If he did, well and good; if he could not he would have to leave it there. But if he is going to lead his party into the Lobby in support of the Clause he will be voting for a great number of things when he knows that he will not get his selective adjustments. A tax concession of £50 million, which I understand this Clause would involve is a very substantial one and only a very small proportion of it would go towards securing the object which he said he wishes to attain. It is a very wasteful way of attempting to secure the concessions.
    Although the new Clause would be less regressive in its effects than the Clause moved in Committee it would still be fairly regressive to the extent that while the Purchase Tax at the 33⅓ per cent. rate covers some articles of a semi-necessary nature it also covers a great number of articles—the bulk of the tax is provided by these articles—of a nature which could not possibly entitle them to be considered necessities.
    When we were last debating this issue the Opposition made a good deal of play with the fact that it was very important to carry through substantial remissions of Purchase Tax not only because of the effect on the home consumer but also because of the effect on our export

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    trade. It was suggested that by an undue concentration upon goods of a more utility type than we had traditionally made we were greatly weakening our own ability to compete in important export markets
    In this connection I should like to draw the attention of the House to what appears to me to be a striking extract from an article in the "Manchester Guardian," a week or so ago, describing the International Trade Fair at Toronto and referring to perhaps the most important of all the overseas markets with which we have to deal at the present time, for certainly no market is more important than the Canadian market. The "Manchester Guardian" article of 19th June said:
    "The conclusion of exhibitors was that Canada was a price conscious country and that it offered a better market for utility than for luxury goods, in which—"
    referring to luxury goods—
    "very little interest was shown."
    It is easily possible to exaggerate the extent to which even North American customers are interested primarily in luxury goods from this country rather than in utility goods.
    Mr. Walter Fletcher: Does the hon. Member not realise that to use the words "utility" and "luxury" in respect of goods produces an entirely false impression? What Canada wishes to import are not rigid utility goods as we know them, but the entire range of goods starting above the utility level and going up, in many instances, into what he calls luxury goods.
    Mr. Jenkins: I was quoting from an article which appeared in the "Manchester Guardian," and it is odd that if there were this great revulsion against utility goods—not using that term in its technical sense—the "Manchester Guardian" correspondent should have used this phrase which, he knows, has a well understood meaning in this country.
    My last point concerns the hon. Member for Chippenham (Mr. Eccles), who I am glad to see in his place. When we were last discussing this subject the hon. Member made a number of points about the correct relationship between direct and indirect taxation. He attacked this Clause from a third point of view, that in the last few years the Labour
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    Party had got into a position in which it was quite untrue to its earlier propaganda by allowing the proportion of indirect taxation to the total sum raised in taxation to rise rather sharply.
    I am surprised that the hon. Member should have made this point during the Committee stage because I thought he was primarily in favour of reducing the burden of direct taxation. I certainly remember him using a phrase previously to the effect that Income Tax was the heaviest burden. I am surprised that he should have urged any readjustment in favour of reducing the proportion of indirect taxation against direct taxation.
    It has been a traditional point of view of the party on these benches that, broadly speaking, direct taxation is to be preferred to indirect taxation. That is my own point of view, but that argument possibly has a little less force in it now than it had before the war because we now have such a much greater equality of income than we had in those days. Of course, Purchase Tax as we now have it, rising to very high levels on luxury goods and excluding altogether the overwhelming majority of necessity and semi-necessity goods, is different from any indirect taxation which we knew in the old days, which was always a flat rate of taxation that bore most heavily, proportionately, on the poorest people and those with the biggest families. And, of course, no one could argue that this is the case with the present Purchase Tax.
    None the less, nobody likes indirect taxation and no one wants to keep it on longer than is necessary. However, as indirect taxes go, the Purchase Tax as we have it is not a bad tax—[HON. MEMBERS: "Oh!"] There might be many worse forms of indirect tax, and if and when concessions can be given I would prefer them to be given in a more selective way than would result by the acceptance of this new Clause.
    Sir H. Williams: I shall only take two or three minutes to say rather more than the hon. Member for Stechford (Mr. Jenkins) said in three times that number of minutes. The hon. Member used the word "regressive". I remember that 40 years ago I argued with a distinguished professor of economics who tied me up in a corner by saying that something was due to the regressive action of the American railways. But that did not

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    mean anything. It is a word which economists use when in difficulties.
    I am against Purchase Tax and always have been. I opposed it when it was first introduced. I regard it as a thoroughly bad tax, and if the hon. Member were engaged in any form of industry he would know how bad it is. The hon. Member thinks it is only applied to luxury goods. During the Committee stage I was handed a dish cloth by one of my constituents. It is now in my car. Tax at the rate of 66⅔ was paid on it.
    Sir Arnold Gridley: Made of cotton waste?
    5.45 p.m.
    Sir H. Williams: It was even worse than that. Hon. Members should not talk that kind of nonsense. Purchase Tax is not new. When I was reading history books they talked about tonnage—it referred to liquor—and poundage, which was Purchase Tax that used to be granted to kings. The moderation of Charles I compared with the present Chancellor was quite amazing. Only yesterday I was reading an ancient Journal of the House of Commons to find out how they dealt with these things. It was dated 21st November, 1640—rather before the date on which the word "regressive" was invented. I think it will be in order to read it out because in those days they had monopolies as well and, of course, the Chancellor today is the great monopolist indirectly because he is the custodian for all the nationalised industries and they are all monopolies. It seems so topical:
    "It is ordered that Sir Nicholas Cripps attend the Committee for Grievances: and that he bring forthwith to the House the patent he hath for the sole trade to Ginney and Binney: and the sole importing of Red Wood: and the patent concerning Coporis Stones: and the patent for the sole making and vesting, of Beads and Beaugles."
    The firm of which I am a director makes bugles; not the ones the Members of the Labour Party are always blowing, but the things ladies wear on their garments which attract Purchase Tax sometimes at one third, sometimes at two thirds, sometimes at 100 per cent. because of trifling errors in design.
    It is sad that we cannot go into these in detail. The only course open to my right hon. Friend is to move the reduction of the entire group. I only wish my new
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    Clause had been in order, but at some time or other the Government will be forced to give an opportunity to the trade to argue its case. If the hon. Member for Stechford had been round a few establishments where they have on view things with Purchase Tax noted on them, he would not have made the speech he made. It showed that he did not know the extraordinary folly being committed by the Customs and Excise under the direction of the Chancellor of the Exchequer.
    Mr. Mikardo: The hon. Member for Croydon, East (Sir H. Williams), began his oration by a gratuitously offensive remark directed at my hon. Friend the Member for Stechford (Mr. Jenkins). Then he said he would speak only for two or three minutes but he actually spoke for four minutes and 31 seconds. Apart from being somewhat amusing, a condition which his nature impels him to be, the hon. Member did not enlighten us any more than did the speech which he criticised. [Laughter.] Really, Mr. Deputy Speaker, when an hon. Member begins by blowing one of the bugles of his own manufacture about himself, we expect his speech to be at least three times as good as that of the previous speaker.
    Sir H. Williams: It was.
    Mr. Mikardo: The hon. Member has an excellent conceit of himself. It would be as well if a few others shared it. Unhappily they do not. [An HON. MEMBER: "Take 31 seconds to say it."] I have plenty of time, the night is yet a pup.
    I was about to say that I agree very much with the right hon. Member for Aldershot (Mr. Lyttelton) when he said that we need to find some way in which we can compromise between the present arrangement—under which we are prohibited from discussing these things except in the most general terms like those of this new Clause—and the situation in which, because we could argue endlessly about every item in a long Schedule, we could reduce the Finance Bill to a farcical debate. It is desirable, if it is possible, that we should find some way out of this but there are other occasions for doing that. All we are discussing at the moment is the Clause on the Order Paper and, as the hon. Member for Stechford pointed

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    out, if the Opposition want to use this as a propaganda demonstration, they are welcome to do so, but they will not be discussing the Clause before us.
    If we are to have a serious Debate it can only be on the wordage printed on the Order Paper. That, as has already been said, is by no means selective. It raises the question of whether, in order to do a little good, we should be compelled, if the Clause were accepted, to do a great evil. That is the problem in all these issues of taxation—to make each penny of taxation do the highest possible amount of work, and it means in turn finding ways of giving a penny to a useful concession without at the same time giving a shilling to a comparatively useless concession.
    It is true that in this group there are some articles which are necessities to a much greater extent than others and there are some articles which are necessities to all of us. The question of what is a necessity and what is not varies considerably from person to person; what is a necessity to one is a luxury to others. The major amount of money which would be involved in this concession would be involved not in respect of things like the dishcloth mentioned by the hon. Member for Croydon, East, or the highly necessary toothbrush which was the only specific instance given by the right hon. Member for Aldershot but would come from two or three, or four at the most, very broad classifications of goods which do not fall into the class of necessity at all. If this Clause were carried—and that is all we are discussing—in order to enable the constituent of the hon. Member for Croydon, East, to give him a dishcloth at less cost and to enable us all to buy a toothbrush at less cost a couple of times a year, we would be giving many millions of pounds in respect of things which are not to the same extent necessaries.
    I believe we need some new thinking on this question of what is in general a necessity—leaving aside the subjective and individual considerations—and what is not. Take, for example, the case of non-utility clothing and footwear. Clothing, of course, is a necessity to every man. A thing, however, becomes not a necessity but a luxury for one of a number of reasons. It becomes a luxury
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    if it is something one can well do without, but equally it becomes a luxury if it is something for which there is readily available a cheaper substitute. In this respect, whilst clothing in general is a first line necessity, non-utility clothing is a non necessity because nobody has to have non utility clothing. I do not know the exact up to date figures, but something of the order of seven eighths or nine tenths of all clothing is now utility clothing, and it will be agreed in all parts. of the House that we cannot anywhere in the world find clothing of such good' value as the utility clothing of this country. It may well be argued that there are some gaps in the utility range, some things we cannot get and that the supply of some things is occasionally or often short.
    It may be argued that there are some respects in which utility ranges are susceptible to improvement, but the remedy for that is for us to put pressure on the President of the Board of Trade continuously even further to improve the already excellent utility schemes. The wrong way would be to try to narrow the gap between the essential utility clothing and the inessential non utility clothing. There are many articles of which we can buy one or two virtually identical things, one with a utility label and one without a utility label at 50 per cent. or 100 per cent. more, or, in the case of some women's apparel, 300 or 400 per cent. more. They are virtually the same article. It has been held that it is not one of the functions of government to see that a fool and his money are not parted and if anyone wants to pay three or four times as much as he need for an article for the snobbish pleasure of having it without a utility label—which, if he is worried about it, he can cut off anyway—it is not the business of government to save him that sum of money.
    I have not looked up most recent figures, but I believe it is a fact that non utility apparel is the one item in this Schedule which brings in the largest amount of taxation, and it would be profoundly wrong to reduce the expenditure of those who insist on buying non utility apparel and hence, directly and inferentially, disadvantage those with lower incomes, who find difficulty in clothing themselves and their families decently outside the utility range.
    Mr. Frederic Harris: Is the hon. Member putting forward a case for doing away entirely with Purchase Tax by going over to 100 per cent. utility production?
    Mr. Mikardo: No, I am not saying anything of the sort. If I may recapitulate in two or three sentences to make my point clear even to the hon. Member, I am saying that of the things we are discussing the one on which most money is spent and of which there are ample supplies is utility clothing and that we have no need for special tenderness in the tax on those who will not buy utility clothing. If there are not sufficient supplies of utility clothing we can make representations to the President of the Board of Trade. I cannot see why we should advantage the higher income groups who buy non utility clothes and object to the lower income groups buying utility clothes. That would be the effect of the Clause, an effect which those supporting it—including the right hon. Member for Aldershot—do not intend, but we can only deal with the Clause as it is and as it is it is giving away a great deal unnecessarily to do a little bit of good necessarily.
    If we get to the stage where we can deal with this on a more selective basis there are many points in the arguments put forward for which I, and, I am sure, many hon. Members on this side of the House and Members of the Government will feel themselves in agreement, but, while we are so limited, it seems to me that in all logic every hon. Member has no alternative but to oppose the proposed new Clause in its present form.
    Mr. Michael Astor: I wish to make a short intervention in view of what has been said by the hon. Member for Reading, South (Mr. Mikardo). He has drawn a rather elaborate picture in the particular context of clothing, of what is necessary and what is not necessary. By and large he has said that non utility clothes are not necessary. I am certain the hon. Member is wrong there. I do not myself stand as any good example of non utility clothes, but I would point out to the hon. Member that tailors and shoe and boot makers of the first quality in this country have a very live industry in the dollar area of North
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    America and South America and also in France and Belgium and this country from visitors and in the capitals of those countries. The reputation of British clothes is built up by the excellence of the superior and more expensive articles we sell.
    Mr. Mikardo: I see the point the hon. Member is making, but I beg him to bear in mind that now we have ended clothes rationing the effect of reducing Purchase Tax on non utility clothing, and hence narrowing the gap in price between non utility and utility clothing, would increase the demand for those things the hon. Member is describing at home and would, therefore, lose export sale—[HON. MEMBERS: "No."] That, in fact, has been happening in recent months.
    6.0 p.m.
    Mr. Astor: That is exactly where I disagree with the hon. Member. I do not believe we can lose these markets in any way other than by losing the home market. We are bound, both because of our materials which we manufacture and because of our craftsmen, to retain these markets unless the Chancellor loses them for us, and the real danger of losing them is that the home market is destroyed. I am certain that that is true and that there are a large number of people in all parts of the country who would avail themselves of what the hon. Member may call the slight luxury of dressing in what, for want of a better term, is known as non utility clothing if they could do so. It is largely a matter of their personal budget.
    Mr. W. Fletcher: And their size.
    Mr. Astor: The hon. Member for Reading, South, has very clearly made the one point on which I and most of my hon. Friends are in complete disagreement; which is the general trend in Government policy on the matter of Purchase Tax. He says that an increased home market would deprive the export trade of these clothes. It is only on an increased market at home that the export trade will thrive. It was only on a large home market that the export trade in' these goods grew up, and I think that the line which the hon. Member for Reading, South, has been propagating, in respect of both tailored clothing and shoes, is a most dangerous line to follow and one which, I hope, the House will not accept.
    Sir William Darling: I support the new Clause, which my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has put forward, without qualification. I support it because I think the Government have to look very closely at the Purchase Tax as a means of taxation. Is Purchase Tax to last for ever? If not, would it be swept away at one fell swoop, or will it be devoured by the extension of additional lines of utility goods?
    The Clause gives the Government the opportunity of beginning progressively to reduce the tax from 33⅓ per cent. to 25 per cent. The general effect of this, of course, would be to compel a review of the articles which would come under the reduced schedule of 25 per cent. Many of the articles now appearing in that schedule should not be there at all.
    I agree with the hon. Member for Reading, South (Mr. Mikardo) that the majority of items which bring in most revenue cause a great deal of trouble and annoyance both to the merchant and to the public. If the Clause is accepted, and a reduction is made in the tax to 25 per cent., we can begin to extricate ourselves from the present difficulty and the first step will have been taken towards the final abolition of the tax. If that is not done, I point out to the Government that they are endangering the growth of utility goods; because if utility items are as good as they are claimed to be, if endeavours are being made to make them as good as possible, if every inducement is given to manufacturers to put good materials and workmanship into the utility lines, and if additional supplies become available, less Purchase Tax will be collected on the non utility items and the tax on articles of this kind will eventually disappear.
    I need not elaborate the argument of the hon. Member for Reading, South. He said it is perfectly plain that no one nowadays, unless for reasons of snobbery or vanity, need buy non utility clothing. His argument is irrefutable. As more and more utility lines are established, however, there will be less and less received by way of taxation on non utility goods, and what better purpose could the Government now do to serve the Budget than to reduce the lowest schedule from 33⅓ to 25 per cent. We offer to the Government the better way, which is to
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    enable them to retain a certain measure of taxation, in having the opportunity of regrouping the items in the present 33⅓ per cent. schedule at 25 per cent. taxation and so preserving the revenue which they seek to enjoy.
    I should like to say a word or two about the definition of "utility" in the Canadian market. I am sorry that such an acute observer of economic affairs as the hon. Member for Stechford (Mr. Jenkins) has made the word "utility" in the "Manchester Guardian" article appear as though it is spelt with a small "u." What the reporters on textiles and clothing were saying was that, in the main, the Canadian public are not very fashion minded, like my hon. Friend the Member for Surrey, East (Mr. Astor). The Canadian public are utility minded, with a small "u." Nobody exports utility goods. Utility goods are not known in the export market as such. The buyer from Canada comes and looks at the goods, caring not whether they are utility or otherwise, because he or she is not concerned with that peculiar classification which is imposed by the Board of Trade upon the British people.
    Mr. Jenkins: I did not, of course, intend to imply that the "Manchester Guardian" reporter was using "utility" in the technical sense in which we have used it in this Debate. All I intended to suggest was that the article showed that the view of the hon. Member for Surrey, East (Mr. Astor), that our exports depended upon the maintenance of a large home market, was a view which could be easily exaggerated.
    Sir W. Darling: I am grateful for the intervention, but it does not change my view. The Canadian buyer does not discriminate between utility and luxury goods as we understand those terms. "Utility" is a term which has no significance to the export market. It is an unhappy label which a Government bent on uniformity and upon the extinction of good taste have imposed upon the British people, and especially upon the textile industry. Our new Clause offers the Government a good means of escape and I hope they will see fit to accept it.
    Mr. Redmayne: I should like very much to refute the suggestion of the hon. Member for Reading, South (Mr. Mikardo) that clothing is in any way a large part of the total Purchase

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    Tax bill. If he refers to the Monthly Bulletin of Statistics, he will find that all the clothing, both utility and non utility, is less than one quarter of that proportion of consumer goods which could be regarded as being taxable—that is, the goods which are either utility or are taxed.
    Mr. Mikardo: I am sure that the hon. Member did not mean to misquote me. Utility clothing, of course, has no tax at all. All I said was clothing is the largest single item in this first classfication of.33⅓ per cent., and I am sure that that is right.
    Mr. Redmayne: I appreciate what the hon. Member says, and I am equally sure that he is wrong. I shall be only too happy to prove that to him with figures if he will give me the opportunity to do so in detail. [HON. MEMBERS: "Do it now."] I could not give it now because it is far too complicated; but it is all there in the Monthly Bulletin of Statistics. The argument that there is some extraordinary difference between utility and what are called luxury goods will mean the death warrant of British industry if hon. Members opposite persist in it. It is a complete fallacy which is being fostered officially by the Financial Secretary to the Treasury when he says that if Purchase Tax is removed altogether, it would affect the cost of living by only one point. That argument disregards entirely the fact that the cost of living index is made up on a working man's budget which largely includes utility items.
    Mr. Leslie Hale: Would the hon. Member tell us—we are all very interested in the discussion and are anxious to know—whether it is his case that non utility clothing is not the largest contributor to Purchase Tax in the 33⅓ per cent. Schedule? Surely he can tell us, so that we may know and can discuss the effects of any alteration.
    Mr. Redmayne: I can claim some authority in doing so, in that I am myself what is called a shopkeeper and I see the whole of the evil effects of this Purchase Tax going on day by day. Hon. Members continue to make the mistake of singling out some particular class of goods—in one case, clothing; in another case, something else—and pretending that bears the whole burden. In point of fact this scale of Purchase Tax runs right
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    through the range of goods that are normally purchased by the consumer in this country.
    Mr. Hale: Surely the hon. Member will answer my question? He has said that my hon. Friend the Member for Reading, South, is wrong in saying that non-utility clothes are the largest contributor in the Schedule. If that is the hon. Member's view, what does he say makes the largest contribution? Surely he can answer that in one word. Is it motor cars, or radios, or what is it?
    Mr. Redmayne: I did not wish to waste time in going into these figures, so I offered to discuss the matter with the hon. Member for Reading, South, privately. However, I will give some figures. Household goods account for about £575 million, footwear for £170 million, other clothing for £778 million and other goods and services £1,506 million, making a total of £3,029 million. It is a comparatively easy task, perhaps easier for me because I have to do it for my living, to work out from the total of goods and services what the tax would be, or to work out the reverse calculation. If we take the total tax paid in this class—£217 million one can by a simple sum work out that it applies to goods totalling £1,200 million in price. That, as I have tried to stress, and as the hon. Member so obviously does not believe, amounts to something like half the range of goods that can be regarded as taxable.
    I leave that subject, which has occupied me rather longer than I should have wished. I wish that hon. Members who doubt the effect of this tax on the quality of goods in this country could have seen the admirable exhibition of such goods shown by the Quality Goods Committee just before the Committee stage of this Bill. The duster which has been bandied about was supplied as an example by Miss Wyatt, representing the Transport and General Workers' Union. Perhaps her opinion might be worth quoting. She said:
    "In the home they use any old rags."
    The tax on the dishcloths which might be used is 66⅔ per cent. She said:
    "If we want a good race with a good mind and a good environment, we must cultivate a taste for good things".
    That puts the matter in a nutshell.

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    There are reasons why Purchase Tax can today be looked at from a point of view totally different from that directly after the war. There was not then the same effect on the quality of goods demanded in the shops. Wages were ahead of prices and there were demobilisation bounties, and the necessity for economising in coupons also meant that people did look for quality regardless of price. Both those factors are absent today. As a result, the great bulk of consumer goods cost on the average 22s. for 18s. worth of value, that is, there is a 4s. surcharge on every 18s. worth of goods in this country. This country's future lies in quality goods. Our future is to be the Bond Street of the world, and this tax is driving us into Petticoat Lane.
    6.15 p.m.
    I wish to make one individual claim in respect of which I must confess I have some interest. The class of goods for which I wish to plead is the sports equipment which goes to youth clubs and schools throughout the country. It bears tax and it is in the country's interest that it should not do so. If one also bears in mind that a large part of such equipment is bought by Government Departments, particularly the Ministry of Education, one sees how fallacious is a tax which takes money out of one pocket and puts it into the other.
    It is fallacious to argue that this tax affects the cost of living by only one point. That may be so but it also greatly affects the cost of life as it is lived, and as all classes wish to live it. As such it should not be regarded as a permanent part of the Revenue but as a war time expedient which has outlived its usefulness and is now a great handicap to industry.
    Mr. Douglas Houghton: The hon. Member, like other hon. Gentlemen before him, has taken us rather a long way from the Clause. The new Clause moved by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) is a modified version of the Clause which he moved during the Committee stage.
    Mr. Nigel Birch: It is the same Clause.
    Mr. Houghton: During the Committee stage the Clause we considered was to
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    scale down the rate of Purchase Tax in all three groups. The Clause now before us jettisons the proposed reduction of Purchase Tax in the case of two of the groups and confines the proposed reduction to one group. I hope that the hon. Member for Flint, West (Mr. Birch) is now familiar with the Clause to which he has put his name.
    The cost to the Exchequer of the Clause moved during the Committee stage would, it was estimated, have been about £68 million. The Clause now before the House is estimated to cost the Exchequer about £50 million, so that the proposed scaling down of the other two groups of Purchase Tax would have accounted for only £18 million. It is a little difficult to understand why hon. Gentlemen opposite believe that one category of Purchase Tax alone is represenative of necessary articles when in fact that group contains many articles which would scarcely be called necessities by many people, whereas other groups of Purchase Tax contain articles which many would regard as necessities.
    For example, if one breaks a mirror, whether a framed one or not, and one goes to buy a new one, that purchase attracts 100 per cent. Purchase Tax. If one is fortunate enough to be able to buy a new motor car that attracts only 33⅓ per cent. There we have the contrast between articles of vastly different use, of different degrees of necessity to different members of the community, which are differently taxed.
    I suggest, therefore, that the one merit of the speech of the right hon. Gentleman in moving this new Clause was to suggest that the machinery of this House is really not suitable for sorting out the anomalies and the difficulties connected with the future of this tax. Many of us on this side of the House feel very much in agreement with that view. Wisely or unwisely, this House has almost imprisoned itself on Purchase Tax in the 8th Schedule to the 1948 Finance Act, where everything is set out in almost tedious detail; not only those items which are subject to tax, but those which are not.
    There is a good deal of merit in the suggestion that in the near future consideration should be given as to how this House is to have control over taxation, and also have the advice from the trade

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    and from others on many of the difficulties and anomalies which have arisen in the imposition of the tax.
    Hon. Gentlemen opposite must not, however, seek to put that proposal in this new Clause, which after all is a proposal to reduce, without qualification whatsoever, the tax on the whole range of articles which are now in the first group of Purchase Tax. That includes not only non-utility apparel which accounts for a substantial amount of revenue drawn from this group, but also motor cars, which also accounts for a substantial amount of revenue, radios and stationery, office requisites, and a host of other articles which are really not part of the domestic cost of living in the sense stressed by the right hon. Gentleman in moving this Clause.
    I consider therefore that the right hon. Gentleman made his point that the machinery of considering and levying and revising the tax needs some attention. But he has not made out a case for a reduction of Purchase Tax for one only of the three groups of Purchase Tax. He has not made out a case for reducing the Purchase Tax on many articles which are not necessity articles. He has in fact not made out a case for reducing any direct taxation at all. In their programme for the General Election hon. Members opposite stressed that a reduction in direct taxation must be a first objective; and I wish to know why hon. Gentlemen opposite have not been stressing the need for a reduction in direct taxation in accordance with their election pledge, instead of concentrating on a reduction in indirect taxation. In those circumstances I am sure the House will reject the new Clause.
    Mr. Birch: We have now had three distinguished financial experts from the other side of the House upon this subject, the hon. Member for Sowerby (Mr. Houghton) the hon. Member for Stechford (Mr. Jenkins) and the hon. Member for Reading, South (Mr. Mikardo). The hon. Member for Sowerby made out a very strong case against the tax and he seemed to be almost as keen on reducing the 664⅔ per cent. level as he was on reducing the 334⅓ per cent. He also pointed out in some detail how extraordinarily capricious was the tax, which is one great disadvantage of it upon which
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    we on this side of the House have always laid stress.
    So far as sorting out the tax is concerned, and getting the classes in proper order, there was a proposal put down on Committee stage by one of my hon. Friends. Unfortunately, it was not called, and as the hon. Member knows we should be out of order in discussing that on this Clause, as, indeed, we should be out of order in discussing the level of direct taxation when we have before us a proposal to reduce a certain indirect tax. To sum up, the hon. Member for Sowerby seemed to think it was not a very good tax but then, as a Socialist, a horrible thought struck him; somebody might buy something of a slightly better quality and he could hardly bear that.
    The hon. Member for Reading, South, who has left the stricken field, and who, incidentally, took 10 minutes on his speech, again pointed out the anomalies, and how in the case of some articles almost indistinguishable from one another, one would not be taxed while others would be taxed at 100 per cent. The hon. Member went on to say that it did not matter, because clothes are practically all non-utility. I happen to notice that he was wearing a double-breasted coat, and as I understand it, a double-breasted coat is non-utility. The hon. Member also said that a fool and his money are soon parted. I should be very sad if he himself had been a fool.
    The hon. Member for Stechford, made an attack upon quality. He represents a division of Birmingham, a city where craftmanship and quality, particularly in the jewellery trade is a source of great pride. I very much hope that his constituents will notice the attitude he adopts in these matters.
    It would be well if hon. Members opposite would remember that the only tax which they have reduced in this Budget is the tax upon Bentleys and that that was done for this reason, as the Chancellor of the Exchequer said:
    "Business has, in fact, fallen below the point necessary to enable these cars to be manufactured at a price attractive to the export markets and it is desired to re-establish a home market sufficient for this purpose."—[OFFICIAL REPORT, 18th April, 1950; Vol. 474, c.73.]
    If it is done with Bentleys I do not see why it should be so extremely immoral to suggest it being done in other cases.

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    It is well to remember what was the original object of this tax. It was not so much to deal with inflation as to stop people buying consumer goods, because they were not available. The then President of the Board of Trade, now the Minister of Town and Country Planning, used to stump the country saying that people did not need any suits; that he had plenty of suits to go on with and he did not see why other people should be buying suits at all.
    The whole basis of the thing was to try to stop people buying, but it is a little saddening to think that now, five years after the end of the war, and with the great process of Socialist democracy we have had since, it is still considered injurious to have a toothbrush or buy a greeting card or buy stationery. The hon. Member for Sowerby mentioned stationery, but is it really very luxurious to write a letter? Very many people write letters to me—
    Mr. Houghton: I did not suggest that stationery was a luxury; I merely distinguished it from other items of domestic expenditure which were more important factors.
    Mr. Birch: The hon. Gentleman thinks that no one should write a letter, but perhaps he is lucky with his constituents—I do not know.
    Then there were electric fires, and lipstick. In the words of one of the greatest living American poets:
    "A girl whose face is covered with paint
    Has an advantage with me over one whose ain't."
    That is not the case with the Chancellor. I think that this attack upon any form of quality is very damaging to the reputation of our country. It is mean. It reveals a feeling of envy. Envy never takes a holiday. This envious feeling is extremely unattractive. We are continually told that we are in the "Century of the Common man." I believe that hon. Gentlemen opposite are looking forward to a still more glorious day, the "Century of the Very Common Man."
    Mrs. Castle: In moving this Clause the right hon. Gentleman prayed in aid a speech which I made on the Committee stage of the Bill. I was surprised and delighted at my powers of conversion over the right hon. Gentleman. I had not hoped to succeed so well.
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    I was very grateful to find that he realised the power of the argument I made then, when I pointed out to the House that in this situation of financial stringency in the country and in many modest homes, the important thing was to pick out first things for relief in the first place. Obviously the right hon. Gentleman went away, thought very seriously over my speech and as a result we have this new Clause today.
    6.30 p.m.
    I should be prepared to go along with the right hon. Gentleman if I were satisfied that his conversion was complete; but, very regretfully, I have had to come to the conclusion, after listening to the Debate, that his conversion is entirely spurious. That is clear not only from his own speech but from the speeches of every one of his supporters. Those who have listened attentively will have found that the examples quoted by hon. and right hon. Gentlemen opposite have not been relevant to the Clause. We had the hon. Member for Flint, West (Mr. Birch), talking about lipstick. Is he not aware that lipstick is not in the category of 33⅓ per cent.?
    Are we to understand that this is not a serious attempt by hon. Gentlemen opposite to get certain alterations in Purchase Tax, but that it is merely another of their propaganda efforts? The hon. Member for Croydon, East (Sir H. Williams) talked about dishcloths at 66⅔ per cent. Is he really agitated about that category or about the 33⅓ per cent. category which is nominally the objective of this new Clause? I am most concerned, as I said in my earlier speech, about the pressure of Purchase Tax on certain remaining essential items in the home. If this is an attempt by hon. Gentlemen opposite once again to make an appeal to the housewife and to say, "Look what we tried to do for you in the House of Commons yesterday," I repeat what I said before. It still remains the answer to this new Clause.
    The items in the 33⅓ category which enter directly into the cost of living of the modest home are very small in number, thanks to the incidence of the utility scheme, to the reliefs given previously by the Chancellor and the exemptions in the Schedule. It would take something more like £15 million than £50 million to lift this remaining burden from the haber-

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    dashery items and the few toilet requisites, like tooth brushes and razor blades, about which the propaganda play will be made tomorrow. I am confident that if we were to say to the housewives of Britain that there was £50 million of concessions which the Chancellor would make, the housewives would not choose to make them on the items which predominate in this category.
    Stationery has been mentioned. Unfortunately, I have not got my Schedule with me, but I believe that the yield from Purchase Tax on stationery is something like £17 million. The great proportion of that does not come from the little domestic envelope but from office stationery. If hon. Gentlemen opposite think that the housewives of Britain would vote for the relief to fall on items like that, they are wrong. I am confident that my right hon. and learned Friend is as anxious as any- one in this House to lift the burden from what are really the essential items. His difficulty, at a time when there is not much money to spare, is to get the agreement of the House on what really are the priorities. Hon. Members opposite are in an advantageous position. They only have to talk about alternatives.
    Mr. Lyttelton: Is it the hon. Lady's argument that, since the Chancellor is unable to determine the priorities, he has found the easiest way out of his difficulty by doing nothing?
    Mrs. Castle: Whatever the Chancellor would do in this situation—and some concessions have been made in this Budget—it would always be possible for hon. Members opposite to say that they would have done this, that and the other as well. They can suggest concessions amounting to something like £500 million without at any time having to say which concessions they would put into operation. They can say "These are alternatives; these are not final proposals."
    In a situation where we have to choose our priorities extremely carefully, the housewives of Britain would not be grateful to the House for an expenditure of money in the way suggested by this Clause. The priorities of hon. Members opposite are not the priorities of the humble home. All their speeches have shown that. We have even had a plea for relief in taxation on ornamental
    104
    bugles worn in the coat lapel. How many housewives are weeping their eyes out today because they cannot afford the hon. Members' ornamental bugles? This Clause is not a serious contribution to the difficulties of the housewife. It is just another propaganda smokescreen, and I hope that the House will reject it.
    Colonel Gomme-Duncan: Like the man in Henley's poem, we on this side of the House feel that we have suffered under the lash of the hon. Member for Blackburn, East (Mrs. Castle), with her Treasury brief; but, like that man, our heads are "bloody but unbowed." We maintain that we are just as interested in the affairs of the housewives of Great Britain as is the hon. Lady. I have experience of housewives considerably beyond that of the hon. Lady.
    A generation is growing up which just does not know what quality means. That is nothing short of tragedy; I am sure that the hon. Lady would agree with that. They think that today is normal, but it is not. When Government spokesmen speak of "normal" they mean war-time. That is normal to them, but when we speak of "normal" we mean pre-war time for quality. [HON. MEMBERS: "Hear, hear."] I am glad that hon. Gentlemen opposite realise that fact. Perhaps they will consider the matter more deeply.
    Mrs. Castle: Can the hon. and gallant Gentleman tell the House what experience of quality the cotton weavers of Blackburn were able to enjoy in their homes in the 'thirties?
    Colonel Gomme-Duncan: I do not speak about people of whom I know nothing, but one thing they were able to enjoy was a much better quality of food. The hon. Lady knows that.
    To return to the new Clause, as it is obvious that we shall not get concessions from the Chancellor, I ask him at least to look at some of the absurdities of Purchase Tax. I am not allowed to go into a lot of detail, but I will give one example. There is high Purchase Tax on a fireman's helmet whereas a miner's helmet is entirely free from tax. There are many other examples. This hits hard at local authorities and others concerned with the fitting out of forces like fire brigades.
    Is this sensible? Does it bring in any revenue worth talking about? I see that

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    the Chancellor is in smiling mood. Perhaps the firemen, or at least the people who buy their helmets, can have a bit of hope. If it is not possible to give reductions of Purchase Tax, at least these absurd anomalies can be considered. They irritate people and interfere with the life of the country. I do not think that drastic reductions in Purchase Tax on items like this would affect the Revenue very much.
    Mr. W. Fletcher: Like the hon. Member for Blackburn, East (Mrs. Castle), I represent a Lancashire working-class constituency, and I am concerned that she should have chosen to mention my right hon. Friend the Member for Aldershot (Mr. Lyttelton), though it may have the effect of enhancing his reputation as being the best dressed man in the House, entirely non-utility, whereas I have tried very often to get utility suits and have found, in common with the hon. Member for Reading, South (Mr. Mikardo) and others, that it is quite impossible to do so.
    I believe that the speech of the hon. Lady was not entirely free from that propaganda element of which she talked when she pulled out the vox humana, no doubt in accordance with the red dot marked on her brief. We have had a rechauffé of her previous speech, in which she tried to create an entirely wrong prejudice about what we are trying to do. What we are trying to do, perfectly honestly, is to force upon the Treasury and the Chancellor the task which they ought to have taken upon themselves of going through the very many ridiculous anomalies created by this tax, which are not only handicaps to the housewife but are having a very serious effect on some of the industries of this country.
    One of the acid tests concerning this tax is the question of frustrated exports. Whenever we send from this country to countries all over the world goods which are of the non-utility type, goods which we can sell abroad only because of their quality, very often there is complete frustration of these exports and then, when we get them coming back here for sale in this country, we have the absurdity that they cannot be sold, without a utility marking on them, unless they are subject to this ridiculous tax. This is one of the great handicaps of the export trade, and the bon. Lady knows this as well as I do.
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    We are facing this ridiculous anomaly concerning an export trade which has been built up on quality—luxury is not the right word to use—and we are placing on this trade a really unnecessary handicap at a moment when we can ill afford to do so.
    The reason for this new Clause is to focus attention on the need, which we have continually urged, to do away with some of these really great handicaps. All the arguments which have been advanced concerning the handicaps to the housewife fade into complete insignificance in comparison with the vital question of what we are going to do and what we are doing now to keep going the export trade. The case was proved in the speech of my hon. Friend the Member for Flint, West (Mr. Birch). If hon. Members opposite think that they can in any way continue our export trade at its present level and to countries which have always demanded quality and always used the two words "Britain" and "quality" in the same breath, while a tax of this sort is imposed on the goods, they are making a very great mistake.
    I say to the Treasury that this is their opportunity, although I know they will not accept it and it is no use talking to them when they are in that mood. The opportunity is being forced upon them by our action in submitting this new Clause so that, by the time we next discuss these things, they will have had the opportunity to reconsider not only the blocking and frustration of our desire to expand the export trade by all means available, but also to see that these things are properly discussed and that, in the result, they may take the advice which we offer, and not listen to the hon. Member for Blackburn, East.
    6.45 p.m.
    Viscount Hinchingbrooke: It has been an unhappy feature of this Debate that every Socialist speaker has been asked to stand up and defend the indefensible position of the Chancellor, and in so doing they have done their consciences a good deal of damage. I do not know what the hon. Lady the Member for Blackburn, East (Mrs. Castle) wanted from the Committee or from hon. Members on this side. She came here the other day and complained because we were attempting to reduce

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    the Purchase Tax in its three ranges, and one of her arguments was that the 66⅔ per cent. and 100 per cent. levels included goods of high quality and high price which ordinary people could not afford and which did not justify their exemption from the tax.
    As the hon. Lady knows, we are bound by certain rules in this Debate, which the hon. Member for Sowerby (Mr. Houghton) revealed. We have only two opportunities in the course of the proceedings on the Finance Bill, and can do only two things. We made an attempt to do the right thing on the first occasion, but the hon. Lady rejected it, therefore leaving us no alternative but to do what we are doing in putting forward this new Clause this afternoon.
    I wonder very much whether, at the price of raising the hon. Lady's reputation as a debater in this House, she is not failing to deal honestly by her own constituents. Did she send her first speech to her own local paper? Does she propose to send the speech which she has made today to her local paper? Is she so sure that the mill girls of Blackburn never wear utility stockings? Is she so convinced that the simple people in her constituency and in the back streets, which I am certain she knows extremely well, do not have cutlery, wallpaper and other things for which they have to pay excessive prices because of this action of the Chancellor?
    Mrs. Castle: Will the noble Lord allow me? I should like to point out that it was not my practice at any time to send copies of my speeches to the local paper, because they have perfectly good agencies of their own and have always adequately reported me without my doing so. The contents of my speech were reported in the constituency, and have not been criticised.
    Viscount Hinchingbrooke: I am very glad—or very sorry, according to the way one looks at it—to hear that the hon. Lady does not communicate her speeches to her constituents, but they will have the opportunity of reading them in HANSARD and will probably draw the same conclusions as they would have done from the report in the local paper.
    The hon. Lady should not make these charges against hon. Members on this
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    side, but should have inquired about the effect of this tax on her own constituents. All her constituents have to buy either gas mantles or electric light bulbs; many of her constituents have wireless sets, and all the children have toys. Does she really think that, five years after the war ended and with goods in greater supply, and when there is some unemployment, no doubt in her own constituency, which might well be taken up by a reduction in Purchase Tax leading to higher productivity—does she not think that, in those circumstances, she is not justified in spending time, as she did a fortnight ago and has done again today, in opposing every action that we are trying to take for the benefit of the people of the country?
    I should prefer to believe that the hon. Lady had been asked to make the speech which she made a fortnight ago and has repeated today by the right hon. and learned Gentleman the Chancellor of the Exchequer and others sitting immediately in front of her, and that behind the scenes—I hope very much—she is taking the action that will result in positive measures of reduction of the Purchase Tax next year, if not before that time, under the powers which the Treasury have to reduce the tax by order; and that she will, by then, eventually reconcile herself to the belief that the principle behind our action is in the interests of the great mass of her constituents.
    Mr. McAdden: I wish to support the suggestion for the reduction of Purchase Tax from 33⅓ per cent. to 25 per cent., not because I believe that it is the only way of dealing with the Purchase Tax, but because it is the only way by which we are likely to gain any concessions from the Chancellor. In the discussion on a previous occasion, it was made perfectly clear that there was no possibility of a reduction of the tax in the other categories, but there was at least a hope held out by the hon. Lady the Member for Blackburn, East (Mrs. Castle) concerning the 33⅓ per cent. category.
    I know that there are a large number of articles included in the different categories and that we cannot attempt to separate them, but it is reasonable that we should draw attention to those instances which are worthy of consideration by the House. For that reason, I hope we shall have

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    support, not only from this side, but from the other side of the House as well, for this very modest concession which I believe to be of great necessity for the people of this country. I have heard a number of arguments this afternoon which would have us believe that Purchase Tax does not press so heavily as it might because there are in existence ranges of utility articles, and so on. Surely hon. Members do not really think that the trade of this country has been built up in the past, and is likely to be built up in the future, merely by the production of utility articles. We do not want to go in for the cult of the commonplace. That is not the way the trade of this country was built up.
    If we are to concentrate purely on utility articles and to penalise and tax heavily by varying stages anybody who manages to produce something which is not only useful but ornamental and attractive as well, then we shall certainly inflict a serious handicap on the producers of this country. It is within the knowledge of the Government Front Bench the stupid way in which this tax works. Very often an article which in itself is quite useful attracts only a very modest rate of tax providing it is of a utility character, but immediately it is made attractive we find it is removed into a higher category of tax.
    If the trade of this country is to develop to the extent to which all of us desire. it can only be done by encouraging our manufacturers to be progressive and enterprising. Because I believe that this tax prevents manufacturers from being progressive, and because, although this is not the best way of dealing with it, I think it is a step in the right direction, I hope the concession asked for this afternoon will be granted.
    Mr. Jay: The right hon. Member for Aldershot (Mr. Lyttelton) did not really argue in favour of this new Clause. He argued, instead that it would be desirable to give relief of Purchase Tax in the case of some of the more necessary items. I can well understand the right hon. Gentleman's procedural difficulty, because of course, the Government are involved in exactly the same difficulty. I agree that there is a case for giving relief, when possible, earlier on the more necessary household goods, but the Parliamentary difficulty in which we are involved is this:
    110
    I think it is fairly generally agreed that it is undesirable, at any rate under the conditions of this Finance Bill, to embark on what the right hon. Member for Bristol, West (Mr. Stanley), called a Dutch auction for individual items of Purchase Tax, but, if there is a way and we do not do that, then, of course, the Government, just as much as the Opposition and Private Members are bound by the terms of the Budget Resolution. Therefore, when the right hon. Gentleman challenges us to name items on which, as he suggested, we should give relief of f15 million, the answer is, of course, that in present conditions, and the House having passed the Resolution it has, it is impossible for us to do that.
    I think I should say something about the Clause which has been the main subject of the discussion. At first sight, I think there is some attractiveness in the proposition that the 33⅓ per cent. rate should be reduced to 25 per cent. At any rate, it is more attractive than the former proposal made by the right hon. Gentleman in Committee for revising all the three rates downwards. That is because, as he said, a number of the more necessary items are naturally included in the 33⅓ per cent. rate.
    When one examines this proposition more closely, however, it is much less attractive as an alternative to the reduction which we decided to make in this Budget in Income Tax, and that, mainly, for two reasons. The first is that as against the £70 million of revenue which would have been lost on the earlier proposal for the reduction of all the three rates, the reduction proposed today in the one rate would cost about £50 million. That is perhaps rather surprising, but the reduction of the one rate would cost that very substantial sum. Secondly—
    Mr. Henry Strauss: In making that calculation, is the Financial Secretary assuming the same volume of sales, or is he making an allowance for the increased sales that would result from the reduction in the tax?
    Mr. Jay: It is very difficult to say what the result would be, and, therefore, difficult to make the calculation, but, generally speaking, we are assuming that there would not be much change in the volume of sales.

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    The second reason is that most of that taxation of £50 million would, in fact, even at this rate, go on the rather less essential items. It is, of course, true, as I said in the earlier Debate, that we have placed nearly all the less essential items, or, at any rate, most of them, at the higher rates of tax and the more essential at the lower rates. There are, however, one or two commodities which would, I think, be called less essential, but which have for special reasons been placed at the 33⅓ per cent. rate. They include, for instance, non-utility clothes which we have been discussing this afternoon, motor cars, and wireless and television sets. They are three notable examples. There are special reasons why those three items were charged at the lower rate, but it so happens that they are the items on which the bulk of the revenue is raised among the goods in that category.
    Mr. Douglas Marshall: I assume that when he mentions wireless sets, the Financial Secretary is not including the dry battery in that category as well?
    Mr. Jay: I think I am, but I could not tell the hon. Gentleman definitely now. I will let him know.
    The hon. Member for Rushcliffe (Mr. Redmayne) maintained that non-utility clothes were not a large proportion of the goods charged at 33⅓ per cent. There, he is quite wrong. In fact, something rather more than one-quarter of the revenue raised at this rate comes from non-utility clothes. Therefore, we are, in fact, getting a substantial proportion of this revenue from clothes which represent not more than about 10 per cent. of the total supply.
    Mr. Redmayne: You accused me of being absolutely wrong. I said that the proportion was rather under a quarter, and you said it was rather over a quarter. That is not being absolutely wrong.
    Mr. Speaker: The hon. Member said, "You said that" I said nothing.
    7.0 p.m.
    Mr. Jay: I am very glad that we are agreed. I thought the impression created by the hon. Gentleman was that non-utility did not contribute the major part of the tax. If we include motor cars,
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    radio sets and television sets, we arrive at something very nearly one-half of the revenue raised at the rate of 33⅓ per cent. It follows that in all probability about half the revenue remitted would, in fact, apply to these commodities. Therefore, I think that, when examined, the proposition is not nearly so attractive as it is at first sight.
    Moreover, I suggest that there is a serious doubt whether the reduction of Purchase Tax on non-utility clothes and motor cars would not be injurious to the export trade in both these items. Since both these industries are producing near to capacity, it is at least arguable, that a reduction of the tax would increase home demand and would have the effect of reducing rather than increasing exports.
    The hon. Member for Flint, West (Mr. Birch) quoted yet again our decision to reduce Purchase Tax on the expensive cars with the express purpose of assisting exports; but I think he forgot two things. First, we reduced it from 66⅔ to 33⅓ and, therefore, it now stands at exactly the same level as the tax on non-utility clothes and ordinary motor cars. Secondly, that was a notable instance where a particular section of an industry was, without question, producing very much below capacity. Therefore, in our view, a case had been made out on the merits of the particular industry—as it must be made out in these cases—for a reduction with the purpose of encouraging exports.
    The hon. and gallant Member for Perth and East Perthshire (Colonel Gomme-Duncan) argued, as did several other hon. Gentlemen, for a continuous effort to iron out the anomalies which he suggested Purchase Tax contained. As I think he knows, that process goes on throughout the year and, as hon. Gentlemen will have noticed, a steady series of Orders are made from time to time by this House to even out anomalies of that kind.
    Colonel Gomme-Duncan: In view of the very encouraging statement the hon. Gentleman has made, may we assume that, during this year of grace, firemen's helmets will be evened out?
    Mr. Jay: I will take note of the hon. and gallant Gentleman's suggestion, but I am afraid I cannot give a precise assurance this afternoon. He will remember

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    that we ironed out an anomaly in the case of Christmas cards recently.
    It has been suggested to us this afternoon that there should be continuous consultations with the trade and the manufacturers on these matters. There again, hon. Gentlemen must really know that, of course, continuous consultation goes on all the year round between Customs and Excise, who are dealing with the tax, and the trades concerned. All the major decisions on Purchase Tax are made after consultation with the trade and usually, indeed very often, in accordance with suggestions made by them.
    Sir Wavell Wakefield: Is the hon. Gentleman aware that there is a feeling amongst manufacturers generally that when all their appeals go forward it is just like battering against a brick wall. There is no understanding of their difficulties and problems, and nothing happens when they put forward requests for help.
    Mr. Jay: I should like to show the hon. Member a letter I have just received from a representative of the trade responsible for coach building in the motor industry. I assure him we have continuous consultations; and I do not think it is true to say that that sort of complaint prevails very widely. If it does, it is up to the trade concerned to make suggestions and representations to Customs and we shall be very glad to hear them.
    I said that, when the time comes and the money is available, there was a case for selecting the more necessary types of household goods for early relief from Purchase Tax. For the reasons I tried to give, and that several hon. Gentlemen behind me gave today, we decided it would give more relief to the cost of living, more incentive to greater productive effort and, generally, more benefit where it was most needed if, this year, we made the reductions in Income Tax which we made in the Budget rather than a cut in the 33⅓ per cent. rate of Purchase Tax. Therefore, I must also ask the House to reject this Clause.
    Captain Crookshank: Certainly, after the speech of the Financial Secretary to the Treasury, I shall ask my hon. and right hon. Friends to support us in the Lobby on the new Clause. I have hardly ever heard a more feeble defence than the one we have just had put
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    to us. In his opening words, the hon. Gentleman admitted there was a case for relief of household goods. That, of course, has been admitted by everybody else who has spoken on either side of the House. The hon. Member for Reading, South (Mr. Mikardo), for example, criticising this Clause, said it would do some good and a great deal of evil. Ever since he spoke I have been wondering, for the life of me, what kind of evil is produced by reducing taxation. I thought that, on general principle, a reduction of taxation was a good thing.
    Mr. Mikardo: If the right hon. and gallant Member wants an answer, that is very simple. Money does not come out of the air, and if £50 million is to be cut in this way it would have to come from somewhere. Presumably, since it was the only concession, this cut would have come at the expense of the reduction of Income Tax we have decided to make. Therefore, it would have created a great deal of evil.
    Captain Crookshank: It might also have come out of reduction of public expenditure. That was not the point that the hon. Member was making. He was dealing with the suggestions of remission in this Clause. The hon. Member for Blackburn, East (Mrs. Castle), said she wanted to reduce the pressure on certain classes of goods in modest homes. That is the object we have at heart in moving this Clause. She is not the only person who can speak for housewives in this House. Apart from that being one of the results that this Clause would bring about, owing to the way we have to discuss these matters other results also follow; but the other results are, in our view, to the good—that is that there should be a reduction in Purchase Tax in these other categories.
    That has been one of the gists of the argument on this side. Another is that, by making the price of a whole series of articles higher than it need be, quality production is endangered. I do not criticise the constituents of the hon. Member for Blackburn, East except, of course, for sending her here. But I am perfectly sure that any housewife who had the argument put to her is not so selfish as to say, "I am not going to get any reduction myself from this particular change in taxation, so it should not take place." I am perfectly certain no one would take that

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    view, especially when the point was supported by the good economic arguments which have come from this side of the House today.
    The fact remains that the Financial Secretary to the Treasury has really given away the whole argument. All he said fell to the ground when, in an unguarded moment, he reminded us that the Government has, as he called it, ironed out the Christmas cards. But they did that by producing a Treasury Order. He admitted in his first sentence that there is a case for relief of household goods; but if, as he says, the Government cannot accept this Clause, is he going to give any assurance that he is going to start ironing out these anomalies?
    Christmas cards of course were a very gross case. There are many others, I am not going to read the list of things affected by the 33⅓ Purchase Tax, but they cover a very wide field. The hon. Gentleman was a little ingenuous when he said that something like half the full amount of this tax came from non-utility apparel, radio sets and motor cars. While those came out of the half, the rest of the half is made up of other articles in the same groups, including electric and gas fires, and new bicycles. Whatever views hon. Gentlemen opposite have about motor cars, they are surely going to admit the bicycle is something which even the modest housewife sometimes requires. Certainly most of the modest housewives' husbands require bicycles to get them to work. I quite admit that one could argue almost indefinitely as to what one means by necessity and semi-necessity.
    In our view, it is a good thing to take a first step towards reducing Purchase Tax. This is an enormous burden on the people and plays a great part in making the cost of living so high as it is now. That in itself would be a reason for accepting our new Clause. Of course, we would have preferred the acceptance of the Clause which we proposed on the Committee stage, because that had even more influence on the point relating to exports than this, as was admitted in the Bentley case. It had more influence over a radge of goods which the hon. Member for Blackburn, East may like to describe as luxuries but which are also extremely valuable for the export trade in dollar countries. We would have pre-
    116
    ferred that on general economic grounds, but it was not possible.
    Therefore, we now come forward with this other proposal, which incidentally does not cost as much. I think I can answer the query of my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss) about whether the Government took into account the increased sales which would result from a reduction in Purchase Tax if this Clause were adopted. If one makes a mathematical calculation one finds that it has not been taken into account. They have assumed roughly a quarter of the actual yield. To the extent that there would be more purchases of these goods in the home market, the return to the Treasury would be the higher.
    To make a start in the general direction of reducing Purchase Tax would be welcomed everywhere, modest housewives in Blackburn included. Having failed in our first proposal we come forward with this, which is in itself useful. It does not go all the way, but we realise that there are limits to the amount which the Treasury thinks it can give away this year. Certainly the limits which we think it can give away are not quite the same as the limits which the Treasury thinks it can give away, because it has given so little during the discussion of the Finance Bill.
    This Clause would certainly help with some of the most important household goods which still bear Purchase Tax. It would help because the prices would be reduced, and it would also help in concentrating once more the greatest amount of interest and effort in maintaining the quality of our goods for the export trade. However much hon. Members opposite may argue one way or the other, the fact remains that a sound home trade is essential for the development of the export trade. One cannot get away from that very platitudinous remark. Therefore, since by reducing the Purchase Tax we would increase the home market and, therefore, assist in developing quality for the export trade, this is a better Clause than hon. Members opposite seem to think.
    7.15 p.m.
    Furthermore, this Clause will reduce the general burden. I am certain these things cannot be evaluated in terms of

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    the cost of living index, but the acceptance of this Clause would go part of the way in reducing the cost of ordinary purchases which have to be made from time to time at home. I know that great care is taken to try and make the cost of living index as accurate a picture as possible of the cost of living of the various groups which it covers, but in fact it cannot do so because so many things have to be bought from time to time but at differing intervals which could hardly be brought into a regular index. One need only think of some of the articles in the group covered by this Clause, such as the bicycle, the electric light bulb, household furnishings and cutlery. People are not buying cutlery all the time, but when they do they find 33⅓ per cent. Purchase Tax on it, and they find it a very heavy burden.
    I hope that we shall be supported in our plea to the Government to tackle this problem. They can do it, but they have shown not the slightest inclination now or at any other time. The fact that the Financial Secretary did not even mention the possibility of a regular inquiry and consultation on this matter shows how little attention he has paid to the arguments put forward by my right hon. Friend in opening the Debate. I have heard poor defences before, and I dare say that in the view of some hon. Members opposite when I was Financial Secretary I made them myself, but I never heard worse than I have heard today. I hope the House will support us in this new Clause.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 273; Noes, 288.

    Division No.52.]

    AYES

    [7.18 p.m.

    Aitken, W. T.

    Crouch, R. F.

    Heald, L. F

    Alport, C. J. M.

    Crowder, F. P. (Ruislip-Northwood)

    Henderson, John (Cathcart)

    Amery, J. (Preston, N.)

    Crowder, Capt. John F. E. (Finchley)

    Hicks-Beach, Maj. W. W.

    Amory, D. Heathcoat (Tiverton)

    Cundiff, F. W.

    Higgs, J. M. C.

    Arbuthnot, John

    Cuthbert, W. N.

    Hill, Mrs. E. (Wythenshawe)

    Ashton, H. (Chelmsford)

    Darling, Sir W. Y. (Edinburgh, S.)

    Hill, Dr. C. (Luton)

    Assheton, Rt. Hon. R. (Blackburn, W.)

    Davidson, Viscountess

    Hinchingbrooks, Viscount

    Astor, Hon. M.

    Davies, Rt. Hn. Clement (Montgomery)

    Hirst, Geoffrey

    Baker, P.

    Davies, Nigel (Epping)

    Hogg, Hon. Q.

    Baldock, J. M.

    de Chair, S.

    Hollis, M. C.

    Baldwin, A. E.

    De la Bère, R.

    Holmes, Sir J. Stanley (Harwich)

    Baxter, A. B.

    Deedes, W. F.

    Hope, Lord J.

    Beamish, Maj. T. V. H.

    Digby, S. Wingfield

    Hopkinson, H. L. D. A.

    Bell, R. M.

    Dodds-Parker, A. D.

    Hornsby-Smith, Miss P.

    Bennett, Sir P. (Edgbaston)

    Donner, P. W.

    Horsbrungh, Miss F.

    Bennett, R. F. B. (Gosport)

    Douglas-Hamilton, Lord M

    Howard, G. R. (St. Ives)

    Bennett, W. G. (Woodside)

    Drayson, G. B.

    Howard, Gerald (Cambridgeshire)

    Bevins, J. R. (Liverpool, Toxteth)

    Drewe, C.

    Hudson, Sir Austin (Lewisham, N.)

    Birch, Nigel

    Dugdale, Maj. Sir T. (Richmond)

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

    Bishop, F. P.

    Duncan, Capt. J. A. L.

    Hudson, W. R. A. (Hull, N.)

    Black, C. W

    Dunglass, Lord

    Hulbert, Wing-Cdr. N. J.

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

    Duthie, W. S.

    Hutchinson, Geoffrey (Ilford, N.)

    Boothby, R.

    Eccles, D. M.

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

    Bossom, A. C.

    Eden, Rt. Hon. A.

    Hyde, H. M.

    Bowen, R.

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

    Jeffreys, General Sir G.

    Bower, N.

    Erroll, F. J.

    Jennings, R.

    Boyd-Carpenter, J. A.

    Fisher, Nigel

    Johnson, Howard S. (Kamptown)

    Bracken, Rt. Hen. Brendan

    Fletcher, W. (Bury)

    Johnston, Douglas (Paisley)

    Braine, B.

    Fort, R.

    Joynson-Hicks, Hon. L. W.

    Braithwaite, Lt.-Comdr. J. G.

    Foster, J. G.

    Kaberry, D.

    Bromley-Davenport, Lt-Col. W.

    Fraser, Hon. H. C. P. (Stone)

    Keeling, E. H

    Brooke, H. (Hampstead)

    Fraser, Sir I. (Lonsdale)

    Kerr, H. W. (Cambridge)

    Browne, J. N. (Govan)

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

    Kingsmill, Lt.-Col. W. H.

    Buchan-Hepburn, P. G. T.

    Galbraith, Cmdr. T. D. (Pollok)

    Lambert, Hon. G.

    Bullock, Capt. M.

    Gammans, L. D.

    Lancaster, Col. C. G.

    Bullus, Wing-Commander E. E.

    Garner-Evans, E. H. (Denbigh)

    Langford-Holt, J.

    Butcher, H. W.

    Gates, Maj. E. E.

    Law, Rt. Hon. R. K

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

    Gomme-Duncan, Col. A.

    Leather, E. H. C.

    Carr, L. R. (Mitcham)

    Gridley, Sir A.

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

    Clarke, Col. R. S. (East Grinstead)

    Grimston, Hon. J. (St. Albans)

    Lennox-Boyd, A. T.

    Clarke, Brig. T. H. (Portsmouth, W.)

    Grimston, R. V. (Westbury)

    Lindsay, Martin

    Colegate. A.

    Hall, J. (Gateshead, W.)

    Linstead, H. N.

    Conant, Maj. R. J. E.

    Harden, J. R. E.

    Llewellyn, D.

    Cooper, A. E. (Ilford, S.)

    Hare, Hon. J. H. (Woodbridge)

    Lloyd, Rt. Hon. G. (King's Norton)

    Cooper-Key, E. M.

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

    Lloyd, Maj. Guy (Renfrew, E.)

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

    Harris, R. R. (Heston)

    Lloyd, Selwyn (Wirral)

    Craddock, G. B. (Spelthorne)

    Harvey, Air-Codre. A. V. (Macclesfield)

    Lockwood, Lt.-Col. J. C.

    Cranborne, Viscount

    Harvey, Ian (Harrow, E.)

    Longden, G. J. M. (Herts, S. W.)

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

    Harvie-Watt, Sir G. S

    Low, A. R. W.

    Cross, Rt. Hon. Sir R.

    Hay, John

    Lucas, Major Sir J. (Portsmouth, S.)

    Crosthwaite-Eyre, Col. O. E.

    Head, Brig. A. H.

    Lucas, P. B. (Brentford)

    Lucas-Tooth, Sir H

    Orr-Ewing, Charles Ian (Hendon, N.)

    Storey, S.

    Lyttelton, Rt. Hon O

    Orr-Ewing, Ian L. (Weston-super-Mare)

    Strauss, Henry (Norwich S.)

    McAdden, S. J

    Osborne, C

    Stuart, Rt. Hon. J. (Moray)

    McCallum, Maj. D

    Perkins, W. R. D

    Studholme, H. G.

    McCorquodale, Rt. Hon. M. S.

    Peto, Brig. C. H. M

    Summers, G S.

    Macdonald, A. J. F. (Roxburgh)

    Pickthorn, K

    Sutcliffe, H.

    Macdonald, Sir P, (I. of Wight)

    Pitman, I. J.

    Taylor, C. S (Eastbourne)

    Mackeson, Brig. H. R.

    Powell, J. Enoch

    Taylor, W. J. (Bradford, N.)

    McKibbin, A.

    Prescott, Stanley

    Thomas, J. P. L. (Hereford)

    McKie, J. H. (Galloway)

    Price, H. A. (Lawisham, W.)

    Thompson, K. P. (Walton)

    Maclay, Hon. J. S.

    Prior-Palmer, Brig. O

    Thompson, R. H. M. (Croydon, W.)

    Maclean, F. H. R.

    Profumo, J D

    Thorneycroft, G E. P. (Monmouth)

    MacLeod, Iain (Enfield, W.)

    Raikes, H. V.

    Tnornton-Kemsley, C. N.

    MacLeod, John (Ross and Cromarty)

    Rayner, Brig. R

    Thorp, Brigadier R. A F

    Macmillan, Rt. Hon. Harold (Bromley)

    Redmayne, M.

    Tilney, John

    Macpherson, N. (Dumfries)

    Remnant, Hon. P

    Touche, G. C.

    Manningham-Buller, R. E

    Renton, D. L. M.

    Turton, R. H.

    Marlowe, A. A. H

    Roberts, Emrys (Merioneth)

    Tweedsmuir, Lady

    Marples, A. E.

    Roberts, P. G. (Hesley)

    Vane, W. M. F.

    Marshall, D (Bodmin)

    Robinson, J. Roland (Blackpool, S.)

    Vaughan-Morgan, J K

    Marshall, S. H. (Sutton)

    Robson-Brown, W. (Esher)

    Vosper, D. F.

    Maude, A. E. U. (Ealing, S.)

    Roper, Sir H

    Wakefield, E. B. (Derbyshire, W.)

    Maude, J. C. (Exeter)

    Ropner, Col. L.

    Wakefield, Sir W. W. (St. Marylebone)

    Maudling, R.

    Ross, Sir R. D (Londonderry)

    Walker-Smith, D. C.

    Mellor, Sir J.

    Russell, R. S.

    Ward, Hon. G. R. (Worcester)

    Molson, A. H. E.

    Ryder, Capt R. E. D

    Ward, Miss I. (Tynemouth)

    Moore, Lt.-Col. Sir T.

    Sandys, Rt Hon. D

    Waterhouse, Capt. C.

    Morris, R. Hopkin (Carmarthen)

    Scott, Donald

    Watkinson, H.

    Morrison, Maj. J. G. (Salisbury)

    Shepherd, W S (Cheadle)

    Webbe, Sir H. (London)

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

    Smiles, Lt.-Col. Sir W

    White, J. Baker (Canterbury)

    Mott-Radolyfle, C. E

    Smith, E. Martin (Grantham)

    Williams, C. (Torquay)

    Nabarro, G

    Smithers, Peter H. B. (Winchester)

    Williams, Gerald (Tonbridge)

    Nicholls, H.

    Smithers, Sir W. (Orpington)

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

    Nicholson, G

    Snadden, W. McN.

    Wills, G.

    Noble, Comdr. A. H. P

    Soames, Capt. C.

    Wilson, Geoffrey (Truro)

    Nugent, G. R. H.

    Spearman, A. C. M.

    Winterton, Rt. Hon. Earl

    Nutting, Anthony

    Spence, H. R. (Aberdeenshire, W.)

    Wood, Hon. R.

    Oakshott, H D

    Spens, Sir P. (Kensington, S.)

    Young, Sir A. S. L.

    Odey, G. W.

    Stanley, Capt. Hon R. (N Fylde)

    Orimby-Gore, Hon. W. D.

    Stevens, G. P.

    TELLERS FOR THE AYES:

    Orr, Capt. L. P. S

    Steward, W. A (Woolwich, W.)

    Major Wheatley and

    Mr. T. G. D. Galbraith.

    NOES

    Acland, Sir Richard

    Cocks, F. S.

    Evans, S. N. (Wednesbury)

    Adams, Richard

    Coldrick, W.

    Ewart, R.

    Albu, A. H.

    Collick, P.

    Fernyhough, E.

    Allen, A. C. (Bosworth)

    Collindridga, F.

    Field, Capt. W. J

    Allen, Scholefield (Crewe)

    Cook, T. F.

    Finch, H. J.

    Anderson, F. (Whitehaven)

    Cooper, G. (Middlesbrough, W.)

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

    Attlee, Rt Hon. C. R.

    Cooper, J. (Deptford)

    Follick, M.

    Awbery, S. S.

    Corbet, Mrs. F. K. (Peckham)

    Foot, M. M.

    Ayles, W. H.

    Cove, W. G.

    Forman, J. C.

    Bacon, Miss A.

    Craddock, George (Bradford, S.)

    Fraser, T. (Hamilton)

    Baird, J.

    Crawley, A.

    Freeman, J. (Watford)

    Balfour, A.

    Cripps, Rt. Hon. Sir S

    Freeman, Peter (Newport)

    Barnes, Rt. Hon. A. J.

    Crosland, C. A. R.

    Gaitskell, Rt. Hon. H. T. N

    Bartley, P.

    Crossman, R. H. S.

    Ganley, Mrs. C S.

    Bellenger, Rt. Hon. F. J

    Cullen, Mrs. A.

    Gibson, C. W.

    Benson, G.

    Daggar, G.

    Gilzean, A.

    Beswick, F

    Daines, P.

    Glanville, J. E. (Consett)

    Bing, G. H. C.

    Dalton, Rt. Hon. H.

    Gordon-Walker, Rt. Hon. P. C

    Blackburn A R.

    Darling, G. (Hillsboro')

    Greenwood, A. W. J. (Rossendale)

    Blenkinsop, A.

    Davies, A. Edward (Stoke, N.)

    Greenwood, Rt. Hn. Arthur (Wakefield)

    Blyton W. R.

    Davies, Ernest (Enfield, E.)

    Grey, C. F.

    Boardman, H

    Davies, Harold (Leek)

    Griffiths, O. (Rother Valley)

    Booth, A

    Davies, R. J. (Westhoughton)

    Griffiths, Rt. Hon. J. (Llanelly)

    Bottomley, A. G.

    Davies, S. O. (Merthyr)

    Griffiths, W. D. (Exchange)

    Bowles, F. G. (Nuneaton)

    de Freitas, Geoffrey

    Gunter, R. J.

    Braddock, Mrs. E. M.

    Deer, G.

    Hale, J. (Rochdale)

    Brockway, A. Fenner

    Diamond, J.

    Hall, J. (Gateshead, W.)

    Brook, D. (Halifax)

    Dodds N. N.

    Hall, Rt. Hn. W. Glenvil (Colne V'll'y)

    Brooks, T. J. (Normanton)

    Donnelly, D.

    Hamilton, W. W.

    Broughton, Dr. A. D. D

    Donovan, T. N.

    Hannan, W.

    Brown, George (Belper)

    Driberg, T. E. N.

    Hardman, D. R.

    Brown, T. J. (Ince)

    Dugdale, Rt. Hon. J. (W. Bromwich)

    Hardy, E. A.

    Burke, W. A.

    Dye, S.

    Hargreaves, A

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

    Ede, Rt. Hon. J. C.

    Harrison, J

    Callaghan, James

    Edelman, M.

    Hastings, Dr. Somerville

    Carmichael, James

    Edwards, John (Brighouse)

    Hayman, F. H.

    Castle, Mrs. B. A.

    Edwards, Rt. Hon. N. (Caerphilly)

    Hewitson, Capt. M

    Champion, A. J.

    Edwards, W. J. (Stepney)

    Hobson, C. R.

    Chetwynd, G. R

    Evans, Albert (Islington, S. W.)

    Holman, P.

    Clunie, J.

    Evans, E. (Lowestoft)

    Holmes, H E (Hemsworth)

    120

    121

    Houghton, Douglas

    Messer, F.

    Soskice, Rt. Hon. Sir F.

    Hoy, J.

    Middleton, Mrs. L.

    Sparks, J. A.

    Hubbard, T.

    Mikardo, Ian

    Steels, T.

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

    Mitchison, G. R.

    Stewart, Michael (Fulham, E.)

    Hughes, Emrys (S. Ayr)

    Mceran, E. W.

    Stokes, Rt. Hon. R. R.

    Hughes, Hector (Aberdeen, N.)

    Monslow, W.

    Strachey, Rt. Hon. J.

    Hughes, Moelwyn (Islington, N.)

    Moody, A. S.

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

    Hynd, H. (Accrington)

    Morgan, Dr. H. B.

    Stross, Dr. B.

    Hynd, J. B. (Attercliffe)

    Morley, R.

    Summerskill, Rt. Hon. Edith

    Irvine, A. J. (Edge Hill)

    Morris, P. (Swansea, W.)

    Sylvester, G. O.

    Irving, W. J. (Wood Green)

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

    Taylor, H. B. (Mansfield)

    Isaacs, Rt. Hon. G. A.

    Mort, D. L.

    Taylor, R. J. (Morpeth)

    Janner, B.

    Moyle, A.

    Thomas, D. E. (Aberdare)

    Jay, D. P. T.

    Mulley, F. W.

    Thomas, George (Cardiff)

    Jeger, G. (Goole)

    Nally, W.

    Thomas, I. O. (Wrekin)

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

    Noel-Baker, Rt. Hon. P. J

    Thomas, I. R. (Rhondda, W.)

    Jenkins, R. H.

    O'Brien, T.

    Thorneycroft, Harry (Clayton)

    Johnson, James (Rugby)

    Oldfield, W. H.

    Thurtle, Ernest

    Johnston, Douglas (Paisley)

    Oliver, G. H.

    Timmons J.

    Jones, D. T. (Hartlepool)

    Orbach, M.

    Tomlinson, Rt. Hon. G.

    Jones, Frederick Elwyn (West Ham, S.)

    Padley, W. E

    Tomney F.

    Jones, Jack (Rotherham)

    Paling, Will T. (Dewsbury)

    Turner-Samuels M.

    Jones, William Elwyn (Conway)

    Pannell, T. C.

    Usborne, Henry

    Keenan, W.

    Pargiter, G. A.

    Vernon, Maj. W. F

    Kenyon, C.

    Parker, J.

    Viant, S. P.

    Key, Rt. Hon. C. W.

    Paton, J.

    Wallace, H. W.

    King, H. M

    Pearson, A.

    Watkins, T. E.

    Kinley, J

    Peart, T. F.

    Webb, Rt. Hon. M.(Bradford. C.)

    Lang, Rev. G.

    Poole, Cecil

    Weitzman, D.

    Lee, F.(Newton)

    Popplewell, E.

    Wells, P. L. (Faversham)

    Lee, Miss J. (Cannock)

    Porter, G.

    Wells, W. T. (Walsall)

    Lever, L. M. (Ardwick)

    Price, M. Philips (Gloucestershire, W.)

    West, D. G.

    Lewis, A. W. J.(West Ham, N.)

    Pryde, D. J.

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

    Lewis, J. (Bolton, W.)

    Pursey, Comdr. H

    White, Mrs. E. (E. Flint)

    Lindgren, G. S.

    Rankin, J.

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

    Lipton, Lt.-Col. M.

    Rees, Mrs. D.

    Whiteley, Rt. Hon. W.

    Logan, D. G.

    Reeves, J.

    Wigg, George

    Longden, F. (Small Heath)

    Reid, T.(Swindon)

    Wilcock, Group-Capt. C. A. B

    McAllister, G.

    Rhodes, H.

    Wilkins, W. A.

    MacColl, J. E.

    Richards, R.

    Willey, F. T (Sunderland)

    McGhee, H. G.

    Roberts, A.

    McInnes, J.

    Roberts, Goronwy (Caernarvonshir)

    Willey, O. G. (Cleveland)

    Mack, J. D.

    Robertson, J. J. (Berwick)

    Williams, Ronald (Wigan)

    McKay, J.(Wallsend)

    Rogers, G. H. R.(Kensington, N.)

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

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

    Ross, William (Kilmarnock)

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

    McLeavy, F.

    Royle, C.

    Wilson, Rt. Hon. J. H (Huyton)

    MacMillan, M. K. (Western Isles)

    Shackleton, E. A. A.

    Winterbottom, I.(Nottingham, C)

    McNeil, Rt. Hon. H.

    Shawcross, Rt. Hon. Sir H

    Winterbottom, R. E. (Brightside)

    MacPherson, Malcolm (Stirling)

    Shinwell, Rt. Hon. E.

    Woodburn, Rt. Hon. A.

    Mainwaring, W. H.

    Shurmer, P. L. E.

    Woods, Rev. G. S.

    Mallalieu, E. L. (Brigg)

    Silverman, J. (Erdington)

    Wyatt, W. L.

    Mallalieu, J. P. W. (Huddersfield,E.)

    Silverman, S. S. (Nelson)

    Yates, V. F.

    Mann, Mrs. J.

    Simmons, C. J.

    Younger, Hon. Kenneth

    Manuel, A. C.

    Slater, J.

    Marquand, Rt. Hon. H. A

    Smith, Ellis (Stoke, S.)

    TELLERS FOR THE NOES:

    Mathers, Rt. Hon. George

    Snow, J. W.

    Mr.Bowden and

    Mellish, R. J.

    Sorensen, R. W.

    Mr.Kenneth Robinson.

    New Clause.—(EXEMPTION FROM UNITED KINGDOM TAX OF PAY OF COLONIAL FORCES, ETC.)
    (1) Members of the armed forces of the Crown who are serving on the establishment any of the colonial forces or of the Gurkha Brigade shall be deemed for the purposes of this section, to be member of the colonial force or of the Gurkha Brigade as the case may be.
    (2) Any emoluments payable out of the public revenue to members of the colonial force or of the Gurkha Brigade shall not be liable to income tax solely by reason of the fact that they are paid from the public revenue.—[Brigadier Priot—Palmer.]
    Brought up, and read the First time.
    Brigadier Prior-Palmer:I beg to move, "That the Clause be read a Second time."
    122
    In moving this new Clause, I seek to deal with—or perhaps "iron out" is the correct word, having regard to the last Debate—an anomaly which is causing very great hardship to members of the Colonial Forces, both native and British. There are three categories affected by the Clause. First, there is the British officer who is seconded to colonial troops; secondly, there is the colonies Briton who has lived in the Colonies for a large number of years, and thirdly three is the native who, by virtue of the fact that he has risen in rank, surprisingly comes within the Income Tax range and is also being taxed at British rates. As an example I refer to a warrant officer, a native of the country, in the King's African Rifles.

    123
    The position, briefly, is that before the war these troops were paid out of colonial resources. During the war, owing to the great expansion of the Forces, that commitment was taken over by His Majesty's Government and practically the whole of the Colonial Forces were paid out of home resources. Although the Colonies made as great a contribution as they could, the fact that the troops were paid out of home resources automatically brought them within the range of British Income Tax.
    That was immediately realised by the then Chancellor of the Exchequer. It was appreciated that it created hardship and anomalies, and as a result, by an Army Council Instruction numered 497, issued in 1941, a list of extra-statutory war-time concessions was laid down wherein the charge to tax in respect of Service pay was abated so as not to exceed the rates which would be charged by reference to the appropriate Colonial Taxation Code. That was reported to the House, printed by order of the Chancellor of the Exchequer and remained in force until 1st April, 1947.
    On that date, incidentally, or just afterwards, I was in East Africa and I saw the War Office letter which was circulated at that time to all colonial commands stating that from 1st April, 1947, this list of extra-statutory concessions ceased and that everybody would come under United Kingdom rates of Income Tax on a P.A.Y.E. basis. As may well be imagined, that caused a considerable amount of perturbation among those concerned, many of whom had lived in the Colonies all their lives. Of course, it included those natives who had risen to a rank which brought them into the Income Tax group. I must emphasise that it affects very much the Gurkha Brigade as well as other Colonial Forces.
    7.30 p.m.
    The effect of that letter was very serious on the recruiting of officers and other ranks to the Colonial Forces. Officers in those Forces are taken on for six-monthly periods, and a large number of officers failed to take on in consequence of that letter. I know personally of the case of one officer who had resided in East Africa since 1897 who fell to be taxed under the United Kingdom Income Tax, and of another who had been there since 1921.
    124
    I wish to impress on the Government the reason I suggest that this Clause must be accepted. It is difficult for us who are interested in Defence matters to be able to put over our case to the Chancellor of the Exchequer and the Treasury who are not in day-to-day contact with the problems of the defence of this Empire of ours and its extensive communications. I wish the Minister of Defence were here on that Government Front Bench to support me, as I am sure he would, in the case which I am putting forward. It is vitally important that we build up our Forces—in Africa, for example—to make up for the great loss which we have suffered in the loss of the Indian Army. With our commitments extended as they are today to the limit, this is one way in which we can help to relieve the position, particularly in South-East Asia and in the Middle East. Therefore, I say that, for this reason if for no other, it is very important that this anomaly and this great hardship should be removed at the earliest possible moment.
    Not only do these people who fall under the United Kingdom rates of Income Tax on their pay not get the benefits of that tax in this country, but this is, surely, a glaring example of taxation without representation, because the large proportion of these people have no vote in this country at all. The case is hard enough for the British officer who is seconded, but it is not him so much: it is, as I have stated already, the people living in the Colonies who do not benefit and who do not have the vote in this country.
    Alongside that are the facts that local salaries are increased by cost of living bonuses; that the colonial civil servant who goes out from this country to take a post in the Colonies alongside his brother who happens to be in uniform is taxed on the colonial rates of Income Tax; and that the native himself, who has probably never been in England in his life, falls to be taxed under this.
    I want to emphasise my point by reading a very short extract from the Second Report of the Select Committee on Estimates. It is a reply given to my hon. Friend the Member for Blackpool, North (Mr. Low) who asked a question on this particular subject. The reply was as follows:

    125
    "If any means can be devised, consonant with Treasury practice and the like, for exempting the whole of the African Forces from United Kingdom taxes and leaving them liable only for colonial taxes, nobody would he better pleased than the Colonial Office, but that is not possible as things are today."
    My final word is this. This Clause makes it possible; and I trust that, in the interests of justice and the interests of dire military necessity, the Chancellor will see his way to accept the Clause. It is a matter of very great urgency. I trust we shall not have the reply that it will be considered for the next Budget, because that is too far away. Something administrative must be done at once if we are not to lose a very large number of officers and other ranks.
    Mr. A. R. W. Low: I beg to second the Motion.
    I hope that the Government will see their way to meet us on this new Clause. Here really is an anomaly which has been created by the change in procedure for paying these troops. The Colonial Forces, which were before the war paid by the Colonial Governments of the territories from which they were drawn, are now paid through the War Office Vote, and it is, as I understand it, only because they are so paid that people who receive that pay, as they are paid out of the public revenues of the United Kingdom, have to pay United Kingdom tax. It has really nothing to do with those officers and men that this change has come about. The change has come about, as I understand it, for administrative reasons, but also, and perhaps quite substantially, because the Colonial Governments are not able to afford the increased sums that are necessary to keep up the increased Forces which are also necessary, or which can be found in their own particular territories.
    It would be an awful confession of failure if the Treasury could not find some way out of the impasse into which that change of procedure has driven them. The quotation which was given to the House by my hon. and gallant Friend the Member for Worthing (Brigadier Prior-Palmer) was of a statement by no less a person than the Permanent Under-Secretary of State to the Colonial Office, Sir Thomas Lloyd, who showed in his evidence before the Select Committee on that occasion how much importance he and the Colonial Office attached to these Colonial Forces.
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    I and my hon. and gallant Friend are aware that there are exceptions to the rule at present. For example, at the present time the Malay Regiment is not paid out of United Kingdom revenues, and therefore the officers in the Malay Regiment, so long as they have been seconded to the Malay Regiment and not just posted from the British Forces, are not subject to United Kingdom Income Tax. However, serving alongside the Malay Regiment in exactly the same place are officers of the Gurkha Brigade whose pay is provided out of public revenues here, and who therefore are liable to United Kingdom Income Tax. That is a glaring example of where the present anomaly leads us, and I think that all hon. Members on both sides of the House can understand what it is we are trying to do—and why it is that we are trying to do it—by this new Clause.
    Perhaps I may make a reference to what happened before the war in the case of the Indian Army. A large number of British officers and men serving in the Indian Army were paid out of Indian revenues, as, incidentally, were all the British Forces serving in India. Because of that they were not liable to United Kingdom Income Tax, but they were liable only to Indian Income Tax. So with the Colonial Forces before the war. Not only were they not liable to United Kingdom Income Tax, but they were also paid at rates different from and, I believe—though it is difficult to make a comparison—on the whole better than the rates of pay given to British officers and men in so far as they applied to them, in the Forces at that time.
    It was the policy then, and I believe it should be the policy now, to encourage good men to serve with those Forces. It is vital, if we are to make use of the tremendous sources of manpower that are available to us in Africa and in other parts of the Colonial Empire, that we should provide good officers and N.C.Os. If we are to do that, we have to see that they are paid fairly. Before the war it was decided—and, in my view, decided quite correctly—that we should pay those men extra in order to induce them to leave their homes and go overseas, and stay there, certainly for the better part of their lives and perhaps for nearly all their lives. That decision is still taken by private firms who send their men overseas today. No private firm would dream

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    of sending a man to Malaya unless it gave him extra pay above what it would give him for doing a similar job in this country. It is necessary to do the same for these men if we are to encourage the right type of man to go overseas and help us in building up the Colonial Forces and the Gurkha Brigade.
    A question which must be in the minds of some hon. Members is this: Why do this for British officers serving with the Colonial Forces and yet do nothing for British officers and men serving in the British Forces in exactly the same place? I, as did all my hon. Friends, asked myself that question, but it seemed to me to be a very wide question, and one extremely difficult to deal with. In this new Clause we have tried to deal with the narrow question affecting the Colonial Forces and the Gurkha Brigade themselves, and I hope that we shall not be told by the Government that nothing can be done for them because nothing can be done for the others. If it is right, as I believe it is, to do something for the British officers and men serving in the Colonial Forces and the Gurkha Brigade, then it is right to do it even though it may be difficult to do something about the others—although I believe that something ought to be done for the others, too.
    I hope that what we have said, and what will be said by, as I hope, hon. Members on both sides of the House, will persuade the Government to do something about this, and thus give a fillip in the selection and recruitment of the right people for our Colonial Forces and the Gurkha Brigade. Perhaps it is as well that we should be discussing this now rather than earlier during the Committee stage, when we had not got the events in Korea to drive home to our minds the importance of building up good Colonial Forces.
    Mr. Speaker: Before the general Debate, perhaps I might remind hon. Members that this new Clause refers only to
    "Members of the armed forces of the Crown who are serving on the establishment of any of the colonial forces or the Gurkha Brigade"
    Mr. George Wigg: I wish to support the principle on which this new Clause is based. In my maiden speech I made a plea for the establishment of the Colonial Forces and the retention of
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    the experience which had been gained during the war. I had in mind, particularly, the West African Forces, and I was most anxious that the benefit of their experience should not be lost and that we should lay down the foundation of what I believe would be, not only a very valuable addition to the strength of the Commonwealth, but also a contribution to the well-being of the Colonies themselves. I am, therefore, following on that speech logically in supporting this new Clause.
    I was particularly glad that the hon. Member for Blackpool, North (Mr. Low), noted the importance of recruiting the best type of warrant-officer into the Colonial Forces. There is no doubt whatever that we shall not get good men if they are treated in a mean sort of way. I am sure that the hon. Gentleman is right when he says that before the war it was difficult to make an accurate comparison, when those men who were seconded to the Colonial Forces—which was then the procedure—tended to be much better off than if they had remained an Imperial charge. It is true that through a series of administrative accidents—the consequence of which I am afraid, could not be completely foreseen—these men are in a much worse position than men who did not take that step.
    I think the hon. Gentleman is treading on rather dangerous ground when he makes a comparison between men seconded to the Colonial Forces and men who remain on British rates of pay and happen to be serving in the same country. I do not want to contravene the rules of order, but I think his mistake arose because he tended rather to overstate his case on a previous occasion when we were discussing a similar matter. He overlooked the fact that before the war colonial allowances were taxable whereas today the comparable emoluments are not taxable. Therefore, the officer or N.C.O. serving in a Colony on British rates of pay is not in quite the adverse position that the hon. Gentleman made out.
    Mr. Low: I hope the hon. Gentleman will be more accurate. If he reads my speech he will find that I did say that there was a difference.
    Mr. Speaker: I would remind the House that Colonial allowances involve a charge, and discussion of them in this Debate is therefore out of order.
    7.45 p.m.
    Mr. Wigg: I was only anxious to reinforce the hon. Gentleman's argument that we should not, as it were, be put off because of a comparison between two officers, one who happened to be serving with a British regiment in a Colony, and another, of perhaps the same regiment, who had been seconded to the Colonial Forces. They are, it seems to me, different situations. The first officer would not be in such a bad position as I thought the hon. Gentleman made out. If he did not do so, I gladly withdraw my remark.
    I think that the substance of this new Clause is sound, although I am not very happy about some of its wording. I am not very happy, for instance, about the phrase "serving on the establishment," because I can imagine this kind of situation arising. An officer might be serving with, say, the West Africa Frontier Force and be held to be serving in the Colonies, and if this concession were made he would then be exempted from tax. If the same officer were then asked to take up a staff appointment in, say, General Headquarters, West Africa Forces, he could perhaps be held to be no longer serving on the establishment of the Colonial Forces. It seems to me that we should then tend to set up a barrier which would discourage good regimental officers from taking staff appointments in the headquarters of the Colony in which they were serving. Therefore, whilst backing the principle of the new Clause wholeheartedly, I hope that the Minister will have a look at its wording, because in putting something right we ought to put it right permanently, at any rate as far as military events will allow.
    Colonel Gomme-Duncan: I am sure the House listened to the speech of the hon. Member for Dudley (Mr. Wigg) with great appreciation, and we are glad to find him supporting the principle underlying this new Clause. I shall confine my remarks to the British officers of the Gurkha Brigade. These officers are labouring under a sense of grievance. There is no question about that, and I think they are right. It is possible that some degree of exaggeration my have crept in, and exaggeration always spoils a good case; but taken broadly, there is no doubt that the British officers now serving on the establishment of the Gurkha Brigade, who were serving with
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    Gurkha troops before the Indian Army was done away with, are financially speaking definitely worse off than they were at that time. I am sure that is not the desire of this country or of the Government, yet I believe it to be the fact.
    It is vitally important to remember that today Gurkha troops are among the most important we have in the British Empire. They may be small in number, but their efficiency and their ability for certain types of fighting in certain parts of the world are unrivalled. We must realise that the British officer serving in the Gurkhas is fixed for life in some part of the world, very often in a most unhealthy climate, and he has no option but to go on leave now and again. Also he has no option but to send his children home to be educated, if they happen to be with him, and that in it self is a very great expense. The advantage of the additional pay he would get when he was a member of the Indian Army, plus the fact that he only paid Indian Income Tax—except for any other income he might have had which originated in the United Kingdom, although few had very much of that—is now gone. Yet this officer is expected to be as cheerful and as efficient and somehow to make do on much reduced emoluments in spite of the increased cost of living.
    These are facts which, I think, ought at least to suggest to the Government that behind this new Clause—whatever the actual wording, which may possibly be disputed—there lies a real grievance which could be put right, first, in the interests of justice and fair play for the men concerned, and, secondly, in the interests of defence which every day is becoming more important for this country.
    Mr. Bing: I want to say a word or two in support of the proposal made by the hon. and gallant Member for Worthing (Brigadier Prior-Palmer), I particularly appreciate his suggestion that if we are faced with a situation which may lead to retrospective legislation, we can cure it by dealing with the matter by administrative action. I feel that we should not approach the question in the way suggested by the hon. and gallant Member for Perth and East Perthshire (Colonel Gomme-Duncan). This is a question of justice

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    for all the people serving in these Forces, irrespective of whether they are African, British, Indian, etc. If it is an injustice, then it is an injustice to all.
    Colonel Gomme-Duncan: I mentioned this type of officer because I know something about him, and I have no experience of Colonial Forces apart from that.
    Mr. Bing: I will not labour the point. There is the technical difficulty of dealing with this matter. May I suggest to the Chancellor of the Exchequer that there does not seem to be any reason why we should treat our own Colonial Forces any worse than we treat the officers of the Polish Resettlement Corps who have not seen fit so far to enter into any of the arrangements made for their rehabilitation and training. Some two or even three years ago, I asked the present Minister of Town and Country Planning a question on this subject. He said that because they were paid at a rather lower rate than the British soldier, we did not charge them any Income Tax.
    Surely there is the same position with regard to the Colonial Forces; and why should not they have the same advantages as we are giving to the Polish Resettlement Corps? If there are technical difficulties which make it necessary to charge Income Tax on everyone who is paid out of Imperial funds, then out of what funds are the Polish Resettlement Corps paid that Income Tax does not attach to them? I hope that the House will join in pressing my right hon. Friend for some concession on this matter. I agree with my hon. Friend the Member for Dudley (Mr. Wigg) that in the phrasing of the Clause there may be some difficulty, but do not let that deter us from taking this opportunity of putting right an injustice.
    Mr. Gammans: We are very grateful for the support which we have had from the two hon. Gentlemen opposite, from which we may adduce that they have either persuaded the.Chancellor of the Exchequer to agree to this very reasonable request or, alternatively, that we may have the pleasure of their presence in the Lobby with us in a few moments. The Chancellor has an opportunity of remedying what I think is an indefensible anomaly, namely, that the liability to pay Income Tax should not depend on a
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    man's domicile or upon the job he is doing but on the fortuitous circumstances of who happens to pay his salary.
    The hon. Member for Blackpool, North (Mr. Low) pointed out that at this very moment in the Malayan jungle we have officers of the Malay Regiment and officers of the Gurkha Brigade fighting side by side; and the officer of the Gurkha Brigade has the miserable experience of receiving his Income Tax demand from the Chancellor of the Exchequer while the water drips down his neck, whereas the other officer merely pays the Malayan Income Tax at a much lower rate. For years I was in the Colonial Service and I never paid a cent of British Income Tax, whereas the British District Commissioner in Singapore who happened to be paid by the Treasury had to pay Income Tax all that time.
    This new Clause is a very narrow one and deals merely with officers specified in it, and we hope that we have convinced the Chancellor of the Exchequer of the justice of our case. I will put forward three arguments. The first is that, on the whole, the officer who is seconded to the Colonial Forces or the Gurkhas has to maintain two homes, one here and the other probably, or almost certainly, somewhere in the tropics. He has to send his children home to be educated from the age of six or seven and the odds are that his wife has to go home with the children.
    The second reason, which I do not think has been mentioned this evening, is that the officer not only has to pay British Income Tax but has to pay the indirect taxes of the country in which he is living. On the whole, in the Colonial Empire the percentage raised by indirect taxation is higher than it is in this country. I admit that the Chancellor of the Exchequer is raising an increased percentage by indirect taxation here; but it is surely quite wrong that an officer who is paid out of the United Kingdom funds has to pay high indirect taxation on the spot and very high direct taxation merely because he is paid from the United Kingdom Treasury.
    The third reason is the one given by my hon. Friends, and it is that we have to make up our minds now whether we want to encourage the best type of young officer to go into this service. If we do,

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    then we must not penalise him when he goes. I hope that for these reasons, the Government will be prepared to grant this concession, which cannot cost the Treasury very much.
    The Minister of State for Economic Affairs (Mr. Gaitskell): The problem which has been raised by hon. Members in connection with this new Clause really springs from an Income Tax principle which is well-known and has been established for a very long time, namely, that all servants of the Crown who are paid out of moneys from the Exchequer should be liable to United Kingdom Income Tax under Schedule E. That was enshrined in the 1918 Income Tax Act, and I think we should be careful before we throw away that principle.
    I am not saying that its application in all instances has not given rise to difficulties, but I shall deal with those in a moment. We should remember that it is a principle laid down which has been accepted by every Government since, and we must be careful before we make any major departure from it. The new Clause proposes to exempt from this principle and, therefore, from the necessity of paying United Kingdom Income Tax, members of the Colonial Forces or of the Ghurka Brigade and includes in their numbers members of the Armed Forces of the Crown who are serving on their establishment. I think that sums up the new Clause.
    The first thing we have to do is to see what would happen if the new Clause were passed in this form. Although I appreciate that hon. Members opposite may from time to time be a little irritated when the Government produce anomalies which result from proposals they make, a moment's consideration will show that we have to be careful if we make a change not to make the position worse by creating additional anomalies. We want to try to find some solution which does not do that.
    I submit that the new Clause would in fact create additional anomalies for these reasons: In the first place, it draws a line between the Armed Forces of the Crown and civilian employees. Clearly, so far as the application of this Income Tax principle is concerned, civilian employees are in just the same situation as the local officers of the Colonial Forces
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    taken over by the War Office. I do not think that we can deal with the problem on the basis of the military employees only. One has only to think of the employees of some of the Royal dockyards in the Colonial Empire to see that they would clearly be in an adverse position compared with those covered by this Clause.
    8.0 p.m.
    In the second place, I should have thought it would give rise to a good deal of feeling on the part of British officers serving with United Kingdom units under precisely the same conditions as other officers seconded to the Colonial Forces. The latter, of course, would get the benefit of not having to pay United Kingdom tax, whereas their fellow officers who happen to be with a United Kingdom unit in the Malayan jungle doing the same work would be still liable to United Kingdom Income Tax. I appreciate that the hon. Member for Blackpool, North (Mr. Low), asked me not to use this argument because he would like to see them helped as well, but we must have regard to the consequences. It is no good making a change of this kind if it leads to a great deal of grievance and unsettlement among other people in the Armed Forces.
    Mr. Mott-Radclyffe: While it is true that British officers with British units serving in Malaya are fighting under similar conditions to British officers seconded to the Ghurkas, their conditions of service are slightly different.
    Mr. Gaitskell: They may be slightly different, but a change of this kind would lead to the comparison being exceptionally unfavourable to British officers still with United Kingdom units. The circumstances would differ, but they are both entitled to the same local colonial allowances, and although there may be some unevenness, I do not think the position would be improved by the Clause. This does not mean that we are satisfied with the present situation. There are undoubtedly some anomalies, but it does not seem to me that we have reached the heart of the problem by drawing the particular line that this Clause does between Service men and civilians, on the one side, and Service men serving in the Colonies and those serving with United Kingdom troops, on the other.

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    In this matter of taxation at United Kingdom rates, the real issue is not so much whether or not the individual is serving in this way or that, but whether or not the pay he receives can be described as United Kingdom pay or local pay. That is a real principle of distinction we can apply. Perhaps I might put it like this, in what I describe as a new principle. Any servants of the Crown, whether service or civilian who are paid at United Kingdom rates, which are fixed as the proper remuneration for people who have to pay United Kingdom rates of Income Tax, ought to bear United Kingdom tax.
    I know that this will not meet some objections of Members opposite, who will claim that almost anyone working in the Colonies for rite Government should have the same concession. We cannot, in my view, make a concession of that kind. We draw this distinction between the principle on which their pay is based. On the other hand, those who are paid at local rates of pay, fixed according to the wage rates of the overseas territory concerned, ought not to pay, in respect of their British tax liability, at more than they would pay at the local rate. That is a principle we ought to apply, which seems to me to be a fair principle.
    The problem only arises in connection with the latter class, that is to say, those whose rates of pay have been determined by local conditions. If that be accepted, the question is how we can put this into operation. There is no doubt that there are some cases where the present legal liability conflicts with the principle I have explained. There are, I think, three ways in which we can deal with the matter. In the first place, we can no doubt raise the rates of pay for the individuals affected above the local rate to take account of the fact that they are paying United Kingdom Income Tax. That would be a very difficult thing to do administratively. One can understand that it would lead to a lot of misunderstanding about these rates of pay being above those rates of pay of persons not liable to Income Tax. Secondly, there is the possibility of amending legislation. Here again, there are certainly difficulties. It is not going to be at all easy to find a simple way to deal with those persons whose pay is settled on a local basis. On the other hand, we have not by any
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    means ruled out the possibility of legislation, and we shall continue to see whether that is necessary and possible.
    The third method is administrative. To some extent, as a matter of fact, it is now in operation, that is to say, in a number of cases the employing Department have charged under P.A.Y.E. employees affected at the local rates of taxation and paid the Revenue authorities the extra amount to bring it up to United Kingdom Income Tax. The difference, of course, is charged on the Vote of the Department concerned. That has happened in a number of cases, and it offers a short-term method of dealing with the problem. I would propose to the House that, as far as the immediate situation is concerned, this is the best way to handle it. If the principle I have enunciated is accepted, then we would apply it at once everywhere. We would have each case examined and meet it on the basis I have indicated, namely, by the Department concerned charging only the local rate of income tax and making up the difference to the Revenue by taking an additional charge on their Vote.
    Mr. Low: Does the right hon. Gentleman mean by "pay at the local rate" pay at the United Kingdom rate plus or minus a smaller or larger local allowance, or must it be overall pay at the local rate, rather than pay influenced by allowances.
    Mr. Gaitskell: I think it is the latter. What I have in mind is not just the case of anyone who happens to be serving in the Colonies with a colonial allowance. Take the civilian case of the dockyard employee in Malta who is taxed at the United Kingdom rate, although his salary is fixed according to local conditions. Against that, the seconded officer would not be covered by this, because he is paid and continues to receive the pay of the ordinary British serving officer with the colonial allowances his colleague gets when he happens not to be seconded to the Colonial Forces.
    Mr. Gammans: I am not sure that I understand the position. Let me take the analogy of the dockyard employee. Do I understand that if a man went from Portsmouth dockyards, where he was receiving £10 a week, to Malta, where he would receive £10, he would not come under this proposal, but that he would

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    if he received only £8? Surely, the point is that he would not go to Malta if he received only £8.
    Mr. Gaitskell: It is obviously extremely difficult to answer every individual case in advance. If a man goes to Malta and is simply seconded and special arrangement were made, I would not say he was in a position to claim special treatment. But if he happened to be paid on the Malta scale, but was nevertheless charged at United Kingdom tax rates, that is an anomaly which we are prepared to put right.
    Mr. Gammans: But the man would not go abroad to a job unless he were getting at least the equal rate he was getting when at home. Take again the case of the dockyard worker. If he were getting £10 a week in Portsmouth he would not go to Malta for £8. Therefore, the right hon. Gentleman is not giving anything at all.
    Mr. Gaitskell: I am not concerned with whether people go there for less or not. What I am saying is that in the case of the dockyard worker, if he is paid at local rates and charged tax under the United Kingdom law, certain anomalies exist, and we must deal with it on that basis. I cannot make a general adjustment by saying that anyone working in the Colonies should be entitled to this, that or the other. That is not a sensible method of procedure.
    Brigadier Prior-Palmer: I quoted a list of extra-statutory war-time concessions, which in 1941 were given by the Chancellor of the Exchequer for this very reason. They went on until 1st April, 1947. If that were just to the end of the war and up to 1st April, 1947, why has it not continued, and why was the War Office circular letter ever issued? If it had not been issued this would never have happened.
    Mr. Gaitskell: It was a wholly exceptional procedure adopted during the war because of the necessity for the War Office to take over these troops, and, therefore, for the time being they had to be charged on the local rate. They are the sort of people who would be touched by this proposal. Their rates of pay would be settled by local additions as they would have been before.
    Mr. Low: As they would have been before?
    Mr. Gaitskell: Yes, unless there has been a change in the meantime.
    Mr. Mott-Radclyffe: Does the right hon. Gentleman really mean that in certain circumstances what are really called local overseas allowances, which are subject now to United Kingdom rates of tax, will in future be subject to rates of tax prevailing in the particular Colony?
    Mr. Gaitskell: No, it is according to whether or not the salary or wage of the individual concerned is settled on a local basis, and, having regard to the local conditions instead of being settled in accordance with United Kingdom conditions.
    Mr. Wigg: But has my right hon. Friend not overlooked the fact that the money of a Colonial officer even before the war was eventually recovered from the revenue of the Colony before he was seconded? The same thing happens now, only the War Office happens to be the collecting agency, whereas before the Colonial Office was. It all goes back to the fact that the money is borne on the revenue of the Colony concerned?
    Mr. Gaitskell: I have already tried to explain that I cannot see there is any ground for distinction between the case of the officer seconded locally and the officer serving in the Colony in the Army. Both receive a rate of pay based on United Kingdom rates.
    Mr. Wigg: Obviously I have not made myself clear. Take the case of officer A. In 1938 he was seconded to serve in the Gold Coast, and when he was seconded the Colonial Office got the money from the Gold Coast revenue and passed it across to him. When the same officer is now seconded, the War Office is the collecting agent. The present method may be just the same, but he is now taxed at United Kingdom rates, whereas he was not so taxed in 1938.
    8.15 p.m.
    Mr. Gaitskell: I am not sure that I follow my hon. Friend in this matter. We are not really concerned with what was the position in 1938. We are concerned with trying to clear up a difficult situation, which has arisen since 1947. We cannot spend the whole of the evening going into the history of this matter and trying to find a solution.

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    I should like to say a word about the Gurkhas, mentioned by the hon. and gallant Member for Perth and East Perthshire (Colonel Gomme-Duncan). As he must know, the Gurkha Brigade used to be employed, paid and taxed by India, before the transfer of power. A number of units were then transferred to the British Army and their members, in accordance with the general principle, were chargeable under Schedule E in Common with all ranks of the British Army. The British officers of the Brigade received their rates of pay and allowances, and so far as they are concerned I would claim that we cannot make a distinction between them and other officers in the British Army serving overseas.
    On the other hand, the Gurkha officers and other ranks are paid at rates derived from India, where other Gurkha formations continue to serve with the Indian Army. To this is added a local addition. Therefore, there we had an anomaly. Officers and men, who have been previously paid at Indian rates of pay, are now liable to United Kingdom Income Tax, and in order to make that up local additions are now being paid, but I would not say that the local additions meet the situation.
    There is one additional complication. There is an agreement between the Governments of India, Nepal and ourselves that parity must be maintained between the emoluments paid to the Gurkha service man no matter what Government he serves. We have to make some special ad hoc arrangement. What we propose to do is to re-examine the position immediately in the light of our agreement with India and the new principle I have tried to explain, and if any adjustment is found necessary we shall make it in the way I have explained by administrative action.
    Colonel Gomme-Duncan: I am very grateful to the right hon. Gentleman so far and I hope it will be successful, but I should like to draw his attention to the fact that the British officer in the Gurkha Regiment is not on a parity so far as terms of service with British officers serving in other units are concerned. He is with the Gurkhas for life and the other fellow comes home. It makes an enormous difference.
    Mr. Gaitskell: It is difficult to draw that particular line. It may be that each officer in each of these formations does not get exactly what he ought to in relation to every other one, but I do not think that that is sufficient grounds for making the tax distinction which it is suggested should be made. On the other hand, I have explained—and it is an illustration of the general principle that I have put forward—that the Gurkha officers and other ranks themselves have had their pay based on Indian rates and this adjustment is reasonable. We do not want to exaggerate the inequalities, but I have said sufficient to show that we are aware that anomalies exist.
    It is also quite clear that this is an extremely difficult matter with many complexities and ramifications running throughout the whole civilian and military spheres. What we shall have to do, as I said earlier, is to examine all these various cases by one means or another, and particularly by the method of administrative action, and make appropriate adjustments. Incidentally, we shall have to take care about double taxation.
    I am not saying that this administrative device is one which is an appropriate one to continue with indefinitely. Quite frankly, I do not think it is very satisfactory that a legal liability should be removed by the device of the employer. It is perfectly legal for a Government Department to pay an employee's Income Tax or part of the Income Tax and then refund the revenue out of its Vote, but it is rather clumsy and not a very satisfactory arrangement. If it were to be made permanent it is something which ought to be brought specifically to the knowledge of the House to secure their approval. It may be that amending legislation would be possible and be the satisfactory answer if we can find the right sort of formula.
    I hope that in the circumstances the House will feel that so far as these taxation anomalies are concerned we have stated a principle which is a reasonable one. I am quite aware that this does not meet the point that some hon. Members have made, which is very big and wide, that, in fact, the pay to persons in the Colonial Forces is not adequate. That is

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    what they are really saying. [HON. MEMBERS: "No."] So much the better, if that is not so, but some of the speeches certainly led me to suppose that that was in hon. Members' minds. This is a practical answer to a difficult problem, but it does not provide an altogether satisfactory solution, and in the circumstances I hope that the hon. and gallant Member will withdraw his proposal.
    Captain Crookshank: It is for my hon. Friends, who are much more versed in this topic than I am, to express their views about the last sentence in the right hon. Gentleman's speech, but it seems to me that he is going about such reforms as he wants to undertake—I do not say whether I think they are right or wrong, because I have not studied them in so much detail—in a very strange way. He starts his speech by enunciating a new principle of taxation. Following from that, he proposes by administrative action to give effect to it. For the House of Commons to legislate about taxation in that way is extremely novel and extremely undesirable. Enunciating a principle does not get us anywhere. If we are to change the basis of taxation, surely this House is the only body which can do it, by some form of formal resolution, if not by a Clause in some Statute. It just cannot be done on the ipse dixit of a Minister—"We are changing the principle of taxation."
    Mr. Gaitskell Mr. Gaitskell indicated dissent.
    Captain Crookshank: That is what the right hon. Gentleman said.
    Mr. Gaitskell: I was trying to meet the hon. and gallant Gentleman who moved the proposed new Clause and who particularly asked for the matter to be dealt with by administrative action. I said that we must have a principle upon which to base the administrative action.
    Captain Crookshank: I should hardly think that my hon. and gallant Friend proposed only administrative action, since he moved the Second Reading of a new Clause, which is the statutory way of doing it. It seems wrong to say that we are to change the principle of taxation just because a Minister says so. Generally speaking, I am averse from making taxation changes by administrative action because that tends to lead to more and more anomalies. The right
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    hon. Gentleman said that the position is very anomalous and he instanced the case of civilian employees in Colonial Territories. The proposed new Clause has nothing to do with civilian employees. We are talking only about a comparatively small number of persons, as Mr. Speaker said when he read out the title of the proposed new Clause, obviously intending the discussion to be on a very narrow basis.
    Whether it would be a good idea to accept the Minister's proposal for doing it by administrative action I must leave to my hon. Friends, but I say that if there are to be changes of this kind, changes in a basic principle of taxation upon overseas allowances, sooner or later it must be done by legislation. It may be that the matter has been left so late this year that we cannot do it in time and cannot have a Clause in the Finance Bill. Sometimes a temporary advantage must be accepted, but not at the cost of regularising the matter in the long run.
    I would add one sentence upon the case which the right hon. Gentleman was making as he sat down. He tried to make out what it seemed to me is quite incapable of being made out, that there was no difference between British officers serving in the Gurkha Brigade and British officers serving in the Army overseas. There can be no similarity because, ex hypothesi, unless I am wrong, the idea of the Gurkha Brigade was that it should always serve overseas. I do not think it was ever suggested that they should serve in Great Britain. On the other hand, British officers serving overseas do not have so much time in England as they used to have when there was a larger Army, but the time to serve in this country does come. The situation in those two cases is not a bit alike. It is not for me to say what action my hon. Friends should take, but whatever action they take I ask that in the end it should be regularised by legislation.
    Mr. J. Enoch Powell: It would be unreasonable not to recognise that in regard to Forces paid on Colonial scales the administrative device which has been put before the House by the Minister of State goes some distance to meet what hon. Members had in mind in putting the proposed new Clause in the Order Paper. On the other hand, his remarks seemed to miss

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    the main point of the Clause. The right hon. Gentleman argued that to accept the principle of the Clause would create anomalies as between serving soldiers or officers and civilian employees, and as between officers seconded to the Colonial Forces or belonging to the Gurkha Brigade on the one hand and officers of the United Kingdom Forces on the other. That is true; but the fact that this Clause is, in a sense, special pleading is not an argument against it. We accept that it is special pleading, because we believe that there is a special case for officers and men of the Forces involved.
    My hon. and gallant Friend the Member for Worthing (Brigadier Prior Palmer) drew attention to the future importance of the Colonial Forces, which is of quite a different order from what they possessed in the past. It is impossible to overestimate the potential value to Britain's future military position of the Colonial Forces. Whether they have that value or not and whether they can serve in future as a replacement of what we have lost in the Indian Army will depend almost entirely upon the calibre of the officer material attracted and maintained by those Forces.
    The great strength of the Indian Army in the past was the strong and lasting attraction for the best of British manpower which it exercised. Unless the Colonial Forces and the Gurkha Brigade in the future can retain that attraction they can never fulfil their function. Tradition undoubtedly played a very great part in the past in attracting the right type of officer. There were the families to which Kipling referred, following one another out to India, generation after generation, "like dolphins following one another out to the open sea." The fact remains that there was a very real and very sensible financial attraction to Colonial and Indian soldiering. Unless that financial attraction is maintained in respect of the Gurkha Brigade and the Colonial Forces, we shall not be obtaining the manpower which we must have.
    The present position is that, so far from the officer who accepts secondment to those forces, or who volunteers to join the Gurkha Brigade, being in an advantageous financial position, he is at a financial disadvantage. The effect of this
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    is even more serious when we realise that in the case of the Colonial Forces a strong tradition has never been built up and in the case of the Gurkha Brigade it has been in part broken. It is incumbent upon us to take whatever measures may be necessary to retain the financial differential and the financial attraction of service in the Colonial Forces and in the Gurkha Brigade. I hope, therefore, that the Government will not dismiss the method proposed in this new Clause on the ground that it constitutes a kind of special pleading. It is a special pleading to which we ought to listen.
    8.30 p.m.
    Mr. Alport:As I understand the practical effects of the principle enunciated by the right hon. Gentleman, it comes to this; that so far as an East African unit is concerned, for example, African warrant officers, noncommissioned officers and other ranks who are paid on colonial levels of pay would not in any circumstances be subject to Imperial Income Tax but the British officers and British N.C.O.s who derive their pay codes from this country would, in all circumstances, be subject to Imperial Income Tax. If that is so, it appears to me that the right hon. Gentleman has missed the fundamental point of this new Clause.
    Before the war, it was the custom of British officers not merely to be seconded from the British Army but to enter into a contract with the Colonial Office and the colonial Governments concerned to serve in what were then regarded as their Forces. That had an important psychological effect. Instead of looking over their shoulders continually at the rate of promotion of colleagues in their own home regiments and at the increased opportunities of their comrades at home for training and staff employment and various other advancements in their profession, they regarded themselves as the servants of the Colony concerned, and they gave to those colonial regiments whole-time and whole—hearted service.
    The result was that during the late war the existence of this small nucleus of men who had served as colonial soldiers, not merely as British officers and N.C.O.s seconded to colonial units but in high comradeship with African warrant officers, N.C.O.s and men, made it possible for the Colonial Forces to fulfil the

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    expectations we had of them. The solution of this problem seems to me to be to institute a system whereby the officer is not seconded but is under contract to the Colonial Office or the colonial Government concerned, and that he should serve as a citizen of the Colony concerned, so to speak—that he should be subject to a contract which would give him a rate of pay of his own, and would also be subject to the Income Tax of the Colony in question. In that way men would be encouraged to prolong their service with colonial units, which is essential to ensure efficient officers and N.C.O.s for the Colonial Forces. I do not see why any administrative alteration or juggling is necessary. It could easily be based upon the contract entered into between the British officer or N.C.O. and the Colonial Office or the colonial Government concerned.
    The next point which the right hon. Gentleman raised was the possibility of feeling arising between the officers in the colonial military services and officers serving next door to them and being paid the British rates of pay and being subject to British Income Tax. I served on Imperial rates of pay and subject to Imperial Income Tax side by side with officers in the same unit who were being paid colonial rates of pay and were subject to colonial rates of Income Tax. There was no sign of feeling whatever between the two categories of officers concerned. We felt that the additional experience and qualifications which the colonial officers could bring to a colonial unit fully justified any advantages which they might have in their rates of pay.
    It seems to me to be wrong that the United Kingdom, merely because it is convenient to pay from United Kingdom funds the officers serving with the Colonial unit, should take from the Colonial Governments the advantage of Income Tax which should properly go to them. After all, by paying those serving with colonial units the United Kingdom Government are merely passing on the money paid to the United Kingdom Treasury by the Colonial Governments, which was the point made earlier by the hon. Member for Dudley (Mr. Wigg). At the present time the colonial Governments are paying, I believe, 125 per cent. of the contribution which they made before the war for the maintenance of military
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    forces in the Colonies concerned. Why should the United Kingdom Government not only take that additional contribution but take the benefits of the Income Tax which before the war would have been paid to the Colonial Government?
    I suggest, therefore, that not only does the principle of taxation enunciated by the right hon. Gentleman not apply in this particular case, but also the interests of the Colonies and of this country are bound up with the acceptance of this Clause, because without it I very much doubt whether we shall be able to revive in the Colonial Forces that spirit which, in 1939, stood us in such good stead.
    General Sir George Jeffreys: I fear that this is one of those cases in which the British officers and N.C.O.s. will be placed in a worse position than they were in before the war. In speaking of colonial service the right hon. Gentleman mentioned Malta and also the possible pay and conditions of a dockyard worker in Malta. The Clause put down by my right hon. Friends speaks of members of the Armed Forces, and I do not know what a dockyard worker has to do with the Armed Forces so far as membership is concerned.
    Malta is a very different place as regards conditions from, shall we say, West Africa or East Africa, or Malaya, or various other Colonies; and they are difficult to compare. East and West African troops, who are perhaps the most numerous classes of colonial troops at the present time, were formerly paid by the Colonial Government. Officers were seconded for service with them, and were not liable to British Income Tax. It was not only because they were keen soldiers that a great many young officers went to East and West Africa. It was very often from motives of economy. They went because they found it hard to live in this country. In West Africa they received higher pay, they did not have to pay British Income Tax, and they found living cheap and expenses few, even though conditions and climate were less pleasant.
    Now African troops are paid by the United Kingdom and the cost of living in the Colonies has increased enormously, even in West Africa. Although certain overseas allowances are issued, there is very little chance of economy for officers,

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    and in addition they are liable to the United Kingdom Income Tax on their pay and their overseas allowances. What attraction will service in these Colonies offer to such officers in the future? How shall we get sufficient officers of the right type to go out when no attraction is given them?
    Another point I consider important is that they do not get, so long as they are serving in the Colonies, any of the benefits which are supposed to accrue to a taxpayer in the United Kingdom. I hope that the right hon. Gentleman will think again and instead of taking two bites at the cherry he will swallow it in one bite and accept this new Clause. It would be reasonable, it would not cost very much money, and it would put officers and non-commissioned officers on the same footing as that they occupied before the war in Income Tax matters.
    I should like to say a few words about the Gurkhas. Formerly they were a corps d'élite of the Indian Army. It was a splendid service, but it entailed long years of service in India with infrequent periods of home leave. Pay and allowances were the responsibility of the Government of India, as were the pay and allowances of officers of the British service in India before the war. Consequently they did not pay British Income Tax on their pay and allowances. It was a splendid service but, in much the same way as those in West Africa, they enjoyed no benefits, and they enjoy no benefits now from British taxation. They get none of the amenities or privileges which accrue to the British taxpayer in this country, and they get very infrequent periods of home leave. Their service in present conditions is still all overseas as it was before.
    They are still splendid troops but they are no longer part of the Indian Army which in the past, with its British headquarters and its friendly influence close at hand, was of very great use to them. Now they are far out of sight. I hope that they are not out of mind of the War Office. They get as little leave as ever. They have no large and friendly headquarters close to them, and they have the privilege of paying these appalling and crushing taxes which afflict the people of this country but for which the people
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    at home are supposed to get some privileges and benefits in return.
    I hope that this distant detachment of the British Army, far from London and the eyes of the War Office, far from the amenities of home, and living in climates which are not always the sort of climates which right hon. and hon. Gentlemen would like to live in, will not be forgotten. Although they are paid by the United Kingdom, it would not be unreasonable for them to be placed upon the same terms as they had before the United Kingdom scuttled out of India and left them serving under very different conditions.
    Brigadier Prior-Palmer: I beg to ask leave to withdraw the Motion, but I do it with great reluctance and a certain amount of trepidation. I do not believe that the Treasury realises, as the Minister of Defence realises, the vital importance and urgency of this matter. I have put Questions down over two years. It is wrong that the Minister should not have produced a new Clause himself to cover the remarks he made. However, we shall watch carefully the administrative action he takes.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(BALANCING CHARGES ON INSURANCE PAYMENTS)
    Subsection (3) of section seventeen of the Income Tax Act, 1945, shall be amended by the substitution of the word "occurs," for the words "is due to a war risk connected with any war in which His Majesty is engaged at the date of the passing of this Act, or to the carriage, in connection with any such war, of explosives or other dangerous cargo in a manner which would be abnormal in time of peace, then whether the loss occurs before or after the conclusion of, or of hostilities in, that war."—[Mr. Maudling.]
    Brought up, and read the First time.
    8.45 p.m.
    Mr. Maudling: I beg to move, "That the Clause be read a Second time."
    The wording of this new Clause is necessarily obscure. I hope that I shall be able to make the purpose of it clear very briefly. In the Income Tax Act, 1945, a system of balancing charges was instituted, the effect being that, if a company parted with a capital asset for a sum greater than the written-down value of that asset in the company's books, then a charge, amounting to the difference between the two values, should be imposed

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    on the company and tax levied on that amount. An exception was made in Section 17 (3) of the Act, and the provision did not apply to insurance proceeds in cases where a ship was lost as a result of the last war and hazards resulting from the termination of hostilities in the last war. The object of this new Clause is to extend the exemption from the balancing charge to all insurance proceeds which arise when a ship is lost from marine risk.
    The theory behind the balancing charge and the balancing allowances is quite clear. It is that, if the asset when the company sells it fetches more on the market than its written-down value for Income Tax purposes, obviously excessive depreciation has been allowed beforehand, and the tax authorities are entitled to levy a charge which balances that up. I think the general principle of the balancing charge in the case of the sale of assets is fairly well-known and generally accepted, but when it comes to applying this principle to insurance proceeds, rather different considerations arise, and certainly in practice very different considerations do arise.
    I read the other day of a very striking case which was quoted by Sir Ernest H. Murrant, Chairman of Furness Withy, concerning a ship built 24 years ago at a cost of £206,000, which was lost from marine risk last year. As it had been afloat for over 20 years, the company had been able to write off pretty well the whole amount of the initial cost of the vessel, and in doing so over the years had saved tax to the extent of £69,000. When the vessel was lost, it was insured for roughly the same sum as its initial cost, that is, about £200,000, and therefore a balancing charge arose on the whole of the insurance proceeds. That balancing charge amounted to £92,000, so that in effect, on the loss of that ship, the company were faced with a balancing charge which was £23,000 more than the amount they had already gained in tax remission through depreciation allowances. On top of that, after a large part of their insurance proceeds were taken for the balancing charge, they found that to build a ship of similar tonnage to replace the one lost would cost them an additional £650,000. These figures are really staggering, and the position of shipping companies faced with the loss of an important vessel and with the enormous cost of replacement is obviously very serious.
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    It will be argued by the Government spokesman that that applies equally to all companies which have to replace their assets as the result of sudden accidents or perhaps of inflated capital costs, but there is surely a different argument regarding the position of shipping companies. The position partly results from differing rates of taxation in the past, which means that depreciation allowances have been granted at a time when the rates of tax were lower than at the time when the charge arose. That is one reason. The other reason is the increasing cost of capital equipment. I suggest that, in the case of the loss of a ship through marine accident, special considerations arise. I want to put forward four arguments in support of that contention.
    In the first place, it was recognised in the Income Tax Act, 1945, that in certain cases the insurance proceeds on the loss of a ship should not carry the balancing charge, and an exception was made in the cases of ships lost in the last war. The second point is that there is no other industry of which I can think where the amount at risk at any one time is as great as it is in the case of a shipping company running two or three large liners. The amount of capital at risk in each case is quite enormous. Very often, almost all the assets of such a company are in one or two ships. The loss of the ship can fairly be compared only to the total destruction by fire of a factory building with all its equipment, which surely is a much rarer occurrence that the loss of a ship. Therefore, there is an argument for saying that the loss of a ship involves a larger amount of capital for the company than does the normal risk of companies operating on terra firma.
    The third point is this: When a ship is sold a balancing charge has to be paid if the sale price is higher than the written-down value. But when a ship is sold, the company concerned has usually made plans two or three years ahead for its replacement, so that the new one is relatively ready to come into service and carry on earning money for the company. On the other hand, when a ship is lost no replacement has been prepared beforehand, and there may be an interval of two, three or four years before it can be replaced. That is the third reason why ships lost should be placed in a special category.

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    It is true that in many cases, owing to the risk of loss of earning power, the ship is insured for a much higher figure than its book value, and in some cases higher than its initial cost. I understand that it is the practice of shipowners to cover not only the loss of the ship, but also the subsequent balancing charge as well. That is a permissible insurance, but the premiums paid in respect of it are not allowable for tax purposes. I noticed the other day in the last published accounts of the Cunard Fund that the company had had to insure against balancing charges to the extent of £2 million over and above an insurance of £11,250,000 in respect of the actual ships concerned. Therefore, a shipping company, in order to replace its ship if lost, has to insure for a sum a great deal more than the book value or the initial value.
    That leads me to my fourth argument. It is clear that the money paid to a shipping company by way of an insurance payment when a ship is lost arises in respect of the contract of insurance, and not in respect of the money paid for the acquisition and operation of the ship. It is an entirely different form of payment. When a company sells a ship, it is selling the asset and recouping itself for the initial capital expenditure and subsequent maintenance of the ship. When it receives money by way of insurance proceeds, it is getting a return for the premiums paid.
    I suggest that is an entirely different matter, and I hope that the Chancellor of the Exchequer, with his fine appreciation of points of law or theory, will see that there is a difference between payment for a ship that is sold and payment in respect of a contract of insurance. It may be argued, if it is maintained that the insurance proceeds, arising as they do from separate contracts, should be free of tax, that the premiums cannot be a charge for tax relief as they are at the present moment. But surely that is not sustainable, for the reason that the payment of an insurance premium in respect of a ship is just as much part of maintaining the capital value of the shipping company's fleet as the paint put on it. The purpose of the payment in either case is to maintain the fleet of the company in being and to provide against loss, whether it be due to the use of the ship
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    at sea or the loss resulting from the sea risk.
    I put forward the argument for this new Clause on those four bases. I must confess that I do not expect that the Government will accept the Clause as it stands. I do not quite know what they are going to do with it. Perhaps they will tucker it away; this seems the convenient way of treating new Clauses on this Finance Bill. If they cannot accept the arguments, I ask the Government not to close their minds to them. The matter is of immense importance, and one could quote many examples of the difficulties shipping companies often face as the result of the operation of these balancing charges.
    It is true that most of our main shipping companies are doing well at the moment and earning a lot of money; but so are their competitors abroad. I fear that in many cases their competitors are able to put away into reserve a good deal more than our companies are allowed to do. As the House is aware, when more competitive conditions arise in future it will be the reserve position of a shipping company which is of vital importance in carrying on any competitive struggle that may arise. I therefore appeal to the Government, if they cannot accept this new Clause, at least to investigate it in the interest of the highly important shipping industry of this country.
    Mr. G. P. Stevens: I beg to second the Motion.
    The Clause was clearly proposed by my hon. Friend the Member for Barnet (Mr. Maudling). It seems to me that when Section 17 of the Income Tax Act, 1945, was framed the situation arising on the balancing charge from an insurance recovery on total loss of a ship was not entirely envisaged. The sort of thing that was in mind was a factory consisting of buildings, plants, machinery, also lorries and that kind of thing—and, perhaps, small ships, but certainly not a large liner—and the piecemeal wearing out or destruction, perhaps by fire, of those assets.
    In such a case the balancing charges or allowances would be spread over the years, and so the incidence of those charges or allowances, from time to time, would not be very heavy. But in the case of a ship we have the whole thing in one

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    piece; we have as it were the buildings, factory, plant and machinery all in one. The consequence is that when that single entity is lost the resulting charge has to be borne wholly in one year alone, instead of being spread over a number of years.
    I believe there are at present a certain number of single-ship companies and, certainly, a number owning three ships or less. The total loss of one ship and the insurance recovery with the following balancing charge must be very serious indeed for them. I must confess—and I feel this even more strongly after listening to my hon. Friend the Member for Barnet—that I fail to see the difference in principle between the loss of a ship in peacetime and the loss of a ship in any war in which His Majesty is engaged after the date of the passing of the 1945 Act. The result is exactly the same to the shipping company, whether the event has arisen out of war or out of conditions in peace time.
    No piecemeal replacement of a ship is possible. If a factory is destroyed entirely by fire it is perfectly possible for the owners to repair it piecemeal and to start production, first at one-quarter capacity rising by stages to half capacity and then to three-quarters. No such progressive return to normal conditions is possible in the case of ships. I do not think there would be many offers of a passage to Australia in one-quarter or one-half of a ship.
    The factory and the ship are on a completely different basis, and it seems to me clear that where a shipping company loses a ship, even where the loss may not arise out of war, the cost of replacement means very serious capital reorganisation, because not only is the cost of replacement very much greater than the original cost—that is inevitable in present circumstances—but, under present taxation, the balancing charge has to be paid. The consequence is that it is likely that capital will have to be raised on an uneconomic scale. It seems to me that there is clearly an injustice here. This Clause tends to remove that injustice, and consequently I support it.
    9.0 p.m.
    The Solicitor-General: As the hon. Member for Barnet (Mr. Maudling) said, this is a case which would fall within the
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    purview of the Tucker Committee's inquiry, and I think I am in a position to say that representations have already been made to that Committee on this point. No doubt, Mr. Tucker will consider them very carefully, and possibly his Committee will make recommendations upon them. In the meantime, I am bound to say that, subject to what Mr. Tucker's Committee may say, it does not seem to us as at present advised that a sufficient case has been made out for this new Clause.
    The special provision in Section 17 (3) of the 1945 Act was made in the circumstances that the war was still on. The war with Germany had come almost to an end when the Income Tax Act, 1945, was passed, but the war with Japan was still on, and it was represented that ships were still at risk whereas plant situated in this country was practically free from risk. It was because ships which were lost before the appointed day for that Act were not subject to a balancing charge whereas ships which were lost after that day were subject to a balancing charge, that this special provision was made. In those circumstances, I do not think it carries the matter much further to say that recognition has already been given in the Income Tax Act, 1945, that ships in this particular connection stand in a special position. That was so, but only because the war was still on and ships were therefore subject to risk, whereas plant and machinery at home were not subject to risk.
    The hon. Member for Langstone (Mr. Stevens) sought to distinguish the position of ships from that of other plant and machinery, and the hon. Member for Barnet quoted a case, which I believe was mentioned to him by the Chairman of Furness, Withy and Co., in which a balancing charge had been more than anticipated, but that was owing to rising costs and a differential taxation rate, as. He himself said. If and in so far as that is the case—and, of course, I accept from him what he says—it would be equally applicable to all types of plant, and that would not be a reason for giving preferential treatment to ships in the kind of way that this Clause proposes.
    Similarly the hon. Gentleman gave four reasons which he said differentiated the position of ships from that of other

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    plant machinery. The first reason he gave was that the fact that ships were in a special category was recognised in the Income Tax Act, 1945. I have already given what I submit is an adequate answer to that point. Another reason he gave was that insurance money was not really the same as money accruing from a sale of an asset. That certainly is not recognised in the drafting of the Income Tax Act, 1945, as being the case, because money arising from the sale and insurance money are treated exactly on the same footing, but if it is the case that there is such a distinction it is equally applicable in the case of ships and other plant and machinery. That would not be a reason for special treatment in the case of ships.
    The hon. Gentleman said that when a ship is at sea it represents an enormous value at risk to the concern which owns the ship. That may be so, but, after all, other concerns also have extremely expensive plant and premises at risk which possibly, owing to some misfortune may be destroyed. I should have thought—although Mr. Tucker's Committee may take a different view about this—that that of itself did not justify this special treatment being accorded to ships.
    I would also bring to the attention of the House the fact that the Income Tax Act of 1945 provides that where the owner of plant replaces it he can, if he wishes, have the balancing charge which is made on the replaced plant treated as a deduction from the cost of the new plant, with the result that he gets a smaller initial allowance on the new plant and smaller annual allowances because the cost is deemed to be less than in fact it was by reference to the deduction of the balancing charge. That was a Section inserted in the Act of 1945—Section 18—I think at the insistence of or as a result of representations by shipping interests. In the kind of case to which the hon. Member has referred it would considerably assist the shipowner, particularly in the kind of case mentioned to the hon. Member by the Chairman of Furness, Withy and Company where there was a very high replacement cost. No doubt to some extent that kind of case was in view when the Section was introduced.
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    Thus the Section in the Act of 1945 already provides some measure of relief for the difficulties which the hon. Member has described. In our view, therefore, the arguments advanced by both Members opposite do not afford a sufficient reason for distinguishing shipping and giving it this special preferential treatment.
    Mr. Maudling: I wonder if the right hon. and learned Gentleman would deal with one point which I raised. I mentioned the loss of earning power to the shipping company during the exceptionally lengthy period before the ship has been replaced.
    The Solicitor-General: I had dealt with that. I said that perhaps there might be some difference in the circumstances, but that that was the kind of situation which might arise in any concern. If a large factory or extremely expensive plant is destroyed owing to some misfortune, then the enterprise of the concern may be interrupted for a long period. The interruption may be very serious and lengthy. That is the kind of risk which may befall anybody who conducts a large-scale enterprise and it is not exclusively confined to shipping.
    I took that point into account in submitting to the House that there was not sufficient reason for this preferential treatment to be given to ships. As I said at the beginning of my argument, and as the hon. Member for Barnet himself said, this is a matter which is before the Tucker Committee. It may be that after considering it Mr. Tucker may make recommendations on the subject and I have no doubt that any recommendations this Committee may make will receive very careful consideration by the Government, although I do not know what he may say on the subject. In the meantime, I urge upon the House that no sufficient case has been made out for this new Clause.
    Mr. Maudling: In view of the undertaking which the right hon. and learned Gentleman has given that the recommendation of the Tucker Committee on this subject will be carefully considered by the Government, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(RELIEF FORENTERTAINMENTS.)
    There shall be added to section seventeen of the Finance Act, 1948, as amended by section eleven of the Finance Act, 1949, the following proviso:
    "Provided that where the Commissioners are satisfied that the average gross weekly takings received do not exceed one hundred and twenty-five pounds, entertainments duty shall not be charged even if the requirements of paragraph (a) of subsection,(1) of section seventeen of the Finance Act, 1948, are not met."—[Mr. Vosper.]
    Brought up, and read the First time.
    Mr. Vosper: I beg to move, "That the Clause be read a Second time."
    I shall not detain the House long on a matter which has been discussed earlier today, but this Clause refers to a specific category in the entertainments industry which, to my mind, suffers undue hardship at the moment and which was not fully covered by the new Clause moved earlier. I refer to the small man in the entertainments industry, the man who has a hall or cinema with a seating capacity not exceeding 400. The House will recall that in the Finance Acts of 1948 and 1949 provision was made to give complete exemption from tax in the case of small halls with a seating capacity not exceeding 400 in boroughs, urban districts or parishes with a population under 2,000 or, alternatively, riot exceeding 640 to the square mile. That has given tremendous encouragement to the entertainments industry in rural areas.
    It has at the same time, however, as the Chancellor well knows, created many anomalies. We have at the present day the example in two towns in a certain county, one of which qualifies under this provision for complete exemption while the other pays the full rate of tax, with the result that all those in the adjacent area are drawn to the cinemas or halls with the lower rate tax, which can put on better shows. Again, we have the case of a hamlet which is, in fact, part of an urban district—but in all other respects is a village—and, therefore, does not qualify for this exemption. There are many examples of anomalies known to hon. Members. This Clause is designed to remove this anomaly by extending exemption to all halls and cinemas provided the takings do not exceed £125 a week. There are some 250 in this category.
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    Apart from the anomalies under the present legislation, these establishments at the moment have suffered a very great increase in their costs. They have, during the past 12 months, had an increase of 7 per cent. in their wages costs. They have had a 10 per cent. increase in other costs. Unlike the larger cinemas or larger halls, they have during the last 12 months suffered a decrease in attendances and a fall in takings of some 8 per cent. Naturally, it is the smaller people who suffer when there is a falling off in admissions, and they also suffer proportionate increases in costs.
    Since tabling this new Clause, I have had over 100 letters from the owners of such buildings. They all tell much the some story, and they all come from the owners of the family businesses. I have no reason to doubt their sincerity, and many of them, in fact, are borne out by facts and figures which tell their own tale. Some of these places did show a loss in the year 1949. Many more will show a loss this year despite the introduction today of reduced rates, and none of them are making a sufficient margin to pay for the repairs that are necessary, to pay for any improvements that are necessary; and, most serious of all, they are not making a margin sufficient to provide a decent living for their owners. They have no alternative at the moment but to carry on and try to put more capital into their businesses. They cannot reduce costs because the wages are fixed for them and other costs are limited by licensing regulations. They cannot raise prices, because if they were to do so, they would drive away the attendances they have at the moment.
    Mr. Leslie Hale: I wonder whether the hon. Gentleman will explain one thing which I do not understand, as I want to understand the new Clause. Suppose in a small village there are two adjacent cinemas or places of entertainment with a seating capacity of 200 each. Suppose one place of entertainment puts on a good show and takes £150 or £160 a week, and suppose that the other place of entertainment puts on a very had show and takes £110 or £120. Is it the hon. Gentleman's proposal to exempt the inefficient show from tax and tax the efficient one? Or what is the proposal?
    Mr. Vosper: I suggest that the point the hon. Gentleman raises is a purely

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    hypothetical one. If we introduce this concession it will encourage efficiency in both halls, I think. At the moment the owners of these places, if they put up their prices, will drive away the attendances they have; and in any case, under present conditions, they have to pay half their takings to the Exchequer. The only alternative left to them is to shut up shop, which many of them probably should have done some time ago. They have been carrying on in the hope that something in the way of relief would be forthcoming, but I do not think that the reduction in duty we have had early today will be sufficient to encourage them to carry on much longer.
    9.15 p.m.
    It may well be that they are an uneconomic proposition; that they are providing surplus entertainment capacity that we do not need. If that is the case, it is much better to be honest about it and to say to them "We do not need you "rather than, as at the moment, encouraging them to go on a little bit longer in the hope that something will be done for them. Many of the instances I have in mind are very well known to the Chancellor and to other hon. Members. The cases I have had represented to me are evenly divided between constituencies on both sides of the House. All these people say that, despite the recent reduction, if something is not done soon they will have to close down.
    I understand the administrative difficulties, and the argument that this rural concession has gone as far as it can go, and that if we were to continue increasing it there might be no limit. I suggest that it is possible to get over the difficulty. We should be able to make provision to enable these small places of entertainment to play their part in our life and to earn a living for their proprietors. If the limit of £125 gross per week is not a possible one, I am sure that we can arrive at some possible alternative. In the Finance Bill Debate last year the Chancellor said, when pressed on a similar proposal, that he would watch matters closely. I hope that watching matters closely does not merely mean that as we have had an over-all reduction the case has been met, because, even though these men will benefit as to the larger part of the recent reduction,
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    I do not believe that their case has been met to any appreciable extent, and if we are to keep them in business, as I believe we all want, we must do something further to implement the pledge given. I ask the Chancellor to consider this matter further, and to do something for these small men, who are very often the pioneers of the entertainment industry.
    Mr. Arbuthnot: I beg to second the Motion.
    In seconding this Motion, so sympathetically moved by my hon. Friend, I should like to draw attention to one special set of people. We have already accepted the principle that the small man in the cinema industry is deserving and needs such assistance as we can give by relief from taxation. But to give the relief in the form that it is given today—that is to say, by exempting cinemas with fewer than 400 seats, or exempting cinemas in the sparsely populated areas—does not cover the whole position.
    I wish to draw attention tonight to those cinemas operating in areas which are slightly above the population standard that brings exemption, but in which, although above that population standard—that is to say, they have more people in the area—the shift system largely operates. In those areas it will mean that, however good the show that the cinema proprietor puts on, he will not be able to draw the audiences which will enable his cinema to pay. For that reason I feel that there should be some standard over and above the seating capacity and the population limit which would allow the small man in the cinema industry to be given the exemption which this House has accepted in principle as his due.
    Mr. Jay: I think that we all realise that some of the small cinemas and halls have been faced with a special problem. We have taken two important steps that go a long way towards meeting that problem. First, by the Finance Act, 1948, as the hon. Member for Runcorn (Mr. Vosper) recognises, we exempt from Entertainments Duty altogether a cinema or other entertainment—because it was not confined to cinema entertainment—in buildings seating not more than 400 persons in rural areas. That was not mainly an attempt to assist cinemas as such, and I think that it is rather illogical to extend

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    the argument in the way in which the hon. Gentleman is now extending it, and to make that a case for giving similar relief to small buildings catering for entertainment in other than rural areas.
    The real purpose of that exemption was to give assistance to entertainment in rural areas. The case for doing so was partly because it was felt that rural areas and small villages had not the same facilities for variety of entertainment as the larger towns, and, secondly, because the provision of entertainment in areas of that kind and in villages is in various ways more expensive. Therefore, we were seeking to help the rural areas for that reason, and that argument does not justify the extension which is now being requested. Indeed, as in many of these cases, a concession of this kind is immediately made a pretext for pressing the Government to go one further.
    Mr. Vosper: The point I made was that this concession resulted in the disparity between those now exempt and those who now pay the full tax.
    Mr. Jay: The anomalies which would follow from the hon. Gentleman's proposal would be considerably worse than those which now exist at the border line. For instance, on his proposal, as I understand it we could have a cinema in the street of a large town, seating just over 400 people, which would pay Entertainment Tax, and another cinema nearby, seating less than 400 people, which would be exempt from tax. I should have thought that it might be argued that that was a worse anomaly than even those that now exist.
    That was the first contribution which the House made two years ago to this problem. Secondly, of course, in the scheme announced by my right hon. Friend the President of the Board of Trade last week, and the new Clause which he moved today, we have made a very substantial concession to the small cinemas. By this new concession we are abolishing Entertainments Duty on seats up to and including the 7d. seats and reducing it by a 1d. on all seats above 7d. and up to and including 1s. 6d.
    In the smaller cinemas, there is a higher proportion of cheaper seats than in the larger cinemas; therefore this new concessions is in itself of considerable benefit to the small cinemas both in rural and
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    in other areas. Indeed, it could be argued that it is generous in that respect to the exhibiting as opposed to the producing side of the cinema industry. It was partly because we recognised that the smaller cinemas have not found things very easy economically in the last year or two that we felt that was justified. Having made both these contributions to this problem, we do not feel that there is any justification for going further at this time. Therefore I am afraid that we cannot ask the House to accept this new Clause.
    Lieut.-Commander Braithwaite: I am sure the House is indebted to my hon. Friends for proposing this Clause. The Financial Secretary made what I thought were one or two quite legitimate points. He also made the sort of response one gets from Financial Secretaries of all calibres at all times. He stressed previous concessions, but skated rather lightly over some of the anomalies that have arisen. After all, the House of Commons exists for the purpose of an annual review of these financial matters. Two years have now elapsed since the concession was made to the small cinemas in rural areas.
    We had a Debate a little earlier when an attempt was made, not altogether successfully, to point out the chief anomalies in this matter. May I submit that one of the difficulties which has arisen is in the definition both of small cinemas—I know this includes other entertainments as well—and what is, in fact, a rural area. I feel that the time has come for the Government to have another look at this definition. It was defined by population—a quota, if I may use that term—of 640persons to a square mile.
    Sir H. Williams: That is one to an acre.
    Lieut.-Commander Braithwaite: I am obliged to my hon. Friend whose statistical mind remains unimpaired. It is, as I said, 640 persons to a square mile. But some astonishing anomalies exist as a consequence. There are two seaside resorts in the West Country—and here, Mr. Deputy-Speaker, if you feel in cinema language that this is where you come in, I apologise; but they do throw a very revealing light on this topic. I am referring to Exmouth and Sidmouth, which are very similar towns. Whereas Exmouth has 5,000 to an acre, Sidmouth has 11,000. I put the case of a group of four cinemas in Exmouth which, after

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    paying Entertainments Duty to the tune of £18,500, which is no small contribution for a small town, find themselves making a trading loss of £2,700 on the year.
    The real trouble with which the House is confronted, is not so much this definition of where a rural area begins and ends, as the undue weighting of taxation upon the entertainments as such. It surely does not make sense for a commercial undertaking with four small units to contribute to the Exchequer to the extent of £18,500 and at the same time to make a trading loss. We feel that the time has come for a revision, not so much in terms of what is urban and what is rural, as in terms of the weighting of population as such.
    We have come to that stage in our proceedings where half a loaf has to be accepted, although in this case I think it works out at one-fortieth of a loaf, as being preferable to no bread at all. I suggest to the Government in all seriousness that if they want this Entertainments Duty to work fairly, the time has come for reconsideration of this weighting of cinemas of 400 seats, not so much in terms of rural and urban areas, but in terms of the weighting of population. Surely the time has come for a reduction in the deadweight of this Entertainments Duty.
    Question put, and negatived.

    New Clause.—(REDUCTION OF STAMP DUTIES ON CONVEYANCES.)
    Section fifty-two of the Finance Act, 1947 (which provides, among other things, that the stamp duties chargeable on a conveyance or transfer shall, as from the first day of August, nineteen hundred and forty-seven, be double the duties which would have been chargeable immediately before that day), shall be amended by the omission of the words "Conveyance or Transfer on sale."—[Mr. Hay.]
    Brought up, and read the First time.
    9.30 p.m.
    Mr. John Hay: I beg to move "That the Clause be read a Second time."
    The object of this new Clause is to effect an amendment of the law as contained in Section 52 of the Finance Act, 1947, and to make a provision that from now on the Stamp Duty on conveyances of land and property should revert to the position obtaining prior to the Finance Act of that year. I should
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    like to take the House back to the position as it existed in 1947. The provision, which it is now sought to amend, was introduced by the then Chancellor of the Exchequer in his Budget of 1948. It was the heyday of the cheap money policy, and a great deal of money was then, as now, being spent by the Government. The right hon. Member for Bishop Auckland (Mr. Dalton), in bringing in this provision, decided that this would be a very convenient way of raising a little revenue to offset certain concessions which he then granted. He gave as a reason for doubling the stamp duties the rather unusual one that they had not been doubled for some 27 years, and therefore, it was high time that they were doubled. This is what he said in his Budget statement:
    "I turn next to the Stamp Duties, in which there has been no important change since the late Mr. Austen Chamberlain, as he then was, doubled most of the rates in his Budget of 1920, two years after the first World War. I now propose, following his example, at this corresponding point after the second World War, to double a number of the Stamp Duties, which I shall specify in a moment"—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 81.]
    As it turned out, the doubling of the Stamp Duties has created a very unsatisfactory position in this country. The duty on the purchase price of a house between £500 and £1,500 remains at the same rate, but between £1,500 and £2,000 it graduates up to a total of £2 per cent. Above £2,000 the rate is £2 per cent., which is double what it previously was. This has caused very severe hardship. As the Government housing policy has continuously failed, houses which previously were selling at £1,000 or less—the ordinary small two or three bedroom houses—have become more and more in demand and more and more expensive. The consequence is that houses which were selling pre-war at £1,000 now bring in £3,000 and often more.
    The pre-war Stamp Duty on a £1,000 house was only £10, being £1 per cent. Today the Stamp Duty on the same house changing hands at about £3,000 has gone up to £60. I am sure the economists in the Treasury Bench will understand me when I say that it seems to be a case of a "law of expanding returns," because the higher the prices rise the greater the amount which the right hon. and learned

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    Gentleman receives. He is now profiteering in Stamp Duty, which is a most reprehensible position for him to be in.
    To come back to the example 1 gave if the Stamp Duty remained at 1 per cent., the house which now changes hands at £3,000 would pay a Stamp Duty of only £30, but by doubling the rate the right hon. and learned Gentleman gets £60. In other words, three times is not good enough for him; he has to have six times. We have put this new Clause down hoping we shall be able to secure a reduction back to the old value, because by increasing the amount of Stamp Duty in that way, we think a very grave impediment has been imposed on those who wish to own their own houses.
    There is universal agreement on both sides of the House that we should give as much encouragement as we can to house ownership, particularly to those people who want to own their own dwelling-house. The increase of Stamp Duties has made house owning difficult, and people have been grievously deterred from owning houses. For that reason we are proposing the new Clause and we hope that the House will pass it. It is an acid test of the Government's sincerity when they talk about house ownership. I hope that they will agree that we are proposing a step which they can take to make it easier for people to own their own houses. By reducing these duties they will not only be giving an earnest of their sincerity but because since 1947 they have been profiteering in Stamp Duty, that practice would cease forthwith.
    Mr. Black: I beg to second the Motion.
    In accordance with the practice of this House, I should at the outset declare my interest because I happen to be concerned in companies which own properties. Therefore I may be regarded as having some personal interest in the Clause. In any event, it will do no harm for me to declare my interest.
    I would emphasise the point made by my hon. Friend the Member for Henley (Mr. Hay) about the importance of encouraging house ownership. The enormous rise in costs incidental to the purchase of a house is proving a big deterrent to families from becoming owners of their homes. I accept the view
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    put forward by my hon. Friend that it is probably as good an estimate as can be made that small houses with vacant possession are selling today for at least three times what they fetched in 1939. Even if, as we seek to persuade the Government to do, Stamp Duties were reduced to where they were prior to the Finance Act, 1947, the Government would still be collecting three times the amount of Stamp Duty in the average case of house transfer to what they collected in 1939. I should have thought that increase was sufficient for the Exchequer without doubling the amount and charging six times the 1939 figure.
    I would bring to the notice of the House the enormous increase in the costs incidental to the purchase of a house. On a house which sold for £1,000 in 1939 and on which the purchaser borrowed £750 from a building society, the legal costs, including Stamp Duties, were about £36. Today, if the same house sells for £3,000 and the purchaser borrows £2,250, the legal costs, including Stamp Duties, are about £137. Obviously this tremendous increase must be a deterrent to many families who can acquire a house only by purchase because there are no houses available for them to rent.
    The House will also realise that the Stamp Duty on the transfer of the property is payable not by the vendor, who is receiving a large price for the house, but by the purchaser, who is compelled to pay the heavy rate of Stamp Duty on top of paying a largely increased price for the property he is to acquire. I hope that there is general agreement on both sides of the House on the desirability of encouraging families to buy their own homes. I would draw the attention of hon. and right hon. Gentlemen opposite to the fact that the programme on which they contested the recent General Election contains this statement
    "Labour moves towards a property-owning democracy while others talk about it."
    I suggest that the acceptance or rejection of this new Clause may very well be regarded as the acid test of the sincerity or otherwise of that particular assertion. We shall have an opportunity tonight to see to what extent there is a sincere desire to bring about a property-owning democracy because one of the most sure and certain ways of bringing that about

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    is to facilitate the purchase of homes by members of the community.
    The encouragement of home ownership, and quite clearly it is encouraged by a reduction in the costs incidental to purchase, is one of the surest ways of encouraging the saving habit which is so very necessary today because the purchaser of his home is prepared to work harder and to save harder to bring the ownership of his home within his grasp. Therefore, I beg the right hon. and learned Gentleman to consider most favourably the points which we have endeavoured to bring to his notice with a view to seeing whether he can accept this new Clause.
    Mr. Bell: My hon. Friends have put the case for this new Clause on the right basis, namely, the encouragement of home ownership. I should like the Solicitor-General to consider the effect which the increases introduced in 1947 have had upon the purchase of homes. As my hon. Friend the Member for Henley (Mr. Hay) rightly pointed out, the market cost of houses has risen to three times the pre-war figure. He might have pointed out, but naturally did not, that his own profession has been quite content with the increased reward derived from that increase in market value, whereas the Treasury has greedily wanted to double that natural increase. It is open to the Solicitor-General to argue that the lower-priced houses have not had that additional impost levied upon them, but what kind of house does one buy nowadays for home ownership for £500. or indeed £1,000?
    9.45 p.m.
    If the matter is carefully considered, it appears that what has really been done by this steepening of the graduation in 1947 is that if a house is bought for investment with a protected tenant in possession, then the purchaser pays a very low and favourable rate of Stamp Duty; but if the purchaser buys the house to live in, then the Government "milks" him good and proper. I think it would be fair to say that for a house worth £3,000 with vacant possession, about £800 is paid for investment; that is to say, if the house would fetch £3,000 vacant, it would fetch £800 on sale with a protected tenant installed. If a man is buying that house to live in, he would
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    pay to the Revenue duty of £60, but if he was buying an investment, which I should have thought hon. Members opposite might have considered rather more wicked—and I of course do not consider either action to be wicked—in that case he would pay duty of £8.
    What reason is there for the change introduced in 1947 which penalises the man who buys a house to live in and, I will not say subsidises but at least encourages, the man who buys it for an investment? I hope the right hon. and learned Gentleman will direct his mind to that point when answering that argument on this new Clause which would merely restore the status quo ante 1947 by which the tax was graduated, but not so harshly graduated as it is now.
    The Solicitor-General: I am sorry, but I cannot accept this new Clause. As it is drafted, it would have the effect not only of going back to the pre-1947 rate in the case of the conveyance of a house, but it would also, as drafted, apply to the transfer of stock. In any case it would be incomplete as a piece of drafting, because if one wished to make that change at all, and if it were acceptable, a number of other changes would have to be made in the 1947 Act which are not made by this Clause.
    For example, one would have to make a corresponding change in the duty on the transfer of marketable securities, the property in which is transferred on delivery. So purely as a piece of drafting this new Clause does not achieve the object which the hon. Gentleman who moved it had in mind, because it extends to something which he, and the hon. Member who seconded it, apparently did not contemplate in the least. Even taking it on its face value, it is incomplete as a piece of drafting. I think the House would agree that, that being so, it would be quite impossible to accept it.
    When the Clause was put down, we considered what it would cost, as obviously a consideration in deciding what attitude to adopt to it. The cost of the Clause as it stands would be no less than £12 million which is, of course, a sum of money we could not contemplate with regard to this matter. The House may ask how much of the £12 million is attributable to the transfer or conveyance of houses? Frankly, I have not that figure with me, for the simple reason that

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    the Clause covered not only the conveyance of houses but the transfer of stock as well.
    Mr. Hay: I do not follow the right hon. and learned Gentleman's argument. Does he say that as drafted, the cost of the Clause would be £12 million, or that, as my intention was, to reduce the rate purely on the transfer of house property would cost £12 million?
    The Solicitor-General: I intended to say, as I think I did say, that the Clause as drafted, that is to say, including the transfer of stock and the conveyance of houses, would cost £12 million. I gave that figure because we took steps to ascertain what would be the cost of the Clause as it stood. I have not the figure in the case of the conveyance of houses only because I did not know when I saw the Clause on the Order Paper that the hon. Gentleman's only object was to reduce the duty on conveyance of houses; but I am endeavouring to ascertain that figure. Obviously £12 million is a very substantial sum of money and we would need a strong case to justify making this concession; but apart from that, even if one considers the object which the hon. Gentleman has in mind, it would hardly be likely to be achieved.
    As the hon. Gentleman pointed out, we are now in a sellers' market for houses. As he will know, the duty upon the transfer of houses is, generally speaking, paid by the purchaser. If we have a sellers' market and if we reduce the duty on transfer, it is likely that the only result will be, not that the purchaser gets the house at a lesser cost, but simply that the reduction in cost will be a reason seized upon by the seller for increasing his price—not expressly, but he will increase his price. It is a matter for speculation or conjecture. I should very much doubt whether the object hon. Gentlemen opposite have in mind would be accomplished if the duty were reduced in this way.
    Be that as it may, the Clause as it stands goes much further than those who moved it wish it to go. It is incomplete; it would be too expensive and, although it would not cost £12 million, it would cost a substantial sum of money even if one excluded transfers of stock. Finally, it is most doubtful whether, if we reduced the duty on the transfer of houses, it would make much difference
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    to the buyer, because in a sellers' market it is, broadly speaking, the seller who says what the price will be.
    Mr. Hay: Will the Solicitor-General tell us whether he looked at the title of the new Clause which says:
    "Reduction of stamp duties on conveyances"?
    The word "conveyances" is usually accepted in the legal profession as referring to the conveyance of house property. Was the right hon. Gentleman really taken so much by surprise?
    The Solicitor-General: I took the new Clause at its face value as it stood on the Order Paper. I read it and compared it with the Section in the 1947 Act to see what its effects would be. It was in that light that I considered the arguments which one might think could be advanced in favour of it and the points which would constitute objections to its acceptance. We cannot see our way to accept the new Clause.
    Captain Crookshank: The case of my hon. Friend the Member for Henley (Mr. Hay) was briefly and cogently put. It dealt only with the small point with regard to conveyances in the case of sales of houses. The right hon. and learned Gentleman is being a little ingenuous. I cannot help thinking that he did not really imagine that in this Clause we were attempting to deal with the transfer of securities and all the rest of it. As my hon. Friend said, the title of the Clause refers to "conveyances" and he, being a solicitor, presumed that the Solicitor-General would take the word to have the same meaning.
    If there had been any dubiety on the matter, I would point out that the Clause has been on the Order Paper for some time, and it is not uncommon for a Treasury Minister—none of whom are present and, therefore, I excuse the Solicitor-General—to find out its purpose from those whose names have been attached to it. There is always a certain amount of give and take in that way in this House. The Solicitor-General has chosen to argue the matter meticulously and no doubt correctly on the actual wording of the Clause. In point of fact, that is not what was intended.
    If he had ascertained that the point of the new Clause was to deal with house

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    sales and conveyances, had the Government been so minded, they could perfectly well have amended this proposal or put down another Clause to cover the same point. There would have been no difficulty about that. The right hon. and learned Gentleman has held out no hope that that was ever in the mind of the Government. On the other hand, we think that it would be a very wise action to take, for the reasons already expressed with which I will not trouble the House. If my hon. Friend is so minded, I shall be pleased to follow him into the Lobby.
    Sir H. Williams: Before we vote on this new Clause, may I say that I was rather pleased with the speech of the learned Solicitor-General, who was abandoned by his Wykehamist friends and left to carry a baby worth £12 million? My hon. Friend who moved the new Clause thought that it dealt with house property, but, according to the learned Solicitor-General, he was dealing with stocks and shares. I am delighted; I think that Stamp Duties are dreadful, and I always have held that view. All Stamp Duties on these transactions are evil and bad, because it is only another form of Purchase Tax. When the Solicitor-General says that, when a fellow buys a house, he goes into the most elaborate calculations about the Stamp Duty, I do not think that he has ever either bought or sold a house. I have not been concerned in many of these transactions, but I have never yet met a person who, being engaged in a deal about a house, either in buying or selling, thought for one moment—
    Mr. Speaker: We are not discussing the merits or demerits of Stamp Duties, but only their reduction.
    Sir H. Williams: The Solicitor-General led me astray, because he said very definitely that, if this new Clause was carried reducing the amount of Stamp Duty on the sale of a house, all that would happen would be that the seller would charge more for the house to the extent of the reduction of the Stamp Duty, and that was all that I was arguing about. I have not had many transactions of this kind, but I know a great many of my friends who have, and I have never met one who thought this was an important factor.
    I shall have the greatest pleasure in following into the Lobby my right hon.
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    and gallant Friend who spoke last. I think that on this issue the Government have been quite stupid. We want people to be able to buy their own houses as cheaply as possible, and the Government do not want them to do that. They want everybody to become council tenants, and that is what is behind the opposition to this new Clause. We want people to be free and own their own houses. The Government do not want that, because they know perfectly well that, when a man owns his own house, he is likely to be free-minded, and they do not want free-minded people.
    Mr. Speaker: These arguments have nothing to do with the Stamp Duties.
    Mr. Geoffrey Hutchinson: I am sure the House will not feel satisfied with the reply which the learned Solicitor-General has given to this discussion. Part of his case comes to this—that the Government, apparently, are making a very substantial sum out of these Stamp Duties on conveyances and transfers. They are making something like £12 million, and that clearly is in addition to the purchase price of the house, whether it comes out of the possible seller or the possible buyer. In times like the present, there is a very widespread demand for houses at reasonable prices. It will come as a very great disappointment to persons trying to accommodate themselves with moderately priced houses to know that the Government are making something less than £12 million—
    Mr. Speaker: May I ask the hon. Gentleman to speak up, because I have not heard a single word he has said?
    Mr. Hutchinson: I was saying that I am sure that the reply which the learned Solicitor-General gave to my hon. Friend's point will be a very great source of disappointment to many persons who are today trying to accommodate themselves in reasonably priced premises. The right hon. and learned Gentleman said that these Duties on conveyances and transfers represent a very substantial sum, and, whether that sum is to come from the pocket of the buyer or that of the seller, it has to be added to the price of the house. That means that this £12 million, or something less, which represents the duty on conveyances, will have

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    to be paid by the person who eventually buys the House. I should have thought that at the present time—
    10.0 p.m.
    Mr. Hamilton: On a point of order. As the hon. Gentleman's speech might well turn the tables, may I appeal to him to speak up so that we may hear his argument?
    Mr. Hutchinson: I apologise to the House, but I am doing my best.
    The Solicitor-General was anxious to say that so far as the transfer of securities was concerned, there was really no case for any remission of these duties. Very much the same argument applies to the transfer of securities as applies to the transfer of houses. The duties, at the rates which the Government intend to maintain, on transfers are just as much a hardship to persons interested in the transfer of small investments, such as those involved in the distribution of small estates on death, as in the conveyance of small house property. I really do not know why the right hon. and learned Gentleman should be so anxious that no concession should be given in the case of the transfer of securities, although he seems prepared to say that something might be done in the case of the transfer of house property.
    These duties on conveyances and transfers represent a substantial hardship to a large number of persons of comparatively modest means. I should have hoped that, in view of the difficulties which persons in all ranges of incomes are experiencing at the present time, this modest concession, at least, might have been made, and that the Stamp Duty restored to something more reasonable than the rate at which it is apparently proposed to maintain it.
    Mr. Joynson-Hicks: I was not fully and enthusiastically converted to the wisdom of this Clause until I heard the speech of the Solicitor-General. He convinced me that it was a good thing. I could not quite see why we should differentiate between conveyances and transfers, but now that the right hon. and learned Gentleman is prepared to fight the issue on the reduction of Stamp Duties on transfers as well as on conveyances, I think it is an admirable thing that we should do so. It may be that there is some technical difficulty in the drafting of
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    the Clause, but if the House makes clear its wishes in the matter, that is a matter which the Government can very easily overcome.
    There is not the slightest doubt that if transfers of property, whether real or personal property, can be facilitated, as they will be facilitated, as a result of the reduction in Stamp Duties which are envisaged in this Clause, it will be an exceedingly good thing for trade and business as a whole, and will redound and reflect to the advantage of the community at large. As my hon. Friend the Member for Croydon, East (Sir H. Williams) has said, Stamp Duties are a distinct hindrance to trade and business in all respects with regard to real estate or personal estate. I very much hope that the House will come to the conclusion that the Clause should be accepted in the way it has been interpreted by the Solicitor-General.
    Mr. C. Williams: I ask the Chancellor of the Exchequer, as a personal favour, to read the Solicitor-General's speech tomorrow. The Solicitor-General put forward the interesting, and, from a free trade point of view, completely wrong argument that if tax is lowered on an article, the cost of the article is likely to rise. I see the Chancellor of the Exchequer looks worried, but he is nothing like as worried as I was and as everyone else was when trying to understand the Solicitor-General's argument. But I ask the Chancellor to read his right hon. and learned Friend's speech and I ask that in future we do not have people getting up and telling us that by reducing taxation the cost of houses may rise.
    My second point is that the Government's attitude to housing is shown in their refusal to accept any amendment of this Clause so as to make it apply only to the purchase of houses. It is most interesting that in these times the Government are absolutely dead against helping people to get their own houses. That is a point that it would be well to emphasise.
    The third point is that, quite clearly and obviously, the intention of the Government in retaining the Bill in its present form, and in refusing this new Clause, is to do everything possible to heighten

    175
    the cost of houses and to make it more difficult for people to obtain their own houses at present. I shall have very great pleasure in telling that to my constituents, and I hope it will reach Bristol and
    that this will put out a large number of the Socialist Party.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 273; Noes, 290.

    Division No. 53.]

    AYES

    [10.10 p.m.

    Aitken, W. T

    Dulhie, W. S.

    Lindsay, Martin

    Alport, C. J. M.

    Eccles, D. M.

    Linstead, H. N.

    Amery, J. (Preston, N.)

    Eden, Rt. Hon. A.

    Llewellyn, D.

    Amory, D. Heathcoat (Tiverton)

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

    Lloyd, Rt. Hon. G. (King's Norton)

    Arbuthnot, John

    Erroll, F. J.

    Lloyd, Maj. Guy (Renfrew, E.)

    Ashton, H. (Chelmsford)

    Fisher, Nigel

    Lloyd, Selwyn (Wirral)

    Assheton, Rt. Hon. R. (Blackburn, W.)

    Fletcher, W. (Bury)

    Lockwood, Lt.-Col. J. C.

    Baker, P.

    Fort, R.

    Longden, G. J. M. (Herts, S.W.)

    Baldock, J. M.

    Foster, J. G.

    Low, A. R. W.

    Baldwin, A. E.

    Fraser, Hon. H. C. P. (Stone)

    Lucas, Major Sir J. (Portsmouth, S.)

    Baxter, A. B.

    Fraser, Sir I. (Lonsdale)

    Lucas, P. B. (Brentford)

    Beamish, Maj. T. V. H.

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

    Lucas-Tooth, Sir H.

    Bell, R. M.

    Galbraith, Cmdr. T. D. (Pollok)

    Lyttelton, Rt. Hon. O.

    Bennett, Sir P. (Edgbaston)

    Galbraith, T. G. D. (Hillhead)

    McAdden, S. J.

    Bennett, R. F. B. (Gosport)

    Gammans, L. D.

    McCallum, Maj. D.

    Bennett, W. G. (Woodside)

    Garner-Evans, E. H. (Denbigh)

    McCorquodale, Rt. Hon M. S.

    Bevins, J. R. (Liverpool, Toxteth)

    Gates, Maj. E. E

    Macdonald, Sir P. (I. of Wight)

    Birch, Nigel

    Glyn, Sir R.

    McKibbin, A.

    Bishop, F. P

    Gomme-Duncan, Col. A

    McKie, J. H. (Galloway)

    Black, C. W.

    Granville, E. (Eye)

    Maclay, Hon. J. S.

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

    Gridley, Sir A.

    Maclean, F. H. R.

    Boothby, R.

    Grimond, J.

    MacLeod, Iain (Enfield, W.)

    Bossom, A. C

    Grimston, Hon. J. (St. Albans)

    MacLeod, John (Ross and Cromarty)

    Bowen, R.

    Grimston, R. V. (Westbury)

    Macmillan, Rt. Hon. Harold (Bromley)

    Bower, N.

    Harden, J. R. E.

    Macpherson, N. (Dumfries)

    Boyd-Carpenter, J. A.

    Hare, Hon. J. H. (Woodbridge)

    Manningham-Buller, R. E.

    Bracken, Rt. Hon Brendan

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

    Marlowe, A. A. H.

    Braine, B.

    Harris, R. R. (Heston)

    Marples, A. E.

    Braithwaite, Lt.-Comdr J. G.

    Harvey, Air-Codre. A. V (Macclesfield)

    Marshall, D. (Bodmin)

    Bromley-Devenport, Lt.-Col. W.

    Harvey, I. (Harrow, E.)

    Marshall, S. H. (Sutton)

    Brooke, H. (Hampstead)

    Harvie-Watt, Sir G. S

    Maude, A. E. U. (Ealing, S.)

    Browne, J. N. (Govan)

    Hay, John

    Maude, J. C. (Exeter)

    Buchan-Hepburn, P. G. T.

    Head, Brig. A. H

    Maulding, R.

    Bullock, Capt. M.

    Heald, L. F.

    Medlicott, Brigadier F.

    Bullus, Wing-Commander E. E.

    Henderson, John (Cathcart)

    Mellor, Sir J.

    Butcher, H. W.

    Hicks-Beach, Maj. W. W.

    Molson, A. H. E.

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

    Higgs, J. M. C.

    Moore, Lt.-Col. Sir T.

    Carr, L. R. (Mitcham)

    Hill, Mrs. E. (Wythenshawe)

    Morrison, Maj. J. G. (Salisbury)

    Channon, H.

    Hill, Dr. C. (Luton)

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

    Clarke, Col. R. S. (East Grimstead)

    Hinchigbrooke, Viscount

    Mott-Radclyffe, C. E.

    Clarke, Brig. T. H. (Portsmouth, W.)

    Hirst, Geoffrey

    Nabarro, G.

    Colegate, A.

    Hogg, Hon. Q.

    Nicholls, H.

    Conant, Maj. R. J. E.

    Hollis, M. C.

    Nicholson, G.

    Cooper, A. E. (Ilford, S.)

    Holmes, Sir J. Stanley (Harwich)

    Nobel, Comdr. A. H. P

    Cooper-Key, E. M.

    Hope, Lord J.

    Nugent, G. R. H.

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

    Hopkinson, H. L. D'A

    Nutting, Anthony

    Craddock, G. B. (Spelthorne)

    Horsbrugh, Miss F

    Odey, G. W.

    Cranborne, Viscount

    Howard, G. R. (St. Ives)

    Ormsby-Gore, Hon. W. D.

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

    Howard, S G. (Cambridgeshire)

    Orr, Capt. L. P. S.

    Cross, Rt. Hon. Sir R.

    Hudson, Sir Austin (Lawisham, N.)

    Orr-Ewing, Charles Ian (Hendon, N.)

    Crosthwaite-Eyre, Col. O E

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

    Orr-Ewing, Ian L. (Weston-super-Mare)

    Crouch, R. F.

    Hudson, W. R. A. (Hull, N.)

    Osborne, C

    Crowder, Capt. John F. E. (Finchley)

    Hulbert, Wing-Cdr. N. J.

    Perkins, W. R. D.

    Crowder, F. P. (Ruislip-Northwood)

    Hutchinson, Geoffrey (Ilford, N.)

    Peto, Brig, C. H. M

    Cundiff, F. W.

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

    Pickthorn, K.

    Cuthbert, W. N.

    Hyde, H. M.

    Pitman, I. J.

    Darling, Sir W. Y. (Edinburgh, S.)

    Jeffreys, General Sir G

    Powell, J. Enoch

    Davidson, Viscountess

    Jennings, R.

    Prescott, Stanley

    Davies, Rt. Hn. Clement (Montgomery)

    Johnson, Howard S (Kemptown)

    Price, H. A. (Lewisham, W.)

    Davies, Nigel (Epping)

    Jones, A. (Hall Green)

    Prior-Palmer, Brig. O.

    de Chair, S.

    Joynson-Hicks, Hon. L. W

    Profumo, J. D.

    De la Bère, R.

    Kaberry, D.

    Raikes, H. V.

    Deedes, W. F.

    Keeling, E. H.

    Rayner, Brig, R.

    Digby, S. Wingfield

    Kerr, H. W. (Cambridge)

    Redmayne, M.

    Dodds-Parker, A. D.

    Kingsmill, Lt.-Col. W. H

    Renton, D. L. M.

    Donner, P. W.

    Lambert, Hon. G.

    Roberts, P. G. (Hesley)

    Douglas-Hamilton, Lord M

    Lancaster, Col. C. G

    Robertson, Sir D. (Caithness)

    Drayson, G. B

    Langford-Holt, J.

    Robinson, J. Roland (Blackpool, S.)

    Drewe, C.

    Law, Rt. Hon. R. K.

    Robson-Brown, W. (Esher)

    Dugdale, Maj. Sir T. (Richmond)

    Leather, E. H. C.

    Roper, Sir H.

    Duncan, Capt. J. A. L.

    Legge-Bourke, Maj. E. A. H

    Ropner, Col. L.

    Dunglass, Lord

    Lennox-Boyd, A. T.

    Ross, Sir R. D. (Londonderry)

    Russell, R. S.

    Summers, G. S

    Walker-Smith, D. C.

    Ryder, Capt. R. E. D.

    Sutcliffe, H.

    Ward, Hon. G. R. (Worcester)

    Sandys, Rt. Hon. D.

    Taylor, C. S. (Eastbourne)

    Ward, Miss I. (Tynemouth)

    Scott, Donald

    Taylor, W. J. (Bradford, N.)

    Waterhouse, Capt. C.

    Smiles, Lt.-Col. Sir W.

    Thomas, J. P. L. (Hereford)

    Watkinson, H.

    Smith, E. Martin (Grantham)

    Thompson, K. P. (Walton)

    Webbe, Sir H. (London)

    Smithers, Peter H. B. (Winchester)

    Thompson, R. H. M. (Croydon, W.)

    Wheatley, Major M. J. (Poole)

    Smithers, Sir W. (Orpington)

    Thorneycroft, G. E. P. (Monmouth)

    White, J. Baker (Canterbury)

    Smyth, Brig. J. G. (Norwood)

    Thornton-Kemsley, C. N.

    Williams, C. (Torquay)

    Snadden, W. McN.

    Thorp, Brigadier R. A. F.

    Williams, Gerald (Tonbridge)

    Soames, Capt. C.

    Tilney, John

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

    Spearman, A. C. M.

    Touche, G. C.

    Wills, G.

    Spence, H. R. (Aberdeenshire, W.)

    Turton, R. H.

    Wilson, Geoffrey (Truro)

    Spens, Sir P. (Kensington, S.)

    Tweedsmuir, Lady

    Wood, Hon. R.

    Stanley, Capt. Hon. R. (N. Fylde)

    Vane, W. M. F.

    Young, Sir A. S. L.

    Stevens, G. P.

    Vaughan-Morgan, J. K.

    Steward, W. A. (Woolwich, W.)

    Vosper, D. F.

    TELLERS FOR THE AYES:

    Storey, S.

    Wade, D. W.

    Mr. Studholme and

    Strauss, Henry (Norwich, S.)

    Wakefield, E. B. (Derbyshire, W.)

    Brigadier Mackeson.

    Stuart, Rt. Hon. J. (Moray)

    Wakefield, Sir W. W. (St. Marylebone)

    NOES

    Acland, Sir Richard

    Davies, Ernest (Enfield, E.)

    Holman, P.

    Adams, Richard

    Davies, Harold (Leek)

    Holmes, H. E. (Hemsworth)

    Albu, A. H.

    Davies, R. J. (Westhoughton)

    Houghton, Douglas

    Allen, A. C. (Bosworth)

    Davies, S. O. (Merthyr)

    Hoy, J.

    Allen, Scholefield (Crewe)

    de Freitas, Geoffrey

    Hubbard, T.

    Anderson, F. (Whitehaven)

    Deer, G.

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

    Attlee, Rt Hon. C. R.

    Delargy, H. J.

    Hughes, Emrys (S. Ayr)

    Awbery, S. S.

    Diamond, J.

    Hughes, Hector (Aberdeen, N.)

    Ayles, W. H.

    Dodds, N. N.

    Hughes, Moelwyn (Islington, N.)

    Bacon, Miss A.

    Donnelly, D.

    Hynd, H. (Accrington)

    Baird, J.

    Donovan, T. N.

    Hynd, J. B. (Attercliffe)

    Balfour, A.

    Driberg, T. E. N.

    Irvine, A. J. (Edge Hill)

    Barnes, Rt. Hon. A. J.

    Dugdale, Rt. Hon. J. (W. Bromwich)

    Irving, W. J. (Wood Green)

    Bartley, P.

    Dye, S.

    Isaacs, Rt. Hon. G. A.

    Bellenger, Rt. Hon. F. J

    Ede, Rt. Hon. J. C.

    Janner, B.

    Benson, G.

    Edelman, M.

    Jay, D. P. T.

    Beswick, F.

    Edwards, John (Brighouse)

    Jeger, G. (Goole)

    Bing, G. H. C.

    Edwards, Rt. Hon. N. (Caerphilly)

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

    Blackburn, A. R.

    Edwards, W. J. (Stepney)

    Jenkins, R. H.

    Blenkinsop, A.

    Evans, Albert (Islington, S. W.)

    Johnson, James (Rugby)

    Blyton, W. R.

    Evans, E. (Lowestoft)

    Johnston, Douglas (Paisley)

    Boardman, H.

    Evans, S. N. (Wednesbury)

    Jones, D. T. (Hartlepool)

    Booth, A.

    Ewart, R.

    Jones, Frederick Elwyn (West Ham, S).

    Bottomley, A. G.

    Fernyhough, E.

    Jones, Jack (Rotherham)

    Bowden, H. W.

    Field, Capt. W. J.

    Jones, William Elwyn (Conway)

    Bowles, F. G. (Nuneaton)

    Finch, H. J.

    Keenan, W.

    Braddock, Mrs. E. M.

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

    Kenyon, C.

    Brockway, A. Fenner

    Follick, M.

    Key, Rt. Hon. C. W.

    Brook, D. (Halifax)

    Foot, M. M.

    King, H. M.

    Brooks, T. J. (Normanton)

    Forman, J. C.

    Kinley, J.

    Broughton, Dr. A. D. D.

    Fraser, T. (Hamilton)

    Lang, Rev. G.

    Brown, George (Belper)

    Freeman, J. (Watford)

    Lee, F. (Newton)

    Brown, T. J. (Ince)

    Freeman, Peter (Newport)

    Lee, Miss J. (Cannock)

    Burke, W. A.

    Gaitskeff, Rt. Hon. H. T. N.

    Lever, L. M. (Ardwick)

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

    Ganley, Mrs. C. S.

    Lever, N. H. (Cheetham)

    Callaghan, James

    Gibson, C. W.

    Lewis, A. W. J. (West Ham, N.)

    Carmichael, James

    Gilzean, A.

    Lewis, J. (Bolton, W.)

    Castle, Mrs. B. A.

    Glanville, J. E. (Consett)

    Lindgren, G. S.

    Champion, A. J.

    Gordon. Walker, Rt. Hon. P. C.

    Lipton, Lt.-Col. M.

    Chetwynd, G. R.

    Greenwood, A. W. J. (Rossendale)

    Logan, D. G.

    Clunie, J.

    Greenwood, Rt. Hn. Arthur (Wakefield)

    Longden, F. (Small Health)

    Cooks, F. S.

    Grey, C. F.

    McAllister, G.

    Coldrick, W.

    Griffiths, D. (Rother Valley)

    MacColl, J. E.

    Collick, P.

    Griffiths, Rt. Hon. J. (Lianelly)

    McGhee, H. G.

    Collindridge, F.

    Griffiths, W. D. (Exchange)

    McInnes, J.

    Gunter, R. J.

    Mack, J. D.

    Cook, T. F.

    Hale, J. (Rochdale)

    Mckay, J. (Wallsend)

    Cooper, G. (Middlesbrough, W)

    Hale, Leslie (Oldham, W.)

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

    Cooper, J. (Deptford)

    Hall, J. (Gateshead, W.)

    McLeavy, F.

    Corbet, Mrs. F. K. (Peckham)

    Hall, Rt. Hn. W. Glenvil (Colne v'll'y)

    MacMillan, M. K. (Western Isles)

    Cove, W. G.

    Hamilton, W. W.

    McNeil, Rt. Hon. H.

    Craddock, George (Bradford, S.)

    Hannan, W.

    MacPherson, Malcolm (Stirling)

    Crawley, A.

    Hardman, D. R

    Mainwaring, W. H.

    Cripps, Rt. Hon. Sir S.

    Hardy, E. A.

    Mallalieu, E. L. (Brigg)

    Crosland, C. A. R.

    Hargreaves, A

    Mallalieu, J. P. W. (Huddersfield, E.)

    Grossman, R. H. S.

    Harrison, J.

    Mann, Mrs. J.

    Cullen, Mrs. A.

    Hastings, Dr. Somerville

    Manual, A. C.

    Dagger, G.

    Hayman, F. H.

    Marquand, Rt. Hon. H. A

    Daines, P.

    Henderson, Rt. Hon. A. (Rowley Regis)

    Mathers, Rt. Hon. George

    Dalton, Rt. Hon. H.

    Herbison, Miss M.

    Mellish, R. J.

    Darling, G. (Hillsboro')

    Hewitson, Capt. M.

    Messer, F.

    Davies, A. Edward (Stoke, N.)

    Hobson, C. R.

    Middleton, Mrs. L.

    178

    179

    Mikardo, Ian

    Richards, R

    Tomlinson, Rt. Hon. G

    Mitchison, G. R

    Robens, A.

    Tomney, F.

    Moeran, E. W.

    Roberts, Goronwy (Caernarvonshire)

    Usborne, Henry

    Monslow, W

    Robertson, J. J. (Berwick)

    Vernon, Maj. W. F

    Moody, A. S.

    Robinson, Kenneth (St. Pancras, N.)

    Viant, S. P.

    Morgan, Dr. H. B

    Rogers, G. H. R. (Kensington, N.)

    Wallace, H. W

    Morley, R.

    Ross, William (Kilmarnock)

    Watkins, T. E.

    Morris, P. (Swansea, W.)

    Royle, C

    Webb, Rt. Han. M. (Bradford. C.)

    Mort, D. L.

    Shackleton, E. A. A.

    Weitzman, D.

    Moyle, A.

    Shawcross, Rt. Hon. Sir H

    Wells, P. L. (Faversham)

    Mulley, F. W

    Shurmer, P. L. E.

    Wells, W. T. (Walsall)

    Nally, W.

    Silverman, J (Erdington)

    West, D. G.

    Noel-Baker, Rt Hon. P. J

    Silverman, S. S. (Nelson)

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

    O'Brien, T.

    Simmons, C J

    White, Mrs. E. (E. Flint)

    Oldfield, W. H

    Slater, J.

    White H. (Derbyshire, N.E.)

    Oliver, G. H

    Smith, Ellis (Stoke, S)

    Whiteley, Rt. Hon. W

    Orbach, M.

    Snow, J. W.

    Wigg, George

    Padley, W. E

    Sorensen, R. W

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

    Paling, Will T. (Dewsbury)

    Soskice, Rt Hon. Sir P

    Wilkins, W. A.

    Pannell, T. C

    Steele, T.

    Willey, F. T (Sunderland)

    Pargiter, G. A

    Stewart, Michael (Fulham, E.)

    Willey, O. G (Cleveland)

    Parker, J.

    Stokes, Rt. Hon. R. R

    Williams, Ronald (Wigan)

    Paton, J

    Strachey, Rt. Hon. J.

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

    Pearson, A

    Strauss Rt. Hon. G. R (Vauxhall)

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

    Peart, T. F

    Stross, Dr. B

    Wilson, Rt. Hon. J. H. (Huyton)

    Poole, Cecil

    Summerskill, Rt. Hon. Edith

    Winterbottom, I. (Nottingham, C.)

    Porter, G.

    Sylvester, G O

    Winterbottom, R. E. (Brights de)

    Price, M. Philips (Gloucestershire, W.)

    Taylor, H. B (Mansfield)

    Wise, Major F. J.

    Pryde, D. J

    Taylor, R. J (Morpeth)

    Woodburn, Rt. Hon. A

    Pursey, Comdr. H

    Thomas, D E (Aberdare)

    Woods, Rev. G. S

    Rankin, J.

    Thomas, George (Cardiff)

    Wyatt, W. L.

    Rees, Mrs. D

    Thomas, I O. (Wrekin)

    Yates, V. F.

    Reeves, J.

    Thomas, I R. (Rhondda, W.)

    Younger, Hon. Kenneth

    Reid, T. (Swindon)

    Thorneycroft, Harry (Clayton)

    Reid, W. (Camlachie)

    Thurtle, Ernest

    TELLERS FOR THE NOES:

    Rhodes, H

    Timmons. J

    Mr. Popplewell and Mr. Sparks.

    New Clause.—(TEMPORARY BUSINESS PREMISES IN BOMBED AREAS.)
    (1) If a person has incurred capital expenditure on the provision for the purpose of a trade or business carried on by him of temporary premises by reason of war damage to the premises previously available for that purpose a deduction equal one fifth of that expenditure shall be made in charging the profits or gains of the trade or business for the year ended the fifth day of April, nineteen hundred and fifty-one, and for each of the following years of assessment.
    (2) In this section the expression "temporary premises" means premises for the erection of which permission has been granted for a limited period only under the provisions of the Town and Country Planning Act, 1947, or any Act repealed thereby being premises which are not included in the definition of an industrial building or structure contained in section eight of the Income Tax Act, 1945.
    (3) The expenditure to which this section relates is the cost to the person carrying on the trade or business in providing the temporary premises reduced by any allowance previously made to him in respect of exceptional depreciation under section nineteen of the Finance Act, 1941, as subsequently amended and reduced by any sum contributed by any public authority or by any other person than the person carrying on the trade or business towards the provision of the premises which has not already been taken into account in any claim for such exceptional depreciation. Any further expenditure incurred on the removal of the said premises reduced by any proceeds of sale of materials salvaged from the demolition of the premises shall be treated as
    180
    further expenditure incurred on the provision of the premises and shall be wholly deducted in charging the profits of the year of assessment in which the demolition takes place, together with any unallowed balance of previous expenditure which has not yet been deducted in charging the said profits or gains.—[Mr. Eccles.]
    Brought up, and read the First time.
    Mr. David Eccles: I beg to move, "That the Clause be read a Second time."
    I am sorry that the Chancellor of the Exchequer is not here because this Clause very much affects Bristol, a famous city, part of which he represents. The Clause provides for an allowance of 20 per cent. per annum for five consecutive years in respect of temporary buildings which firms or traders erected while they were waiting for permits and other facilities to re-establish their premises which had been blitzed. The House will know that in badly-blitzed areas it is in many cases very difficult to undertake reconstruction except at a slow pace. Clearly, too, dwelling-houses have often had priority in permanent construction, and I think the House will agree that that was right.
    On the other hand, in order that the livelihood of a city should continue, it has been of the highest importance that

    181
    bombed firms should get back into business as soon as possible, and all over the country in these blitzed areas temporary premises have been erected by firms which knew that for some time they would not be able to build permanently. These buildings, unless they are industrial buildings, do not rank for any depreciation allowance such as is given in the Income Tax Act, 1945.
    Two years ago a similar Clause to that which I am now moving was moved by the hon. Member for Ealing, North (Mr. J. Hudson), whom I am glad to see in his place. The hon. Gentleman moved that Clause in the early hours of the morning, as he will, no doubt recollect. He based his arguments rather too narrowly, I thought, on the interests of the Co-operative Societies. I am all in favour of the "Co-ops" which, no doubt, have erected temporary buildings up and down the country, getting this allowance, but I do not, like the hon. Gentleman, speak only for the "Co-ops"; I wish to speak for all those who have put up buildings of this nature.
    On that occasion the Solicitor-General refused to accept the Clause on grounds of principle. He said—and quite rightly—that, of course, it would make a breach in the principle of the Income Tax Act, 1945, by allowing buildings to receive this allowance which were not industrial buildings—in other words, temporary shops; and he said that that was a principle which the Government could not go back on. Well, at a later stage we shall have an opportunity—I understand on the next Clause you are going to call, Mr. Speaker—of arguing that general principle. Therefore, 1 shall not argue it on this Clause, though I believe it to be a bad principle today.
    The smaller question which is contained in this Clause is that where war damage creates special cases, it should receive special treatment. I think that the Solicitor-General was wrong two years ago to brush aside the special question of these temporary buildings, which, after all, would never have been there but for the war. One of the arguments which the right hon. and learned Gentleman used was this:
    "If it were regarded as an exceptional reason, then equivalent reliefs would have to be accorded in the case of all other temporary buildings. Take the case of a soldier returning to civilian life. In order to build up his
    182
    pre-war business he takes temporary shop premises. He would have just as strong a case"—[OFFICIAL REPORT: 7th June, 1948; Vol. 451, c. 1822.]
    I do not know why the ex-soldier should be considered not fit for this allowance, but even if we disregard the ex-Service man, I still think that the arguments are very strong where a firm has had to make expenditure which it knows must come to an end quite shortly.
    I believe the Solicitor-General also used the argument that the wear and tear allowance, the ordinary repairs allowance, and so on, on the building were quite good. Yes, they are; but that does not get a man back his capital so that he can be in a position to put up a permanent building; and I should think that in many cases the fact that a man has had to wait some years before he could build the permanent premises to take the place of his blitzed premises means that he has to pay more. because building costs have risen in the period of waiting—which has not been due to the man's wish, but due to the fact that the Government, for one reason or another which I shall not now go into, have not allowed him to get on with his permanent building. Therefore, the "Coop," and anybody else who has to put up these temporary buildings, requires a larger capital sum, and that is all the more reason why this allowance should now be given.
    I conclude by saying this. No one on this side of the House supported the hon. Member for Ealing, North, in the early hours of the morning two years ago, and I should like to tell the hon. Gentleman why that was. It was because we had a very important Clause which we desired to argue at length coming shortly afterwards, and we decided that it was better to let his Clause go, because he had argued it from the narrow "Co-op" point of view, and to concentrate upon our own Clause which was coming afterwards. I know that he will not have such a spirit himself. I am asking for better treatment from him than we gave to him two years ago, and I am sure I can count upon his support on this occasion.
    Sir Peter Bennett: I beg to second the Motion.
    This is a matter in connection with which a considerable number of people feel that they are suffering an injustice,

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    and it is not good to allow even a small number of people to go on feeling that. Of course, large establishments take this sort of expenditure for temporary buildings in their stride, but the small organisations feel it very keenly. I come from a city of small organisations, where there is a large number of small business people who are very concerned at the fact that they can get only temporary licences, and yet their expenditure will be treated eventually as permanent capital. We always have this quarrel with the Revenue who insist upon treating as real capital, money which we have had to sink and write off—money which is lost and gone for ever. They say it is still capital because it came out of the capital account originally.
    These people of whom I speak are in that position. They have taken temporary premises in order to carry on and yet they are not allowed to write them off; they are not allowed the allowance for taxation purposes. I feel very strongly on this matter, because my mind has been going back to this very month ten years ago when I was given the job of creating an organisation to deal with business premises that were likely to be bombed. The House will remember that we were only just in time; we got the organisation going in July and in August the bombs started to fall. My reason for mentioning that is simply this: that I spent my time then encouraging people to take temporary premises, to do everything they possibly could to get going when they were hit. That put moral fibre back into people who were down and out; it helped their workers; it had a great psychological value. It now seems very hard that, having told those people to get on with it, not to think about anything else but to find somewhere to be able to get going at all costs, they should now be treated like this.
    The Solicitor-General: I am sorry to say that we cannot accept this new Clause, and I will endeavour to give the reasons which actuate us in coming to that decision. The new Clause, of course, as the hon. Member for Chippenham (Mr. Eccles) pointed out, applies only to non-industrial buildings—broadly speaking, shops and similar business premises. He also pointed out that as matters stand they already enjoy the ordinary deprecia-
    184
    tion allowances, exceptional depreciation, wear and tear, and so on, so that they are not altogether without relief as the law stands.
    10.30 p.m.
    There are many and weighty reasons why we feel we cannot accept the Clause. To begin with, it would be impracticable not to extend it to a whole variety of different cases. The hon. Member for Chippenham referred to a speech which I made two years ago, in which I spoke of a soldier who had returned and in order to set himself up in business had opened a temporary shop. I gave that only as an example. But if we allowed this measure of relief in that case, we would have to extend it to all sorts of temporary premises if we wanted to act fairly as between one taxpayer and another. I gave only that example, but it is easy to find others in respect of which a stronger case could be put forward. Therefore, it would not be fair as between one taxpayer and another to accept the Clause as it stands.
    Purely as a matter of drafting—though this could be remedied—the Clause is incomplete in that it does not provide for anything in the nature of a balancing charge in the event of the relief being shown to be too much. The main reason we cannot accept the Clause is, as I pointed out previously and as the hon. Member for Chippenham reminded the House I had pointed out before, that it would constitute a complete departure in principle from the basis of the Income Tax Act, 1945.
    As the then Chancellor of the Exchequer said, in moving the Second Reading of the Bill, the relief by way of initial and other allowances was limited to industrial buildings in the true sense, that is, buildings necessary for the productive industries upon which our industrial strength depends, and he carefully limited the relief which he felt able to give in the Bill to that kind of building. The position as he envisaged it at that time is, for this purpose, the same at the present day. We still feel it necessary to give the relief first where it is of most importance from the national point of view and we think, as the Chancellor thought at that time, that the great productive industries certainly should come first.

    185
    The only reason we are asked to depart from that principle is that the premises in question are temporary premises. I put it to the House that this is a wholly inadequate reason for departing from the principle of the 1945 Act. It would be quite impracticable to apportion relief on premises on the ground that they were temporary. It would be a very doubtful Income Tax principle to give relief according to whether a building is short-lived or long-lived.
    Let me give an example. Take a shop which cost £1,500 and has a life of five years; the amortisation rate would be £300 a year. Then take a shop which cost £15,000 and has a life of 50 years; it would have the same annual rate of amortisation. It would be impossible, as a matter of logic or as a matter of consistency, to give relief for the shop that has the shorter life and refuse it for the shop that has the longer life. It would be altogether unjustified. The Clause would have the effect of giving relief only in the case of the shop with the short life.
    There is the further objection that the expression "temporary" is far too vague to be translated into an Act of Parliament in this connection. It is well known that a number of planning authorities give permission for a limited period at first and then extend the period of permission when the first permission has expired. For example, I know of a ease where the premises cost £2,400, and a licence was given for seven years in the first place and was extended ultimately to 20 years. In that case, are the premises to be regarded as temporary or not.
    Sir H. Williams: May I interrupt the right hon. and learned Gentleman? He is talking about temporary premises. We have the Minister of Health talking about temporary housing, and the Financial Secretary to the Treasury talking about temporary civil servants. What is the difference between the "temporary" in those cases and the "temporary" about which the right hon. and learned Gentleman is talking?.
    The Solicitor-General: I was talking about a taxing Statute where there has to be precision. If there were no definition, no clear idea of what the premises were and whether they came within the scope of the Bill, it would lead to most impos-
    186
    sible results if this sort of relief were given. That is what I meant when I said that the expression in the new Clause is hopelessly vague in that context. This, again, is a matter which I am told has been represented to the Tucker Committee, which will not doubt consider these representations, and any recommendations the Committee think proper to make will receive, as indeed all recommendations coming from that Committee would naturally do, careful consideration by the Government.
    But at the moment the Government cannot see their way to accept the Clause. The basic reason is that it involves a radical departure from the principle of the 1945 Act on an inadequate ground, namely, that the premises are temporary premises, and would mean that one would have to go too far into the types of premises. It would also be unfair to different groups of taxpayers, all of whom could put forward equally strong cases with regard to the temporary premises they use, to limit it to this particular type. For those reasons, I hope the House will agree that it is not right to accept the Clause.
    Mr. Erroll: The Solicitor-General has made plain that he does not want to accept the principle of our new Clause. He has chosen to disparage it on certain narrow technical grounds. Maybe it is not perfectly drafted, and maybe we have not been precise in our wording; but surely the principle of the Clause is clear beyond all reasonable doubt. Who has not gone through blitzed towns since the war and seen how the shopkeepers in those towns have got going in temporary premises, determined at all costs to carry on their trade? To suggest that relief should be given only to industrial buildings, as though they were the only buildings that mattered, is merely to use a narrow argument to defeat the principle behind our new Clause.
    Suppose that these traders had decided not to set up in temporary premises but had said, "We will wait to make sure we are going to get the full tax relief before we start": suppose there had been no shops in any of the blitzed areas to replace the ones bombed; does anyone think that production would have been maintained or increased? In these days the distribution of goods efficiently

    187
    and cheaply in our great industrial areas is an essential part of our production efficiency, and cannot be separated from it. It is to the great credit of the small men and traders of our industrial towns that they did not wait upon a reluctant Chancellor of the Exchequer in war-time, but seized whatever means came to their power to get going again and to supply whatever goods they could to the industrial workers and their familities in the blitzed towns.
    Now they are to be told, several years after the end of the war, that they are not in the same category as productive industries, and that if they put up a building worth £1,500 with a life of only five years it would create an anomaly to compare them with the owner of a building worth £15,000 who had the good fortune not to be blitzed during the war. I suggest that this is a wholly unreasonable argument. To say that some relief has been accorded to these people is no defence against the representations which we have made, because the relief to which these traders are entitled is no more and no greater than the relief to which all traders were entitled during the war, and have been since that time. It may be that there is the problem of balancing charges, but surely that is a problem which could be overcome with goodwill on the part of the Solicitor-General and his advisers.
    Finally, I should like it to be made clear that here we have a situation in which traders who suffered great loss during the war in having their premises blitzed, and losing their stocks, have now to meet the inconvenience of setting themselves up again entirely out of taxed profits. It would have been tempting for them to have put up prices in order to bring in a bigger margin to offset their increased costs; but for the most part they did not do that. They have had to rely entirely on such profits as could be made, after paying taxation, to recover the exceptional costs which they have incurred. It may be that it is some time since the damage was incurred, but the injustice remains; and it is surely up to the Government to rectify it even at this late date.
    Sir H. Williams: May I, Mr. Deputy-Speaker, move to report Progress and ask leave to sit again, as none of the
    188
    three Ministers from the Treasury is present?
    Mr. Deputy-Speaker (Major Milner): I should not be able to accept that Motion.
    Mr. James Hudson: I am glad to take part in this Debate tonight and to find that the right hon. and learned Gentleman who had the facts in hand two years ago is here to reply. That seems to me to be quite adequate representation of the Treasury. As the hon. Member for Croydon, East (Sir H. Williams) was not here two years ago, he cannot be aware of the way his party behaved on that occasion. I shall be glad to devote a moment or two to giving him one or two of the facts.
    10.45 p.m.
    The hon. Member for Chippenham (Mr. Eccles) has done his best to indicate to me what he considers to be my failings on this occasion, since my name is not found among those supporting this new Clause. But the hon. Member's new Clause is very different from the Amendment which I moved two years ago. I still think that there was a case for my Amendment on the basis of my experience of the Co-operative Societies. I was not excluding claims on behalf of other traders on that occasion; but I knew the Co-operative Societies' case thoroughly. I had the facts of a large number of Co-operative Societies which had been forced to erect temporary premises, at great disadvantage to themselves, because of the delays imposed upon them in connection with town planning, and so on, when they would have preferred to erect their new permanent premises.
    This being a disability to them, I thought there was a case for my Amendment. I put the matter to the Government on that occasion in the hope that there could he some alleviation offered them in the form of taxation; but I found two years ago as I find tonight, that the right hon. and learned Gentleman was able to show that there would be an extremely large class of claimants who would come under this head if this alteration were permitted. That did not seem to affect hon. Members of the party opposite on that occasion. They left the whole of the speaking to me, and it was 1.15 in the morning; but their energies were not exhausted, because on that occasion they

    189
    talked until 6.20 a.m. and yet never found the opportunity to express—
    Captain Crookshank: May I interrupt the hon. Gentleman? The House adjourned that night at 12 minutes past two o'clock.
    Mr. Hudson: At 12 minutes past two? Well, I found it difficult to get a copy of HANSARD for that day; there would seem to be a "corner" in copies of HANSARD on the part of right hon. and hon. Members opposite. I shall have to look in different quarters.
    Mr. N. H. Lever: What time was it?
    Mr. Hudson: On 7th June it was 20 minutes past six in the morning. I have now a copy of the OFFICIAL REPORT with my speech published in it, and it must be right. I am only trying to say that on that occasion hon. Members opposite found that the right hon. and learned Gentleman's reply was apparently quite satisfactory. They said nothing about it after that, especially when the hon. Member for Chippenham stated that there was some other Amendment coming later. They did not challenge a Division. They were perfectly willing to let it go; and on the present occasion, seeing that we have had a very good reply, I am perfectly willing to be led by the example of hon. Members opposite two years ago and say that there is no need on this occasion to divide the House.
    Mr. Ian L. Orr-Ewing: I consider that it would be most improper to delve so deeply into history as the hon. Member opposite has done, but I say that the reason which calls forth this Clause is that the whole procedure is really governed by Government policy. It is, I think, very wrong that, when the Government set out a policy and have control of that policy by saying what shall, or shall not, be built, at the same time those who have suffered under that policy should feel that the Government have failed in their duty.
    I suggest that it would have been wiser if greater licence had been granted to cover exactly the sort of case which this new Clause seeks to cover. But whether it would have been wiser or not, these people for whom we are asking for this slight improvement—and it cannot be called more than a slight improvement—
    190
    are those who have, in fact, suffered from the action, or inaction, of the Government; or perhaps the inability of the Government to take action. For this reason, among many others, I support this new Clause.
    Captain Crookshank: We on this side are not satisfied, although the hon. Member for Ealing, North (Mr. J. Hudson) appears to be quite happy, with the Solicitor-General's reply. I should like also to add that we are extremely dissatisfied that once again, on an important new Clause, not one of the three Treasury Ministers should see fit to be here. The question is one which obviously has a very considerable bearing on the economic life of the country. It certainly has on the economic situation in the towns and areas where the shops and premises are situated. [An HON. MEMBER: "And in Bristol"] Considering that we have a Minister of State for Economic Affairs, it really is almost intolerable that he should not be here to listen to the arguments which my hon. Friends have so cogently put forward.
    If there were no other reason, I should ask the House to divide on these grounds alone; but as a matter of fact we are not satisfied with what the right hon. and learned Gentleman said. After all, he is here to interpret the law, generally speaking, on the Finance Bill and not to go into policy questions, and right well he does interpret the law, until it is reversed elsewhere. For the moment, this is purely an economic question of the hardship undergone by those people who are occupying premises which were damaged during the war. When the right hon. and learned Gentleman says that it is rather difficult to say what exactly is covered by this new Clause, I would point out that the words are absolutely clear. They are
    "… temporary premises by reason of war damage …"
    and the expression "temporary premises" is thereafter explained in subsection (2).
    My hon. Friends would be perfectly ready to admit that there may be drafting mistakes in the Clause; that is bound to be the case when Clauses are discussed for the first time on the Report stage, which is the last effective stage of the Finance Bill. On the other hand, as I said earlier, this Clause was not put on the Order Paper only this morning, and

    191
    had there been a will to do anything about it, the Government could quite well have produced the necessary words to bring it into due form and order.
    We think there is a case for special arrangements to be made just as the hon. Member for Ealing, North, did two years ago. At that time, the Solicitor-General was arguing that it was not good to do it because it was all a question of priorities, and that the first priority obviously had to be for industrial buildings. Granted that was so, but that was two years ago, and now that these owners of premises are suffering under an injustice and a grievance, as they think it is, it would be right for this House to go into the matter and give them some form of redress. The Government, through the mouth of the Solicitor-General, have refused to do that. I do not blame the Solicitor-General; he
    is not responsible for the policy; but I do object and resent the fact that Treasury Ministers are not here, and I hope my hon. Friends will divide the House.
    Mr. Hudson: On a point of personal explanation. I made a mistake in what I said in response to an interruption by the right hon. and gallant Gentleman. He was right in his statement, and I feel it necessary to say that. I had the copy of HANSARD very late and slipped over a whole day in computing the time of the Debate.
    Captain Crookshank: I am much obliged to the hon. Gentleman. We shall have a glass of milk over it together.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 273; Noes, 286.

    Division No. 54.]

    AYES

    [10.57 p.m

    Aitken, W. T.

    Crosthwaite-Eyre, Col. O. E.

    Heald, L. F.

    Alport, C. J. M.

    Crouch, R. F.

    Henderson, John (Cathcart)

    Amory, D. Heathcoat (Tiverton)

    Crowder, Capt. John F. E. (Finchley)

    Hicks-Beach, Maj. W. W.

    Amery, J. (Preston, N.)

    Crowder, F. P. (Ruislip-Northwood)

    Higgs, J. M. C.

    Arbuthnot, John

    Cundiff, F. W.

    Hill, Mrs. E. (Wythenshawe)

    Ashton, H. (Chelmsford)

    Cuthbert, W. N.

    Hill, Dr. C. (Luton)

    Assheton, Rt. Hon. R. (Blackburn, W.)

    Darling, Sir W. Y. (Edinburgh, S.)

    Hinchingbrooke, Viscount

    Baker, P.

    Davidson, Viscountess

    Hirst, Geoffrey

    Baldock, J. M.

    Davies, Rt. Hn. Clement (Montgomery)

    Hogg, Hon. Q.

    Baldwin, A. E.

    Davies, Nigel (Epping)

    Hollis, M. C.

    Baxter, A. B.

    de Chair, S.

    Holmes, Sir J Stanley (Harwich)

    Beamish, Maj. T V. H.

    De la Bère, R.

    Hope, Lord J.

    Bell, R. M.

    Bell, R. M.

    Deedes, W. F.

    Hopkinson, H. L. D'A

    Bennett, Sir P. (Edgbaston)

    Dodds-Parker, A. D.

    Hornsby-Smith, Miss P

    Bennett, R. F. B. (Gosport)

    Douglas-Hamilton, Lord M

    Horsbrugh, Miss F.

    Bennett, W. G. (Woodside)

    Drayson, G. B.

    Howard, G. R. (St. Ives)

    Bevins, J. R. (Liverpool, Toxteth)

    Drewe, C.

    Howard, Gerald (Cambridgeshire)

    Birch, Nigel

    Dugdale, Maj. Sir T. (Richmond)

    Hudson, Sir Austin (Lewisham, N.)

    Bishop, F. P.

    Duncan, Capt. J. A. L.

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

    Black, C. W.

    Dunglass, Lord

    Hudson, W. R. A. (Hull, N.)

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

    Duthie, W. S.

    Hulbert, Wing-Cdr. N. J.

    Boothby, R.

    Eccles, D. M.

    Hutchinson, Geoffrey (Ilford, N.)

    Bossom, A. C

    Eden, Rt. Hon. A.

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

    Bowen, R

    Erroll, F. J.

    Hyde, H. M.

    Bower, N.

    Fisher, Nigel

    Jeffreys, General Sir G

    Boyd-Carpenter, J. A.

    Fletcher, W. (Bury)

    Jennings, R.

    Bracken, Rt. Hon. Brendan

    Fort, R.

    Johnson, Howard S. (Kemptown)

    Braine, B.

    Foster, J. G.

    Jones, A. (Hall Green)

    Braithwaite, Lt.-Comdr. J. G

    Fraser, Hon. H. C. P. (Stone)

    Joynson-Hicks, Hon. L. W

    Bromley-Davenport, Lt.-Col. W

    Fraser, Sir I. (Lonsdale)

    Kaberry, D.

    Brooke, H (Hampstead)

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

    Keeling, E. H.

    Browne, J. N. (Govan)

    Galbraith, Cmdr. T. D. (Pollak)

    Kerr, H. W. (Cambridge)

    Buchan-Hepburn, P. G. T.

    Galbraith, T. G. D. (Hillhead)

    Kingsmill, Lt.-Col. W. H

    Bullock, Capt. M.

    Gammans, L. D.

    Lambert, Hon. G.

    Bullus, Wing-Commander E. E

    Garner-Evans, E. H. (Denbigh)

    Lancaster, Col. C. G

    Butcher, H. W.

    Gates, Maj. E. E.

    Langford-Holt, J

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

    Gomme-Duncan, Col. A.

    Law, Rt. Hon. R. K

    Carr, L. R. (Mitcham)

    Granville, E. (Eye)

    Leather, E. H. C.

    Channon, H.

    Gridley, Sir A.

    Legge-Bourke, Maj. E. A. H

    Clarke, Col. R. S. (East Grinstead)

    Grimond, J.

    Lennox-Boyd, A. T.

    Clarke, Brig. T. H. (Portsmouth, W)

    Grimston, Hon. J. (St. Albane)

    Lindsay, Martin

    Colegate, A

    Grimston, R. V. (Westbury)

    Linstead, H. N.

    Conant, Maj. R. J. E.

    Harden, J R E.

    Llewellyn, D.

    Cooper, A. E. (Ilford. S.)

    Hare, Hon. J. H. (Woodbridge)

    Lloyd, Rt. Hon. G. (King's Norton)

    Cooper-Key, E. M.

    Harris, F W. (Croydon, N.)

    Lloyd, Maj. Guy (Renfrew, E.)

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

    Harris, R. R. (Heston)

    Lloyd, Selwyn (Wirral)

    Craddock, G. B. (Spelthorne)

    Harvey, Air-Codre. A. V. (Macclesfield)

    Lockwood, Lt.-Col. J. C.

    Cranborne, Viscount

    Harvey, Ian (Harrow, E.)

    Longden, C. J. M. (Herts, S.W.)

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

    Hay, John

    Low, A. R. W.

    Cross, Rt. Hon. Sir R.

    Head, Brig. A. H.

    Lucas, Major Sir J. (Portsmouth, S.)

    Lucas, P. B. (Brentford)

    Orr-Ewing, Ian L. (Weston-super-Mare)

    Strauss, Henry (Norwich, S.)

    Lucas-Tooth, Sir H.

    Osborne, C.

    Stuart, Rt. Hon. J. (Moray)

    Lyttelton, Rt. Hon O.

    Perkins, W. R. D.

    Studholme, H. G

    McAdden, S. J.

    Peto, Brig. C. H. M

    Summers, G S

    McCallum, Maj. D.

    Pickthorn, K

    Sutcliffe, H.

    McCorquodale, Rt. Hon. M. S.

    Pitman, I. J.

    Taylor, C. S. (Eastbourne)

    Macdonald, Sir P. (I. of Wight)

    Powell, J. Enoch

    Taylor, W J. (Bradford, N.)

    Mackeson, Brig. H. R.

    Prescott, Stanley

    Thomas, J. P. L. (Hereford)

    McKibbin, A.

    Price, H. A. (Lewisham, W.)

    Thompson, K. P. (Walton)

    McKie, J. H. (Galloway)

    Prior-Palmer, Brig. O.

    Thompson, R. H. M. (Croydon, W.)

    Maclay, Hon. J. S.

    Profumo, J. D.

    Thorneycroft, G. E. P. (Monmouth)

    Maclean, F. H. R.

    Raikes, H. V.

    Thornton-Kemsley, C. N.

    MacLeod, Iain (Enfield, W.)

    Rayner, Brig. R.

    Thorp, Brigadier R. A. F.

    MacLeod, John (Ross and Cromarty)

    Redmayne, M.

    Tilney, John

    Macmillan, Rt. Hon. Harold (Bromley)

    Remnant, Hon. P.

    Touche, G C

    Macpherson, N. (Dumfries)

    Renton, D. L. M

    Turton, R. H.

    Manningham-Buller, R. E

    Roberts, P. G. (Heeley)

    Tweedsmuir, Lady

    Marlowe, A. A. H.

    Robertson, Sir D. (Caithness)

    Vane, W. M. F.

    Marples, A. E

    Robinson, J. Roland (Blackpool, S)

    Vaughan-Morgan, J. K.

    Marshall, D. (Bodmin)

    Robson-Brown, W (Esher)

    Vosper, D. F.

    Marshall, S. H. (Sutton)

    Roper, Sir H.

    Wade, D. W.

    Maude, A. E. U. (Ealing, S.)

    Ropner, Col. L.

    Wakefield, E. B. (Derbyshire, W.)

    Maude, J. C. (Exeter)

    Ross, Sir R. D. (Londonderry)

    Wakefield, Sir W. W. (St. Marylebone)

    Maudling, R.

    Russell, R S.

    Walker-Smith, D. C.

    Medlicolt, Brigadier F

    Ryder, Capt R. E. D

    Ward, Hon. G. R. (Worcester)

    Mellor, Sir J.

    Sandys, Rt Hon D.

    Ward, Miss I. (Tynemouth)

    Molson, A. H. E.

    Scott, Donald

    Waterhouse, Capt. C.

    Moore, Lt.-Col. Sir T.

    Shepherd, W. S (Cheadle)

    Watkinson, H.

    Morrison, Maj. J. G. (Salisbury)

    Smiles, Lt.-Col. Sir W.

    Watt, Sir G. S. Harvie

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

    Smith, E. Martin (Grantham)

    Webbe, Sir H. (London)

    Mott-Radclyffe, C. E

    Smithers, Peter H. B. (Winchester)

    White, J. Baker (Canterbury)

    Nabarro, G

    Smithers, Sir W. (Orpington)

    Williams, C. (Torquay)

    Nicholls, H

    Smyth, Brig. J. G. (Norwood)

    Williams, Gerald (Tonbridge)

    Nicholson, G

    Snadden, W. McN.

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

    Noble, Comdr. A. H. P

    Soames, Capt. C.

    Wills, G.

    Nugent, G. R H

    Spearman, A. C. M.

    Wilson, Geoffrey (Truro)

    Nutting, Anthony

    Spence, H. R. (Aberdeenshire, W.)

    Woods, Rev. G. S.

    Oakshott, H. D

    Spens, Sir P. (Kensington, S.)

    Young, Sir A. S. L.

    Odey, G. W.

    Stanley, Capt. Hon. R. (N. Fylde)

    Ormsby-Gore, Hon. W. D

    Stevens, G. P

    TELLERS FOR THE AYES:

    Orr, Capt. L. P. S.

    Steward, W. A. (Woolwich, W.)

    Major Wheatley and Mr. Digby.

    Orr-Ewing, Charles Ian (Hendon, N.)

    Storey, S.

    NOES

    Acland, Sir Richard

    Clunie, J.

    Evans, E. (Lowestofe)

    Adams, Richard

    Cocks, F. S.

    Evans, S. N. (Wednesbury)

    Albu, A. H.

    Coldrick, W.

    Ewart, R.

    Allen, A. C. (Bosworth)

    Collick, P.

    Fernyhough, E.

    Allen, Scholefield (Crewe)

    Collindridge, F.

    Field, Capt. W. J.

    Anderson, F. (Whitehaven)

    Cook, T. F.

    Finch, H. J.

    Awbery, S. S.

    Cooper, G. (Middlesbrough, W.)

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

    Ayles, W. H.

    Cooper, J. (Deptford)

    Follick, M.

    Bacon, Miss A.

    Corbet, Mrs. F. K. (Peckham)

    Foot, M. M.

    Baird, J.

    Cove, W. G.

    Forman, J. C.

    Balfour, A.

    Craddock, George (Bradford, S.)

    Fraser, T. (Hamilton)

    Barnes, Rt. Hon. A. J

    Crawley, A.

    Freeman, J. (Watford)

    Bartley, P.

    Cripps, Rt. Hon. Sir S.

    Freeman, Peter (Newport)

    Bellenger, Rt. Hon. F J

    Crosland, C. A. R.

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

    Benson, G.

    Crossman, R. H. S

    Ganley, Mrs. C. S.

    Beswick, F.

    Cullen, Mrs. A.

    Gibson, C. W.

    Bing, G. H. C.

    Daines, P.

    Gilzean, A.

    Blackburn, A. R.

    Dalton, Rt. Hon. H.

    Glanville, J. E. (Consett)

    Blenkinsop, A.

    Darling, G. (Hillsboro')

    Gordon,Walker, Rt. Hon. P. C.

    Blyton, W. R.

    Davies, A. Edward (Stoke, N.)

    Greenwood, A. W. J. (Rossendale)

    Boardman, H.

    Davies, Ernest (Enfield, E.)

    Greenwood, Rt. Hn. Arthur (Wakefield)

    Booth, A.

    Davies, Harold (Leek)

    Grey, C. F.

    Bottomley A. G.

    Davies, R. J. (Westhoughton)

    Griffiths, D. (Rother Valley)

    Bowden H. W.

    Davies, S. O. (Merthyr)

    Griffiths, Rt. Hon. J. (Llanelly)

    Bowles, F. G (Nuneaton)

    de Freltas, Geoffrey

    Griffiths, W. D. (Exchange)

    Braddock Mrs. E. M.

    Deer, G.

    Gunter, R. J.

    Brockway, A. Fenner

    Diamond, J.

    Hale, Leslie (Oldnam, W.)

    Brook, D. (Halifax)

    Dodds, N. N.

    Hall, J. (Gateshead, W.)

    Brooks, T. J. (Normanton)

    Donnelly, D.

    Hall, Rt. Hn. W. Glenvil (Colne V'll'y)

    Broughton, Dr. A. D. D.

    Donovan, T. N.

    Hamilton, W. W.

    Brown, George (Belper)

    Driberg, T. E. N.

    Hannan, W.

    Brown, T. J. (Ince)

    Dugdale, Rt. Hon. J. (W. Bromwich)

    Hardman, D. R.

    Burke, W. A.

    Dye, S.

    Hardy, E. A

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

    Ede, Rt. Hon. J. C.

    Hargreaves, A.

    Callaghan, James

    Edelman, M.

    Harrison, J.

    Carmichael, James

    Edwards, John (Brighouse)

    Hastings, Dr. Somerville

    Castle, Mrs. B. A.

    Edwards, Rt. Hon. N. (Caerphilly)

    Hayman, F. H.

    Champion, A. J.

    Edwards, W. J. (Stepney)

    Henderson, Rt. Hon. A.(Rowley Regis)

    Chetwynd, G. R.

    Evans, Albert (Islington, S.W.)

    Herbison, Miss M.

    194

    195

    Hewitson, Capt. M.

    Manuel, A. C.

    Snow, J. W

    Hobson, C. R.

    Marquand, Rt. Hon. H. A

    Sorensen, R. W.

    Holman, P.

    Mathers, Rt. Hon. George

    Soskice, Rt. Hon Sir F

    Holmes, H. E. (Hemsworth)

    Mellish, R. J.

    Sparks, J. A.

    Houghton, Douglas

    Messer, F.

    Steele, T.

    Hoy, J.

    Middleton, Mrs. L.

    Stokes, Rt. Hon. R. R.

    Hubbard, T.

    Mikardo, Ian

    Strachey, Rt. Hon J

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

    Mitchison, G. R.

    Strauss, Rt. Hon. G R (Vauxhall)

    Hughes, Emrys (S. Ayr)

    Moeran, E. W.

    Stross, Dr. B

    Hughes, Hector (Aberdeen, N.)

    Monslow, W.

    Summerskill, Rt. Hon Edith

    Hughes, Moehwyn (Islington, N.)

    Moody, A. S.

    Sylvester, G O.

    Hynd, H. (Accrington)

    Morgan, Dr. H. B

    Taylor, H. B. (Mansfield)

    Hynd, J. B. (Attercliffe)

    Morley, R.

    Taylor, R. J. (Morpeth)

    Irvine, A. J. (Edge Hill)

    Morris, P. (Swansea, W.)

    Thomas, D. E. (Aberdare)

    Irving, W. J. (Wood Green)

    Mort, D. L.

    Thomas, George (Cardiff)

    Isaacs, Rt. Hon. G. A.

    Moyle, A.

    Thomas, I O. (Wrekin)

    Janner, B.

    Mulley, F. W.

    Thomas, I. R. (Rhondda, W.)

    Jay, D. P. T.

    Nally, W.

    Thorneycroft, Harry (Clayton)

    Jeger, G. (Goole)

    Noel-Baker, Rt. Hon. P. J.

    Thurtle, Ernest

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

    O'Brien, T.

    Timmons, J.

    Jenkins, R. H.

    Oldfield, W. H

    Tomlinson, Rt. Hon. G

    Johnson, James (Rugby)

    Oliver, G. H

    Tomney, F.

    Johnston, Douglas (Paisley)

    Orbach, M

    Usborne, Henry

    Jones, D. T. (Hartlepool)

    Padley, W. E

    Vernon, Maj. W. F

    Jones, Frederick Elwyn (West Ham, S)

    Paling, Will T. (Dewsbury)

    Viant, S. P.

    Jones, Jack (Rotherham)

    Pannell, T. C.

    Wallace, H. W.

    Jones, William Elwyn (Conway)

    Pargiter, G. A.

    Watkins, T. E.

    Keenan, W.

    Parker, J.

    Webb, Rt. Hon. M. (Bradford. C.)

    Kenyon, C.

    Paton, J

    Weitzman, D.

    Key, Rt. Hon. C. W.

    Pearson, A

    Wells, P. L. (Faversham)

    King, H. M.

    Peart, T. F.

    Wells, W. T. (Walsall)

    Kinley, J.

    Poole, Cecil

    West, D. G.

    Lang, Rev. G.

    Porter, G.

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

    Lee, F. (Newton)

    Price, M. Philips (Gloucestershire, W.)

    White, Mrs. E. (E. Flint)

    Lee, Miss J. (Cannock)

    Pryde, D. J.

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

    Lever, L. M. (Ardwick)

    Pursey, Comdr. H.

    Whiteley, Rt. Hon. W

    Lever, N. H. (Cheetham)

    Rankin, J.

    Wigg, George

    Lewis, A W. J. (West Ham, N.)

    Rees, Mrs. D.

    Wilcock, Group-Capt. C. A. B

    Lewis, J. (Bolton, W.)

    Reeves, J.

    Wilkins, W. A.

    Lindgren, G. S.

    Reid, T. (Swindon)

    Willey, F. T (Sunderland)

    Lipton, Lt.-Col. M,

    Reid, W. (Camlachie)

    Willey, O. G. (Cleveland)

    Logan, D. G.

    Rhodes, H

    Williams, Ronald (Wigan)

    Longden, F. (Small Heath)

    Richards, R

    Williams, Rt. Hon. T (Don Valley)

    McAllister, G.

    Robens, A

    Williams, W. T (Hammersmith, S.)

    MacColl, J. E.

    Roberts, Goronwy (Caernarvonshire)

    Wilson, Rt. Hon. J. H. (Huyton)

    McGhee, H. G.

    Robertson, J. J. (Berwick)

    Winterbottom, I. (Nottingham, C.)

    McInnes, J.

    Robinson, Kenneth (St. Pancras, N.)

    Winterbottom, R. E. (Brightside)

    Mack, J. D.

    Rogers, G. H. R. (Kensington, N)

    Wise, Major F. J.

    McKay, J. (Wallsend)

    Ross, William (Kilmarnock)

    Woodburn, Rt Hon. A

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

    Shackleton, E. A. A.

    Woods, Rev. G. S.

    McLeavy, F

    Shawcross, Rt. Hon. Sir H

    Wyatt W. L.

    MacMillan, M. K. (Western Isles)

    Shurmer, P. L. E.

    Yates, V. F.

    MacPherson, Malcolm (Stirling)

    Silverman, J. (Erdington)

    Younger, Hon. Kenneth

    Mainwaring, W. H.

    Silverman, S. S. (Nelson)

    Mallalieu, E. L. (Brigg)

    Simmons, C J

    TELLERS FOR THE NOES:

    Mallalieu, J. P. W (Huddersfield, E.)

    Slater, J.

    Mr. Popplewell and Mr. Royle.

    Mann, Mrs. J.

    Smith, Ellis (Stoke, S.)

    Question put, and agreed to.

    Further consideration of the Bill, as amended, adjourned.—[Mr. Pearson.]
    Bill, as amended (in Committee and on recommittal), to be further considered Tomorrow.

  FIRE SERVICES, SCOTLAND (COMPENSATORY GRANTS)
  11.5 p.m.
  Colonel Gomme-Duncan: I beg to move,
  That an humble Address be presented to His Majesty, praying that the Fire Services (Conditions of Service) (Scotland) (Amendment) Regulations, 1950 (S.I. 1950, No. 887), a copy of which was laid before this House on 31st May, be annulled.
  196
  It will be recalled that within the last two or three weeks the contents of these Regulations were discussed in similar Regulations relating to England and Wales. That was on Statutory Instrument No. 686, 1950, and the Debate was on 22nd May, 1950. Briefly the matter is that firemasters in Scotland, who are the equivalent, I believe, of chief officers in England and Wales, are entitled to their pay plus quarters, or, if there are no quarters available, they are entitled to allowances in lieu. The officer with quarters is not taxed on them, and the one who has the allowance in lieu is taxed on it.
  Unfortunately the Under-Secretary of State for Scotland will not be able to

  197
  answer the questions we are going to put to him because it is a matter for the Treasury, as was emphasised on the occasion the English Regulations were debated. I am particularly sorry, too, on this occasion to see that there is no Treasury representative on the Government Front Bench, and I am afraid that the Under-Secretary of State for Scotland will be in the same quandary as was the Under-Secretary of State for the Home Department.
  This matter is really reduced to ridicule if one bears in mind that the man who draws an allowance in lieu of quarters is taxed on it, but in order that he should not be the loser a supplementary allowance is made to make up for that Income Tax, and on that supplementary allowance Income Tax is charged. Therefore, a supplementary allowance is issued in order that the Income Tax which was required for the first supplementary allowance against the Income Tax originally charged may be balanced up again. I read recently in the "Budget of Paradoxes" published in 1850 by Professor De Morgan:
  "Great fleas have little fleas upon their backs to bite 'em,
  And little fleas have lesser fleas, and so ad infinitum;
  And the great fleas themselves in turn have greater fleas to go on,
  While these again have greater still, and greater still, and so on."
  Written in 1850, these lines are just as applicable to 1950.
  The Chancellor of the Exchequer, on the Committee stage of this year's Finance Bill, emphasised in the case of the Services that if it was considered that they should have greater remuneration to meet their costs of living, it should be done by increases in pay and not by a change in the method of taxation. He also mentioned miners, and re-emphasised again his attitude to Service allowances. But tonight we have a determined effort on the part of the Secretary of State for Scotland, in collusion with the Secretary of State for the Home Department—who tried the same thing the other night and got away with it—to dodge the Chancellor's edict. How else can we explain these Regulations?
  Now, does the Chancellor—and it really is intolerable that no Treasury representative is here tonight—intend that these senior officers of the fire services in
  198
  Scotland and England should have special treatment over that given to miners, sailors, soldiers or airmen? What does he say on this matter? I will, with permission, read a word or two from the OFFICIAL REPORT of 20th June last. When asked by my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) why he would not deal with this question, as between the fire services and the Fighting Services, the Chancellor said:
  "The basis of these supposed equivalents was with the knowledge and understanding that they were taxed. That is the whole fallacy. The whole of this structure is based upon the assumption that these three types of allowances would be taxed; the figures and everything else have been fixed in relationship to that state of affairs. Obviously, therefore, it would not be right to disturb that state of affairs, upon which the whole structure has been erected."—[OFFICIAL REPORT, 20th June. 1950; Vol. 476, c. 1170–1.]
  Well, that is what he said in relation to the Fighting Services. Does he say that similar conditions should not apply in the case of firemasters? If not, why not?
  This is, without exaggeration, a clear case of discrimination between two kinds of taxpayers faced with the same problem. Both get allowances to meet what is not available in kind. That is important to remember. It is not available in kind, so they are paid an allowance in lieu. Both of them pay tax but one only is reimbursed for that tax. Now why is that?
  When debating the English Regulations the Under-Secretary of State for the Home Department said, on 22nd May:
  "Under the Income Tax law, a man occupying free quarters 'as a necessary consequence of his employment'"—
  and that applies both to the Fighting Services and to firemasters—
  "does not pay Income Tax on the value of those quarters. The man who received rent allowance instead did pay Income Tax on that rent allowance. I stress again that in the case of firemen, this necessary consequence of their employment, is a factor of the greatest importance."
  It is in the case of firemasters and also in the case of the Fighting Services.
  "To make it fairer, therefore, those who got rent allowance were given this extra compensatory grant to cover the Income Tax they paid. That grant, like the rent allowance itself, was taxable. A compensatory grant may not have been, or may not be in the case of chief officers"—
  that is, firemasters in Scotland—

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  "who are still to be covered by it, the ideal solution of what is admittedly an extremely difficult fire brigade problem …. what alternatives were there? If we increased the rent allowance to take account of the average amount of Income Tax paid it would mean making a flat rate of increase which would ignore the particular man's liability"—
  and—
  "it would most likely cause great hardship."
  Then my hon. Friend the Member for Kingston-upon-Thames again asked whether this would not apply to the Fighting Services, and the Under-Secretary said:
  "I ask the hon. Member to consider the nature of the fireman's job in relation to the quarters he must occupy as a necessary consequence of his employment."—[OFFICIAL REPORT, 22nd May, 1950; Vol. 475, c. 1803.]
  Well, where do we stand in this matter? Here we have two diametrically opposed schools of thought, one on the part of the Chancellor who says it must not be and the other on the part of the Home Secretary and the Secretary of State for Scotland who say it shall be. I think it is not unreasonable to say that the House and the country are entitled to know which is correct and what is Government policy on this very important matter. Is the Chancellors' method correct or is that of the Secretary of State for Scotland and his right hon. Friend the Home Secretary? One thing is quite certain: they cannot both be right, because they are diametrically opposed to each other.
  It is the fantastic rate and state of taxation which is responsible for this. We have the dreadful state of affairs that the rate of taxation is so high that Ministers are driven to think and say and write that a man must be given some compensation because taxation is intolerable. But that one man doing the same job in the same service as another should be treated differently is a poisonous and dangerous policy—and not only that, it is stupid. It is maddeningly irritating to the persons concerned. Most important, I believe it to be entirely unjust.
  11.16 p.m.
  Mr. Boyd-Carpenter: I beg to second the Motion.
  I have a good deal of sympathy with whichever one of the Under-Secretaries of State for Scotland is to reply, because he will be in the position of a man who has
  200
  to defend, as many of us have to do, interests for which he is responsible against the policy of his colleagues. I think the case which the Under-Secretary of State for the Home Department made on the English Regulations a few weeks ago is really unanswerable, but it is unfortunately one which the Chancellor of the Exchequer none the less tried to answer.
  The difficulty with which right hon. Gentlemen opposite are faced is this: Is it, or is it not, the policy of the Government that allowances of this kind should be paid subject to tax? While there are arguments in favour of their being tax-free, there are arguments in favour of submitting them to tax. Surely there is no justification whatever for treating differently senior officers of the fire services and officers of the Armed Forces of the Crown? As my hon. and gallant Friend the Member for Perth and East Perthshire (Colonel Gomme-Duncan) said, both policies cannot be right, and I am the last man to attack Regulations because they are contrary to the policy of the Chancellor of the Exchequer. I must confess that the fact that they are contrary to the right hon. and learned Gentleman's policy is to me prima facie evidence that they are right.
  None the less, it cannot be administratively justifiable for the Home Office and the Scottish Office to take one line of action and the War Office, the Air Ministry and the Admiralty to take another. I hope that when the hon. Gentleman replies he will not confine himself to justifying these Regulations, but will recall that he is a member of a Government which in many respects is taking an opposite line and that every argument he adduces in favour of his own Regulations is a damning condemnation of the Chancellor of the Exchequer.
  11.19 p.m.
  Mr. Messer: It is difficult to understand why this Prayer has been moved. It has been well known in local government that emoluments have never been subject to tax. I can well understand that if certain principles apply to officers of the Armed Forces and different principles are being applied to officers of the fire services, they ought to be adjusted, but the attempt to adjust them on these grounds seems to me strange.

  201
  We are to have resident firemasters and under the Income Tax law the rent for the premises they occupy is not counted. We shall also have firemasters for whom we cannot find accommodation, and they are to be granted a sum of money in lieu of accommodation; but, by virtue of the fact that it is a sum of money, it becomes taxable. We therefore find that the two firemasters or chief officers are placed in the position that the one who occupies premises that are part of his office or emolument, would be better off, unless there was some compensatory grant made to the other one, who is occupying premises for which he must pay rent. It seems elementary justice that a compensatory grant should be made.
  Mr. Boyd-Carpenter: If it be elementary justice in the case of the firemaster, why is it not elementary justice in the case of the soldier?
  Mr. Messer: I think that question should be directed to the Service Department and not to the Scottish Office or the Home Office, who are doing the right thing.
  Mr. A. R. W. Low: Will the hon. Gentleman tell the House how he voted on a new Clause which we debated earlier in the day?
  Mr. Messer: There is no relevance in that at all. The hon. Gentleman might imagine that I voted in ignorance. If he does, I would retort by saying that for the period he has been in the House, he has displayed more ignorance than I have in the 20 years I have been here.
  11.22 p.m.
  The Joint Under-Secretary of State for Scotland (Mr. Thomas Fraser): I think the mover and seconder of the Motion have made it clear in their remarks that they do not expect me to reply to them. Indeed, it would be wrong, on the Fire Services (Conditions of Service (Scotland) (Amendment) Regulations, 1950, if we were to start to discuss the whole Income Tax law of this country. I am sorry if hon. Gentlemen opposite are going to be disappointed, but I do not propose to discuss it. I would just say. however, that the hon. and gallant Gentleman who moved the Motion described these compensatory grants in language that amused the House
  202
  and said they went on ad infinitum. I commend him to read paragraph 26, from which he will see that they come to an end in the year 1951–52 and that they are compensatory grants to cover the period from 6th April to 31st May this year.
  Colonel Gomme-Duncan: Will the hon. Gentleman forgive me? I am not suggesting they go on year after year, but it is a matter of tax, grant; tax, grant, and so on.
  Mr. Fraser: So far as the Regulations are concerned, it is not tax, grant; tax, grant; tax, grant, at all. It is only until the new Regulations come into effect on 1st June, and the grant is in respect of that tax and for the year following, and if the hon. and gallant Gentleman reads paragraph 26 he will find that is correct. We do not require a system of tax, grant; tax, grant, for the firemasters in Scotland, because we have only 11, all of whom are living in quarters provided by the fire authorities. Not one has to have an allowance of cash in lieu of tax. In the circumstances, I do not really think there is anything further I can say.
  Sir John Mellor: What is the purpose, then, of making these complicated Regulations? The hon. Gentleman has not really finished his speech, for he has not explained the object of making the Regulations, and he ought to do so.
  Mr. Fraser: I have not been told by the mover or seconder of the Motion, or by any other hon. Member, why they have prayed against the Regulations.
  11.25 p.m.
  Mr. Henry Strauss: I understood from my hon. and gallant Friend who moved this Motion that the reason he put down this Prayer was that he objected to the provisions found on page 13, relating to compensatory grants. Do I understand the Under-Secretary's reply to be that in fact these provisions for compensatory grants do not apply to anyone? If that is so, why make the Regulations? Surely, if they have no application of any kind, that is a very good reason for not making them. If they do apply to someone, then my hon. and gallant Friend deserves a reply. I hope that the Under-Secretary, who invariably is the most courteous and

  203
  reasonable of Ministers, will explain what he means by the extraordinary statement that though we have this whole page of this document, with its complicated provisions, there is no one in Scotland to whom they apply.
  If, on reconsideration, he comes to the conclusion that the reason that the provisions were put into the Regulations was that there were people in Scotland to whom they would apply, has he any assurance from the Chancellor of the Exchequer that the benefits will not be taken away from the men who will receive them by retrospective legislation?
  11.27 p.m.
  Mr. Fraser: I am very sorry for the hon. and learned Member. It is always a disability for an hon. Member to speak upon Regulations which he has not read. If the hon. and learned Member had read them, he would have appreciated that we have many firemen, not firemasters, in Scotland who hitherto have lived in houses provided by the fire authority, and for which they did not pay rent. He would also have gathered from the Regulations that, as from 1st June this year, every fireman, and everyone, apart from firemasters, who lives in a house provided by the fire authority, will pay rent and will not get any additional allowance to enable him to pay that rent beyond the salary or wage laid down in the Regulations. The firemen will not get a compensatory grant, but those who were given, between 6th April this year and 1st June, an allowance in lieu of a rent-free house, and who would have received on an average about 13s. a week from the fire authority, will be taxed on that allowance and, at the end of the present financial year, will be given a compensatory grant.
  I have explained that the grant will not require to be repeated, because there will be no such allowances after 1st June this year. The only other members of the service who are provided with accommodation without payment of rent are the firemasters who, if they were not
  204
  given accommodation, would have to be paid an allowance in lieu thereof. I have explained that we have only 11 fire-masters in Scotland, that all have accommodation provided by the fire authorities, and that none of them in the circumstances requires any allowance in lieu thereof.
  11.29 p.m.
  Colonel Gomme-Duncan: I am obliged to the hon. Gentleman. [Interruption.] If hon. Members opposite are satisfied with his tergiversations in his efforts at an explanation, I can only consider that they are the best reason I can offer for having moved this Motion. His explanation was a far better reason for this Prayer than anything I have said. We do not wish to divide the House on this matter. [Interruption.] Hon. Members may go to bed now, so far as we are concerned, but I do not know what the Patronage Secretary will say to that advice.
  I consider that it was reasonable to move this Prayer because no explanation was given previously by the Under-Secretary of State for the Home Department. This same thing was then brought forward for Scotland, and pushed by without the agreement of a National Joint Council such as was in existence in the case of England and Wales. But we are now told that none of these fire-masters comes into this category, except between 5th April and 1st June. [Interruption.] My hon. Friend tells me that nobody comes into it. Well, here we have 14 pages of Regulations, and we are told that the provisions apply to nobody.
  We did not wish that this admirable and excellent body of men should be penalised by our action; but the relationship of these allowances between the Fighting Services and the fire service is still unjust, and I can only say that I hope the hon. Gentleman will send a note to his right hon. and learned Friend the Chancellor of the Exchequer. I beg to ask leave to withdraw the Motion.
  Motion, by leave, withdrawn.

  QUEEN VICTORIA HOSPITAL, MORECAMBE
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Hannan.]
  11.31 p.m.
  Sir Ian Fraser: The town of Morecambe and Heysham is a very independent town, and one that has a long history of local patriotism, of looking after itself and taking care of its own needs. There are some 50,000 persons living in that town; the population is more than doubled in the summer months, and that fact presents some very special problems.
  Some 50 years ago the town built its own hospital, out of its own contributions, and ever since it has maintained, and indeed improved, it. Here we have a very good hospital; there were 73 beds, until recently used, as one would expect, for all the purposes of the town in connection with medical and surgical care; surgery, medicine, gynaecology and obstetrics; and the hospital provided what the townsfolk thought to be not merely a good, but a very satisfactory, service.
  When the National Health Service came into existence, this hospital was called a "general practitioner hospital" and so it remained until 10th May of this year. Up to then, general practitioners were recognised and allowed to go to that hospital to take care of the cases they were looking after as general practitioners in the town. On 10th May, the general practitioners were told that they must no longer go to the hospital, except as other citizens, who had the right to visit or talk to patients; but, even if their own patients were in the hospital, they were told they could not go there to treat them.
  I want to explain, first, what has happened to the hospital; secondly, what the public think, and thirdly, the peril to medicine which has been caused in this town—and, where there are similar cases, in other towns as well. This hospital has been made into a "surgical unit." It no longer serves the general interests of the town but the surgical interests of a wide area around the town; but in so far as surgical cases come in from round about, there are no beds for the medical cases of the town.
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  This town probably has a high proportion of old people; older and middle-aged people go to Morecambe. It is a place to which people retire, and they suffer from medical rather than surgical conditions, and they are being deprived of the beds which they look upon as their own. They are, they feel, the beds they have paid for. Furthermore, they feel they are being deprived of their own medical practitioners in whom they have faith; and hon. Members in all parts of the House will agree that faith in one's hospital and one's doctor is a very important part of treatment.
  Therefore, I submit that the treatment that can be given to them is less good than it was before. Not only that, but they are put to the trouble of going four or five miles to another hospital instead of to their own. Their relations are put to the trouble of going eight to 10 miles to visit them, and all because of the desire to produce a scheme which will be symmetrical and theoretical. The practical thing, it seems to me, would be to allow this Morecambe hospital to go on treating Morecambe people and allow the general practitioners to go on treating cases in the hospital.
  There is a general question involved here, and it is this. I believe that the Minister is, in the main, advised by senior medical men who have been brought up in the teaching hospitals or in the big towns. They have a big-town complex and they do not realise and understand the situation in the smaller towns. Therefore, they are rather impatient at the strong local feeling which the public and doctors show. It is true that in this case the doctors who ordered this arrangement from Manchester did it arbitrarily and did not come down and discuss it with the general practitioners, much less with the public.
  The Minister himself realises this matter to a much greater extent than some of his advisers, and he did issue an order called RHB (49) 132 in which he specifically dealt with the question of small hospitals. I have only time to summarise it in one sentence and to say that this circular urged regional authorities not to overlook local sentiment and not to overlook the importance to medicine generally of having the general practitioners continue to go into the hospital and, to quote the words of the circular, "to be in charge

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  of beds." There is the essence of the matter. If the general practitioner is not in charge of beds and cannot follow his patient in, he loses touch with all the interesting circumstances of that case and with all the educational value which comes to him by discussion with colleagues and by discussion with consultants. This is, therefore, rather a wider issue than merely a Morecambe issue, but I am speaking particularly for the Morecambe hospital.
  I want to ask the Minister whether he cannot consider applying the spirit of RBH (49) 132 to this case; whether he can answer why it has not been applied in this case; and whether he will give us back in Morecambe, say, 50 beds or even 30 beds, to be "a general practitioners' wing." These words appear also in RHB (49) 132, to which I have made reference. The Minister evidently wants local sentiment to be considered and evidently wants the general practitioners to continue to do this valuable work and maintain this important contact. I therefore ask him if he will reconsider the decision which is now being put into force in this case.
  I would add, finally, that the town council of Morecambe has passed a resolution unanimously asking that their hospital may be given back to them and that a petition is being widely signed, having in the first instance been signed by the ex-mayor, the present mayor, and all the members of the town council, and that there really is widespread feeling here that the hospital which these people built of their own accord without asking the central Government to help them, and that the hospital which they have cherished and nourished and looked to all these years, should continue to look after them in their old age and give them the full service they need and allow them to have in their hospital the treatment of their own general practitioners.
  11.39 p.m.
  Dr. Hill: My hon. Friend the Member for Morecambe and Lonsdale (Sir I. Fraser) has spoken clearly and forcibly on the local conditions in Morecambe. May I comment very briefly on the underlying general principle? None would deny that the main role of the hospital is to provide accommodation for the treatment of specialist conditions in one
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  of the many specialist fields; but it is sometimes forgotten—and it is important that this House should not forget—that an important role for hospital accommodation is to provide, in addition to the field of specialist conditions, beds, nursing and other assistance so that the conditions falling within the scope of the general practitioner can be treated by the general practitioner in the circumstances and surroundings of the hospital.
  There are all too many people whose conditions could properly be treated at home given satisfactory domiciliary conditions but who nowadays must perforce be treated in hospital, not because of the specialist character of their condition but because of the domestic circumstances; and I would, in support of my hon. Friend's plea, urge upon the Minister the real importance of securing that regional hospital boards observe the terms of the circular which he has sent out and do their utmost to retain such general practitioner beds as exist, and indeed to develop such beds in the future.
  It is of real importance to the public, as well as to the status and efficiency of general practice, that there should be such beds in which the general practitioner can treat patients whose condition falls within his proper scope in hospital beds. It is essential to the public interest and to the general practitioner's efficiency that such beds should be retained and. indeed, developed.
  11.43 p.m.
  Mr. Reader Harris: I support what has been said by my hon. Friends. There is a very strong feeling among general practitioners that their service is being debased. They feel that in many ways, and one of the ways in which it is felt most is their increasing exclusion from the hospitals, if I may put it that way. The case raised this evening is merely symptomatic. It is merely another example of what is happening. We have had the case of the Kingston Victoria Hospital. The same sort of thing happened in the West Herts Hospital, where a specially-built maternity block has been closed down. We have exactly the same thing in other places in that area—at Tring, Berkhamsted, Hemel Hempstead and King's Langley.
  I do not know whether the circular to which I want to refer is the same circular as that to which my hon. Friend referred,

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  but I ask the Minister whether he still stands by these words:
  "The Minister … would ask regional hospital boards to make sure that in carrying out their plans they are not depriving local patients of a valuable feature of the general practitioner (cottage) hospital."
  Again—mark the Minister's words—
  "It is essential if the level of general practitioner medicine is to be maintained that the interchange of ideas between general practitioners and specialists should be facilitated by such consultation and by informal contacts on the occasion of regular visits from consultants to general practitioner beds."
  I do not know whether this is the same thing as my hon. Friend quoted.
  Sir I. Fraser: It is.
  Mr. Harris: It is the same thing—well, that reinforces what he said. We want a definite statement from the Minister on this point. It is reinforced, too, by the fact that health centres will not be provided, at any rate, not for many years; and if they are not to be commenced, the next best thing is the general practitioner hospital where the general practitioner can get all the experience that he requires.
  11.45 p.m.
  The Parliamentary Secretary to the Ministry of Health (Mr. Blenkinsop): I am grateful to the hon. Member for Morecambe and Lonsdale (Sir I. Fraser) for raising this subject and for the very courteous information that he gave us of his intention beforehand.
  I should like to say right at the start that we fully intend that the attention of regional hospital boards shall be called to the circular that was issued and to which reference has been made this evening. It was a circular and in no sense an order. The Minister was calling the attention of regional hospital boards to the desirability of their paying attention to local sentiment, and to the desirability, as mentioned by the hon. Member for Luton (Dr. Hill), of maintaining, wherever possible, the contact of the general practitioner with hospital work within his own field. It is important that I should emphasise those words "within his own field" because we would claim that in this case this was not a general practitioner hospital in the ordinary sense of the term but that, in fact, the larger proportion of cases coming into the hospital were specialist cases rather than ordinary general practitioner cases.
  Sir I. Fraser: This was called a general practitioner hospital by the Ministry, and the general practitioners were recognised and paid by the Ministry to go there and do the work.
  Mr. Blenkinsop: I know that has been the case, but the reorganisation of the service has been under consideration by the regional hospital boards, acting on behalf of the Minister, for some time, and it was natural that they should take under review a hospital of this kind, where there is no doubt at all that the great majority of cases that were treated in that hospital were cases of a specialist kind.
  Sir I. Fraser: No, no.
  Mr. Blenkinsop: But, in fact, a very large number of surgical cases were treated there, and it is clear from the information we have of the type of case coming in, and indeed from the specialists who were called in very frequently from outside, that in fact there is a very wide service given in it of a specialist character.
  Sir I. Fraser: More than half the beds were used by Morecambe medical cases.
  Mr. Blenkinsop: I am quite aware that the Morecambe general practitioners did use this hospital as a general hospital, but the argument that I am making is that much of the work they did in that hospital was, in fact, of a specialist character. They did frequently call in specialists from outside, when they felt it desirable, but they were not in any way required to do so.
  In our view, it is highly desirable that the specialist facilities that are available should be made more generally available in areas like Morecambe and other districts of that kind, within their proper field. Indeed, it has been one of the main purposes of the reorganisation of the hospital service as a whole that we should be able to make more generally available the specialist services in the interests of the patients themselves, while at the same time doing our utmost to maintain that contact with the general practitioners which is suitable within their own field.
  I suggest, therefore, that this is not a case of a hospital that comes within the definition of a change in service, a change from a general practitioner cottage hospital to a specialist hospital. In our view,

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  the specialist work has always been done there, and therefore it is not a change of function so much as a change from the general practitioner to the specialist in charge of what has always been largely specialist work.
  In fact, this hospital consists of three main wards, one of which has been reserved for female cases, another for male cases, and another for maternity cases. As far as the maternity cases are concerned, I understand the general practitioners' position will not be altered. They will still have full control over 12 maternity beds. There will, in fact, be an additional four maternity beds for specially difficult cases for the specialist to be in charge of. The 12 beds that have always been available to the general practitioner in Morecambe district will still be available in future. Our experience has been, as far as true medical cases are concerned, that very few have been taken in.
  Sir I. Fraser: That is quite untrue. I am not saying that the hon. Gentleman is not telling the truth, according to his information, but what he states is quite untrue. More than half the beds have been used for cases of medical ailments in Morecambe and district, and the general practitioners have looked after them.
  Mr. Blenkinsop: I am not disputing the fact that general practitioners have looked after the cases, but much of the work they have done would be regarded as specialist work, and if we are to improve the standard of work it is only right to see that specialists should be in charge in a field essentially their own. We are arranging for four beds in side ward—two male and two female—as emergency medical beds to be available to general practitioners for their emergency cases.
  We feel it to be undesirable, as do the regional board, that medical cases should, in fact, be mixed up in the ward with surgical cases as they have been. Therefore, we are arranging in future for the medical cases proper to be transferred to Lancaster which is, as the hon. Gentleman said, some four miles away. It is not a very great distance, and we would expect that, in fact, very few cases will have to do that journey, because the
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  great majority of cases coming into Morecambe Hospital will still go there to receive the specialist treatment available for them.
  Dr. Hill: There is an important point of difference here. As I understand my hon. Friend, he says that approximately half the cases entering Morecambe Hospital are medical cases, from which I assume medical cases within the field of general practice, and attended by general practitioners. The Parliamentary Secretary challenges that. It is important to get the facts right.
  Mr. Blenkinsop: I quite agree. It is quite true that more than half the cases have been attended by the general practitioners in charge—in some cases a consultant is called in from outside—but much of that work has fallen within special fields which we, at any rate, would regard as the province of the specialist.
  Sir I. Fraser: Coronary thrombosis is not a surgical condition, or am I wrong? Such cases can no longer be sent there. The old people who get "hearts," strokes, and urinary troubles, and a lot of other medical trouble that is not always surgical, can no longer go there.
  Mr. Blenkinsop: I am not denying that with the exception of the four general medical beds, they will now go to Lancaster, but the number of cases of that particular type which went into Morecambe Hospital were very few indeed. There were a great variety of cases of all kinds which did require very often specialist treatment, whether in fact that was called in or not. It is a very well equipped hospital for surgical work, and therefore it is highly desirable that the type of cases which have always gone in should continue to be dealt with by those most proficient to handle them.
  It seems to us that the general practitioner is not being excluded altogether. He will have as much maternity work as he ever had; he will have this special arrangement for emergency beds; and he will also be able to use the outpatient clinic. The hon. Gentleman said that he would come in as a visitor, like a relative to a patient, but surely the position is simply that he will be able to call in as he would normally call in at a general hospital. He would be able to consult with the specialist in charge of

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  the case, but he would not in future be in charge of the case. That is really the point at issue.
  Mr. R. Harris: The specialists will not be resident on the premises, will they?
  Mr. Blenkinsop: No, of course not.
  Mr. Harris: They will be eight miles away.
  Mr. Blenkinsop: But they will be able to consult with the specialists when they are present, of course, and in that way they will be able to maintain contact, which they naturally would desire to do, with the progress made by their patients.
  The suggestion has been made that this will in some way reduce the facilities for emergency treatment. In point of fact the reverse is the truth. There will be at
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  least one, if not two, resident medical officers who will be available for emergency treatment, and there will also be on call, as there always has been in the past, general practitioners to take any emergency cases.
  Mr. Harris: Will they be paid for it?
  Mr. Blenkinsop: In fact, therefore, over the whole picture it seems to me that, far from any reduction in the service to the people in Morecambe, there will be a great improvement of service, and they will have the benefit of specialist services which in the past have not been wholly available to them.
  Adjourned accordingly at Four Minutes to Twelve o'Clock.

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