Sitting of 17 June 1952

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

    Purchase Tax Certificates
    Mr. Shepherdasked the Chancellor of the Exchequer if, in view of the increasing area of goods brought under Purchase Tax through the adoption of the D scheme, he has considered asking the Customs and Excise to be more liberal in the granting of Purchase Tax certificates.
    The Chancellor of the Exchequer (Mr. R. A. Butler): I fear that we must adhere to the general principles which my hon. Friend the Financial Secretary explained during Committee stage of the Finance Bill, though that does not preclude the consideration of individual cases on their merits consistently with those principles.
    Mr. Shepherd: Would my right hon. Friend bear in mind that many people who were previously refused certificates for justifiable reasons, now have a substantial trade in taxable goods, and that they now merit further consideration?
    Mr. Butler: My hon. Friend explained the general manner in which this matter was envisaged and administered and we must adhere to certain general principles. I will certainly bear in mind what my hon. Friend says.

    Banknotes (Issue)
    Lieut.-Colonel Liptonasked the Chancellor of the Exchequer what the cost would be of recalling Treasury notes now in issue and of making a new issue.
    Mr. R. A. Butler: No reasonable estimate can be given of the cost of calling in all Bank of England notes now in circulation and replacing them with a new issue.
    Lieut.-Colonel Lipton: Is not this a rather unsatisfactory state of affairs? Is it not now clear, both by reason of the recent mail bag robbery and the large number of transactions carried out by tax dodgers for large sums of cash, that a very handsome profit would be made by the Treasury if a new issue of Treasury notes were made as soon as possible?
    Mr. Butler: I think the hon. and gallant Member's contribution is rather an oversimplification.
    Colonel Gomme-Duncan: Would my right hon. Friend consider, when the time comes, that a more accurate statement in writing should be put on the notes than "I promise to pay…"

    Blind Persons' Sticks (Tax)
    Mr. Ian Harveyasked the Chancellor of the Exchequer if he will now abolish Purchase Tax on sticks provided for blind people.
    Mr. R. A. Butler: I have had to refuse many requests for relief in favour of particular users of taxable goods. I understand how necessary these sticks are for the blind. I will take this into account when I am able to review the incidence of the tax on such articles.

    Incomes and Wages
    Mr. W. T. Williamsasked the Chancellor of the Exchequer what was the disparity of income between the average income in the highest and the lowest income groups, respectively, at the end of each financial year 1937–38, 1948–49 and 1951–52.
    Mr. R. A. Butler: I am not sure what the hon. Member means by highest and lowest income groups. Figures relating to the financial years 1938–39 and 1948–49 are given in the Report of the Commissioners of Inland Revenue for 1949 (Cmd. 8052). This shows that in 1938–39, there were 2,100 incomes over £20,000 and in 1948–49, 2,300. In 1938–39, there were 2,483,000 incomes between £125 and £150. In 1948–49, there were 975,000 incomes between £135 and £150. Corresponding figures for 1951–52 are not yet available.
    Mr. Williams: While appreciating that there is a remarkable change in the distribution of income, may I ask the Chancellor to observe that there are still many

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    people with very small incomes and a large number with very high incomes? Will he not consider the possibility of reducing the disparity still further?
    Mr. Butler: Every effort has been made to examine, in the light of the hon. Member's representations, the material which we have collected from this paper, but I think it would be a pity to draw any generalisation from it. If we are to achieve any results we had better have a little discussion together.
    Mr. W. T. Williamsasked the Chancellor of the Exchequer what share of the national income was taken, after direct taxation, by the recipients of rent, interest and profits in 1938, 1950 and March, 1952, respectively; and what was the share going to wages.
    Mr. R. A. Butler: The proportion of total personal income after tax represented by rent, dividends, interest and profits is estimated to have been 32 per cent. in 1938 and 23 per cent. in 1950. The comparable figures for wages were 37 per cent., and 43 per cent. respectively. Estimates are not available for March, 1952, but figures for 1951 will be published next month.
    Sir H. Williams: Can my right hon. Friend say whether, in the term "profits," professional earnings or only strictly commercial profits are included?
    Mr. Butler: I should want notice of that question.

    Wage Claims (Restraint)
    Mr. Edelmanasked the Chancellor of the Exchequer what reply he has received from the Trades Union Congress in connection with his request that wage claims should be restrained.
    Mr. Osborneasked the Chancellor of the Exchequer what reply he has received from the Trades Union Congress to his suggestion to them on 15th May that a committee of employers and workers should be appointed to consider the economic situation; what similar approaches he has made to the employers; and with what results.
    Mr. R. A. Butler: My statement on our present economic problems was made to the National Joint Advisory Council. There was no approach to the two sides of industry separately. The employers'
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    side have informed my right hon. and learned Friend the Minister of Labour and National Service that they would be prepared to participate in a joint committee of the Council. He has not yet heard from the other parties to the Council, but I am meeting the Economic Committee of the T.U.C. for further discussion next week.
    Mr. Edelman: Will the right hon. Gentleman bear in mind, in the meantime, that it is quite impossible to achieve wage stability unless we have stability in the cost of living, and also the original advice given him by the T.U.C. in connection with food subsidies and act accordingly?
    Mr. Butler: The answer to the latter part of the question is, No, Sir. That does not mean that I have not respected the advice given to me by the Trades Union Congress nor that I do not look forward to further consultation with them. I sincerely hope that between us we may be able to take the right path.
    Mr. Shin well: Did not the right hon. Gentleman embarrass the trade union leaders considerably by reducing the food subsidies, thus making it very difficult for them to influence their members as regards wage restraint?
    Mr. Butler: I do not think that trade union leaders are men who are easily embarrassed, and despite any feelings they may have had, they have, in their published statements, so far shown every sign of a desire for restraint and moderation within the limits which they have already set. I would make no further statement on their behalf because they are capable of speaking for themselves, and I would rather look forward to meeting them next week and learning what is in their minds.
    Mr. Gaitskell: Is not the right hon. Gentleman aware that in their published statement they have made it plain that they deplore the cuts in food subsidies which have made things much more difficult for them?
    Mr. Butler: Things have not been made more difficult for them than for anybody else. I am satisfied that the financial policy pursued by the Government so far has had a remarkable effect on stopping the drain on our reserves. That is proved by the published figures.

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    I am certain that trade union leaders, however much they have expressed or may still express their disagreement, realise that there are certain advantages in the policy which has been pursued.
    Mr. Gower: As the speed of the increase in the cost of living has been retarded, even taking into consideration the removal of the food subsidies, does my right hon. Friend not think that the pressure for increased wages should be accordingly less?
    Mr. Butler: It is true that there are definite signs and tendencies in certain directions of the cost of living actually coming down, in regard to certain commodities at any rate, and this should have an effect of moderation and general restraint.

    National Wages Policy
    Miss Wardasked the Chancellor of the Exchequer whether, in view of the fact that many skilled workers are underpaid compared with other skilled workers, when he meets the representatives of the Trades Union Congress, he will urge that the interests of the workers would be served if they would discuss within the Trades Union Congress a national wages policy directed to eliminating the grievances which exist.
    Mr. R. A. Butler: No, Sir. Any such matters as these are for settlement by the two sides of industry.
    Miss Ward: I am sorry, but I could not hear what my right hon. Friend said May I ask him to repeat it?
    Mr. Butler: I said:
    "No, Sir. Any such matters as these are for settlement by the two sides of industry."
    Miss Ward: Will my right hon. Friend bear in mind that there are certain legitimate grievances among the workers of this country, like railwaymen and engineers, whose wages appear to be out of balance with the wages of other workers in industry? Would it not be a good idea for once to ask the trade unions if they would look at these grievances themselves rather than necessarily come to the Government for relief?
    Mr. Butler: I do not think that that alters the obvious sense of my original answer, namely, that this is not a matter
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    for me to dictate upon or to animadvert upon, but one to be discussed between the two sides of industry. If at any time the good offices of the Government or of my right hon. and learned Friend the Minister of Labour can be used, so much the better.
    Miss Ward: But could not my right hon. Friend give some advice and guidance in conversations?

    Public Service Pensions
    Miss Wardasked the Chancellor of the Exchequer whether he can now make a statement on the pensions increases for retired Government and local government servants.
    Mr. Hamiltonasked the Chancellor of the Exchequer if he can yet make a statement on the results of the conference with the authorities concerned on the question of retired teachers' pensions.
    Mr. R. A. Butler: A Bill dealing with these matters has been published today.
    Miss Ward: Would my right hon. Friend bear in mind that though this Bill does assist certain sections of the community with low incomes, a large number of people will not benefit under this Bill. Will he therefore take some steps to deal with their predicament?
    Mr. Butler: We really must give thanks for any benefits we receive, and I would remind my hon. Friend that this Bill was designed for the purpose of supplementing the pensions of existing pensioners of the public service, that it affects civil servants, teachers, local authority staff, policemen and firemen, to name the chief categories, although there are others also affected, and that the increases proposed are considerable. The Bill, as part of the general Budget plan, is designed to give what help it can in this sphere.
    Mr. Gibson: Will the Bill deal with retired railway servants?
    Mr. Butler: Those were not alluded to in my statement, and I think the hon. Gentleman had better examine the Bill before we take the matter any further.
    Mr. Legh: Is it intended to give increases in retired pay and pensions to ex-Service officers? Will my right hon. Friend bear in mind that they represent

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    a very deserving section of the community who, unfortunately, possess very small political bargaining power?
    Mr. Butler: I am glad to be reminded of them, but that is a separate question and perhaps my hon. Friend will put it down.

    Food Price Increases (Tax Allowances)
    Miss Wardasked the Chancellor of the Exchequer what action he proposes to take to recompense, for the withdrawal of the food subsidies, those living above the National Assistance scale but with incomes not subject to Income Tax assessment.
    Mr. R. A. Butler: I refer my hon. Friend to the answer which the Financial Secretary gave to the hon. Member for Coventry, South (Miss Burton) on 8th May.
    Miss Ward: In view of the fact that it is the policy of the Conservative Party to protect the weak and that the answer which the right hon. Gentleman gave previously was far from satisfactory, will he bear in mind that this section of the community has suffered more than any other under six years of Socialism? Will he therefore take steps to reconsider whether it would not be wise to appoint a committee, so that every aspect of these people's position might be looked at with a view to its amelioration?
    Mr. Butler: I am very glad that the hon. Lady has had a crack at the other side. In all seriousness, I would say that it is very difficult for the State or the Government of the day to reach every case. For example, if persons or families do not pay Income Tax it is impossible to relieve them by Income Tax relief, and it is difficult to reach every section. I would remind the hon. Lady that the benefits of the Budget, taken as a whole, and with the aid of family allowances and other things, do good among all sections of the community.
    Mr. Jay: As, judging by an answer given to me yesterday by the Minister of Food, the Government have not yet decided what they mean to spend on food subsidies this year, will the Chancellor reconsider the whole question in the light of the views of the T.U.C., among others?
    Mr. Butler: The Government adhere to the policy I announced in the Budget.
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    At the same time, I feel that all statements made by the Minister of Food are crystal clear.
    Miss Ward: Owing to the unsatisfactory nature of the answer I beg to give notice that I shall raise the matter at the earliest possible moment on the Adjournment. My right hon. Friend has not dealt with the party's policy in this matter.

    Book Exports, Israel (Currency)
    Mr. Edelmanasked the Chancellor of the Exchequer whether he will authorise the export of books from Britain to Israel to be paid for in Israeli currency.
    Mr. R. A. Butler: I regret that I cannot accept this suggestion.
    Mr. Edelman: Is the right hon. Gentleman aware that at the present time the Russians are sending into Israel a great deal of propaganda material printed in English, and that the Americans have made special arrangements for the export of books to Israel? Would not it be wise to consider a special arrangement by which our books might be sent to Israel and paid for in Israeli currency?
    Mr. Butler: I have discussed this question with the representative of Israel. I realise that there is a genuine case here, but our difficulty is in deciding whether to start making an exception in favour of particular exports, even books. I will bear the question in mind. It has a legitimate background and it is an important matter.
    Mr. Chetwynd: Would the right hon. Gentleman consider the special case of scientific and technical journals, for which there is great need in Israel?

    Disabled Persons' Garages (Assessment)
    Mr. Haleasked the Financial Secretary to the Treasury in what circumstances and under what provision, garages provided by the Crown for the accommodation of disabled persons' individual invalid chairs are assessed for Schedule A tax; and on what basis.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): It is not intended that such garages should, in practice, be assessed to Income Tax Schedule A.
    Mr. Haleasked the Financial Secretary to the Treasury whether he is aware that an Oldham man, whose name has been supplied to him, totally disabled by infantile paralysis and having a Crown garage for his invalid chair which was assessed at £5 for rates, reduced on appeal to £2 10s. 0d., has now received notice assessing this garage at £7 10s. 0d. a year for Schedule A tax; and whether he will now make regulations exempting these buildings from Schedule A tax.
    Mr. Boyd-Carpenter: No, Sir. The rating assessment on the garage was £1 not £5 or £2 10s. 0d. It is not proposed to assess such garages for rating in the future, and if, as I have already informed the hon. Member, the gentleman concerned enters an objection to this assessment, the Inland Revenue will not resist it.
    Mr. Hale: I am much obliged to the Financial Secretary. It was £5 last year and it has been re-assessed this year. I am very glad that we are to stop assessing this for tax. I hope that the hon. Gentleman will see that this fact is generally known.

    "Report to Women"
    Mr. Anthony Greenwoodasked the Financial Secretary to the Treasury what saving will be made in the current financial year as a result of the decision to stop publication of "Report to Women."
    Mr. Boyd-Carpenter: The estimated saving in the current financial year is £821, assuming 11 issues for the year.
    Mr. Greenwood: Would not the hon. Gentleman agree that this organ of opinion was serving a most useful purpose and that the economy effected is quite petty in its nature? Does not he think it is quite wrong to suppress organs of this kind when he remembers the way in which he and his colleagues complained that the last Government did not keep the public fully informed on matters of this kind?
    Mr. Boyd-Carpenter: That supplementary question forms a very good example of the ease with which a particular economy can be criticised on the basis of its triviality; but the House will recall that it is on the sum of those savings alone that substantial economies can be achieved in this field.

  PRISON STAFFS
  Lieut.-Colonel Liptonasked the Chancellor of the Exchequer what representations have been made to him on the provision of adequate prison staffs; and what instructions in this matter he has issued.
  Mr. R. A. Butler: I have been consulted by my right hon. and learned Friend the Home Secretary about the staffing requirements of the prisons in the light of the continued growth of the numbers in prison. We have reached substantial agreement about the future recruitment of prison officers.
  Lieut.-Colonel Lipton: Is that answer equivalent to an assurance that so long as the prison population continues to increase and prisons remain overcrowded, as they are, the Chancellor of the Exchequer will not seek to reduce the number for reasons of economy?
  Mr. Butler: I am satisfied that a thoroughly statesmanlike attitude has been taken towards this important problem. In so far as the Chancellor is keen on economy, in this sort of matter he has to match economy to the needs of the moment.
  Sir H. Williams: Can my right hon. Friend say how many of the constituents of the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) are now in Brixton gaol?

  GOVERNMENT OFFICIALS (POWERS OF ENTRY)
  Mr. F. Macleanasked the Chancellor of the Exchequer the total number of officials authorised to carry out inspections and investigations in private houses and premises without a search warrant at 1st June, 1952.
  Mr. R. A. Butler: Six thousand one hundred and twenty-eight. As I informed my hon. and gallant Friend the Member for Portsmouth, West (Brigadier Clarke) an urgent investigation is being undertaken into this question.
  Mr. Maclean: Can my right hon. Friend say whether all private and business premises are included?
  Mr. Butler: The figure includes a great variety of officials from different

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  Government Departments, such as the Ministry of Civil Aviation, the Ministry of Health, the Home Office, the Inland Revenue, the War Damage Commission and the Central Land Board. Therefore, in some cases property other than private domiciles is involved.
  Mr. Maclean: Is my right hon. Friend aware that this very remarkable reduction in the number of these snoopers will give widespread satisfaction in the country?
  Mr. Butler: I am not sure that that is giving a right impression. It would be dishonourable of me to let such an impression go. I do not think that there has been, in fact, a satisfactory amount of reduction, and that is why we are looking into the matter.
  Mr. Patrick Maitland: Will my right hon. Friend give strict instructions to all snoopers that they must produce their credentials on arrival at a place of inspection, because there have been complaints in this matter?
  Mr. Butler: All these matters are governed by Statutory Instruments and these officials, commonly known as snoopers, are supposed to act according to their statutory duties. Therefore, I would not desire to alter the statutory basis upon which they act.
  Mr. Woodburn: Is the Chancellor not aware that to give too much protection to criminal classes against the working of the law would be dangerous to the community?

  GOVERNMENT STAFFS (COMMAND PAPERS)
  Mr. Patrick Maitlandasked the Financial Secretary to the Treasury why a double sheet of paper, priced at 3d., is used for Command Paper No. 8557, entitled, "Staffs Employed in Government Departments," as at 1st April, 1952, whereas Command Paper No. 8482 on the same subject but relating to January, 1952, was successfully confined to a single sheet, priced at 2d.
  Mr. Boyd-Carpenter: Command No. 8557 was in the usual form with space for explanatory notes. Command Paper No. 8482 was an exception, since no explanatory notes were included. The difference in the cost of the Paper was 10s. 0d.

  CENTRAL OFFICE OF INFORMATION MATERIAL
  Mr. Patrick Maitlandasked the Financial Secretary to the Treasury to how many overseas information officers and other reference material produced by the Central Office of Information for the Foreign Office, Colonial Office and Commonwealths Relations Office, is despatched; and to what extent such material is used by its recipients.
  Mr. Boyd-Carpenter: The material is sent to 161 posts, where it is used for too wide a variety of purposes to permit of enumeration within the reasonable compass of a Parliamentary answer. Uses, however, include both the answering of Press and other inquiries about this country, the countering of anti-British propaganda, and the local preparation of information material appropriate to local conditions.
  Mr. Maitland: Can my hon. Friend say on how many occasions overseas information officers have had recourse to this material, and whether they have enough filing clerks to file it?
  Mr. Boyd-Carpenter: From what we see of their output there is very good evidence that full use is made of this material, which is issued only on the recommendation of the appropriate overseas Department.
  Mr. Dugdale: Does this mean that the Government have now decided that the Ministry of Information does, in fact, serve a useful purpose, in contradistinction to what they thought before?
  Mr. Boyd-Carpenter: There is no Ministry of Information.

  CIVIL SERVANTS (ACCESS TO MEMBERS)
  Dr. Kingasked the Financial Secretary to the Treasury whether he will abolish those regulations which prevent a civil servant from exercising the right possessed by other British citizens of approaching their Members of Parliament on their personal problems.
  Mr. Boyd-Carpenter: No regulation prevents a civil servant from approaching his Member of Parliament on a personal matter that affects him as an individual citizen, for example matters of taxation.

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  He is, however, forbidden to enlist political support for his individual claims as a civil servant, for example, on questions of promotion. I see no reason for abolishing this long-standing and salutary rule.
  Dr. King: Is the Minister aware that the right to raise grievances through Members of Parliament is a most ancient privilege of British citizens and includes the right for most citizens to raise questions concerning injustices done to them in earning their own living? Does not he think that it is wrong to deprive citizens of that right merely because they receive wages from the State?
  Mr. Boyd-Carpenter: I think it would be very harmful to the whole tradition of non-political civil servants in this country if they could enlist political support for their own claims for promotion as against those of their colleagues.
  Dr. King: Is the Minister aware that British citizens approach their Members of Parliament independently of their political affiliation? Labour and Tory citizens alike approach Tory or Labour Members of Parliament, as the case may be. What I am asking for is the right of a constituent, even of he is a civil servant, to approach his local Member of Parliament.
  Mr. Boyd-Carpenter: There is no interference with the right of a civil servant to approach his Member of Parliament in respect of his general rights as a citizen. The only matters on which he is barred are Civil Service matters in respect of which, for the reasons I gave in my last supplementary answer, it has for many years been thought undesirable that there should be an appearance of political pressure being brought to bear.
  Mr. Nicholson: Is there any distinction between the rights of civil servants and the rights of military servants in this connection? Surely it is thought proper for members of the Forces to write Service letters to their Members of Parliament? Is there some distinction in this matter?
  Mr. Boyd-Carpenter: I can only answer in respect of the Civil Service. Perhaps my hon. Friend will put down a Question dealing with the military aspect of this matter.

  HOUSING

    Caravan Sites
    Mr. Doddsasked the Minister of Housing and Local Government if, in view of the inevitable long-term shortage of housing accommodation and the growing popularity of caravan homes he will, as a matter of urgency, discuss with all interested authorities the provision of licensed caravan sites as a national problem.
    The Minister of Housing and Local Government (Mr. Harold Macmillan): No, Sir. I do not think that the general conference which the hon. Member suggests would prove very useful at this stage.
    Mr. Dodds: Does not the hon. Gentleman appreciate the disparity in contracts up and down the country with regard to this matter? As the State has so much to say about building non-traditional houses, why should not caravan homes be considered as places where childless couples and families with one child might go, when otherwise they will have to wait for years and their marriages might break up? Is it not worth a trial, in order to reduce human misery?
    Mr. Macmillan: I do not regard caravans as suitable substitutes for houses.
    Mr. Dodds: If they are not a substitute for houses why not provide the houses?
    Mr. Sparks: Will the hon. Gentleman take steps to bring within existing legislation the tenancies of caravans which, I understand, are at present outside that legislative protection?

    Ashton-in-Makerfield (Fire Insurance)
    Mr. Shepherdasked the Minister of Housing and Local Government if he is aware that the Ashton-in-Makerfield Urban District Council is demanding that purchasers of houses under the Small Dwellings Acquisition Act insure their property against fire in a named insurance company, and that the ground land lord specifies another company, thus involving purchasers in double insurance; and, since the Ashton-in-Makerfield Urban District Council threatens to withdraw the mortgage unless double insurance is effected, what steps he is taking in the matter.
    Mr. H. Macmillan: I am in correspondence with the local authority on this matter and will let my hon. Friend know the result in due course.
    Mr. Shepherd: Is my right hon. Friend aware of the feeling that the course pursued by the local authority in this case is most unreasonable and will he assure the House that similar insistencies will not be made by other local authorities?
    Mr. Macmillan: I think I would rather await the result of my inquiries.
    Mr. Tom Brown: Is not the Minister aware that when I put a Question on this matter I received from him and his Department a very prompt, well-considered and courteous reply? Is it not a fact that the matter can only be dealt with by the local authority concerned?
    Mr. Macmillan: I am glad to have the hon. Gentleman's bouquet.
    Sir W. Darling: Is the Minister aware that when an insurance company is advancing money for developing a house of this description, it is not unusual to make a condition of the insurance of the house as part of the bargain?
    Mr. Bottomley: Is it not right that the local authorities should look after their ratepayers' interests, and that the grievance, if there is one at all, is against the ground landlord?
    Mr. Macmillan: If the matter can be settled amicably it had better stay where it is.

    Property Owners (Addresses)
    Lieut.-Colonel Liptonasked the Minister of Housing and Local Government what steps he will take to ensure that the correct names and addresses of property owners are recorded with local rating authorities.
    Mr. H. Macmillan: I do not think that any steps are called for on my part.
    Lieut.-Colonel Lipton: Is the Minister aware of the difficulties met by many boroughs when trying to ensure compliance with sanitary notices, when they find that owners of property are working under false names with accommodation addresses, and cannot be traced? Is not that an unsatisfactory state of affairs and should not local authorities be able to
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    ascertain without difficulty the real owner of any property?
    Mr. Macmillan: It would be a difficulty if it were not that sanitary notices, and similar documents, may, by law, be addressed simply to the owner of the property.
    Lieut.-Colonel Lipton: Is it not a fact that sanitary notices entail large expense when the sanitary authorities have to be in a position to carry out the work? What action can be taken by the local authority in those circumstances? The Minister is not treating this problem with the seriousness that it deserves.

    Tenants (Protection)
    Mr. Jannerasked the Minister of Housing and Local Government whether he is aware that the Court of Appeal has upheld the judgment of the Divisional Court in the case of Rex v. St. Helens Rent Tribunal ex parte Pickavance; and if he will introduce legislation to protect tenants who are affected by this decision.
    Mr. H. Macmillan: I am aware of the decision in the Court of Appeal. I have the matter under consideration.
    Mr. Janner: Would the Minister be good enough to consider the debate which took place when an endeavour was made to remove an anomaly by which tenants could not get protection at all? When Section 11 of the Act of 1949 was passed everybody thought that that protection had been granted. Will the Minister go into the matter rapidly, because it means that a large number of tenants will be placed in peril unless there is legislation quickly?
    Mr. Macmillan: Yes, but the matter is subject to further appeal.
    Mr. Jannerasked the Minister of Housing and Local Government if his attention has been called to the growing practice of some landlords of property controlled by the Rent Restrictions Acts to request their tenants to make some voluntary contribution in addition to the controlled rent; and whether, in view of the fact that many tenants think that if they do not respond they may be penalised or blacklisted in some way, he will take steps to ensure that the intention of the Rent Restrictions Acts is not undermined by the development of such practices.
    Mr. H. Macmillan: I am aware of the practice, but very few complaints have reached me. I have no power to penalise or blacklist anybody. But the tenants have their legal means of redress.
    Mr. Janner: That will not do. The Minister must realise that he has the power to give instructions. May I ask whether he will exercise the power that he has to instruct local authorities to make clear what the rights of tenants really are and, by that method, avoid these serious and pernicious practices?
    Mr. Macmillan: Yes, Sir, but that was not the Question, which was whether I would penalise those responsible for the practice.
    Mr. Janner: Perhaps the Minister has misread the Question. If he will read it again he will see that the persons concerned are penalised, not that he should penalise them. I ask him to consider this matter. Is it not a fact that tenants voluntarily pay these sums, and will he get the local authorities to make clear to tenants what their rights are?

    Rugeley
    Mr. Snowasked the Minister of Housing and Local Government if he will authorise a special joint allocation of houses to the Lichfield Rural District Council and the Rugeley Urban District Council, in connection with the sinking of the new pit at Lea Hall, Rugeley; and if he will instruct his officials to assist these bodies in the submission of a joint scheme for the development of services in this area.
    Mr. H. Macmillan: I have instructed my regional officers to get into touch with the two local authorities mentioned, who have not yet approached my Department on the subject, and with local representatives of the National Coal Board.
    Mr. Snow: While thanking the Minister for that reply, may I ask him whether he is aware that in the case of one of these local authorities sewage disposal plant has been recently constructed and may have to be scrapped because of the lack of survey and planning prior to the decision of two nationalised industries and the local authority concerned?
    Mr. Macmillan: I am not aware of that, but if it proved to be so it would be very regrettable.

    Advance Rent Demands
    Mr. Sparksasked the Minister of Housing and Local Government if he is aware of the growing practice of aggregating rent over a period of years in advance and demanding payment of such sums as a condition of letting vacant accommodation to prospective tenants; and if he will take steps to put an end to such undesirable practices.
    Mr. H. Macmillan: My attention has been drawn to some cases of this kind. I am considering whether anything ought to be done or can be done about it.
    Mr. Stokes: Is not the object of the exercise envisaged in the Question to evade the intention of the Town and Country Planning Act?

    Furniture and Fittings (Premiums)
    Mr. Sparksasked the Minister of Housing and Local Government if he is aware of the high premiums being demanded for furniture and fittings as a condition of letting vacant accommodation to prospective tenants; and if he will take steps to protect tenants from such extortion.
    Mr. H. Macmillan: I would refer the hon. Member to the reply given to the hon. Member for Clapham (Mr. Gibson) on 22nd April last.
    Mr. Sparks: Is the Minister aware of the growing practice whereby one or two bits of old junk are put in a couple of rooms, a fantastic price is charged and, as soon as the new tenant has taken possession, the landlord begins to make himself unbearable by quarrels until he drives the tenant out and regains possession, when he repeats the process again and again? Will the Minister look into the matter, because it is a growing practice in some parts of London?
    Mr. Macmillan: It is illegal.
    Mr. Gibson: Cannot the Minister do anything to encourage the prosecution of people who carry out this illegal action? It is not sufficient to say that it is illegal. We ought to make sure that prosecution takes place in proved cases.

    Building Licences
    Mr. Sorensenasked the Minister of Housing and Local Government if he now has information in respect of the

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    number and percentage of licences issued for the building of houses for sale; how many of these were returned or refused; or, approximately, when he expects these to be available.
    Mr. H. Macmillan: I would refer the hon. Member to the reply given to his Question on 10th June. Up-to-date figures will, so far as available, be included in Table 3 of the Housing Return for June.
    Mr. Sorensen: Could the right hon. Gentleman say whether the licences refused or not used will be transferred by local authorities for use in building houses to let?
    Mr. Macmillan: That is another question. It is a question of allocation. They will be given all that is possible with the labour and materials available, so that there will be no loss in production.

    Building Labour Force
    Mr. Edward Daviesasked the Minister of Housing and Local Government what steps he is taking to ensure that an adequate labour force is available for the building of houses in those areas where they are most urgently required.
    Mr. H. Macmillan: Employment exchanges do all they can to persuade building workers to take housing work where they are most urgently needed. Local authorities are encouraged, particularly in areas where building labour is inadequate for local needs, to use non-traditional methods of house-building, which require a minimum of labour, especially skilled labour, on the site. I am sending the hon. Member a copy of a circular on this subject that I addressed to all local authorities last March.
    Mr. Davies: But is the right hon. Gentleman aware that where there is demand in contiguous areas there is some danger of bargaining—of enticing and attracting workers by his financial arrangements? Does he not in some instances make provision for travel? Has it not the effect, in the case of non-traditional contractors, of abstracting men who could be more usefully employed building houses, instead of travelling, say, two or three hours in a bus to their work?
    Mr. Macmillan: There is always some danger in rivalry, but there is still greater danger in stagnation.
    Mr. Ellis Smith: How does the right hon. Gentleman reconcile his original answer with what is taking place in the City of Stoke-on-Trent, where houses are required not only for normal needs but also for thousands of miners who are being transferred from other parts of the country to a Development Area? In view of the most urgent need for attention to be given to the problem there, will the right hon. Gentleman undertake to give his personal attention to this special case?
    Mr. Macmillan: Yes, Sir, if the hon. Gentleman will put down a Question about Stoke-on-Trent I shall endeavour to add to the information which he has just given to the House.
    Mr. Smith: But is not the Minister aware that he knows that this Question relates to Stoke-on-Trent?
    Mr. Davies: Is the Minister not aware that his Department has already been supplied with the facts before this Question was put down?

    London Families (New Towns Accommodation)
    Mr. H. Brookeasked the Minister of Housing and Local Government what action should now be taken by a person living in London who wants the opportunity as soon as possible of moving his family out to a house in one of the new towns.
    Mr. H. Macmillan: I hope shortly to be sending a circular on this matter to all London housing authorities. Meanwhile, any person on the housing lists of those authorities who wants to live and work in a new town should advise his authority accordingly.
    Mr. Brooke: Will my right hon. Friend particularly bear in mind the difficulties of the Metropolitan borough councils, which are almost at an end of their available building sites and still have thousands of people on their waiting lists and, up to now, have been offered no accommodation in any of the new towns except a few very expensive flats at Stevenage?
    Mr. Macmillan: Yes, Sir, it is that that we are trying to get arranged.
    Mr. Sorensen: Is the right hon. Gentleman aware that one advantage of those who live in the City of London is that

    983
    they have areas outside their own particular Metropolis while many of the outer boroughs have been affected by that fact and, therefore, require that their overspill population should go to these new towns in preference to people who come from the City of London?
    Mr. Macmillan: It is these rival claims we have to try to iron out. These are just examples of them.

  LOCAL GOVERNMENT

    Pennine Way and Kinderscout
    Mr. P. Robertsasked the Minister of Housing and Local Government whether he will now make a statement about the route of the Pennine Way footpath in the neighbourhood of Kinder-scout.
    Mr. Blenkinsopasked the Minister of Housing and Local Government whether he has reached a decision regarding the route of the Pennine Way following the public inquiry held some months ago.
    Mr. Daltonasked the Minister of Housing and Local Government whether he has yet reached any conclusion, following the further inquiry at Chapel-en-le-Frith on 21st March, on the suggestion to vary the route of the Pennine Way over Kinderscout, as designated by his predecessor.
    Mr. H. Macmillan: Yes, Sir. I am inviting the National Parks Commission to submit to me a proposal for the additional path around the edge of Kinderscout, which they put forward at the inquiry.
    Mr. Roberts: Can my right hon. Friend assure the House that he will not be influenced by any statements made outside the public inquiry by the right hon. Member for Bishop Auckland (Mr. Dalton)?
    Mr. Dalton: Is the Minister aware that a great deal of nonsense has been talked about the alleged danger on Kinderscout, that in company with some of my hon. Friends I spent Whitsun there, and that we formed the view that it was less dangerous to walk across Kinderscout than to walk across Whitehall?
    Mr. Macmillan: I have no doubt that my Parliamentary Secretary and the right
    984
    hon. Gentleman will take the high road, but I shall take the low road.
    Mr. Blenkinsop: Are we to understand that it is proposed that there shall be an alternative route, in addition to the one across Kinderscout?
    Mr. Macmillan indicated assent.
    Mr. P. Roberts: Is my right hon. Friend aware that the rather flambuoyant intervention of the right hon. Member for Bishop Auckland has been resented by the more serious-minded people on both sides of the House who are awaiting the result of the public inquiry?
    Mr. Daltonasked the Minister of Housing and Local Government what consultations he has had with the Peak Planning Board for the making of an access order to the whole plateau of Kinderscout.
    Mr. H. Macmillan: None, Sir. If the Board need to be stimulated in this matter—which I have no reason to suppose—it is for the National Parks Commission to do it.
    Mr. Dalton: Is the right hon. Gentleman aware that more than half the population of England lives within 50 miles of this point, and that it is most desirable that the inhabitants of all those industrial centres, particularly younger people, should have free access throughout the year, without interference by gamekeepers?
    Mr. Macmillan: Having inherited this particular structure of administration, I think it would be very wrong of me to go behind the National Parks Commission and to attempt to direct one of the authorities which are under its control.
    Mr. Dalton: Will the right hon. Gentleman mention it to the Commission next time he meets them?
    Mr. Macmillan indicated assent.

    Durham County Council
    Sir H. Williamsasked the Minister of Housing and Local Government if he will introduce legislation to enable him to replace the Durham County Council by Commissioners until it stops its present closed shop policy.
    Mr. H. Macmillan: No, Sir.
    Sir H. Williams: Would my right hon. Friend examine what happened some 20 years ago, when one of his predecessors was dealing with West Ham Board of Guardians and other authorities who were not then obeying the law?
    Mr. Macmillan: It is not a question of what happened 20 years ago, but of what is happening today. The matter is sub judice.

    Appeal Decisions (Bulletins)
    Mr. Walker-Smithasked the Minister of Housing and Local Government whether he will cause to be inserted in the next bulletin of selected appeal decisions, sufficient particulars to identify the area which is the subject matter of the appeal.
    Mr. H. Macmillan: The bulletins do describe the areas in question so far as seems necessary to the understanding of the decisions; and I do not think that to go further, and give the names, would add anything very useful, while it might, in some cases, embarrass the parties. But if my hon. Friend thinks that the bulletins in their present form are not as useful as they might be, I will be glad to consider anything he has to suggest.

    Tree Preservation
    Mr. Walker-Smithasked the Minister of Housing and Local Government whether, consequent upon the passage of the Forestry Act, 1951, he will issue a new circular in supersession of Ministry of Town and Country Planning Circular 66, relating to tree preservation orders.
    Mr. H. Macmillan: Yes, Sir.

  PROPOSED PRISON, MERSTHAM (DECISION)
  Mr. Doughtyasked the Minister of Housing and Local Government whether the objections to the proposal by the Prison Commission to build a prison at Merstham have now been considered; and if he will make a statement.
  Mr. H. Macmillan: The objections have been considered, and it has been decided not to build the prison on this site because of the harmful effect this would have on the Green Belt.
  Mr. Doughty: Is my right hon. Friend aware of the very great satisfaction that that answer will give to those in this country interested in the preservation of the Green Belt, particularly this part, which is situated at the top of the North Downs?

  N.A.T.O. (POLITICAL PRONOUNCEMENTS)
  Mr. Donellyasked the Prime Minister if he will instruct that representations shall be made to the North Atlantic Treaty Organisation to the effect that Her Majesty's Government is opposed to any political pronouncements being made on behalf of the North Atlantic Treaty Organisation by military commanders rather than by civil representatives of Governments.
  The Prime Minister (Mr. Winston Churchill): I see no need to make representations of the kind suggested.
  Mr. Donnelly: Is the Prime Minister aware of the Press reports of a statement by General Ridgway on the anniversary of D day? Does he not think, in view of the criticism made about Field Marshal Montgomery, that it would be a good thing to see that the same limitation should be applied wherever Great Britain has collective responsibility regarding military commanders?
  The Prime Minister: I was not aware of any criticism that was made about Field Marshal Montgomery, and I certainly have not been informed of any remarks by General Ridgway which it would be suitable or proper for us to take up in this House.
  Mr. Shinwell: Is it not becoming very difficult to draw a distinction between political and military pronouncements— for example, in connection with the North Atlantic Treaty Organisation?
  The Prime Minister: The right hon. Gentleman, in his tenure of office, found himself thoroughly able to keep a most active political life going in combination with his duties as Defence Minister.
  Mr. S. Silverman: If a general has some difficulty in distinguishing between a statement which is military in its bearing, or political, could he not avoid any

  987
  embarrassment to himself and anybody else by refraining from making the statement?
  The Prime Minister: I really think it would be rather difficult to arrange that all the military officers serving in N.A.T.O. and other organisations should submit their statements beforehand to the hon. Member.
  Mr. Shinwell: To avoid any erroneous impression, may I ask the right hon. Gentleman whether he is aware that, so far as is known, the military commanders associated with N.A.T.O. have worked, and appear now to be working, in the utmost harmony?

  MINISTRY OF WORKS

    Westminster Hall Offices (Reconditioning)
    Mr. Braineasked the Minister of Works whether he will now take steps to speed up reconditioning of the offices on the west side of Westminster Hall.
    The Minister of Works (Mr. David Eccles): I will certainly see that these offices are reconditioned as quickly as possible, but the internal work cannot be done until the repairs to this section of the external stonework are completed.
    Mr. Braine: While thanking my right hon. Friend for that reply, may I ask him if he is aware that these offices, which have been lying derelict for some time, used to be occupied by the Commonwealth Parliamentary Association, which now occupies rather restricted and dingy premises? In view of the fact that the Association receives an increasing flow of visitors from overseas will he give very special attention to this problem?
    Mr. Eccles: Yes, Sir, I am very anxious that the Commonwealth Parliamentary Association should get back into its offices.

    Trafalgar Square Traders (Licensing)
    Mr. H. Brookeasked the Minister of Works by what principles he is guided in deciding which of the photographers who have been operating in Trafalgar Square shall receive licences from him to continue to earn their living there.
    Mr. Eccles: I have tried to select men of good character who would serve the public well and be a credit to the Square.
    Mr. Brooke: Will my right hon. Friend bear in mind that the licences he is issuing have a very large monopoly value for their lucky recipients, and that justice would not only be done but be seen to be done if he would arrange for those who have built up this trade in the Square to have the opportunity of being interviewed in his Department, before he refuses licences to them and issues licences to people who have never traded there before?
    Mr. Eccles: The men to whom I have refused licences have been interviewed. Every one admitted that the Square must be cleaned up. Every one put the blame on somebody else. [HON. MEMBERS: "The pigeons."] Those to whom licences have been refused have unsatisfactory records.
    Lieut.-Colonel Lipton: Is the Minister aware that by reducing the number of persons trading in Trafalgar Square from about 50 to about six he has been a little too harsh in the cuts he has imposed, and that he has inflicted considerable hardship upon a small number of deserving applicants, as well as having deprived the public of the facilities to which they have become accustomed?
    Mr. Eccles: My object is to give the public better service and to prevent them from being gulled. I think the monopoly value existed before, when traders ganged up and kept off anyone who attempted to trade independently.
    Mr. C. I. Orr-Ewing: Was their photographic ability taken into account in deciding who should remain?
    Mr. Eccles: Yes, Sir.
    Mr. M. Stewart: Is the right hon. Gentleman aware that one result of his action in this matter has been to deprive of his livelihood a young man who has been earning his living respectably in this way for four years, whose choice of employment is seriously restricted by ill-health, and who has to maintain an invalid father and an aged grandmother; and will he look at this policy again?
    Mr. Eccles: If the hon. Gentleman will give me the particulars I will certainly look at them. It may be that six is not enough, but I want to see how we get on.
    Mr. Shinwell: Is not this contrary to the Conservative Party's policy of unlimited competition, private enterprise and setting the people free?
    Mr. Eccles: What was contrary to the policy of decent trading was the way in which it was carried on before. This place has to be cleaned up.

    Older Staff (Employment)
    Mr. M. Stewartasked the Minister of Works what revision he has made of the regulations governing retirement for employees in his Department.
    Mr. Eccles: None, Sir.
    Mr. Stewart: How does the Minister reconcile that with the statement, made to me in a letter a fortnight ago, that he was revising the regulations in his Department?
    Mr. Eccles: I think the hon. Gentleman is really not talking of retirement, which is the word used in the Question, but of the rules for the discharge of employees on engineering maintenance when there is not enough work, which is a different question.
    Mr. Stewart: Does the Minister not agree that what he is doing is making an alteration which is affecting the employment of older people in his Department? If so, how does he reconcile that with the recent statement by the Minister of Labour on the need for men to remain at work longer?
    Mr. Eccles: The hon. Gentleman is really asking an entirely different question, which is not about retirement at all, but perhaps I may be allowed to answer it. The only change I have made is in the London area, where we are treating the whole area as one. That is to say, if there is not enough work in one
    990
    depôt we are discharging a man over 65 in another depôt, although that depot has enough work, to make room for the younger man. That is the only change which has been made.
    Mr. Gibson: Before the right hon. Gentleman changes these regulations, even for the London area, will he give an assurance that the Whitley Council or the trade unions will be consulted before these changes are made?
    Mr. Eccles: They have been, and they agreed.

  EMPLOYMENT

    Shetland and North Scotland
    Mr. Grimondasked the Minister of Labour how unemployment in Shetland and the seven crofting counties, respectively, compares, over last year, with the general United Kingdom rate.
    The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Harold Watkinson): As the reply includes a Table of figures I will, if I may, circulate it in the OFFICIAL REPORT.
    Mr. Grimond: Is it not the case that unemployment, at least in certain of the crofter counties, has been consistently higher; and if that is the case, can the hon. Gentleman say what the Government propose to do to reduce it?
    Mr. Watkinson: Perhaps the hon. Gentleman would have a look at the figures. It is quite true, as he rightly says, that the position, particularly in the Shetlands, must cause my right hon. and learned Friend grave concern. He is watching the position very carefully.
    Mr. Patrick Maitland: Can the figures for 1950 be included in the information my hon. Friend is giving to the House?
    Mr. Watkinson: Yes, Sir, the figures will be included in the information.
    Following is the reply:

    PERCENTAGE RATES OF UNEMPLOYMENT IN THE UNDERMENTIONED AREAS: MAY, 1951-MAY, 1952

    Area

    Number of unemployed persons on the registers of Employment Exchanges in the area named in Col. (1) expressed as percentage of the estimated total number of employees in the area of those Exchanges

    21st May, 1951

    13th Aug., 1951

    12th Nov., 1951

    11th Feb., 1952

    12th May, 1952

    Shetland Islands

    11·9

    8·6

    13·3

    21·1

    18·0

    Orkney Islands

    1·0

    0·6

    1·6

    2·6

    0·7

    Counties of Caithness, Ross and Cromarty, Sutherland, Inverness Argyle.*

    5·4

    4·4

    6·5

    8·7

    5·7

    Great Britain

    1·0

    1·0

    1·4

    1·9

    2·2

    * Owing to the fact that the boundaries of employment exchange areas do not coincide with county boundaries it is not possible to provide separate figures for each of these counties.

    Remploy Factory, Treforest (Dismissals)
    Mr. G. Thomasasked the Minister of Labour whether he is aware of the dismissal of three men who have been employed at the Treforest Remploy Factory for the past three and a half years; and what change of policy is responsible for this treatment of disabled men.
    Mr. Watkinson: I am informed by Remploy Limited that there has been no change of policy in this respect. It has never been possible for Remploy to retain in their employment men who, because of their medical condition, are no longer able to do any useful work.
    Mr. Thomas: Is the hon. Gentleman aware that there is considerable apprehension amongst the employees at the Treforest Remploy Factory because they fear, what the Minister has denied, a change of policy? Is he further aware that these men are as fit now as they were when they were employed three and a half years ago; and will he look into the matter?
    Mr. Watkinson: The matter has been very carefully examined. I would remind the hon. Gentleman that under the Disabled Persons Regulations, 1945, there must be a reasonable prospect of obtaining and keeping some form of work as a condition of employment in a Remploy factory. I know that my right hon. and learned Friend views this case with very great sympathy, and the case of these three men was most carefully considered.
    992
    There was a deterioration in eyesight in the case of one of them, and a possible deterioration in mental activity in the case of one of the others. But the great point is that their case has been carefully examined. It was referred to the senior medical officer and to one of the directors of the factory before this action was taken.
    Mr. Paton: Is the hon. Gentleman aware that some weeks ago an exactly similar case arose in my own constituency, which I raised in this House; and is it not significant that these discharges continue to go on of men who have been employed for several years? In my own case I was able to show that there had been no significant deterioration of condition at all. Is the hon. Gentleman not aware—[HON. MEMBERS: "Speech."] If hon. Gentlemen opposite are not interested in Remploy, I am. Is the hon. Gentleman aware that there is a growing suspicion that too much pressure is being applied from headquarters to increase the productiveness of these factories?
    Mr. Watkinson: The point raised by the hon. Gentleman was answered in the Adjournment debate.
    Mr. Paton: It was not answered.
    Mr. Watkinson: In any case, what I want to make plain to the House, if I may, is that there has been no change of policy. As far as is humanly possible the very difficult human problem of the people in these factories is considered as carefully and fully as possible.

    Lancaster
    Mr. F. Macleanasked the Minister of Labour the unemployment figures for the borough of Lancaster on 1st November, 1951, and on the first day of each month since then.
    Mr. Watkinson: As the reply contains a number of figures I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Maclean: Will my hon. Friend take this opportunity of re-affirming that

    NUMBERS OF UNEMPLOYED PERSONS ON THE REGISTERS OF THE LANCASTER EMPLOYMENT EXCHANGE AND YOUTH EMPLOYMENT OFFICE AT THE UNDERMENTIONED DATES

    Date

    Males

    Females

    Total

    Wholly Unemployed

    Temporarily Stopped

    Wholly Unemployed

    Temporarily Stopped

    12th November, 1951

    …

    …

    162

    —

    214

    32

    408

    15th December, 1951

    …

    …

    268

    2

    202

    48

    520

    14th January, 1952

    …

    …

    383

    205

    233

    319

    1,140

    11th February, 1952

    …

    …

    297

    166

    253

    439

    1,155

    17th March, 1952

    …

    …

    242

    49

    214

    183

    688

    21st April, 1952

    …

    …

    266

    299

    192

    231

    988

    12th May, 1952

    …

    …

    247

    8

    210

    96

    561

    Building Trade Workers, Sunderland
    Mr. F. Willeyasked the Minister of Labour what factors have contributed to the present unemployment of 453 building trade workers in Sunderland; and what action he is taking to bring them into employment.
    Mr. Watkinson: Normal labour turnover accounted for most of the 453 building trade workers registered as unemployed on 12th May.
    Mr. Willey: Does the hon. Gentleman not realise that that is not a satisfactory reply to the building trade workers in Sunderland, and that we feel this is an exceptionally high figure; and would he bear this figure in mind when considering building projects required for the defence programme?
    Mr. Watkinson: Certainly I will bear it in mind.
    Mr. Fletcher-Cooke: Can my hon. Friend give the comparable figure for 1950?
    Mr. Watkinson: The position is not normal in the earlier months of the year when we get the normal seasonal decline.
    it is the Government's policy to do everything in their power to reduce these figures to the lowest possible level?
    Mr. Watkinson: Yes, Sir.
    Following is the reply:
    The Table below gives the available information. The statistics of unemployment are completed only for a date in the middle of each month.
    That is now taking place. But, of course, in the latter months of the year, particularly in the building industry, the position deteriorates. Nobody can say what may happen. Actually, in comparison with previous years, it does show some improvement.
    Mr. Willey: Does the hon. Gentleman not agree that the figure is appreciably higher than the figure 12 months ago?
    Mr. Watkinson: The hon. Gentleman asked how we accounted for the number at present on the books of the employment exchanges, and although he seems to have considered that the answer I gave him was not correct, as far as we can ascertain the figure of 453 is accounted for entirely by transitional unemployment, of people who are moving from one job to another.
    Mr. Emrys Hughes: Where is the Minister of Labour?

  SCOTLAND

    Agricultural Labour, Dumfriesshire
    Mr. N. Macphersonasked the Secretary of State for Scotland whether he is aware of the shortage of agricultural

    995
    labour in Dumfriesshire and of the difficulty in obtaining replacements for men called up for national service; and what action he proposes to take in the matter.
    The Secretary of State for Scotland (Mr. James Stuart): I am not aware of any acute shortage of agricultural labour in Dumfriesshire. I am informed by my right hon. and learned Friend the Minister of Labour that there are only 10 outstanding vacancies for male workers registered for the whole of the county.
    Mr. Macpherson: Is my right hon. Friend aware that when application was made the other day to Dumfries for an agricultural worker the answer was that there was already such a long waiting list that it was not worth while putting the name down; and can he please look into this matter again?
    Mr. Stuart: I have looked into it. There were 31 vacancies but there are now only 10, the 21 having been filled in recent weeks.

    River Clyde (Purification)
    Mr. Patrick Maitlandasked the Secretary of State for Scotland what progress has been made toward establishing a river purification board for the River Clyde, bearing in mind the urgent need for effective measures to preserve river amenities for anglers.
    Mr. J. Stuart: I have sent draft proposals to the 21 local authorities concerned, and am awaiting their comments.
    Mr. Maitland: Will my right hon. Friend bear in mind the intense interest which the amenities of the River Clyde provide for all those engaged in the sport of angling, which is a particularly popular sport among miners and other of my constituents?
    Mr. Stuart: Yes, Sir, I will certainly bear that in mind.

GREAT BRITAIN AND AUSTRALIA (MR. MENZIES' VISIT)
The Prime Minister: With the permission of the House, I desire to make a statement.
Mr. R. G. Menzies, Prime Minister of Australia, concluded his visit to London today, when he attended a full meeting of the United Kingdom Cabinet. During the past three weeks he has had opportunities to meet a number of Ministers of the United Kingdom Government, and to discuss with them matters which are of common concern to the United Kingdom and Australia.
These talks have covered a wide range of topics—including the whole field of international relations, with special reference to the position in the Far East and South East Asia, defence policy and the progress of our joint military planning.
Important conclusions were reached on the question of defence equipment required by Australia and the sources from which it should be obtained. We discussed the amount of Australia's productive capacity which should be devoted respectively to food and to armament production, so as to reconcile the demands in the interests of both countries.
On all matters the sympathy and understanding between Her Majesty's Governments in the United Kingdom and in Australia have been notably advanced by the exchange of views which has taken place.
Mr. Menzies' visit has afforded an opportunity to review the impact of the Australian import restrictions on United Kingdom trade generally and on the particular industries which are most seriously affected. Mr. Menzies has been anxious to examine possible ways of alleviating our problems subject to the over-riding necessity for the Commonwealth Government to safeguard the Australian reserves.
Full discussions took place between Mr. Menzies and Her Majesty's Ministers concerned, and also between him and the representatives of a wide range of United Kingdom industries affected by the import cuts. The Australian Government have already declared their intention to give special consideration to goods manufactured or in process of manufacture at the 8th March, which were made to

997
special specification for Australia, and which were not saleable elsewhere without severe loss. Other cases of real hardship would also receive special attention.
Mr. Menzies said that the Australian Government is also prepared to take measures to ensure that Australian importers would normally use their quotas in category "B" to honour their outstanding commitments before applying them to new orders. Mr. Menzies' view was that, having regard to Australia's balance of payments position, she would not be able to go beyond these measures at the present time but he hoped that the difficulties of the industries affected by the Australian import cuts would be eased by the arrangements outlined above.
Mr. Gaitskell: May I ask the Prime Minister, first, whether there was any discussion with Mr. Menzies about the possibility of Australia diverting orders from dollar sources to United Kingdom sources, and, secondly, whether there was any discussion with him about the possibility and desirability of holding a Commonwealth economic conference in the near future?
The Prime Minister: Yes, Sir. On both these subjects there was full discussion.
Mr. Gaitskell: Will the Prime Minister say what conclusions were reached on them?
The Prime Minister: I think that we should like to choose the most convenient moment for such an announcement.
Mr. Gaitskell: Would not the Prime Minister, at least, indicate whether it is likely, for example, that a Commonwealth economic conference will be summoned in the near future, in view of the fact that Mr. Menzies himself proposed this in public? Cannot we have an indication of the Government's own attitude?
The Prime Minister: I am not prepared to make a definite statement today, but I am satisfied that it is very desirable that
998
such a conference should be held at the earliest possible moment.
Dr. Broughton: May I ask the Prime Minister two questions? First, does he consider that any progress has been made along lines leading towards a concerted economic policy for the British Commonwealth of Nations; and, second, is there any prospect, in the immediate future, of more trade between the two countries, bearing in mind the present state of our textile industry and our need to import food and wool?
The Prime Minister: I am hopeful that progress has been made in both those directions.
Mr. Bottomley: May I ask the Prime Minister whether the adjustment in tariff rates by the Australian Tariff Board were considered, and, if so, with what result?
The Prime Minister: I think that is a question of some detail, of which I should require notice.
Mr. G. R. Strauss: The Prime Minister stated that important conclusions had been reached about the sources from which Australia would obtain her war equipment. Will he indicate particularly what he meant by that phrase?
The Prime Minister: I meant exactly what I said. I certainly do not think that a detailed statement on such a matter could be reached until after Mr. Menzies has been through the matter in detail in Australia with his own military experts.
Mr. Ellis Smith: While welcoming the statement so far as it goes, may I ask if the Prime Minister is aware that in large industrial areas where there are thousands of unemployed and thousands on short time there is a growing uneasiness about our economic situation? Is he also aware that there is a desire that this matter should be treated as one of the utmost urgency, and will he reconsider his reply in the light of that fact?
The Prime Minister: These are obviously matters which are in all our minds.

BUSINESS OF THE HOUSE
Motion made, and Question put,
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.— [Mr. R. A. Butler.]
The House proceeded to a Division. Mr. BUTCHER and Major CONANT were appointed Tellers for the Ayes but, no Member being willing to act as Teller for the Noes, Mr. SPEAKER declared that the Ayes had it.
Major Sydney Markham: On a point of order, Mr. Speaker. Might I explain that when the Division was in progress, it was not announced in the Lobbies that it was off and so I did not have a chance to regain my place to move my Bill to amend the Transport Act, 1947, before the Orders of the Day were called. In the circumstances, might I formally move my Transport Act (1947) Amendment Bill?
Mr. Speaker: I am sorry, but I gave the hon. and gallant Gentleman an interval. He must put down his Bill again.

ORDERS OF THE DAY

  FINANCE BILL
  Order for consideration, as amended, read.
  3.41 p.m.
  The Chancellor of the Exchequer (Mr. R. A. Butler): I beg to move,
  That the Bill be re-committed to a Committee of the whole House in respect of the Amendments to Clause 43, page 49, line 42 and page 50, line 11; Clause 45, page 51, lines 11, 13, 24, 26 and 38 and page 52, line 24; Clause 46, page 52, line 42 and page 53, line 6; Clause 57, page 65, line 8; and Schedule 12, page 122, line 9, standing on the Notice Paper in the name of Mr. Chancellor of the Exchequer.
  We are re-committing the Bill according to normal procedure and have taken the normal course of moving the Motion, notwithstanding the practice of the House, because these are matters of very small technicality and there is some doubt whether they would not impose a charge. In the circumstances it was thought necessary to re-commit the Bill.
  The Amendment to Clause 43 is to deal with a point raised by the right hon. Gentleman the Member for Huyton (Mr. H. Wilson). The Amendments to Clauses 45 and 46 are to deal with points raised by the former Solicitor-General, and the Amendment to Clause 57 is to deal with a point raised by my hon. and gallant Friend the Member for Renfrew, East (Major Guy Lloyd). The Amendment to the Twelfth Schedule is purely drafting. The Amendments are, therefore, to meet points put by right hon. Gentlemen opposite and by my hon. and gallant Friend and one Amendment is drafting; they are not of major substance but in themselves they improve the Bill, and owing to the doubt about imposing a charge I am sure it was right to move to re-commit. I hope we need not spend very long on the re-committal and may then come to the substance of the Report stage.
  Mr. Frederick Mulley: On a point of order. Is it your intention, Mr. Speaker, to call my Amendment to the re-committal Motion?
  Mr. Speaker: The hon. Gentleman's Amendment is not selected, and the Amendment in the name of the hon. Member for Huntingdon (Mr. Renton) is preparatory to a new Clause and is out of order as going beyond the Ways and Means Resolution.
  3.45 p.m.
  Mr. Hugh Gaitskell: Perhaps I might clarify the proceedings by saying that the Opposition see no reason for objecting to the re-committal Motion. As the Chancellor has pointed out, it is designed to meet points raised by right hon. and hon. Friends of mine during the Committee stage. I am not clear about the position of the Amendment in the name of my hon. Friend the Member for Sheffield, Park (Mr. Mulley). Do I understand that it is not in order?
  Mr, Speaker: It is not selected.
  Mr. Gaitskell: I cannot argue with you on that point, Mr. Speaker, and I can only express my regret. Perhaps you will allow me to say that the Amendment was put down by my hon. Friend because of Amendments made by the Chancellor during the Committee stage. He had no earlier opportunity of moving the Amendment, though it is true that he referred to the matter during the Committee stage. We are in your hands, Mr. Speaker, and, having said that, I must leave the matter there.
  Mr. Mulley: I appreciate that the Amendment has not been called, Mr. Speaker, but I should like to protest to the Chancellor about the terms of his Motion, for he could well have worded it to include the E.P.L. Clauses generally, and so give hon. Members an opportunity to put down Amendments which we did not wish to put down at about six hours' notice when 100 Amendments were put on the Order Paper by the Chancellor during the Committee stage. We have had no opportunity of putting down Amendments to a number of changes which the right hon. Gentleman has introduced into E.P.L. It would have been more courteous to the Committee to have moved to re-commit these Clauses instead of merely the Clauses and the detailed Amendments in his own name.
  Question put, and agreed to.
  Bill immediately considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    Clause 43.—(COMPUTATION OF PROFITS AND LOSSES FOR EXCESS PROFITS LEVY PURPOSES.)
    The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. R. Maudling): I beg to move, in page 49, line 42, at the end, to insert:
    1002
    "or the apportionment is under subsection (5) of this section required to be made as mentioned in that subsection."
    It would be for the convenience of the Committee if we might also consider at the same time the following Amendment, in page 50, line 11, at the end, to insert:
    (5) Where part, but not the whole, of an accounting period of a body corporate—

    (a) falls within a standard year and the fact that sufficient accounts are available as to that part may, under the last preceding subsection, be treated as a special circumstance affecting the apportionment of profits or a loss for that accounting period; or

    (b) falls after the beginning of the period of charge to the excess profits levy and sufficient accounts are available as to that part,

    the body corporate may, by notice in writing given to the Commissioners, require that the apportionment of the profits or loss for that accounting period shall be made in accordance with the accounts for that part.
    (6) For the purposes of this section accounts of a body corporate for any period shall not be treated as sufficient unless the body corporate has at the beginning and at the end of that period balanced its books and, if it has any stock, taken stock.
    The two Amendments give effect to an undertaking I gave during the Committee stage on an Amendment moved by the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) to deal with the position when the accounting period of a company overlaps the calendar year which forms the E.P.L. period. A company's accounting period may run to 31st March. Normally the first three-month period would be a quarter of the profits for the whole period of 12 months, but it was our intention to provide that where adequate accounts were forthcoming from 1st January to 31st March the taxpayer might elect to be charged on his actual profits and not on the profits calculated as a quarter of the period of 12 months.
    It was pointed out by the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) that, as drafted, the Clause left a discretion to the Commissioners and did not give the taxpayer the right to claim that in those circumstances he should be charged on his actual profits. The Amendments will give the taxpayer the right, in cases where the books of a company have been balanced and where stock has been taken, to claim that he shall be taxed on his actual profits for that period and not if he does not wish to be, on the profits

    1003
    expressed as a proportion of the period of 12 months which overlaps the E.P.L. chargeable accounting period. The Amendments are designed to meet a point put forward by the Opposition, and in those circumstances I hope the Committee will accept them.
    Mr. Austen Albu: My right hon. Friend the Member for Huyton (Mr. H. Wilson) is not present and I should like on his behalf to thank the Chancellor for accepting this Amendment, which, of course, will make a substantial difference to the particular companies which my right hon. Friend had in mind, namely, those in the textile industry, which are suffering a severe slump at the present time.
    This is only another example of the valuable work done by the Committee on this Excess Profits Levy and company taxation as a whole, because as the Clause was originally drafted there is no doubt it would have fallen very heavily on companies which found that the end of the accounting period overlapped the period of charge for the Excess Profits Levy and which are suffering from the severe recession in trade. As far as I can see, the Clause as drafted now is entirely satisfactory, and I think that will be very much welcomed in Lancashire and also in industries making furniture and other consumer goods, where there is a general recession.
    Amendment agreed to.
    Further Amendment made: In page 50, line 11, at end, insert:
    (5) Where part, but not the whole, of an accounting period of a body corporate—

    (a) falls within a standard year and the fact that sufficient accounts are available as to that part may, under the last preceding subsection, be treated as a special circumstance affecting the apportionment of profits or a loss for that accounting period; or

    (b) falls after the beginning of the period of charge to the excess profits levy and sufficient accounts are available as to that part,

    the body corporate may, by notice in writing given to the Commissioners, require that the apportionment of the profits or loss for that accounting period shall be made in accordance with the accounts for that part.
    (6) For the purposes of this section accounts of a body corporate for any period shall not be treated as sufficient unless the body corporate has at the beginning and at the end of that period balanced its books and, if it has any stock, taken stock.—[Mr. Maudling.]
    Clause, as amended, ordered to stand part of the Bill.

    Clause 45.—(EFFECT OF TRANSFERS OF GOING CONCERNS ON STANDARD PROFITS AND COMPUTATION OF PROFITS AND LOSSES.)
    The Solicitor-General (Sir Reginald Manningham-Buller): I beg to move, in page 51, line 11, to leave out from "concern," to "to," in line 12.
    It might be for the convenience of the Committee if we took this Amendment together with the five other Amendments to this Clause, because they all deal with the same point. The Committee may remember that during the Committee stage the wording of Clause 45 was subjected to considerable criticism by the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) and the hon. Member for Stechford (Mr. Roy Jenkins), who contended that the words
    "transferred, as a going concern and without substantial alteration in the character thereof"
    might be taken to mean that there should not be any substantial alteration at the moment of transfer. Our object—and I do not think there was any disagreement about the object of the Clause—was to stop the purchase and transfer of a business just for the purpose of acquiring its standard so that the purchaser might avoid or reduce his E.P.L. liability. At the same time we did not want to stop bona fide commercial transactions where this right of standard should pass.
    On the Committee stage I promised that I would look at the wording again. I thought it was a matter of drafting, because our object is the same. This Amendment is intended, and I think succeeds, in removing any ambiguity that existed. If there is any substantial alteration in the trade or character of the business within 12 months, the standard does not pass, whereas if there is no such substantial alteration then the standard will pass. This meets the point which was raised in Committee.
    Mr. Gaitskell: I should like to thank the Solicitor-General for making this Amendment. I know that my right hon. and learned Friend was much concerned at the wording of this Clause. We discussed it ourselves at considerable length and we think that his point has been fully met and that the Clause is now in satisfactory form.
    Amendment agreed to.
    Further Amendments made: In page 51, line 13, after "corporate," insert:
    "and there is no substantial alteration in the character of the trade or business in the period ending twelve months after the transfer."
    In line 24, leave out from "concern," to "to," in line 25.
    In line 26, after "corporate," insert:
    "and there is no substantial alteration in the character of that part of the trade or business in the period ending twelve months after the transfer."
    In line 38, leave out from "concern," to "to," in line 39.
    In page 52, line 24, leave out from "and," to "then," and insert:
    "there was no substantial alteration in the character thereof in the period ending twelve months after the transfer."—[The Solicitor-General.]
    Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
    Major Guy Lloyd: I want to ask my hon. and learned Friend a question about the Amendment to line 38, which is part of the Clause we are now discussing. I appreciate very much the concessions which my right hon. Friend has made and which will he appreciated on both sides of the Committee, for they are very valuable, but there is a point in that connection about which I am not quite sure and do not understand what it really means. My right hon. Friend knows that I am not as clever as he is in understanding the intricacies of these very technical points.
    I should like to know if he or the Solicitor-General can inform me whether this transfer refers to a company controlled by the people specified in paragraphs (a) (b), (c), and (d)? Does it mean a company which has been controlled by members of a family and close associates at the point of time when the business was transferred from the partnership to the company? This is a very important point which has not been covered by the Solictor-General's remarks. If this is so, then the new company—for it will be a new company— will continue to enjoy the benefits of the subsection even if the transfer has been made within a short time and the company has passed out of the hands of the persons listed in these three paragraphs.
    The other question is this. If one must look at the control and, therefore,
    1006
    at the point of time that a business is transferred to a new company, many transfers which should benefit under subsection (3) may be deprived of their rights on technical grounds. I will not delay the Committee by describing the possibilities of that, but my right hon. Friend will appreciate the point I am making. It would not be right that these transfers, which otherwise would be satisfactory, should be delayed on purely technical grounds of which there might be many. Common justice would dictate that my point should be considered by my right hon. Friend. I hope he will understand my amateurish way of expressing it. This is a point on which many people who know more about this matter than I do feel strongly, and I would urge my right hon. Friend and the Solicitor-General to give consideration to it and perhaps give me a favourable reply.
    4.0 p.m.
    The Solicitor-General: With regard to the first point raised by my hon. and gallant Friend, as I understand the Clause, for subsection (3) to operate the body corporate to which the business is transferred must be a body corporate over which one or more of the persons described in that subsection is at the time of transfer in control. That, I think, is the answer to the first point.
    The second point put to me by my hon. and gallant Friend was, if I understood him correctly, whether that provision might possibly effect a delay in the transfer. I appreciate that in certain circumstances it might cause a slight delay, but I do not think it is possible in a Bill of this character to make any further provision to benefit the company which is acquiring a business from an individual.
    Question put, and agreed to.
    Clause, as amended, ordered to stand part of the Bill.

    Clause 46.—(SPECIAL PROVISIONS AS TO TRANSFERS OF TRADES OR BUSINESSES TO NEWLY CREATED BODIES CORPORATE WITHOUT CHANGE OF ULTIMATE CONTROL.)
    Amendments made: In page 52, line 42, leave out from "concern," to "to," in line 43.
    In page 53, line 6, at end, insert:
    "and
    (d) there is no substantial alteration in the character of the trade or business in the period ending twelve months after the transfer."—[The Solicitor-General.]
    Clause, as amended, ordered to stand part of the Bill.

    Clause 57.—(PARTNERSHIPS.)
    Mr. Maudling: I beg to move, in page 65, line 8, at the end, to insert:
    (2) Where, for the purpose of ascertaining a body corporate's liability to the excess profits levy for any chargeable accounting period, its share in the profits or losses of such a business as aforesaid falls to be determined in calculating its profits or loss for the standard years, then, if at any time before the end of the chargeable accounting period there has been an alteration in its share in the profits or losses of the business—

    (a) any sum paid or received in cash by the body corporate in respect of the alteration shall be treated as having been paid by it in cash by way of repayment of its share capital or, as the case may be, received by it in cash in respect of an issue of its share capital; and

    (b)its profits or loss for the standard years shall be computed (except for the purpose of ascertaining undistributed profits or over-distributions of profits) as if throughout the standard years it had had the same share (if any) in the profits or losses of the trade or business as it had during the chargeable accounting period.

    References in this subsection to an alteration in a body corporate's share in the profits or losses of a trade or business include a reference to the acquisition or disposal of its share; and the reference in paragraph (6) of this subsection to the share in the profits or losses of the trade or business which a body corporate had during a chargeable accounting period shall be construed, where that share was altered during that period, as a reference to its average share during that period in the said profits or losses.
    The purpose of this Amendment is to carry out an undertaking which I gave on behalf of my right hon. Friend to my hon. and gallant Friend the Member for Renfrew, East (Major Guy Lloyd) in Committee. The Clause as it now stands deals with the position where a partnership is carrying on a business which is liable to E.P.L. and where one of the partners is a body corporate. The individual partners are, of course, not liable to E.P.L., whereas the corporate partner is, and it is laid down that the profit or loss of the corporate body for E.P.L. purposes shall be its share of its total profit or loss of the business carried on under the partnership.
    1008
    It was pointed out earlier by my hon. and gallant Friend that provision had not been made for circumstances which might arise when between the standard and the chargeable period there has been a change in the balance of the partnership. For example, the corporate partner might have taken over from the other partners a larger share of the business, and in those circumstances, quite obviously, unfairness might arise.
    Therefore, we have sought by this Amendment to cover such a situation as this where there has been a change in the division of the share of profit between the various partners by providing that the proportion of the partnership profits in the standard years is to be adjusted so as to coincide with the altered arrangements which may be in force in the chargeable period. In other words, if the company owns three-quarters of the business in the chargeable period, it shall be deemed to have owned it in the standard period.
    This calls for a consequential Amendment because sums of money may have passed as part of this arrangement. Therefore, it is provided that any cash paid out by the company as part of this change in the division of the profits of the business or any cash received shall be treated for E.P.L. purposes as cash paid out by way of repayment of share capital or as cash received in respect of an issue of share capital. I think that if this Amendment is accepted by the Committee it will ensure in this rare type of case, should it arise, that justice will be done the body corporate which is a partner.
    Major Lloyd: It is right and proper that I should say how much I appreciate my hon. Friend's remarks. He has not only met the point which I tried to make in my Amendment, but he has gone much further because I had not fully grasped the full significance of my Amendment and he very readily did. He realised that its implications went further than I had originally anticipated. Not only has he met my point of view, but he has met all the implications of the Amendment, and I very much appreciate the consideration he has given to the matter.
    Amendment agreed to.
    Clause, as amended, ordered to stand part of the Bill.

    Twelfth Schedule.—(EXCESS PROFITS LEVY: INTERCONNECTED BODIES CORPORATE.)
    The Solicitor-General: I beg to move, in page 122, line 9, after "if," to insert "any of."
    This is really a drafting Amendment to make something in the Twelfth Schedule quite clear. As the Schedule now stands, the question has been raised whether it is necessary that none of the subsidiaries of a particular company are subsidiaries of a company of which that company is a subsidiary for the subsection to operate. This Amendment makes it clear that if any of the subsidiaries of the intermediate company are not also subsidiaries of the ultimate owner, then there is the right of election for group treatment.
    Amendment agreed to.
    Bill reported, with Amendments; as amended (in Committee and on re-committal), considered.

    New Clause.—(REDUCTION, IN CERTAIN CASES, OF EXCESS PROFITS DERIVED FROM INVESTMENTS.)
    (1) Subject to the provisions of subsection (2) of this section, where the functions of a body corporate consist wholly or mainly in the holding of investments, the provisions of this Act relating to the excess profits levy shall have effect in relation to it as if each of the following amounts, that is to say—

    (a) the excess of its profits for a chargeable accounting period over its standard profits,

    (b) the deficiency of its profits for a chargeable accounting period,

    (c) its profits for the whole period mentioned in subsection (1) of section forty-one of this Act,

    were reduced by such an amount as bears to the whole thereof the same proportion as so much of its profits for the said chargeable accounting period or, as the case may be, the said whole period, as is attributable to sums received by it by way of dividend or distribution of profits from other bodies corporate ordinarily resident in the United Kingdom bears to the full amount of its profits for that period.
    (2) This section does not apply to a body corporate which is a member of a group within the meaning of the Twelfth Schedule to this Act unless the functions of each of the other members of the group also consist wholly or mainly in the holding of investments.
    (3) For the avoidance of doubt it is hereby declared that the references in this section to the holding of investments do not include a reference to the holding of land.—[Mr. Boyd-Carpenter.]
    Brought up, and read the First time.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): I beg to move, "That the Clause be read a Second time."
    This is the first of the new Clauses in the name of my right hon. Friend, and this one is put down to implement the undertaking which, on behalf of my right hon. Friend, I gave during the debate in Committee. As I then indicated, this Amendment applies only in the case of investment trusts. I did venture to put to the Committee during the debate in Committee the difficulties which would arise if it were attempted to apply the same principles in the case of trading companies. I do not want to weary the House with a repetition of those arguments, but I pointed out that those difficulties arose in a much less degree in the case of investment trusts, and I indicated that this new Clause, which is confined to investment trusts, would be put down on the Report stage.
    The effect of the new Clause, in brief, is this. It provides in subsection (1) that in the case of investment trusts the excess profits for E.P.L. purposes for each chargeable accounting period shall be reduced in the ratio which the amount of profits attributable to dividends and other distributions of profits received from other bodies ordinarily resident in the United Kingdom bears to total profits for the relevant period. Debenture interest or dividend income from overseas bodies will not be taken into the calculation.
    Similarly, the amount of profits attributable to dividends from United Kingdom resident companies will, in the same proportions, reduce any deficiency of profits for E.P.L. purposes and be taken out of the calculation of total profits for purposes of computing the limitation under the over-riding maximum provisions. This will, in general, secure that money which has already borne E.P.L. taxation when distributed by a trading company does not have to bear it again when distributed by an investment trust.
    The House will see that this does not apply where the body corporate is one of a group, some of which are trading companies. This limitation is imposed so as to secure that trading companies do not come into this concession by the back door. It is sometimes the case that

    1011
    a group of what are really trading companies vests for convenience its investments in a holding company. That holding company is really part of, in general, a trading group, and there seems no particular reason to exempt it as opposed to other trading companies.
    I appreciate that this Amendment does not go as far as some of my hon. Friends would have liked, but, as I said during the Committee stage, this was as far as we could go in this direction. As I then indicated, the cost will be of the order of £1 million. If we went further and covered all companies, the cost would be of the order of £5 million.
    Mr. J. Grimond: As this Bill was originally drafted, it would have meant that some trust companies would have found themselves paying E.P.L. for the second or third time on their income. Not only would that have been unfair to the company concerned but, as these companies may again be a substantial source for the raising of risk capital—an activity in which they only play a limited part at the present time—it could have been a serious matter for the country. Those of us who put down Amendments earlier seeking to exclude such companies from E.P.L. altogether must nevertheless be grateful for small mercies, indeed for the reasonably substantial mercy offered by this Clause. I have no doubt it will be welcomed by the companies themselves as far as it goes.
    I have only one question to ask. Subsection (3) is clearly designed to refer to companies which are themselves engaged in the holding of land. There are certain companies, however, which benefit indirectly from land or its products—most of which draw their incomes from land abroad and to that extent would not in any event be affected—but where a company holds shares in another company which is managing land in this country, I assume this Clause will apply?
    Mr. Boyd-Carpenter indicated assent.
    Sir Patrick Spens: I want to add my word of thanks for this new Clause. As the hon. Member for Orkney and Shetland (Mr. Grimond) has said, it goes a substantial way to meeting what we felt was not only a grievance but a matter of principle. I am sure the
    1012
    Financial Secretary will not complain when I say that where a principle is admitted that this is right and everything else is wrong, it is difficult to realise why it is confined only to a proportion of what comes in under the principle.
    I appreciate that it is done really for financial reasons, and that to ask that the Clause should cover all income which these companies receive from companies that have already borne the tax would cost more than the Treasury feel they are able to give to investment trust companies. I hate looking a gift horse in the mouth and I am grateful for this concession so far as it goes. At the same time, the principle of double taxation is one that ought to be avoided even to the last halfpenny.
    Mr. Mulley: I want briefly to fortify the Financial Secretary in resisting the demands of his hon. Friends behind him to extend this concession to holding companies of a trading group. We all agree that double taxation is a bad principle, and that where a trust company is concerned whose income is solely derived from investment there is an unanswerable case for exempting it, as this new Clause does.
    However, it would not be in the interests of the Exchequer to extend the provision to give another £4 million back by relief from Excess Profits Levy. It is not as if the Excess Profits Levy were a new tax on companies. The additional impost of Excess Profits Levy has been offset by a reduction in the rates of Profit Tax. Therefore, the Financial Secretary should resist the demands of his hon. Friends to extend the concession to the holding companies of trading groups.
    4.15 p.m.
    Mr. Ian Horobin: We must all agree that this new Clause is an improvement, but this tax has repeatedly been called, not a revenue tax, but one of moral principle. As a matter of moral principle, double taxation is wrong and cannot be justified by saying that we want £4 million. I much regret that insurance companies and other similar bodies will still be subjected to double taxation under these provisions. If it were not that this tax is a temporary one, I do not think this House could accept such a situation, but in all the circumstances we appreciate

    1013
    that the Chancellor has gone some way, and since this injustice will not last more than two or three years, we must grin and bear it.
    Mr. Douglas Johnston: May I ask the Financial Secretary two questions? The first is whether he is quite accurate in describing this as an investment trust provision. As I understand it, an investment trust company is one which was formed wholly for the purpose of holding shares in other companies. This Clause applies not only to such companies which wholly own shares, but also to companies whose business is mainly holding shares. Would it not apply to such companies as those who were formerly engaged in the coal mining industry, whose assets have been taken over and who now hold stocks and shares but, at the same time, carry on a subsidiary business?
    My second question applies to the use of the word "ordinarily" which occurs before the words "resident in the United Kingdom." As the Financial Secretary and the Solicitor-General know, there have been frequent comments by the courts on the use of any adjective or qualification of the word "resident" in so far as that applies to companies. Is the word "ordinarily" meant to be a qualification of "resident"? Is it something less than resident? If so, what is it? If it is no qualification, then why not leave the word "resident"? As the Solicitor-General knows, the question of where the residence of a company is depends entirely upon where the control of the company rests. Is the use of the word "ordinarily" meant to be a qualification or a departure from that?
    Mr. Boyd-Carpenter: My hon. and learned Friend the Solicitor-General will endeavour to deal with the point raised by the hon. and learned Member for Paisley (Mr. D. Johnston), which is clearly a matter of legal construction. On the first point, I used the term "investment trusts" collectively. So far as I know, it is not a term of art and is an illustration of the class of bodies which would receive the benefit of this provision.
    As the hon. and learned Gentleman will appreciate from his reading of the terms of the new Clause, it covers bodies corporate whose functions consist wholly
    1014
    or mainly in the holding of investments. He asked me whether it would cover the case of the former colliery companies. It must be a question of fact in each case whether they have so converted themselves largely into bodies that hold investments or whether they have not. I should not like to give a dogmatic answer, because it would probably cover some but not others. Generally speaking, however, it covers bodies which are clearly described in the opening words of the Clause. I fully appreciate that that goes a little way, perhaps not far, beyond what are colloquially described as investment trusts.
    The Solicitor-General: The hon. and learned Member for Paisley (Mr. D. Johnston) will find that the phrase in the Income Tax Acts and earlier in the Bill —in Clause 35—is always, or nearly always, "ordinarily resident." The Clause is not meant to make any alteration in the usual definition of "resident" so far as a company is concerned.
    The hon. and learned Gentleman has advanced an interesting argument that the word "ordinarily" is unnecessary, but, as he knows, if the word is left out of the Clause, that might have an effect upon the application of the Clause having regard to the phrase which is so generally used—"ordinarily resident."
    Mr. D. Johnston: Am I not right in thinking that where the words "ordinarily resident" are used in the Income Tax Acts and in the Bill, they are used in relation to a natural, and not an artificial person; and that where the word "resident" is used in relation to an artificial person, what is used is the phrase "resident or ordinarily resident," which implies a difference between the two?
    The Solicitor-General: The short answer to that is that the phrase "ordinarily resident" is also applied to artificial persons. It is so applied in Clause 35.
    Question put, and agreed to.
    Clause read a Second time.
    Mr. G. P. Stevens: I beg to move, as an Amendment to the proposed Clause, at the end of subsection (1), to insert:
    "or unless in the opinion of the Commissioners the functions of the group as a whole consist mainly in the holding of investments in which case the proportions provided by subsection (1) of this section shall apply."

    1015
    On behalf of my right hon. and hon. Friends and myself, I say "Thank you" to my right hon. Friend the Chancellor of the Exchequer for recognising to a very large extent the merits of the case that we tried to make during the Committee stage for avoiding as far as possible the evils of double taxation. We recognise the difficulties of going beyond investment trust companies, but I feel that the Financial Secretary to the Treasury is going a little far when he refers to the wording of the Amendment and suggests that it would open the back door to trading companies.
    Mr. Boyd-Carpenter indicated dissent.
    Mr. Stevens: I thought that that was what was suggested—certainly the hon. Member for Sheffield, Park (Mr. Mulley) suggested that—and that if the Amendment was put into effect, trading companies, masquerading in the shape of children of holding companies, would benefit. That is not so and it is not intended to be so.
    I have in mind, not one case, but a number of cases, where a company which comes within the generic heading of an investment trust company operates none the less through a group of, perhaps, eight or ten different companies, where it holds both quoted and unquoted stocks and shares, and in addition, within the group, perhaps holds freehold and leasehold land, ground rents and things of that kind. For the purposes of efficient and economical management it sets aside one subsidiary company within the group to act as the company owning the freehold land and leasehold land interests.
    Although the proportion of quoted and unquoted investments in a case of that sort may be 90 per cent. of the total wealth or assets of the group, nevertheless it seems to me that subsection (2) of the Chancellor's new Clause would exclude that company from the benefits of the operation of his Clause. In other words, although the business of that group would undoubtedly consist mainly —indeed, very nearly wholly—of the holding of investments, none the less because for the purposes of efficient administration the holding of the land had been set aside into one particular company, that group of companies would not benefit in any shape or form.
    1016
    I suggest that that is an anomaly. It is a blot upon an otherwise admirable attempt, and I hope that the Chancellor, having heard the case for the Amendment, will let us know why he cannot accept it or, alternatively, will tell us that he is going to accept it.
    Mr. Ralph Assheton: I beg to second the Amendment.
    Mr. Boyd-Carpenter: The Amendment, which my hon. Friend the Member for Langstone (Mr. Stevens) has moved with such commendable brevity, illustrates very clearly the great and genuine difficulty in this matter in drawing a very clear line of demarcation. I have a great deal of sympathy with the class of case to which he refers, but, as he will appreciate, there is a very great risk in this sort of matter, if we were to abandon the line taken in the Government's new Clause, of opening up quite a wide area in which the concession would operate, probably a wider area than my hon. Friend has in mind in his Amendment.
    The words used in the Amendment are:
    "the functions of the group as a whole"—
    note the words, "a whole"—
    "consist mainly in the holding of investments…
    That would cover the case of a large group of companies, some of which were carrying on trading activities on a very substantial scale. If the intention of the Amendment were effective in those words, the effect would be in certain cases, simply because trading companies were grouped with others, to give this concession to those trading companies and not to other trading companies so grouped. We should find that the line, difficult as it is adequately to define, even under the Government's new Clause, would be extremely irregular, anomalous and unfair
    I appreciate that the intention is to deal simply with those anomalies, but we must deal with the Amendment, which is, after all, intended to be put into the Bill, on its actual draft and wording. I suppose that on a strict reading the Amendment would give the concession, or might be deemed to give the concession, in the case of a group which, taken as a whole, could be divided up as to 51 per cent. holding of investments and as to 49 per cent. trading activities, although I am quite certain that that is

    1017
    not my hon. Friend's intention; but that is how, I think, the line would be drawn under his Amendment, and very great practical difficulties in administering such a line would arise.
    In the case of a group of companies such as the extreme case to which I have referred—the 51–49 per cent. case—it is more than likely that the balance of activity might shift from one side of the line to the other. The administrative difficulty in that sort of situation, for the company's accountants no less than for the Board of Inland Revenue, would make the whole matter impossibly difficult.
    Mr. Stevens: I was actually quoting, of course, from the first subsection of the Chancellor's new Clause:
    "where the functions of a body corporate consist wholly or mainly in the holding of investments…"
    Would my hon. Friend's arguments not apply equally in that case?
    Mr. Boyd-Carpenter: They would apply, but not equally, because what is just practicable in the case of one company becomes a wholly different matter when dealing with a group of companies. The variables are much greater in number and much more difficult to follow in the case of a group of companies.
    I appreciate that my hon. Friend has done my right hon. Friend the courtesy of imitation in drafting his Amendment. That serves to underline that even the line that we have taken in our attempt to meet the genuine points that were raised during the Committee stage involves some difficulty. Those difficulties would be magnified if we sought to apply a rule which could operate, we believe, with reasonable success in the case of a single company, to a whole group of companies, with all the more complex factors that there arise.
    We do none the less recognise that my hon. Friend and those associated with him have raised a very real point of difficulty. We do not believe that it can be solved quite as easily as the Amendment suggests. But my right hon. Friend, however, authorises me to say that he is far from shutting his mind to the difficulties which will arise on the Government's new Clause and that he intends to follow very closely the operation of this aspect of the tax.
    1018
    Indeed, he authorises me to go further and to say that if in the event, when the tax has actually operated, the sort of situation to which my hon. Friend referred, quite rightly, as an anomaly should develop, he would be prepared to consider the inclusion in next year's Finance Bill of amending legislation; and in his consideration of that possibility he certainly does not exclude the introduction of legislation with retroactive effect. But he feels that the best thing at this stage is to seek to operate this somewhat difficult concession along the lines of the Government's new Clause, and at the same time to watch the matter in the way he has authorised me to say he will do.
    I hope that that will re-assure my hon. Friend that it is not our intention to allow anomalies of a gross character to spring up in this connection, and that in that aspect of the tax, as in all others, the intention of my right hon. Friend is to administer the provisions of the Bill as fairly between company and company and between individual and individual as it is administratively possible to do.
    4.30 p.m.
    Mr. Assheton: I am sure that the House will be grateful to the Financial Secretary for the way in which he has met the point which my hon. Friend the Member for Langstone (Mr. Stevens) put so well in regard to the Amendment standing in my name and the names of two of my hon. Friends. My attention has been drawn to very serious anomalies which would arise under the Clause as at present drafted, anomalies which obviously any Chancellor and the Inland Revenue would wish to remedy. I appreciate that that is difficult, particularly at such a late stage, and I think that the suggestion of the Financial Secretary is a very fair and proper one. In view of that, I beg to ask leave to withdraw the Amendment.
    The Chairman: Does the hon. Member for Langstone (Mr. Stevens) agree to the withdrawal of the Amendment?
    Mr. Stevens: Yes, Sir Charles.
    Amendment to the proposed Clause, by leave, withdrawn.
    Clause added to the Bill.

    New Clause.—(PROHIBITION OF CERTAIN ACTIVITIES FOR PROTECTION OF POOL BETTING DUTY.)
    (1) With a view to protecting the revenue derived from the pool betting duty, it shall be an offence under this section for any person—

    (a) to conduct in Great Britain any business or agency for the negotiation, receipt or transmission of bets to which this section applies; or

    (b)knowingly to issue, circulate or distribute in Great Britain, or have in his possession for that purpose, any advertisement or other document inviting or otherwise relating to the making of such bets.

    (2) This section applies to all bets made byway of pool betting, except (in the case of bets not made by means of a totalisator) where the promoter of the betting is in Great Britain or the promoter of the betting is in Northern Ireland and the bets are such as to be chargeable with a duty corresponding to the pool betting duty under an Act of the Parliament of Northern Ireland, or (in the case of bets made by means of a totalisator) where the totalisator is in Great Britain.
    (3) A person guilty of an offence under this section shall be liable—

    (a) on summary conviction to a fine not exceeding one hundred pounds or, in the case of a second or subsequent conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding two hundred pounds or to both; or

    (b) on conviction on indictment, to a fine not exceeding five hundred pounds or, in the case of a second or subsequent conviction, to imprisonment for a term not exceeding one year or to a fine not exceeding seven hundred and fifty pounds or to both.

    (4) A person who makes or tries to make a bet by way of pool betting, or who gets or tries to get any advertisement or other document given or sent to him, shall not be guilty of an offence by reason of his thereby procuring or inciting some other person to commit, or aiding or abetting the commission of, an offence under this section.
    (5) For the purposes of this section the expression "bets made by way of pool betting, "the expression "promoter" and the expression "totalisator" have the same meanings as they have for the purposes of section six of the Finance (No. 2) Act, 1947.
    (6) This section shall come into force on the fifteenth day of August, nineteen hundred and fifty-two.—[Mr. Boyd-Carpenter.]
    Brought up, and read the First time.
    Mr. Boyd-Carpenter: I beg to move, "That the Clause be read a Second time."
    This Clause relates to the rather different subject of pool betting. As the House is aware, Clause 4 of the Bill is designed to close a loophole which has been discovered in the present administration and operation of the Pool Betting
    1020
    Duty. I will, if I may, summarise what it dealt with. Certain firms had adopted a system known by the agreeable title of "flexible odds," which under the law as it stood enabled them to evade duty. Apart from the loss of revenue, this was very unfair to the pools operated in the normal way and which, therefore, paid duty in the normal way.
    Since the introduction of this Bill, one of the firms which had been operating the flexible odds system has devised a new method which, under the existing law, would enable them to evade duty. The essence of the problem is that under Section 6 of the Finance (No. 2) Act, 1947, under which the Pool Betting Duty is imposed, the operation of the duty is limited to bets, wherever made, in cases in which either the totalisator, or, as the case may be, the promoter of the betting, is in Great Britain.
    One of the firms which had been operating the flexible odds system no doubt studied the Finance (No. 2) Act, 1947, with the attention it deserved, and formed a company in the Isle of Man from which a pool could be promoted. No pool betting was conducted in that island because under Manx law pool betting is illegal; but the fact that the company operating the pool was registered in the Isle of Man, taken in conjunction with the provision of the 1947 Act to which I have referred, would almost certainly enable the operation of that pool to evade duty.
    This new Clause has been put down to close that very rapidly found loophole in Clause 4 of the Bill. It is taking the minimum powers required for the purpose. For example, subsection (1) of the new Clause provides that no penalty is incurred by anybody who merely sends in a coupon. Equally, I am advised that junior employees of any pool so operating would not be caught by the provisions of the new Clause unless they were knowingly co-operating in that evasion of the law.
    Similarly, newspapers inserting advertisements would not be so caught unless the Crown were in a position to prove that they had knowingly assisted in an evasion of the law. But the agent, the person really conducting the pool, would be caught by the Clause and would be liable to the penalties, which are the same

    1021
    penalties as under the present betting and lotteries legislation.
    Another aspect of the matter to which I should invite the attention of the House is the fact that the Clause does not apply to a pool operating from Northern Ireland. The reason is not a desire to encourage tax evasion in that Province; it is so drafted merely in view of the fact that already the pools operated in Northern Ireland come under a tax which is substantially the same as our own, and their enforcement legislation last year exempted a pool operated in this country. That is the reason for that exemption.
    The object of the Clause is to protect not only the interests of the pool promoters who operate their pools in accordance both with the spirit and letter of the existing law, but, what is more important, the substantial revenue which the Exchequer derives from this duty, which last year was about £17 million.
    Mr. W. Nally: With so many much more important matters ahead, I do not wish to detain the House for too long upon this subject, but I would venture to make one or two comments which I hope the Financial Secretary and the House might not think inappropriate. This Clause, largely justified in itself, is the culmination of a process which began three or four years ago.
    The process consisted roughly in this. More and more the pool betting business of this country was and is falling into fewer and fewer hands. So much was this so that two years ago it was true to say that 90 per cent, of the normal, legitimate football pool betting in this country had fallen into the hands of seven major firms. Since that time there has been a further amalgamation. The result now, broadly, is that four major firms control 90 per cent. of the pool betting.
    Appetite grows. The major pool companies—Littlewood's, Vernon's and two others—are now engaged on a campaign which is perfectly legitimate but about which it is just as well the House should be aware, and which the Financial Secretary and the Chancellor—I make no complaint about them on this—are engaged at the moment in aiding and abetting by this Clause. It is a campaign whereby the major pool firms are in process of cleaning up all smaller forms of pool betting, no matter what they might be, or by whom they might be run, or from
    1022
    where they might be run. The large pool organisations, the great quartette, are now engaged in exterminating the periphery of minor people in the pools business. This Clause substantially assists them in that task.
    This Clause, in effect, makes matters almost, though not quite, impossible not only for one firm but for one or two others, which are taking, at a rough estimate, something like £500,000 to £750,000 a year in turnover out of the general pool business of the United Kingdom.
    I hope the Financial Secretary will forgive me, as there is not the slightest reflection on him about this. I think, however, I am right in saying—I am certain it was for the first time in his life—that a few weeks ago he had the pleasure of meeting downstairs a pool millionaire. The pool millionaire, accompained by a very able legal adviser—in this case I am looking into the crystal and perhaps the Financial Secretary will correct me if I am wrong—made representations to him on behalf of the pool promoters' group, which led to this Clause. I am not complaining of the Clause as it stands. I ask, however, the Financial Secretary and the Chancellor to realise precisely what is happening, and what they are doing in this Clause.
    The Financial Secretary referred to the ingenious discovery of "flexible odds. "It is true that the flexible odds device was intended to overcome the provisions of the 1947 Act. The leading pool promoters were perfectly entitled to draw his attention to and embark on their campaign, with his co-operation, for the extermination of those who had discovered this device.
    Surely that argument can cut both ways? The position now is, with the leading football pool firms, that although we know they receive £X amount and although we know the State draws 30 per cent. of any revenue of a legitimate pool firm—in addition to which the Post Office draws a satisfactory sum from the point of view of the Financial Secretary —and although flexible odds are a device for evading Income Tax, if one were to inquire more closely into the general expenses of the football pool firms who are largely responsible for the introduction of this Clause, one would, equally, find grave anomalies which should be cleared up.

    1023
    The pool firms who made the representations to the Financial Secretary, and others whom he saw, claim to pay out —and I think they do so—80 per cent. of their total revenue. The other 20 per cent. goes as to roughly 5 per cent. in promoters' profits and 15 per cent. for expenses. But, if I were a leading pool promoter and chose to put my cousin's son on my pay roll at £1,500 a year in the capacity of a director of a sub-postal department, that would be completely allowable for normal expenses purposes.
    One of the minor complaints I make about the Financial Secretary's apology for the Clause is this idea that here are the blacks and the whites—the naughty little people registered in the Isle of Man who have actually devised a wicked way of getting round the provisions made by the Chancellor of the Exchequer and on the other hand, the legitimate, worthy gentleman conducting a large legitimate pools business whose only purpose in seeing the Financial Secretary was in order that the honour of the State should be preserved and in order that proper Income Tax revenue should be derived from those naughty people who are evading it.
    I think that, on the whole, the Financial Secretary has been just as clear and just as honest about it as was our own Front Bench in these matters; that is to say, there is no question of blame attaching in this, but I would make this point to him. One of these days the House and the country will have to face the fact that, although a person is as entitled to put on two or three bob a week as anyone is entitled to smoke cigarettes, or have a glass of beer, this football pool business is becoming a large profiteering racket which is made even worse by virtue of the fact that the State takes 30 per cent. of the proceeds.
    This new Clause, which certainly I do not dream of criticising unduly, does not represent a genuine effort on the part of the big pool promoters to draw the attention of the Chancellor of the Exchequer to an evasion of tax; this is part of a long-term policy embarked upon by the quartette who now largely run the football pool betting of this country to exterminate any competitors of whatever kind, large or small, who interfere with the monopoly which, in about 18 months
    1024
    from now I should say, those firms will have in controlling the whole of football pool betting in this country.
    Whilst approving of the new Clause, it is my sincere hope that either this Government or another, one of these days, will at least have the courage, in drawing 30 per cent. of football pool revenue, to have regard to how far those who are at present battening on and making large fortunes out of the football pool industry themselves deserve the further examination and possibly the further penalties involved in this Clause which apply, as drafted, only to minor firms who have committed the major offence of taking a few odd thousands out of the pockets of bigger promoters.
    4.45 p.m.
    Mr. Muiley: What struck me most in the speech of the Financial Secretary was the enthusiasm he appeared to show in stopping private enterprise. It really seemed to me that hon. Members opposite are realising, what we have known a very long time, that the great disadvantage of private enterprise is that it is, much of it, not in the public interest but has a purely selfish profit end. For that reason we shall support this new Clause.
    In reading the Clause through, I must confess that I did not understand what it really meant. Indeed, there was a very great contrast between the cogent and clear explanation by the Financial Secretary and the actual drafting of the Clause. I ask him to assure me, and possibly other hon. Members, that there is nothing in this Clause which will interfere with or get into trouble the ordinary working man, and many non-working men, who participate in pool betting. I am quite sure that if I cannot, and other hon. Members cannot, realise whether or not if they participate in pool betting they will be under a penalty under this Clause, a great many other people will be similarly placed. Therefore, I should like his assurance on that point.
    I wish to reinforce what my hon. Friend the Member for Bilston (Mr. Nally) said with regard to the check on pool expenses generally. I think it would be very unreasonable and hypocritical to bring in a Clause of this size to catch one small firm evading tax, although I agree that they should be caught, if comparable measures are not taken to check the accounts of the large companies. Pos-

    1025
    sibly they are not defrauding because it is quite legal for them not to submit accounts.
    We have been through this in Committee and received very little sympathy from the Financial Secretary and the Government Front Bench in our demand that tax evasion should be dealt with on a large scale. I do hope that after this Clause, although it is a very small point dealing with a tiny hole in the net of tax through which evasion can take place, we shall get the support of the Financial Secretary in stopping some of the much larger holes we have to discuss as the Report stage progresses.
    Mr. D. Johnston: I understand and sympathise with the aim of the Financial Secretary to strike at those persons who are avoiding their due rate of tax. But I was not quite satisfied with his explanation when he went on to say that those small persons employed by the pool promoters as clerks, messengers and so would not be struck at by the Clause nor incur very heavy penalties under subsection (3)—the penalties being, on summary conviction, a fine of £100 and, on indictment, £500.
    If the hon. Gentleman will look at subsection (1, b), which is the alternative offence, he will see that it says it is an offence:
    "knowingly to issue, circulate or distribute in Great Britain …any advertisement or other document inviting or otherwise relating to the making of such bets."
    Surely any person who knows that the circular relates to bets and issues that, either by putting it in an envelope, addressing it and so on, or delivering it, is a person who may be convicted under this subsection and on whom heavy penalties under subsection (3, a and b) may be inflicted.
    The second question I would ask is, what would happen in the case of a person who registered his company in the Channel Islands and then operated in this country? If an offence would be committed, as I think it would, by the circulation of advertisements in this country, how would jurisdiction be obtained over the person really behind the circulation? I doubt even if it would be possible to attack or obtain jurisdiction over such persons.
    Mr. Gaitskell: Perhaps I may put one or two questions to the Financial Secre-
    1026
    tary before he replies, and thus save time.
    This, of course, is different from many of the other new Clauses and Government Amendments, because it does not arise from any of our discussions during the Committee stage. It is a last minute move by the Government to prevent tax evasion. We on this side of the House are against tax evasion, and therefore in principle we welcome the new Clause.
    But some of my hon. Friends have, I think very properly, expressed anxiety about it, and I should like to ask the Parliamentary Secretary whether subsection (4) of the new Clause is really adequate protection. It reads:
    "A person who makes or tries to make a bet …"
    and so on,
    "shall not be guilty of an offence by reason of his thereby procuring …"
    Does that mean there is no danger whatever of some British citizen—who may not indeed know that the firm in question is located outside Great Britain —who makes a bet or writes for a coupon being prosecuted? I think we ought to have that assurance. We certainly do not want to attack innocent people.
    I hope also, and here I am following what was said by my hon. and learned Friend the Member for Paisley (Mr. D. Johnston), that the Financial Secretary will give a full answer as to how the offenders are to be got at. It is not only a question of the Channel Islands. It may happen in France, or elsewhere in Europe, or in the United States. Or it may even become a move in the cold war, with little bits of Soviet propaganda included in the literature——
    Mr. Boyd-Carpenter: Which would ensure widespread interest.
    Mr. Gaitskell: —thus ensuring widespread interest, as the Financial Secretary said. How do we impose fines on these people? We do not want to punish our own citizens. How, therefore, can we get at those who really are at fault?
    I should also like to ask about the position regarding Northern Ireland. I understood the Financial Secretary to say that Northern Ireland was treated with Great Britain for the purposes of this new Clause, because there is a similar tax on

    1027
    pool betting in Northern Ireland. Therefore, there is no danger of any incentive for a firm to operate from Northern Ireland, because of course it would have to pay the Northern Ireland tax if it did so. But that seems to me very much to depend on the rates of tax. Can the Financial Secretary give us an assurance that there is not sufficient difference—if there be any difference at all—between the rates of tax here and in Northern Ireland to provide an inducement to firms to move over to that part of the United Kingdom?
    I was interested, as I think was the House, in the speech of my hon. Friend the Member for Bilston (Mr. Nally). I was a little anxious once or twice. He seemed to associate the Front Bench on this side of the House with the Government Front Bench in being extremely obtuse about the machinations of the leading pool companies.
    Mr. Nally: One thing I have always held to be true of all Governments of all parties is that they are completely frightened of the pools organisation, the Lords Day Observance Society and the Bookmakers' Protection Association. That applies to both Front Benches.
    Mr. Gaitskell: I would say to my hon. Friend that I do not think the fact that we introduced taxation on pool betting, and derived very considerable revenue from it, is very good evidence that we were frightened of this organisation.
    I did not quite follow the argument of my hon. Friend that in some way or other the imposition of a tax had helped the pools. It is very rare that anybody on whom a tax is imposed thinks that he is being helped. It may be, but while I was at the Treasury I got no indication, direct or otherwise, from the pools firms that this was the case. I should like to reassure my hon. Friend at once that I never met any pools millionaire, upstairs, downstairs or anywhere else. If the Financial Secretary has had the pleasure of such a meeting, I hope we shall hear about it and that he will tell us what transpired.
    Having done my best to reply to what, I will not call aspersions, but to some misunderstanding which may have arisen as a result of the speech from my hon. Friend, I would suggest to the Financial
    1028
    Secretary that if there really is prima facie evidence of monopolies in this industry— if we may call it so—it would be an appropriate subject to be referred to the Monopolies Commission; and as it would probably be much more interesting than many other industries submitted to them, we might get an earlier report. I think he might look at it in that way.
    Having put these few questions, I would also say that the printing of this new Clause has gone wrong in one word. There are five "s 's" in the word "possession" in line 6. Perhaps the Financial Secretary will see to it that that is put right, or it might somehow or other prove to be another loop-hole through which the pools companies could march.
    Mr. Boyd-Carpenter: I require the leave of the House to reply to the points which have been raised.
    I did not quite follow—any more than did the right hon. Member for Leeds, South (Mr. Gaitskell)—the whole of the argument of the hon. Member for Bilston (Mr. Nally), which went perhaps a little wide of the precise provisions of this Clause. I would say, too, that to the best of my recollection, and to use the words of the Bill, I have not knowingly consorted either with a pools millionaire—I may have met one, but I did not knowingly do so—or with his legal advisers; and if I had, that had nothing whatever to do with the origin of this Clause—as it appears to be me rather than the right hon. Member for Leeds, South who is supposed to have moved in that refined company.
    Mr. Nally: It may have been a clumsy phrase on my part about precisely what happened. The Financial Secretary would probably be unaware of it, but downstairs recently he did meet a gentleman, as he was perfectly entitled to do, who was with others. He may not have known that the gentleman he saw, and with whom he discussed this Clause and another Clause, was in fact one of our leading football pool millionaires. I can well understand why the name may not have been familiar to the Financial Secretary, as the name of the pool is different from the name of the person concerned; and I can well understand why the person concerned was not anxious that the Financial Secretary

    1029
    should fully understand what was his financial interest in the matter.
    Mr. Boyd-Carpenter: It gets more and more exciting. I am bound to say, lacking as I do the expert knowledge of the hon. Member for Bilston on this subject, that I may have met somebody without realising I was enjoying the distinction of being in the company of a pools millionaire.
    Mr. Gaitskell: Is my hon. Friend quite sure that it it was not the Minister of State for Economic Affairs?
    Mr. Boyd-Carpenter: I am sure that my right hon. Friend would be capable of dealing even with a pools millionaire. I think that we may now proceed to matters which are at least as important as a pools millionaire, the points raised in the discussion on this new Clause, most of which were of a very helpful nature.
    The point of law, as I think it was, which was raised from the Front Bench opposite is one to which I would reply with some hesitation. If my reply does not satisfy the hon. and learned Member for Paisley (Mr. D. Johnston), the Solicitor-General is available as always to give the House the value of his legal advice.
    5.0 p.m.
    As I understand it, the use of the word "knowingly," to which I have already referred in another context, has the result that for the Crown to secure a conviction it will be necessary to prove that the person concerned knew not merely that he was dealing with pool bets but with illegal pool bets. It is, in any event, not intended to proceed either in the case of a subordinate employee of this organisation or, still less, in the case of the person who fills up a coupon and sends it, as is made illegal by the proposed new Clause. Although it is possible that a member of the public might be prosecuted for so doing he could not rightly be convicted, which is what an hon. Gentleman opposite had in mind. The right hon. Member for Leeds, South raised a very important question—
    Mr. Ede: Before the hon. Gentleman leaves that point, would he explain it a little further? A person commits an offence; he is one of those understrappers to whom the hon. Gentleman has alluded.
    1030
    If anyone lays an information against this person, surely the court has to try the case on the words of the proposed new Clause. Does it need the fiat of the Attorney-General, or anything like that? If an offence has been committed, surely the person can be convicted.
    Mr. Boyd-Carpenter: The right hon. Gentleman is referring now not to the member of the public, who is expressly excluded by subsection (4), but to the agency assistant of the pool promoter. There—I speak subject to correction by the hon. and learned Gentlemen opposite —it is necessary to prove only the illegality of the transaction. If that is proved, a prosecution, when launched, might result in a conviction. What I have tried to suggest is that in the administration of this provision it is not our intention to initiate prosecutions. That is what I said and is what I would like to have on record.
    Mr. Ede: Surely a police officer, finding that an offence has been committed, can lay information, and the Government cannot prevent him. He puts the machinery of the law in motion. It proceeds and, on the assumptions I have laid down, there is a conviction. Is it proposed to ask the Home Secretary then to recommend the exercise of the Royal prerogative and a remission of the penalty?
    Mr. Boyd-Carpenter: Certainly not. For such a person to be convicted he must have known, and it must be proved that he knew, that he was taking part in the operation of an illegal pool. I cannot see why the House should hesitate to bring about that legal possibility. All I wish to say by way of qualification is that the right hon. Gentleman is perfectly right. It is open to any police officer or any citizen to take such proceedings as he desires, but it is not our intention to waste time and public money on the prosecution of small fish. Our intentions are to aim at much bigger game.
    Mr. D. Johnston: Is the Financial Secretary not right only if "knowingly" in subsection (1, b) applies to the words "issue, circulate and distribute," and also to "such bets"? Is it not clear from the reading of the subsection that the word "knowingly" applies only to the first of these words and it does not apply to "such bets."
    Mr. Boyd-Carpenter: If the hon. and learned Gentleman is unhappy on that point I will leave my hon. and learned Friend to reply to him. My own un-instructed understanding would be contrary to that sense, but I would not, on a matter of legal construction, put my own powers against those of a former Law Officer of the Crown. I will leave that point to be dealt with by my hon. and learned Friend, if it is so desired.
    The point was raised by the hon. Member for Leeds, South that we might not be able to catch the principal promoter if he were outside the jurisdiction. That is true, but in the case which has given rise to this problem promotion is apparently to be undertaken simply by the formation of a subsidiary company in the Isle of Man without, so far as I know, transportation of any of the individuals concerned in the effective operation of the pool. There may be cases where what the right hon. Gentleman fears may be effected, and where the operation of the pool may be, not only in strict law but in substantive fact, outside this country—not, as he suggested, behind the Iron Curtain but in some more conveniently placed territory.
    What we would be enabled by the proposed new Clause to do is to proceed against the principal agent or operator inside this country in respect of whom no difficulty about jurisdiction would arise. After fully considering the matter, we think that the difficulty about the real promoter being outside the jurisdiction could in substance be met by making it extremely difficult for such a person to find a responsible agent to act for him in this country and to incur the penalties of the Clause.
    Mr. Ede: Suppose a person is domiciled in Alderney and carries on business there. He has his office and sends out all his circulars from there.
    Mr. Boyd-Carpenter: He would have some difficulty in operating a pool of any size without having some operating machinery in this country involving some senior representative being in this country on his behalf. It is possible there may be someone doing this on a small scale who could, in that way, evade the operation of the proposed new Clause, but as a matter of practical common sense the operation of any large-scale pool from
    1032
    outside this country would present very considerable difficulty.
    In any event, the fact that the proposed new Clause might not completely prevent evasion should not act in its disfavour provided we can show that it is a means of dealing with a real threat to the Revenue. In point of fact, there arises in the particular case to which I have referred an actual instance in which there is no doubt that the operation of the proposed new Clause would prevent evasion. This was the argument which I was seeking to put when I gave way to the right hon. Member for South Shields (Mr. Ede). It will be possible, even where the principal person concerned is outside the jurisdiction, to make his operations in this country very difficult, because he will have difficulty in finding a person to act as his agent in this country.
    Mr. Gaitskell: May I clear up one point? Does not that mean, though, that the Government would have to prosecute the underlings in this country? The hon. Gentleman was saying earlier that that is precisely what they did not intend to do.
    Mr. Boyd-Carpenter: I think the right hon. Gentleman misunderstood me. There are three categories of people. There is the actual promoter himself, be he an individual or a body corporate; there are what one might describe as his senior operating officers; and there are what I describe as the underlings. I think that probably the right hon. Gentleman was construing as underlings everybody other than the main promoter himself, whereas I was proceeding on the three-tier basis. At any rate, we have cleared that up. We are not seeking to prosecute the office boy; what we want to do is to deter by seeing to it that the principal agent or operator incurs the penalty to discourage him from acting as principal agent.
    Mr. Nally Mr. Nally rose——
    Mr. Boyd-Carpenter: Really, the hon. Gentleman must contain himself for a moment. I am unable to get out more than a couple of sentences before he rises to his feet.
    Mr. Nally: On a point of order. The hon. Gentleman may remember that, as a matter of courtesy, when I had his permission to ask a question, I gave way, at his request to my right hon. Friend. In point of fact, apart from the one occasion

    1033
    when I put a question to him, I have not bothered the Financial Secretary at all. The truth of the matter is that, with great respect to my own leaders, the Financial Secretary is very uneasy about this Clause, because the Clause does not do precisely what he says.
    Mr. Deputy-Speaker (Mr. Hopkin Morris): If the Financial Secretary does not give way, the hon. Gentleman cannot intervene.
    Mr. Boyd-Carpenter: That particular intervention does not encourage me to give way to the hon. Gentleman, although I think I have given way on a great many occasions to right hon. and hon. Gentlemen opposite when I thought they had some helpful contribution to make in dealing with this very difficult matter.
    Mr. Gaitskell: Will the hon. Gentleman allow me? I am very much obliged. I hope he will not misunderstand the situation. My hon. Friend knows a great deal about this matter, and he was putting an important point. We are anxious, as is the Financial Secretary to stop all evasion as far as we possibly can. I think the Financial Secretary will agree that this Clause as it stands does involve certain difficulties, and we are discussing those difficulties. The problem really is how we are to catch the people who really count and not the people who do not count. Now, we have a three-tier system. Supposing the principals are all outside this country, and there is nothing but a quite small office here. What, then, is the position? I would ask the hon. Gentleman to give consideration to that point.
    Mr. Boyd-Carpenter: If the right hon. Gentleman thinks that his hon. Friend has a useful contribution to make, I will give way to the hon. Member when I have dealt with the point raised by the right hon. Gentleman.
    The difficulty which the right hon. Gentleman contemplates is a very real one. In the case of someone who is outside effective jurisdiction, it is quite obvious that nothing which this House can legislate can operate against him, but we can provide, as this Clause in my submission provides at the moment, that it will involve the risk of penalties falling upon those through whom a person must operate if he is to operate inside this country.
    1034
    It is our intention to try to catch the senior and most responsible servants, and I think the right hon. Gentleman, from his own experience, will appreciate that, although this is no doubt second best, in the case of a person operating from outside, if we are to catch the agent through whom he acts, it is going to be very much more difficult for him to conduct his operations in this country if the fact of these people acting as his agents involves them in certain criminal penalties, and that is the principle on which we are proceeding. We would rather catch the principal, and in some cases we hope to do so.
    It is our view that the provisions of this Clause will in practice discourage the operation of a system which, I would remind the House, is perfectly legal under our law, because I do not believe that many people in this country deliberately fly in the face of the criminal law. Fairly hard words have been used about these people who use their ingenuity to evade tax, but it is fair to point out that they have operated within the law, and that it is the defects in and inadequacy of the law which enables them so to operate and which caused us to come to the House to ask for the law to be amended. Now, in accordance with my promise, I must give way to the hon. Member ton Bilston if he so desires.
    5.15 p.m.
    Mr. Nally: I am grateful to the hon. Gentleman, and I would assure him that all I desire to do is to be helpful. It is plain from the discussion on this Clause that he completely misunderstands the nature of the football pool business. The major agents in cities like Manchester, Liverpool or Birmingham are not full-time people at all, but part-time agents who work in other occupations, who distribute the coupons and receipts for £200 or whatever it may be. In spite of the reluctance of the Financial Secretary to put up with my interventions, I must give him warning that I shall pursue the matter, and, I think, demonstrate to him that this Clause is not his at all, but a pool promoters' Clause. That he knows it as well as I do.
    Mr. Boyd-Carpenter: I do not think that intervention helps us very much.
    The right hon. Gentleman the Member for Leeds, South asked about the

    1035
    Northern Irish tax. I understand that it is about the same rate as our own. I have had inquiries made, and although I cannot say that it is precisely the same, in substance it is somewhere round about it, and it is unnecessary to make special provision in this Clause for Northern Ireland. I agree entirely with the suggestion that the pool promoters were helped by the tax, and, certainly representations made on their behalf to me, as they were to the right hon. Gentleman, seem to indicate that they took that view.
    This Clause has been subjected to criticism, most of which has been very helpful. I do not submit it to the House as being a specific for the prevention of all possible means of future evasion. In many cases here, we are dealing with extremely quick-witted people. The duty on pools is heavy, and there is a substantial incentive to them to evade it. This further provision is necessary to deal with those whom we cannot catch under the existing law, and we have taken the trouble to draft this Clause at this stage because we are convinced that, if this hole is not stopped, a substantial part of the duty which the Exchequer derives from these pools will be imperilled, and that is a result which I imagine no hon. Member would wish to see.
    Mr. Mulley: May I ask the hon. Gentleman to state the position in regard to newspapers? Quite clearly, in these days, if a pool promoter is to contact the public, he must advertise the nature of his pool and the results and the dividends in the newspapers. What is the position regarding these newspapers which accept advertisements from one of these pools and publish them alongside other advertisements of pools which are apparently legal and which pay the duty in the proper way?
    Mr. Boyd-Carpenter: The answer is to be found in the Clause itself, in subsection (1, b,) which uses the words "knowingly to issue, circulate or distribute. "That means that a newspaper accepting an advertisement in respect of a pool is not liable to conviction unless the Crown can establish that, at the time of such acceptance, the newspaper was aware that this was an illegal pool under these provisions. I suggest to the House that that is a perfectly fair position. A
    1036
    newspaper which, in the ordinary course of business, knowingly accepts what appears to be just another pool advertisement will not be subject to conviction under this Clause.
    Mr. Ede: I want to make it quite clear that we on this side of the House are as anxious as is the Financial Secretary that this evasion of the law shall be stopped and that persons liable to pay this tax on pool betting shall pay it. I am bound to say, however, having listened to the hon. Gentleman's explanation, that I cannot regard this as a very satisfactory Clause for inclusion in our law, because I do not think the answer he gave to questions put to him can be regarded as satisfactory.
    After all, contributions to the Irish Sweepstake are illegal in this country, but hundreds of them are made every year. Efforts are made to stop just the kind of procedure which I can envisage being used here by someone who is resident in the Channel Islands and who uses the Channel Islands, or possibly the Isle of Man, or some other place which is not technically within our jurisdiction, which is not part of the United Kingdom and certainly not part of Great Britain. Those firms would be quite small in their operations but would enable a very considerable amount of business to be done. I wonder how many tickets are still sold in this country in the Irish Sweep. Some of the agents are known and on occasion they are prosecuted.
    If this Clause is included in the Bill— and I shall not oppose that—I hope that the various difficulties which have been pointed out this afternoon will be considered and that the practice of some of these people on the fringe of the legitimate pool business will be watched so that next year the difficulties which have been discussed this afternoon and any weaknesses in the operation of the Clause can then be remedied.
    I very much dislike the position in which it is said, "Well, the big man will be prosecuted but the small man, although guilty of the offence, will not be prosecuted." That leaves a number of people open to a kind of legalised blackmail. We have tried to get rid of the common informer, and we do not want to re-establish his operations in a similar way by someone saying to someone else, "You

    1037
    are probably just big enough to be within what the Government said they would deal with. Do not rely too much on your immunity if I go and tell the police that I know you are operating."
    Everyone will agree that that would be a most unfortunate position to arise, and I am certain that no Government in this country would desire that it should arise. It is clear, nevertheless, from the answers which the Financial Secretary gave to me, that there is a loophole for that kind of thing. While we wish the Financial Secretary well in his efforts to stop evasion, I hope it will be possible to get something more satisfactory when further consideration has been given to the matter.
    The Solicitor-General: Perhaps I may say a few words in reply to the right hon. Member for South Shields (Mr. Ede). We all agree that, if we can, we want to catch the chief offender, no matter where he may be, but the right hon. Gentleman knows as well as I that it is extremely difficult to bring before the courts of this country someone who commits an offence under our law but who, at the time of organising it, is resident outside the jurisdiction and does not come inside. That is the case in the ordinary law and the case which will arise after this Clause has been introduced; we cannot avoid it.
    I do not profess to be such an authority on pool betting as the hon. Member for Bilston (Mr. Nally), but I should have thought there was great force in the contention put forward that it would be difficult to get pool betting organised from overseas up to any considerable size without some advertising in the newspapers. The right hon. Member for South Shields took the Irish Sweep as an analogy, but there was a time when that sweep was fairly widely advertised in this country and thus became widely known. It would not be so easy to get a pool operation so widely known in the absence of advertisements.
    This Clause has a general application to people in this country. One will always want to prosecute the chief offender, but it may be that one cannot get the chief offender, and one must then try, if one wants to stop this sort of thing, to get the next people responsible. As the right hon. Gentleman said, very fairly, this Clause will enable any policeman to lay information and to have the
    1038
    matter adjudicated upon. I must say that that is right. It is a very bad thing to have the right of prosecution confined to certain individuals. There may be an exceptional need for that, but the general rule should be that it is open to anyone to lay information for the court to adjudicate upon.
    We want to go for those primarily responsible inside this country, if we are not able to get at those primarily responsible who are outside our jurisdiction. I agree with my hon. Friend the Financial Secretary that the mere passage of this Clause should do a great deal to stop the expansion of this loophole and to prevent its use by people for the purpose of evading duty.
    Mr. Ede: I do not want to give away too many secrets of the trade, but surely it is not unusual on occasion to start with the lowest offender in the scale in the hope that, by following a trail, you will get back to the principal offender. Here the Financial Secretary has virtually promised the lowest offender that he is in no jeopardy. Why should he then do anything to help to get to the chief offender?
    The Solicitor-General: I listened to what my hon. Friend said, and I do not think that accurately represents his words. As I understand it, my hon. Friend wanted to make two things clear. If one knew an offence had been committed one would primarily go against the chief offender. The second point he wanted to make was this—that the person innocently placing a bet would run no risk.
    Mr. Ede: I am not dealing with him.
    The Solicitor-General: We will leave him on one side. If this Clause is passed it will enable prosecutions to be launched in proper cases. Obviously it may be necessary on occasion to prosecute in the hope of getting evidence in order subsequently to prosecute those higher up, but that will depend on the case in question.
    May I turn to the question of the application of the word "knowingly" in Subsection (1, b.) In my view—and I fear that lawyers often differ—I believe the word "knowingly" covers the whole of the content of that paragraph. It makes it an offence
    "knowingly to issue, circulate or distribute in Great Britain, or have in his possession for

    1039
    that purpose, any advertisement or other document inviting or otherwise relating to the making of such bets."
    I think the word "knowingly" covers the whole of the paragraph. I have taken steps to obtain other advice to see whether my opinion is right; and that advice agrees with my view. I am grateful to the hon. Member for Sheffield, Park (Mr. Mulley) for having raised that point, and I hope I have put his concern at rest.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(INCOME TAX: ALLOWANCES FOR BUILDINGS, ETC., OF TUNNEL UNDERTAKINGS.)
    (1) Subject to the following subsections, the Income Tax Act, 1952, shall have effect as if in subsection (1) of section two hundred and seventy-one (which defines "industrial building or structure" to mean a building or structure in use for the purposes listed in paragraphs (a) to (f) of the subsection for the words" or hydraulic power undertaking," in paragraph (b) there were substituted the words "hydraulic power or tunnel undertaking."
    (2) No allowance or charge shall be made by virtue of this section for any year of assessment earlier than the year 1952–53, and in any case in which, on the day immediately preceding any such year of assessment, a building or structure is to be treated as an industrial building or structure by virtue only of this section, subsection (5) of section two hundred and sixty-eight of the Income Tax Act, 1952 (which provides for treating part of the expenditure on a building or structure as written off in years in which no annual allowance or scientific research allowance is made in respect of it), shall apply with the omission of proviso (a) (which excludes the operation of the subsection in the case of industrial buildings and structures).
    (3) This section shall not affect any allowance or charge which would have been made under Part X of the Income Tax Act, 1952, if this section had not been passed, and where by virtue of this section a balancing charge is made on a person in respect of any expenditure, the amount on which it is made shall not exceed the amount of the allowances made to him in respect of that expenditure by virtue of this section.—[Sir A. Salter.]
    Brought up and read the First time.
    5.30 p.m.
    The Minister of State for Economic Affairs (Sir Arthur Salter): I beg to move, "That the Clause be read a Second time."
    The object of the Clause is to extend the scope of allowances for industrial
    1040
    buildings and structures under Chapter 1, Part X of the Income Tax Act, 1952, to include buildings or structures used for purposes of a tunnel undertaking. The general effect of the Clause, as it is now before the House, will be that qualifying capital expenditure on such undertakings will rank for allowance at 2 per cent. per annum from 1952–53, but that no allowance will be made for amounts attributable from the time the tunnel opened until the year 1952.
    The House will remember that my hon. Friend the Member for Toxteth (Mr. Bevins) introduced a new Clause on the Committee stage which was supported by hon. Members on both sides of the Committee. We were unable to accept the Clause in the form in which he then introduced it for various technical reasons, but also because he had proposed that it should have a retrospective effect and we did not feel that that was appropriate or right. The Clause at that time was otherwise very strongly supported and universally recognised by both sides of the Committee to have an overwhelming case. It had been recommended by the Millard Tucker Committee, though not of course with the retrospective point. I then undertook that, while for that reason we could not accept the Clause as proposed, I would see that a new Clause was put before the House on the Report stage.
    Mr. Charles Williams: Can my right hon. Friend say precisely what tunnel undertakings are referred to? Does he mean tunnels in connection with power works, water works and things of that kind?
    Sir A. Salter: Any tunnel undertaking falling within the definition here included. At present I do not know any other case that satisfies the conditions except the Mersey Tunnel. But the Clause is in general terms and would apply to any other undertakings that satisfy the same conditions.
    Mr. J. R. Bevins: My hon. Friends associated with me in suggesting a Clause on these lines on the Committee stage are very grateful indeed to my right hon. Friend for the new Clause now proposed.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(STAMP DUTIES (EXEMPTION FOR CERTAIN TRANSFERS TO JOINT BOARDS OR JOINT COMMITTEES OF LOCAL AUTHORITIES).)
    (1)Where provision is made either—

    (a) by an order under the Water Act, 1945, for the transfer of the whole or part of the undertaking of any water undertakers to a joint board or joint committee consisting exclusively of representatives of local authorities; or

    (b) by an order under the Public Health Act, 1936, or the Local Government (Scotland) Act, 1947, for the transfer of any property to a joint board constituted under section six of the said Act of 1936 or to a joint board or joint committee constituted under section one hundred and nineteen or one hundred and twenty of the said Act of 1947, as the case may be, from a local authority which is represented on the board or committee;

    then, in considering whether any and if so what duty is payable under section twelve of the Finance Act, 1895 (which relates to the stamp duty payable in connection with certain statutory conveyances), the consideration for the transfer shall be left out of account.
    (2) No stamp duty shall be payable on any contract or agreement for such a transfer as is referred to in paragraph (a) of the foregoing subsection, if the contract or agreement is conditional on the making of an order under the Water Act 1945, to give effect to it.
    (3) No stamp duty shall be payable on any conveyance, agreement or assignment made, or instrument executed, solely for the purpose of giving effect to a transfer of property to a joint board or joint committee constituted under section one hundred and nineteen or one hundred and twenty of the Local Government (Scotland) Act, 1947, from a local authority which is represented on the board or committee.
    (4) In this section references to a local authority include a joint board or joint committee consisting exclusively of representatives of local authorities, and the expression "local authority" means, in England and Wales, the council of a county, county borough or county district and, in Scotland, a county council or town council.
    (5) This section shall be construed as one with the Stamp Act, 1891.—[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 the Committee stage I gave an undertaking to my hon. Friend the Member for Wimbledon (Mr. Black) to put down a Clause exempting from stamp duty the transfer of property from local authorities on the creation of a water board under the Water Act,
    1042
    1945. This new Clause fulfils that undertaking and goes a little further than that undertaking in two respects, to which I will refer.
    It not only exempts from stamp duty the transfer of property from the local authority to the water board, but it also exempts from stamp duty the acquisition by the water board of the property of a private water company or other privately owned water undertaking. In exempting that from stamp duty we are following the precedent set in relation to Scotland by the Water (Scotland) Act, 1946, bringing the law of Scotland and England into conformity in that respect. That is one of the respects in which this Clause goes a little further than the undertaking I gave on the Committee stage.
    The other respect is that the Clause not only applies to water boards but makes similar provision in respect of property transferred from a local authority to a joint sewerage board. The circumstances are much the same and the arguments in favour of this exemption are equally strong. I hope I have said enough about this Clause to explain its object and purposes, and I hope the House will pass it.
    Mr. G. R. Mitchison: I only want to ask the Solicitor-General whether this Clause applies to joint burial boards. I have had to concern myself—I hope a little prematurely— with burial boards and joint burial boards recently. These bodies exist for public purposes, and I should have thought they might reasonably be entitled to a similar exemption, unless that is already provided.
    I warn the Solicitor-General that it does not appear easy to discover whether these provisions cover burial boards and, in mercy to him, I would not ask him for an immediate answer. I merely suggest that the matter should have consideration in due course. Burial boards are no joke. One can be put into prison for 14 years for forging the seal of a burial board even before one comes under it in any other way.
    Sir Geoffrey Hutchinson: This Clause was put forward to meet a point raised by a proposed new Clause put down by me on the Committee stage, although I was not able to deal with it then. I am very grateful to

    1043
    the Solicitor-General for the manner in which he has dealt with this point. I cannot claim that this is a matter which will revolutionise the finances of local authorities, but it is a concession which will be welcomed by all those local authorities and undertakings which will be affected by it. Perhaps, what is more important, I hope it will enable them to reduce the charges they would otherwise impose upon the population.
    Whether the Clause applies to burial boards or not I do not feel myself capable of saying. If it does not, I hope that at some stage we shall be able to recognise the very useful functions those undertakings carry out. I should like to thank my hon. and learned Friend for having met my point so handsomely.
    The Solicitor-General: With the leave of the House, may I say a word in answer to the hon. and learned Member for Kettering (Mr. Mitchison)? I am intrigued to know that among the many subjects in which he takes an interest he takes a keen interest in a burial board. My short answer to his question is that if the burial board happens to be constituted by Order under Section 6 of the Public Health Act, 1936, then the burial board will gain the advantage in the transfer of property of this exemption from the stamp. Why anyone should want to forge the seal of a burial board perhaps the hon. and learned Gentleman will explain to me later.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(EXPENSES OF EMPLOYEES, ETC., IN TRAVELLING TO AND FROM WORK.)
    (1) Where—

    (a) an individual assessable to income tax under schedule E in respect of any office or employment incurs expense in travelling between his residence and the place where the duties of his office or employment are performed; and

    (b) the said expense, or a part of it, is made good to the individual by the person under whom he holds that office or employment

    the amount so refunded shall not (subject as hereinafter provided) be treated as income of that individual chargeable to income tax under Schedule E.
    (2)The exemption from tax given by the immediately preceding subsection shall be
    1044
    limited to such part of the amount so refunded as may properly be deducted by the person making the payment in computing the profits and gains of his trade for the purposes of assessment and charge of income tax.—[Mr. Black.]
    Brought up, and read the First time.
    Mr. Cyril W. Black: I beg to move, "That the Clause be read a Second time."
    I believe it is the established practice of the Inland Revenue authorities, in cases in which a firm or business provides luncheons or other meals for its employees without making a charge for them, to allow the expenses incurred by the firm or business as an expense for tax purposes but that the same allowance is not made in cases in which a firm or business pays the travelling expenses to its employees for travelling to and from their homes and places of work.
    The purpose of this new Clause is to put from a tax point of view the payment of fares by a firm or business in the same category as the payment for lunches or for other meals. It may be said that there has been a very long practice in this matter not to allow such fares as an expense for tax purposes, but I submit that there are several new factors in this case which, at any rate, merit a reconsideration of the position by the Chancellor of the Exchequer, and I will mention quite briefly three reasons which, I think, constitute new grounds on which this matter at any rate ought to be considered.
    First—and I am sure I should be out of order if I were to develop this at any length—fares have risen so much that they are a much more important matter nowadays in the case of many people who have to live a long way from their place of employment than they have been in former days when fares were much lower.
    The second point is that a great many people nowadays, owing to the housing shortage, are compelled to live a long way from their place of employment, not because they want to live a long way away and have all the inconvenience and expense of long journeys between home and place of work but because they simply cannot find another home nearer to their place of employment. That is a circumstance which has certainly only operated to the extent that it operates today since the housing shortage became

    1045
    so acute during and particularly at the end of the war.
    The third point which I suggest is another reason why this problem should be reconsidered is that a great many people are now being encouraged on grounds of national interest to transfer their employment from some business which may not have a high priority of national importance, and to take up what may appear to be very similar work to that which they are doing already but which will involve them in a much longer journey between their homes and the new place of business than the journey between their homes and their present place of employment. It would be a very great pity if these movements of labour, many of which I think the House will agree are very much in the national interest, were interfered with or frustrated because people were unwilling to pay the increased fares that might be involved in moving to another job further away from their homes.
    This general problem of the heavy incidence of fares in the case of work— people of various kinds is being recognised by employers and is, perhaps, being recognised more by the more enlightened and progressive employers than those whose ideas may be more old fashioned. There are a good many cases today in which employers, in order to obtain suitable labour for important work in which they may be engaged in the national interest, are willing to pay the fares of prospective employees between their homes and their place of employment. But of course the difficulty is that if they do pay the fares, those fares are not under the existing law allowed as a business expense when the question of their tax liability comes to be settled between the firm or the business on the one hand and the Inspector of Taxes on the other.
    5.45 p.m.
    The whole purpose of this new Clause is to give relief to the extent of the tax involved to the firm or the business which undertakes to pay the travelling expenses of its employees between their homes and their place of employment. Of course, the principle has already been dented, if I may so put it, because in cases in which the employer provides and runs his own transport the cost of providing and running this transport is an allowable expense for tax purposes.
    1046
    The builder, for instance, who has his own vehicles and who uses those vehicles for the purpose of picking up his workers at their homes and taking them to their jobs which may be a considerable distance from their homes, is allowed to charge the cost of maintaining and running those vehicles as a business expense against his profits. But if, instead of providing his own transport, he pays the fares of his employees on the public transport, then the fares are not allowable for tax purposes.
    It surely cannot be in the national interest to perpetuate a system which, from a tax point of view, encourages employers of labour more and more to discourage their work people from travelling upon public vehicles and increasingly diverts their travelling into vehicles maintained especially for the purpose by the employer. I suggest that since this matter was last considered there has been a very great change in the circumstances surrounding the whole matter. Changes have taken place which, in my submission, justify the Revenue taking a rather more helpful and more sympathetic view of this problem than has hitherto been taken.
    Sir Herbert Williams: I beg to second the Motion.
    Mr. Douglas Houghton: The hon. Member for Wimbledon (Mr. Black) dealt in passing with a much wider question, namely, whether expenses incurred in travelling to and from work shall be admitted as an expense allowed against Income Tax liability on wages and salaries. The proposed new Clause itself deals with a much narrower question, and I think it will be as well if we do not mix up the two.
    I am sure the Financial Secretary is going to remind the House that there is a Royal Commission sitting which will, no doubt, receive evidence and give much consideration to this and many other difficulties and complexities in connection with Income Tax law. But on the wider question as to whether travelling expenses to and from work shall be allowable as a deduction against tax liability, there can be two and probably more than two points of view. I would only say, since I should be out of order if I were to develop that aspect of the matter, that the hon. Gentleman has not got the Trades

    1047
    Union Congress on his side, which is a very important consideration in looking at this matter.
    But on the question of the new Clause itself, it proposes to allow a firm or an employer to deduct from taxable profits the expenses incurred in refunding travelling expenses of workers to and from their work. It also proposes to exempt from taxation the money value of the travelling expenses when the Inland Revenue come to add them to wages or salaries and say, "These are part of your income."
    I think that if the House were to pass this new Clause it would give rise to many abuses straight away. It would certainly make widespread the whole practice of refunding the travelling expenses which, happily, at the moment is not widespread, but which, if the new Clause were passed, would rapidly increase all over the country, as indeed the meal voucher system has expanded all over the country. There are grave abuses already in connection with the granting of meal vouchers to workers.
    From the aspect of trade expense it may well be argued by a firm which is big enough to have a canteen that they subsidise that canteen and that their workers get their meals at less than the economic cost; but they can set off against their trading profits the subvention which they give to their employees which are part of the staff welfare and part of the necessary arrangements which they make for their workers. But many firms and offices in the City who are not big enough to have canteens adopt the alternative plan of giving meal vouchers. These vouchers are encashable at a selected list of neighbouring restaurants, and when the worker presents a meal voucher he is entitled to a meal to the value of that voucher.
    I am assured that in many cases workers come to a private arrangement with restaurants whereby they can have a meal to a smaller value than the nominal amount of the meal voucher and can get the balance in buns, cakes, bread or other articles which those restaurants sell. That is clearly an abuse of the arrangement, and we do not want to introduce into the field of travelling expenses the same kind of abuse which we now see in connection with meal vouchers.
    1048
    A worker may walk to work but nevertheless claim the cost of his daily travel to and from his work. He may go by bicycle and yet claim the cost of public transport. In those cases the employer may feel bound in equity to refund to the worker who walks or bicycles to work the equivalent of the money being spent by other workers who are using public transport. I think the hon. Member for Wimbledon should realise that he is opening up a wide field of petty abuse and irregularity in connection with this matter. I think he will agree on reconsideration that he would not be furthering the cause which he mentioned in moving this Clause and that he would, in fact, be complicating and worsening the situation by pressing this Clause further.
    Mr. Black: Would not the hon. Member agree that every tax arrangement or concession is liable to abuse in certain circumstances, and that it is the duty of the authorities, as far as possible, to close the door against abuses? The argument which the hon. Gentleman has put forward could very well have been made, as far as the general principle is concerned, against any kind of tax concession that is ever proposed.
    Mr. Houghton: Since the hon. Member for Wimbledon has raised this matter, I would point out that there is a further question, which is that of equity as between workers who work for employers who refund their travelling expenses and workers who are employed by firms who cannot or do not refund those expenses. That is a further objection to this Clause.
    Mr. Black: Why not encourage the employers?
    Mr. Maudling: This Clause has been moved by my hon. Friend the Member for Wimbledon (Mr. Black) with some very powerful and interesting arguments. It is a matter which affects people living in many constituencies, particularly—to judge from the correspondence which I have had and which is no doubt, similar to that received by my hon. Friend—those living in constituencies surrounding London, who, nowadays, have expensive journeys to and from their work.
    My hon. Friend referred to several new circumstances which, he said, seemed to strengthen the case for making this amendment to the tax law. He said that

    1049
    fares had been increasing. That is only too true, though they will not have increased quite so much in a few weeks' time as he thought they would do at the time when he put down this Clause. But the fact that the expenditure on this particular item is higher does not constitute a valid argument for saying that it is a type of expenditure that should be admitted as a permissible deduction for tax purposes.
    The hon. Member also referred to the shortage of housing which undeniably restricts the choice of residence. I think I would be entitled to argue that that is a passing phase, passing quicker now, perhaps, than a year ago, though I do not want to embark upon controversy at this stage; I am merely stating facts.
    The third point referred to people having to change their occupation as part of the drive for increased armaments and exports. That is also a strong point. I am quite certain that the Chancellor will consider all these points when he reads my hon. Friend's speech; but I suggest that they are transient points, for the large part, whereas we are dealing with a permanent provision of the tax law. I would suggest to my hon. Friend that the case he has made out, persuasive as it is, is not persuasive enough to justify what would be a very large change of principle in our tax arrangements.
    He also drew the analogy in connection with payments made in respect of meals taken in canteens, and he drew some fire from the hon. Member for Sowerby (Mr. Houghton), who is always vigilant in pointing out that tax evasion is going on. I cannot accept what was said by the hon. Member for Sowerby about the grave and widespread abuses of the meal voucher system. I do not think that is true. If one looks for trouble one can usually find it. There are opportunities for abuse and no doubt there are abuses, but I do not think I should let it be said without protest that there are grave abuses of the meal voucher system which was introduced by the right hon. Member for Leeds, South (Mr. Gaitskell) or his predecessor. It all goes to show how anomalies tend to grow and possibilities of abuse arise when one makes extensions in the tax allowances system.
    The law, as settled in the case of Nicoll v. Austin, is that where the employer
    1050
    undertakes a pecuniary obligation on behalf of an employee the amount spent by the employer in discharge of his obligation is liable to tax in the worker's hands as part of his salary. That is common sense. If one does not have a provision of that kind the employer would be able to assist his employee to evade a large amount of the proper tax on his remuneration by discharging expenses for him instead of paying him a wage or salary.
    Sir H. Williams: Does that include a policeman's uniform?
    Mr. Maudling: That is a point of detail which I should not like to answer offhand. The actual rules as to what expenses are deductible for Income Tax purposes are contained in what used to be Rule 9 of Schedule E and which is now paragraph 7 of the Ninth Schedule of the Income Tax Act of 1952. That provides that travelling expenses are allowed only in so far as they are expenses incurred in the performance of a duty or the carrying out of an occupation and not incurred in getting from one's place of residence to one's place of work. That was the decision in Ricketts v. Colquhoun.
    Surely the very clear distinction of principle here is that between expenditure which is inherent in the job and which must be incurred by anyone carrying out that particular job, and expenditure which is really part of a person's own mode of living and which is in his own determination—expenditure which depends upon where or how he decides to live and which is not a necessary part of the job for which he is being paid.
    Mr. M. Follick: What about the salaries of Members of Parliament? They receive an allowance for travelling from London to their divisions and that is not in the actual performance of their duties to Parliament.
    Mr. Maudling: I think that travelling between Parliament and one's constituency is travelling in the performance of one's Parliamentary duty. Travelling between one's place of residence and Westminster is travelling to and from one's Parliamentary duties. I do not want to go into the details of the rules governing the expense allowances of Members of Parliament, which are a little compli-

    1051
    cated, but that is the distinction made in law between expenditure incurred in carrying out a job and expenditure incurred in putting oneself in a position to be able to carry out that job.
    6.0 p.m.
    If this principle were breached in one particular, there would be many other claims which it would be difficult to resist. For instance, in certain trades special protective clothing is needed. Any worker doing the job needs this type of clothing and he can claim a tax allowance for the expenditure involved. But suppose that someone gets promoted to a job in which he has to appear well dressed— dressed respectably and perhaps rather more expensively than his usual custom. He may say, "I cannot take this job without buying a lot of new clothes. Before I take it I must spend a lot of money. Therefore, I should be allowed to set off that additional expenditure against my income." Surely, that would not be admissible.
    Then there is the case of someone living in London who finds that the cost of living is higher than it is in some provincial centres. He might say," I have to live in London instead of in a provincial town and therefore the higher cost of living should be an allowable deduction for Income Tax purposes as an expense of my occupation."
    Mr. J. McGovern: Is the hon. Gentleman aware that in many factories and workshops the management buy special equipment, such as overalls, for both men and women, and that that is borne by the firm as a legitimate expense?
    Mr. Maudling: That is exactly my point. The distinction in law is between expenditure necessary to the conduct of an occupation and expenditure that a person has to incur in carrying out his occupation because of his own personal circumstances. If a man chooses to live in the country he will probably get the benefit of paying a lower rent and perhaps lower rates. On the other hand, he will have to pay a higher fare when going to work. If we allowed the person the cost of his fare to and from his work then we should per contra allow a person the higher rent he has to pay because he lives in a more expensive place.
    Mr. John Rankin: Will the hon. Gentleman bear in mind that many people today when they go into the country to live on the new housing estates do not go into houses at cheaper rents than those they have paid in the past. On many housing estates the houses to which the workers now have to travel are let at higher rents than houses in the industrial parts of the cities which the workers have left.
    Mr. Maudling: No system of taxation can take care of every separate circumstance. Any tax system has to strike a balance between logic and simplicity of operation and the fitting of every separate circumstance. Another feature is that the new Clause applies only in circumstances where an employer refunds to the employee the cost of travel.
    There might be two people living side by side and working in different firms side by side. In one firm the employer might refund travelling expenses to the employee, and in the other firm the employer might not. In those circumstances, this Clause would work unfairly. One would get the benefit of the tax reduction and the other would not.
    I am sure that my right hon. Friend the Chancellor of the Exchequer will study carefully the arguments advanced in support of this proposal. It is not a new proposal. It has been put before the House many times. As my hon. Friend said, there are certain special circumstances nowadays on the strength of which it can be argued that the claim is stronger than it used to be. Nevertheless, my right hon. Friend does not consider that the arguments are strong enough to admit a breach in what is a clear principle of tax law which has been established for some time. In the circumstances, I ask my hon. Friend to withdraw the new Clause.
    Mr. Ellis Smith: I wish to place on record my satisfaction that an assurance has been given that the Chancellor and his officials are prepared to consider this suggestion between now and the next Finance Bill. I assure my hon. Friend the Member for Sowerby (Mr. Houghton) that none of us desires to be a party to increasing the danger of abuses. We know that already too much administrative expenditure is incurred in dealing with abuses. We all want to safeguard the position.

    1053
    Having said that, I assure the Minister that there is more in this suggestion than appears on the surface. One of the greatest needs of British economy is mobility of labour. In spite of the optimism of the Minister, I do not think that the position is improving to any great extent. He was making a political point. Something should be done about this matter.
    In Lancashire, thousands of men and women travel between 15 and 25 miles a day between north-east Lancashire and Trafford Park. It becomes a serious problem when one or more members of each family pays an abnormal amount for travelling of this description. Instead of improving, as the Minister suggested, it appears that the position will worsen considerably. I have had a number of letters from constituents asking that some action should be taken. In the present position we have not been able to do anything.
    I hope that between now and the next Finance Bill the Minister will ask representative organisations to submit details to him. He should ask managements to request working people to put on paper details of their travelling expenses. He should consult the Ministry of Labour. I am convinced that if that is done a Clause of this kind will be adopted sooner or later.
    Mr. Albu: I support my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) in his plea to the Minister. I realise that the Clause as drafted is far too wide in one sense. In a way, it is also too exclusive. It would be unfair as between one employee whose expenses were refunded by his firm and another whose expenses were not. I do not know how that matter could be dealt with, but I am certain that we must consider the question of labour mobility, especially in the engineering trades.
    The position in industries such as the aircraft industry which are having to expand rapidly is most serious. Local authorities have given housing priority for key workers, and so on, and no doubt this helps. I am sure that most of these firms would be willing to assist their workers by financial grants or otherwise, if they could get workers from a distance. Something must be done to assist them. It is no good the Minister saying that we shall solve the housing problem in any-
    1054
    thing like the time in which we have to deal with the re-armament problem and the balance of payments crisis. That was complete nonsense.
    The immediate problem is the transfer of workers to essential industries many of which are having to be built up at a rapid rate. The aircraft industry is an example. Anything of this nature that can be done to attract workers into these industries, especially from areas where there is unemployment, should certainly be done. I am glad that the Minister says that the Government intend to look at this problem.
    I am aware of the doubts of my hon. Friend the Member for Sowerby (Mr. Houghton). I think that the Minister under-estimated the extent to which there is tax evasion at present. It is natural for people to tend to evade the payment of tax if loopholes appear. This sort of change certainly provides loopholes. Nevertheless, there is a good deal in the idea. I do not agree with it for those who are permanently established in the outer London suburbs—and I have some interest in that myself. People who finally settle down in a certain area make up their mind to do so with a full understanding of the facts and of the conditions under which they do it.
    Certainly, for the temporary situation in which we have to get a rapid transfer of labour, particularly key labour, to the engineering industry, this matter should be looked into. I do not know whether the hon. Gentleman will be in a position to answer the question next year, but I hope that by then the matter will have been given friendly consideration.
    Mr. Black: In rising to ask leave to withdraw the Clause, I should like to thank my hon. Friend for the trouble that he has taken in explaining in some detail the circumstances in which it is felt the Government must advise the House on this occasion to reject the Clause. Although, not unnaturally, I am disappointed at the decision, I should like to thank my hon. Friend particularly for saying that the Chancellor of the Exchequer will take the trouble to read and consider the arguments that I endeavoured to put before the House, and I hope that consideration of those arguments may, perhaps, lead him to consider the matter when framing his Budget for

    1055
    next year. Having said that, I beg to ask leave to withdraw the Motion.
    Motion, and Clause, by leave, withdrawn.

    New Clause.—(QUALIFICATIONS OF GENERAL AND ADDITIONAL COMMISSIONERS.)
    For Part III of the First Schedule to the Income Tax Act, 1952 (relating to the qualifications of general commissioners) the following shall be substituted: —
    "To be qualified to be appointed a general or additional commissioner, a person must, in the year of charge next preceding the year of charge in which he is appointed, have a total income of not less than two hundred pounds."—[Mr. Mitchison.]
    Brought up, and read the First time.
    Mr. Mitchison: I beg to move," That the Clause be read a Second time.
    It was 16 years ago, roughly, that this particular matter was described by the Codification Committee as among the most archaic and anomalous of all the provisions of the Income Tax Act, which, at that time, was the Income Tax Act, 1918. It is, of course, re-enacted and codified in the 1952 Bill, and it appears there in the First Schedule.
    The present position is that no person shall be capable of acting as a general commissioner unless he possesses certain property qualifications, which I shall mention in a minute, or, even more oddly, unless he be the eldest son of a person possessing three times the qualifications, or, if it is in Scotland in a Scottish county, twice the qualifications.
    That is a bit odd to begin with, but matters become even queerer when we turn to see what the qualifications are. They are exclusively a matter of property, and they may be qualifications on the value of real estate—that is to say, land held—or of personal estate—that still excludes earnings, of course, but it covers other property; or, lastly, the combined qualification of those two matters. They are divided according to where the general commissioners are operating, and if they are operating in county divisions in England, and in various cities to which I shall refer in a minute, they have to have the highest qualification of the lot, and they have to own by way
    1056
    of real estate £200 worth a year or to have personal estate amounting to £5,000 or producing an annual income of £200.
    6.15 p.m.
    Then there is also the combined qualification. The archaic character of this remarkable position is illustrated by the choice of the towns. London is included, Birmingham, Bristol, and so on—Great Yarmouth, King's Lynn, Hull and Leeds. I do not want to trespass in any way on the territory of my hon. Friend the Member for Sowerby (Mr. Houghton), or, indeed, to touch rashly on the affairs of Yorkshire at all, but it is very odd that the qualification, if one happens to be a general commissioner for Leeds, is different from what it is if one is a general commissioner for Bradford, and it is odder still if one happens to be a general commissioner for the comparatively small place of King's Lynn—one is up on to the highest scale; while numbers of large cities escape entirely from that particular provision.
    Next we have all other cities—city divisions—of England, and they have £150 real estate qualification. But this is not only an English anomaly. There is an even more remarkable position when we get to the qualifications in Scotland. In Scotland we have a very broad line of division—county divisions in Scotland and the qualifications, be they in Clackmannan, Midlothian or the remoter parts of Caithness are, by way of real estate, £150 per annum valued rent. They are not pounds we know. They are £ Scots.
    I am going to ask whoever is to reply for the Government if he would tell me exactly what the Scots £ is worth. I can assure him of this, that from time to time in the history of the two Kingdoms its relation to the English £ has varied considerably, and I think I am right in saying that when I last heard of it it was worth about Is. 8d. At any rate, such is the accumulation of wealth or the lack of it in Scotland—that I leave economists; I do not say Scotsmen, but economists to say—that the value of the Scots £ is comparatively unknown. It is, I believe, uncertain, and, so far as I am aware, it does not appear in our Income Tax legislation anywhere else.
    But the position is that the general commissioner, if he is relying on his real estate qualification, not only has to have

    1057
    £150 Scots per annum valued rate, but, having got it, he has got to keep it, because these provisions are not merely what is the qualification when he assumes office; they hang over his head from time to time, and if the real estate or the Scots £, as the case may be, alters in value, he may find himself one day qualified to act and the next day disqualified from acting, and I invite the attention of the Chancellor to the remarkable peril of the matter from the point of view of the Revenue.
    For all the right hon. Gentleman knows, a general commissioner who yesterday was qualified may unwittingly enter upon his office today disqualified, and, being no longer capable of acting, that which he has done may be no longer of any legal effect, and it may quite well be that the Revenue, having regard to what these commissioners do, may find itself unexpectedly deprived of those fruits which it expected to draw, or those advantages which it hoped to gain.
    Then, oddly enough, the other Scots qualifications—which, by the way, are higher in the counties than they are in Edinburgh or Glasgow, for some absurd reason, while in England they are higher in London than in other cities—the other property qualifications, the personal estate or the combined personal and real estate are suddenly expressed in sterling, not in £ Scots.
    I need not trouble the House by going on with the absurdities of this position, in which these archaic conditions are still required, not merely at the commencement of the office, but held over a man in that capacity while he holds it. I need not repeat again the absurdity of having a qualification because one is the eldest son of someone who had either twice or three times the qualification. This is too ridiculous, and it is no excuse to say that it has been going on so long, and that Government after Government have failed to put it right.
    It is certainly no excuse to say that there is a Royal Commission sitting who will attend to the matter. When attention is called to something so completely silly and foolish as this, the moment comes when this House should take some action, as it took action in a very similar case over some of the provisions of the Army and Air Force Annual Bill. This is quite
    1058
    as bad as anything to which we drew attention then. It is not only archaic and anomalous; it is not only wrong and dangerous; but it is also—and here I speak seriously—most unjust socially that qualifications as high as some of these are should be demanded of people who are performing these public functions. A great many of them are high figures. Also, they are entirely unearned income. It is an absolute property qualification, dating from heaven knows how long ago.
    This was considered by the Codification Committee, who were half minded, if I may summarise their Report, to abolish the property qualification altogether. I think there would have been a great deal to be said for doing that. On the other hand, there is something to be said for the proposition that those adjudicating on Income Tax matters should themselves be liable to pay Income Tax in some capacity. Therefore, in drafting this Amendment we followed exactly the form that the Codification Committee recommended; that is to say, that there should be one qualification and one only, and that it should be at the beginning of the term of office irrespective of what happens afterwards.
    To put it quite shortly, the person concerned should have had £200 a year, say roughly £4 a week, earned or unearned in the previous year, and having once so qualified, that is the end of the matter. I hope—indeed, I expect—that this skeleton will be withdrawn from the Revenue candelabra—a reference the Leader of the House will follow—and that this simple Amendment will remove a wholly ridiculous, rather dangerous and very wrong provision which has been there far too long.
    Mr. Houghton: I beg to second the Motion.
    I hope that no hon. or right hon. Gentleman will suggest that there is any need to await further consideration of this matter by the Royal Commission now sitting. We have had a Royal Commission which made a recommendation on this very matter 32 years ago, and it is a sobering thought that we have the recommendation of a Royal Commission, 32 years old, which no Chancellor has apparently seen fit to recommend the House to adopt.
    The Royal Commission of 1920 recommended that the Commissioners should

    1059
    act only tor the division in which they reside or carry on business and should be Income Tax payers, but that no property qualification should be insisted on. The Codification Committee, which reported in 1936, did suggest that perhaps it was too sweeping a change to have no qualification whatever, and therefore recommended a minimum income, earned or unearned, which should be the sole qualification for appointment as a general or additional commissioner.
    These commissioners are assessing bodies for some purposes and appellate bodies for others, and in these days workers who are claiming small allowances on matters of fact such as claims for deductible expenses to be set off against wages or salaries may have recourse to the additional commissioners to settle the dispute between themselves and the Inland Revenue. It is quite archaic and indefensible that those who move and live among the great mass of Income Tax payers of this country should be denied the right to sit as a general or an additional commissioner.
    The general commissioners are drawn from a list compiled by the Land Tax Commissioners, but the property qualification or appointment as a Land Tax Commissioner was abolished by Act of Parliament in 1906, so the Land Tax Commissioners, who are the appointing body, need have no property qualification or appointment as such, but when they select persons to act as commissioners these ridiculous property qualifications have to be satisfied.
    The property qualification for the appointment of a commissioner goes back to the day when there was a property qualification for the franchise, and clearly relates to the early part of the 19th century. We want something more democratic and more in keeping with the times, more in harmony with the wide range of direct taxation which brings into its net as direct taxpayers something like 12 million people, eight or nine million of whom are ordinary working folk who have to submit their cases to these local bigwigs, landowners and propertied people when they have a little dispute with the Inland Revenue.
    Mr. Ellis Smith: Why did they let it go on so long?
    Mr. Houghton: I cannot answer for the Chancellor of the Exchequer. Still less can I answer for the House of Commons. All I can say is that, in my small way, I have been drawing attention to this archaic survival of the original Income Tax Act for a very long time. There are quite a few others.
    Mr. Derek Walker-Smith: Has the hon. Gentleman moved this new Clause before on a Finance Bill?
    Mr. Houghton: No, I have not moved this new Clause before. But that does not mean to say that I have not had other things to do on Finance Bills. I am sure the hon. Gentleman would be the first to complain if any hon. Member on this side of the House intruded too frequently and for too long upon the time of the House.
    I make no excuse for supporting this new Clause now, and I sincerely hope that the Chancellor, whom I now see in his place, will cut this connection with the archaic past, will not wait for Royal Commissions, but will recommend the House to adopt the proposal made by the last Royal Commission, as slightly modified by the Codification Committee of 1936—which was set up, I may add, by his right hon. Friend the present Prime Minister. It took nine years to reach its conclusions, so none can complain that this or any other recommendation was hurriedly arrived at by the Codification Committee.
    I sincerely hope that we can make at least one small reform in the whole complex machinery of Income Tax by a more democratic and socially just basis of appointing assessing and appellate commissioners.
    The Solicitor-General: It might be convenient if I now deal with what has been said in support of this new Clause. I should like to make it clear, first, that I do not rise to defend in any way at all the existing property qualification for general and additional commissioners, which has existed for so many years, including, as has already been pointed out, the last six years.
    This, I fear, is only one instance of some of the dead wood which exists in Income Tax law, and which has really been brought to light and brought to the surface by the consolidation of the

    1061
    Income Tax Acts. Of course, in trying to get the Income Tax law into a clearer, more effective and more up-to-date form the first process has to be consolidation, and it is from consolidation that we can then go on to make improvements in the general structure.
    6.30 p.m.
    This Clause seeks to abolish the property qualification. The difficulty we feel about it is not the abolition of that qualification, which, I agree, is entirely obsolete, but the form in which the qualifications which general and additional commissioners should possess should now be stated. The House may remember that the Royal Commission which first recommended the rejection of this property qualification in 1918 went on to recommend that the qualification should be that the Commissioners should be payers of Income Tax, and they also went on to recommend qualifications by referance to business or professional standards. That is a matter which. I think, everyone would agree ought properly to be borne in mind.
    The Codification Committee in 1936 recommended that the sole qualification should be an annual income of £200 from any source.
    Mr. Mitchison: This is their Clause.
    The Solicitor-General: The effect of a Clause in that form might mean that in certain circumstances the commissioner might not be an Income Tax payer, and to that extent there might be a conflict between the 1918 Royal Commission's Report and the Codification Committee's Report.
    Mr. Houghton: That possibility existed then, and the Codification Committee dealt with it in their Report. Then, £200 could have exempted some persons from paying tax.
    The Solicitor-General: It might exempt a great many more people now. We are not at all unsympathetic to the proposal that the property qualification must go, but the difficulty we feel is this: we are not sure that it is right at the moment to accept this simple definition of a qualification. This qualification was considered by the 1918 Royal Commission. It seems desirable that the Royal Commission that is now sitting should have
    1062
    an opportunity of expressing a view upon this. We feel that there is force in that argument.
    This is only one of the matters that want overhauling, and it touches on the wider question of the powers and duties of the general commissioners. Some of those powers which now exist and the duties are obsolete, and it would be much more convenient and much better, I think, to try to tidy all this up in relation to the general commissioners in one Bill rather than to deal with it piecemeal. That is the conclusion to which we have come.
    While being entirely sympathetic with the object of this Clause, we feel that it is, in fact, too limited in character to make it possible for us to accept it. We entirely agree with the hon. and learned Member for Kettering (Mr. Mitchison) that this has some of the dead wood which might find a home in that burial ground to which he drew attention.
    Mr. Mitchison: May I point out that there is one other relevant question which the learned Solicitor-General has entirely omitted to answer? How much is £1 Scots worth? Unless he can give an answer to that there are general and additional commissioners up and down Scotland who may be making awards in the firm belief that they are qualified to do so, and the Crown may be extracting money from taxpayers to which, for lack of this qualification, they cannot possibly be entitled.
    The Solicitor-General: I cannot possibly express an opinion on the £1 Scots without notice.
    Mr. Douglas Jay: I thought that the Solicitor-General's answer was most disappointing and most unconvincing. When a representative of the Treasury says that he cannot take any action of this type because there is a Royal Commission considering some subject or other, one can be assured that he has no good argument against what is proposed. So it seems in this case. Everybody admits that this property qualification is entirely antiquated and indefensible. I think that it goes back to the time when there was a property qualification for the franchise, and surely we all agree that it is ridiculous, therefore, to preserve that qualification today.
    In addition, the new Clause which my hon. and learned Friend the Member for

    1063
    Kettering (Mr. Mitchison) has moved— and I think that he has done a great service in bringing to light this matter, which I do not remember having been brought to light in the past six years— is simply the identical suggestion, as I understand it, of the Codification Committee of 1936, and it therefore has a good deal of authority behind it.
    It is essentially a reasonable and moderate proposal. The Solicitor-General can only bring forward two objections to it. One is that this might have the effect of some persons who are not themselves Income Tax payers becoming commissioners. I do not think that is a real objection to the proposal.
    The Solicitor-General: The right hon. Gentleman has not stated my view quite accurately. All I was seeking to point out was that there was a possible conflict between the Report of the Codification Committee and the Report of the Royal Commission in 1918.
    Mr. Jay: As my hon. Friend the Member for Sowerby (Mr. Houghton) pointed out, in reply to that, that was dealt with by the Codification Committee. I do not think we need be deterred from doing what we think it is reasonable and right to do because there may have been a difference of opinion between the Codification Committee in 1936 and the Royal Commission in 1918.
    Finally, the Solicitor-General argued that this was only one anomaly among others, and he wished to dissuade us from putting right this limited anomaly because, perhaps, if we did not, at some later time we might be able to make a clean sweep of a whole group of abuses associated with it. I do not find that argument very convincing. I think that we are agreed that this qualification is indefensible, and we have a sensible suggestion for reform, so there is every reason for going ahead, regardless of whether or not we alter various other abuses in the future.
    Unless the Solicitor-General or some other spokesman of the Government has some more encouragement to offer us, I feel disposed to advise my hon. and learned Friend to press this proposal to a Division.
    Mr. Albu: When Amendments or new Clauses are moved during the course of
    1064
    the proceedings on the Finance Bill there are a series of different types of replies. In some cases, the answer is "No," because it is a matter of policy, and this is generally done when it is a matter of political division between the two sides of the House or Committee.
    In some cases, the proposal is said to be drafted in such a way as to give rise to anomalies or to provide loopholes for tax evasion, and, in other cases, that it is not suitable for carrying out its purpose. In the latter case we are told that it cannot be done for administrative reasons, that it will be considered at a further stage, or that it will be considered during the course of the year and brought forward in a future Finance Bill.
    It seems that in this case none of these arguments has been adduced by the Solicitor-General. He has brought forward a whole series of arguments, that lots of other changes are really necessary, that it wants looking into further, that there is a Royal Commission studying the whole matter, and so on. But the Clause moved by my hon. and learned Friend is, of course, an extremely simple one, and it would not prevent any further changes taking place in the Income Tax Act in the future.
    This Clause is very narrow in its scope, and deals with an archaic, social injustice which everyone agrees is completely wrong and which should no longer exist. I cannot see any argument for not accepting the Clause. No argument has been adduced that it would prevent further changes in the Income Tax Act in future, there are no administrative difficulties and there are no divisions of policy between the two sides of the House. The answer "Yes" would be the simplest way to dispose of the matter, and it would also save time.
    I simply cannot understand why the answer "Yes" cannot be given. There is not much case for a property qualification at all. It might be said that the commissioner might not have paid Income Tax the year before he was appointed but it is highly unlikely that any commissioner who had not paid tax would ever be appointed, and, therefore, the dangers in accepting the Clause seem to be minute. I hope that even now, especially after what my right hon. Friend the Member for Battersea, North (Mr. Jay) has said, the Government will

    1065
    be prepared to accept this small improvement in what is, in many of its Sections, a very archaic Act.
    Mr. Raymond Gower: The hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Sowerby (Mr. Houghton) have unearthed what appears to be an inconsistency but neither of them has alleged that the matter is at all urgent, or, if they have done so, it was obviously just as
    urgent last year. It would seem that the argument that the Report of the Commission cannot be awaited does not accord with the fact that this has existed so long. It would waste time to have a totally unnecessary Division on a matter which seems to be one of procedure.
    Question put," That the Clause be read a Second time."
    The House divided: Ayes, 232; Noes, 249.

    New Clause.—(EXEMPTION FROM DUTY OF AMATEUR ENTERTAINMENTS.)
    In the application of section ten of the Finance Act, 1949, to any entertainment which is held after the passing of this Act, the following proviso shall be added to subsection (2) of that section: —
    1110
    "Provided that where an entertainment consists wholly or in part of a performance on a stage and all the performers whose words or action constitute the entertainment are actually present and performing, the entertainment shall be deemed to be an amateur one if both the following conditions are fulfilled—

    (a) no payment is made or reward given for the performance of any of the performers on the stage; and

    (b) no member of the society, institution or committee which provides the entertainment receives any payment or reward for services rendered in connection with the entertainment,

    so however that under this proviso there shall be no increase in the amount of entertainment duty for which, but for this proviso, any person would pay.—[Mr. H. Rhodes.]
    Brought up, and read the First time.
    Mr. H. Rhodes: I beg to move, "That the Clause be read a Second time."
    This Clause is in the name of hon. Members on both sides of the House and I wish to explain the reason for moving it. We wish to re-define the definition which was inserted in the Finance Act of 1949, Section 10, by the late Sir Stafford Cripps. It was a great assistance to amateur societies throughout the country and was a step forward from the position which had previously existed. It read:
    "For the purposes of this section an entertainment shall not be deemed to be an amateur one if any payment is made or reward given for the appearance of any of the performers whose words or actions constitute the entertainment or any part of it, or for any person's services in connection with the entertainment as instructor, producer, manager or conductor or in any advisory capacity."
    It will be seen that that definitely precludes an amateur society from having the benefit of the services of a producer or an instructor, of a manager or a conductor who receives payment in any way whatever.
    9.0 p.m.
    Before I come to my argument on the basis of which type of society will benefit from this new provision, I ought to state the forms of exemption which are possible now. There are five forms, according to the constitution of the society. The first is where the society is an integral part of an educational establishment. That is provided for under Section 12 of the Finance (New Duties) Act. 1916. Societies which get benefit under those provisions are associated perhaps with

    1111
    polytechnic institutes or evening classes of different kinds. They have the benefit of professional tuition and they can produce any type of show, whether musical or dramatic, without incurring the penalty of Entertainments Duty.
    The second type is the society not conducted for profit, whose aims and objects are partly educational. That comes under Section 8 of the Finance Act, 1946. I understand that there are professional associations or companies which can also benefit under the provisions of this Act. In the case of the professional entertainment, the company or association is assessed by the Commissioners of Customs and Excise not on the material they play but on the assumption that in the long run more will be done towards the furthering of educational projects than otherwise. It was under this Act that we saw the production of "A Street Car Named Desire."
    Mr. Gordon Walker: A very good play.
    Mr. Rhodes: My right hon. Friend says it was a very good play, but I should hardly call it educational. The difference under this form of exemption between the assessment and the amateur society is that the society is not assessed but the work that the society is proposing to do. So it can be that if the Commissioners of Customs and Excise are not well up in what should be done or what is good or what is educational, they can refuse to sanction exemption for a particular show. I understand that Gilbert and Sullivan operas, for instance, and things of that sort are permitted. It is, however, too speculative and too inconsistent for most amateur societies to try to gain exemption under the Act.
    The third category is for a permanent body with solely or partly charitable and philanthropic objects which puts on shows. This, I believe, is under Section 6 (4) of the Finance Act, 1924. This is the only form of exemption with working rules, which are contained in Notice 96 of the Customs and Excise, Under the provisions of the Act, the whole of the net proceeds must be devoted to charity, and the net proceeds must exceed 20 per cent. of the gross takings.
    The fourth category is societies in rural areas, where, as is well known, the popu-
    1112
    lation must not exceed 640 persons per square mile and the seating of the theatre, schoolroom or whatever the place in which the performer plays, is not more than 400. The fifth is the definition to which I alluded first, and which I do not need to repeat.
    Take the case of a society which is doing musical shows. There is hardly a Member in the House whose constituents at some time or other do not put on musical shows either in schoolrooms, theatres or picture houses in their constituencies, and who wish to engage a professional producer and a professional orchestra. Which one of the forms of exemption can they take advantage of at the present time?
    They cannot take advantage of the evening school provisions. They cannot take advantage of the tax exemption under the category "partly educational." They cannot take advantage of the provisions for rural areas, and if they are paying a producer and an orchestra neither can they take advantage of the provisions under the 1949 Act. The only way in which they can gain exemption is by applying under No. 3: that is, as a permanent body with solely or partly charitable and philanthropic objects.
    Imagine what an enormous burden that puts on a society that is running a show in the local theatre, when the net proceeds must be devoted to charity and must exceed 20 per cent. of the gross takings. It might be said, "Do not have a professional producer, or make do with an amateur orchestra." I wonder whether the Financial Secretary to the Treasury has heard an amateur orchestra at work. Some of them are very good, but some of them are not quite so good. It was not a very large city to gather together enough amateurs who could play sufficiently well to take part in an amateur show at a theatre of this description, even if they were willing to do so.
    I have had a lot of experience, not as a professional producer, but as one with a tremendous interest in the amateur theatrical movement. I spent 10 years of my leisure in this work and I want to impress on the Financial Secretary that there is a real social and human side of the appeal being made to him tonight. It is a creative work. It is not dependent on the gramophone record, television, wireless, or something turned

    1113
    on or off at will. This is something which needs the effort and work of people gathering together with a first-class object in view. This amateur theatrical movement is a wonderful social institution.
    The amateur society with which I was connected did more towards bridging the gap between the employed and the unemployed than any other industry which I ever knew. There was an inferiority complex among men and women who were unemployed in the years between the wars. In many cases they could not be persuaded to associate with people in work, but my experience was that the form of society where people could mix together and realise that they were working for one common object, and eventually, perhaps, don costumes whereby they were transported to another worlds did remove a lot of the difference, the inverted snobbery, existing between unemployed and employed. Time and again I saw the tremendous benefit which accrued.
    Societies are fortunate, and so are their members, if they can have the training of a professional producer. Much talent and good craftsmanship have been lost in the past simply because they have not been spotted. The society which does this kind of work in my constituency is continually finding new talent which goes forward from the amateur status to the professional. I could mention several well known names in the artistic world today, people who have gone through that school. I ask the Financial Secretary sympathetically to consider this redefinition of the status of an amateur performance so that societies throughout the country can develop and put on better shows without the fear that they will lose money, and so that they can work with a carry over from one season to another.
    I know that the Financial Secretary will say that the Customs and Excise allow that now. They do in a small degree, but there has to be a reckoning when the society put on their next show, because there has to be an assessment to bring it into the previous year's accounts. I ask the Financial Secretary to consider sympathetically this new Clause, because by so doing I am sure
    1114
    that he will be rendering a great service to the amateur dramatic movement, which is such a first-class movement throughout the country.
    9.15 p.m.
    Mr. James MacColl: I beg to second the Motion.
    Unlike my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) I speak without any kind of vested interest in this matter. I never have taken part in any kind of amateur performance and I need hardly say to the House that I am not likely to be asked to do so in the future. Although I agree with my hon. Friend that in amateur dramatics many people remain with their talent unnoticed, I think that applies not only in the field of amateur dramatics, but in other fields as well. In the field of amateur dramatics my talent has passed completely /unnoticed for many years.
    This is a very reasonable proposal which will lead to an improvement in the quality of amateur performances, which are not only great fun for the people taking part in them but provide valuable and useful funds for charity; and, at the same time, provide an entertainment of real value in itself in a small community. It may be true that in larger towns where there is an adequate professional theatre that point of view is not as important as in smaller towns, as, for example, in my own constituency which is an average-sized Lancashire town. But I can personally bear witness that the quality of the amateur entertainment does provide the people with something which they could not otherwise get.
    I think that quality should be maintained and I wish to emphasise in particular the point about the professional producer. After all, it would be rather foolish if the exemption from tax on the grounds that something was an educational class was lost because a professional teacher was employed. It does not make sense that people who want to learn any of the arts should not get the best possible person to teach them. That is not only in their interest, but also in the interest of the people who, either from reasons of duty or for other reasons, attend the performances. It is desirable that they should see that the quality is maintained and I hope, therefore, that the Government will accept this Clause.
    Mr. Rupert Speir: I should like to support this new Clause. Like the hon. Member for Widnes (Mr. MacColl) I have had no experience of amateur dramatic societies but in a large and widespread rural constituency, such as mine, they play a large part in cultural community life. I should like to see them given the advantage of professional assistance which they are now largely denied.
    I do not feel that we are asking the Government for very much and a professional producer could give great assistance and encouragement to small amateur dramatic societies. I sincerely hope, therefore, that the Government will be able to accept this Clause.
    Mr. Blackburn: I hope that this Clause will bring joy to the heart of the Financial Secretary. It must be boring for him to have to spend the day repeatedly saying, "No." It must be souring to the disposition. I hope that he will now be able to cast aside his mantle of Molotov and for a change say, "Yes." This is a minor change, not in the sense of its importance but in the sense of the amount of money involved. If this Clause is adopted I do not think that the whole structure of the Budget will be upset. I cannot believe that the amount of money involved is of great importance, but the principle behind the Clause is of the utmost importance. In the Finance Act, 1949, exemption of duty was granted to certain entertainments—
    "where the Commissioners are satisfied that the entertainment is provided by a society, institution or committee which is not conducted or established for profit and that the entertainment is an amateur one."
    Section 10 of the 1949 Act sets out the types of entertainment:
    "(a) a stage play; (b) a ballet (whether a stage play or not); (c) a performance of music (whether vocal or instrumental); (d) a lecture; (e)a recitation; (f) an eisteddfod";
    I hope that my Welsh friends will forgive me if my pronunciation of the last word was not all that it might have been.
    Mr. James Griffiths: It was a good shot.
    Mr. Blackburn: Section 10 (2) explains what is meant by an amateur entertainment. It says:
    "For the purposes of this section an entertainment shall not be deemed to be an amateur one if any payment is made or reward given for the appearance of any of the performers
    1116
    whose words or actions constitute the entertainment or any part of it, or for any person's services in connection with the entertainment as instructor, producer, manager or conductor or in any advisory capacity."
    Hon. and right hon. Members will see from the Clause that the point at issue is really a very small one. The question now arises, under the new definition, that the societies could pay an instructor, a producer or a manager. I am sure that every hon. Member could quote examples from his own constituency of excellent societies which do good work.
    The provision of our own entertainment was at one time one of the features of our life. There is a danger now that we may be losing something which is of great value. Today, far too much of our entertainment is provided for us by the cinema, the wireless and the television, and there are even hon. Members opposite who want to provide us with sponsored television. So much of our entertain is provided for us today that it is our duty to foster anything whereby we provide our own entertainment. The cost to the Exchequer would not be very great: the help given to these societies would be most important.
    If we are to have amateur performances, I think that the Financial Secretary will agree that it is of value that they should be as efficient as possible. I do not think that, by employing a professional producer or a professional conductor or trainer, a musical or operatic society is committing any sin whereby they should be penalised by having to pay Entertainments Duty. I certainly hope that in this case the Financial Secretary will not merely look upon this new Clause with a sympathetic eye, but that, for a very pleasant change, he will be able to say, "Yes, the Government accept it."
    Mr. A. Blenkinsop: I think all of us will agree that we are very anxious to do all we can to help and encourage amateur operatic and dramatic societies, because we agree that they can do a very great deal to encourage the general community life of our country. It is one of the richnesses of the country that we have so many both small and large operatic and dramatic societies.
    Unlike some of my hon. Friends, who have declared that they have no personal

    1117
    interest in this matter, I must confess that I have had a personal interest, although I strongly suspect that I am never likely to have any again. It is a matter of some interest that many of the provisions that were made during the last five years have been of very great benefit indeed to amateur dramatic societies in particular. There is one, in which I used to have a fair part and a fairly considerable interest, which undoubtedly gained a great deal by the provision for societies which took a fairly large part in educational activities.
    In the particular society in which I was interested, we did not find it necessary to engage professional producers or have professional assistance of any kind. We were fortunate, and that is a rather exceptional example, and I know of very many other small societies whose work could be enormously improved if they could have the help of at least a professional producer. When we come to the small operatic and musical societies, of which everyone has a good deal of experience in every constituency, one knows how much difference it would make if they could have some professional advice and help.
    I am not wedded to the idea that professional performances are necessarily automatically so much better than amateur performances, but I do know that in the case of some amateur performances that are put on for charity, it is something of a charity to attend them, and I think that a very great deal of good could be done to help to produce some of the raw elements of talent that are there by the use of some more experienced people who can do so much to help.
    I can give one example of an operatic society that I know which has done some exceedingly useful work. In this case, the society used to take a large theatre for some of its performances, and, when it did so, it was usually required, as a term of the lease, to use the professional orchestra which was available in the theatre. That immediately ruled this particular society out of making any claim for exemption from Entertainments Duty. In spite of that fact, the value of this society's work was such as to give great pleasure to very many people in the north, and I am sure that other
    1118
    hon. Members could quote very many cases of this kind.
    9.30 p.m.
    Therefore, I am not claiming that professional advice and help are essential in all cases. There are, as I say, some cases where amateur societies can manage with their own talent, but in the majority of cases the addition of even a small amount of professional help can make all the difference in the world, not only to the quality of the performances given, which is sometimes, perhaps, only a secondary consideration, but in the value to the performers themselves in giving them a greater insight into the art which they are practising.
    Sometimes, of course, as I have said, it is very difficult to recognise it as an art, but there is in every small society, however raw, however amateur, some talent which can in almost every case be brought forward. I feel that we are losing a great deal in this country by not being able to encourage it as much as we should like. We very much appreciate all the help that has been given up to now, but I think it would be of inestimable benefit if we could enrich our cultural life this little extra bit by making a very modest concession which would bring a great deal of happiness and benefit to the whole of our population.
    Mr. Albu: My hon. Friend the Member for Stalybridge and Hyde (Mr. Blackburn) mentioned the growing extent of entertainment by mechanical means in which there is no participation by those enjoying it. The growth of wireless, televison, the cinema, and so on, has undoubtedly had another effect which is that it has very largely cut into the live entertainments upon which our forefathers relied. There is probably a growing number of people in the country who would never see one but for the amateur bodies.
    All these amateur bodies are not of the rather chronic character to which my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) referred. Many of them, like the one to which he referred and which I think I know very well, are of a very much higher quality and are, in fact, practically repertory theatres. I think my hon. Friend was referring to the People's Theatre at Newcastle-upon-Tyne where, for many years, I, like himself, played some part in

    1119
    it. That is a very exceptional body, and, as he said, has not had to employ professional producers, although I am not sure that on one or two occasions it did not employ professional musicians.
    If we are to raise the standards of the very large number of amateur bodies throughout the country to the level of the People's Theatre and that of the unnamed players in Manchester and others of that sort, then we must certainly give them the opportunity and encouragement to have professional training and production. I am now, of course, referring to amateur theatrical companies, but the same also applies to an even greater degree to musical societies and to the ever more popular ballet societies.
    I should have thought this was a very small concession to grant in this mechanical age when the constructive use of leisure is becoming more and more important and yet something which it would be very gracious of the Government to grant and which, I should have thought, they would very much like to encourage. In view of my personal experience of the extraordinary value of bodies of this sort in an age where the cinema and television are growing so fast, I sincerely hope that the Financial Secretary, who I see it eager to get up, will be helpful to us on this occasion.
    Mr. Boyd-Carpenter: I fully share the views that the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes) so admirably expressed as to the value of the amateur theatrical movement. Indeed, we can find an extremely good example in the case of a most flourishing society within the confines of Her Majesty's Treasury. As the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) knows, it is a really first-class society—and I am glad to have his endorsement of that.
    The proposal put forward is for an extension of the concession granted in the Finance Act, 1949. I am glad to be able to tell the House that that concession has proved of very real value to the societies in general, who are, I understand, on the whole, in a very flourishing condition. It may be of interest to the House to know that some 1,200 of these societies who might have got exemption under one of the other headings have got it with greater ease under the amateur one;
    1120
    some 300 who probably could not have got it under any other method have got it under this. So we are dealing here with a cheerful subject—more cheerful than some we have been discussing—that produces no particular difficulties; with bodies that, in general, I am glad to say, and the House, I know, is glad to hear, are in pretty good condition.
    What we are dealing with here is one rather narrow aspect of the matter. This new Clause, whose effect would be to widen the amateur concession by allowing payment to an orchestra and to performers provided they did not appear on the stage, as well as instructors, producers, managers, conductors, relates only to the amateur concession; that is to say, it relates only to the case of societies which do not find themselves able to obtain exemption under the other categories, in particular the charitable or partly educational category. Indeed, I think one hon. Member during the debate drew attention to the fact that it appeared not to be terribly difficult to get inside the partly educational category—at any rate, in a certain number of cases. So we are dealing here with a proposed extension of one of the categories, the amateur category, only. We are dealing only with a not very large corner of the problem.
    The difficulty, quite frankly, posed by this new Clause, whose intentions we all recognise to be wholly admirable, is the fact that it seeks to draw the line beyond which exemption can be obtained in a very difficult position. The present position is quite easy—quite easy to administer, perfectly clear to the societies. They can pay such people as stage hands—the workmen employed, and so on—without forfeiting the concession; and that is a clear and comprehensible line of demarcation.
    I have analysed how this new Clause would work, and it really would create a rather curious situation. The exemption would remain if a professional conducted a musical comedy provided he did not set foot on the stage. If he set foot on the stage the exemption would be lost. The same applies to an orchestra. A professional orchestra in a theatre that had the good fortune to have an orchestra pit would still not cause the society to forfeit its immunity. Transport that orchestra, perhaps inevitably, to the stage, and the immunity is forfeited.

    1121
    Equally, in entertainments of some kinds some of the action takes place off the stage. Where that is so, the exemption would be given; but where any of them went on the stage—any of the professionals went on the stage—the exemption would be lost. The extreme case is that of the employment of a soloist. A soloist concealed in the background behind curtains would not forfeit exemption. A soloist more bravely displayed upon the stage would forfeit the exemption.
    I think those examples—they can be multiplied—do show that the proposal contained in this new Clause would give rise to a good many difficulties. They are difficulties, I would stress, not so much from the point of view of the collection of the duty as for the societies themselves.
    We are dealing here with a highly respectable series of organisations and bodies, most of whom have not the slightest wish to defraud the Revenue. They will be in some difficulty if their liability to duty in respect of any particular performance depends upon such narrow distinctions as those of which I have given illustrations to the House. I therefore very much doubt whether this proposal would be of as great assistance to the societies as perhaps hon. Members were at one time inclined to think.
    Mr. Blackburn: Do I understand that the hon. Gentleman would accept the proposal if the wording were different? That seems to be the substance of his remarks at present, that the wording is wrong but that, otherwise, he has every sympathy with the new Clause.
    Mr. Boyd-Carpenter: It goes a good deal deeper than the wording, as the hon. Gentleman will appreciate.
    This is a specific proposal for an Act of Parliament. It introduces—and this goes far deeper than wording, although the wording of course, affects it—a line of demarcation, on one side of which they will pay duty and on the other side of which they will not. In our view that would give rise to very real and practical difficulties, and that is a serious objection to it. On the other aspect of the matter, I would prefer, if I may, to confine what I have to say to the point on which I decided to introduce it at the end of my speech, on the point of view of our
    1122
    general attitude towards the matter. What I am at the moment dealing with is the Clause actually before the House.
    Dr. Horace King: Would the hon. Gentleman examine the illustrations he has given? He has produced hypothetical cases of a society bringing a conductor or an orchestra on to the stage, and hiring professionals to sing in the wings while the amateurs themselves remain on the stage, and having done this fantastically unusual thing make themselves liable under this new Clause to pay Entertainments Duty.
    Mr. Boyd-Carpenter: I am sure it is my fault, but the hon. Gentleman must have misapprehended my argument. If a professional soloist appears in the normal way upon a stage the immunity is lost. If, while perfectly audible to the audience, he or she is concealed behind a curtain at the back of the stage, the immunity proposed by this Clause would be given. That is the point. That really would produce a farcical situation into a good many of these productions, and give very great difficulty to those who have the job of producing them. That is the real difficulty behind this Clause, that in a sincere and genuine attempt to give further assistance to these admirable societies it would land them and the Customs in the difficulty of trying to administer a position riddled with anomalies.
    As I said a moment ago, we are anxious to encourage these societies to the full, and we are not perturbed by the financial implications of the proposal. It is difficult to estimate what the amount would be; probably of the order of £10,000 a year. But we cannot accept a proposal which we cannot honestly say to the House we believe to be a workable one.
    During the year my right hon. Friend is willing to consider the position of these societies and the working of the amateur concession. He is prepared to look at it sympathetically with a view to seeing, whether in the first place, it might be of real assistance to them to take the concession further. If he comes to the conclusion that it is, he would propose to bring forward proposals to that end.
    My right hon. Friend is anxious that these societies should be encouraged. He would like to see during the coming year

    1123
    if there is a possible way of helping them, so that if further assistance really appeared to be of value he would then be able to consider bringing forward proposals. I think that is an indication that my right hon. Friend appreciates the spirit behind this Clause and behind the support which has been given to it.
    Although for the reasons I have ventured to give to the House it is not practical to accept these proposals, we are not unsympathetic to the spirit behind them, and we look forward to the possibility of producing something in next year's Finance Bill which may be of assistance to these societies to the extent which they need.
    9.45 p.m.
    Mr. Gaitskell: When I saw my hon. Friends had put this new Clause on the Order Paper—and it was on the Order Paper during the Committee stage but was, unfortunately, not selected—I was a little doubtful whether it would be possible to draw the line exactly as they proposed, and I confess that I preferred to wait and listen to the arguments. I think that the arguments put up by my hon. Friends and by at least one hon. Member on the other side of the House were extremely powerful ones, and I certainly was not impressed in any way at all by the reply of the Financial Secretary.
    All that he has said is, firstly, that this concession would cost virtually nothing, so we do not have to worry about finance; secondly, he has put up a series of highly specious arguments, with which I will deal in a moment; and, thirdly, he has promised that the Chancellor of the Exchequer will have a look at the whole problem before next year. My hon. Friends had this new Clause on the Order Paper right at the beginning of the Committee stage of the Bill. The hon. Gentleman has had plenty of time to consider the problem. He might, if he had any doubts about the value of this concession to amateur dramatic societies, have got in touch with the British Drama League or similar bodies between the beginning of the Committee stage and today.
    I think that the vague promises which we have been given are a great disappointment and quite inadequate to the situation. There is a genuine enthusiasm
    1124
    in the House, which is evident, for amateur dramatics. It may be, of course, that Members of Parliament are naturally inclined to sympathise with amateur dramatics. Indeed, I see an hon. Member opposite drawing attention to the fact, I suppose, that this is in a sense an amateur entertainment. I use the word "entertainment," Mr. Speaker, in a cultural and educational sense.
    I would add another argument which I think might appeal to the Chancellor of the Exchequer. There is considerable value from dollar earnings obtained by the services of British actors and actresses, and I think that most of us are very proud of the high standard of acting which exists in this country, yet those ladies and gentlemen began their careers as amateurs, even if it was at a very youthful age, and therefore there is every reason for encouraging amateur dramatic societies to the utmost possible extent.
    The Financial Secretary very rightly drew attention to the high standard of acting of the Treasury Dramatic Society, and I am sure that if the Chancellor would take the advice of that particular society he would be strongly in favour of the Amendment. Can we, then, do more for these societies?
    We have been told that this new Clause will really not help at all because if the conductor of an orchestra is off the stage all is well and the benefit of the new Clause is obtained, but if he is on the stage it is not obtained. Why on earth an amateur dramatic society should wish to have a conductor on the stage I do not know. After all, this is intended to encourage amateur dramatics. Similarly with noises off. I can hardly imagine that an amateur dramatic society wishes to employ a professional to make noises off. That is really quite an easy thing for amateurs to do, and perhaps it can be done by mechanical means if there is any difficulty.
    The same argument applies to soloists. An amateur society does not wish to have paid professional soloists on the stage. All the arguments from the other side have been irrelevant. I am sure that my hon. Friends will agree with the arguments, but that does not make any difference to their case, and in view of the answer that we have had I should be disposed in the circumstances to press the matter.
    Mr. Charles Royle: I am sure that, after having listened to the arguments of my hon. and right hon. Friends, the whole House will feel that the Financial Secretary has not been forthcoming on this matter. My only experience of taking part in amateur dramatics was very many years ago, when I took part in Dickens's "Oliver Twist" and played the part of the Artful Dodger.
    Mr. Ellis Smith: No wonder my hon. Friend was made a Whip.
    Mr. Royle: When I listened to the Financial Secretary it seemed to me that the mantle of that character had fallen on his shoulders. Throughout his speech he was dodging. After the arguments put forward by my hon. Friends, to come along with the fatuous arguments which he used and then to say, "We will look at this before another 12 months have transpired," is completely shirking the issue.
    I join my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) in saying that, in view of the way the Financial Secretary has dodged the issued, my hon. Friends will be fully justified in dividing the House and letting us try to put the mater right now at the cost of a mere £10,000 instead of waiting another 12 months.
    Miss Irene Ward: I noticed with interest the alacrity with which the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) jumped on the band wagon. He thought that if a concession was made it would be extremely awkward if he had not been associated with the new Clause.
    I believe that last year or the year before my hon. Friend the Member for Twickenham (Sir E. Keeling) had a similar Amendment on the Order Paper throughout the time the Finance Bill was under discussion, although it was not selected. I am very surprised that the right hon. Gentleman who now wishes to divide the House did not then consider the value of the Amendment put forward by my hon. Friend.
    Mr. MacColl: I must really come to the assistance of my right hon. Friend. My right hon. Friend made it clear that when he saw the proposal on the Order Paper he was doubtful about its wisdom and that it was only after he had had
    1126
    the privilege of hearing myself and one or two of my hon. Friends speak that he swung in favour of it. As he did not have that opportunity on the last occasion, surely that is a conclusive indication of his courage and sincerity.
    Miss Ward: I have no doubt that the right hon. Gentleman is delighted at his hon. Friend's intervention, but if an Amendment was on the Order Paper during the last Finance Bill the right hon. Gentleman could easily have sent for my hon. Friend and asked him what his arguments were in support of his Amendment. The hon. Gentleman's intervention is a very poor one.
    I can very well realise the consternation that the Financial Secretary's intervention has caused among the ranks opposite, because I happen to come from a constituency where we have a large number of amateur societies of a very high quality and I have been asked by my constituents to support this Amendment. I can very well see what the right hon. Gentleman has in mind. He wishes, of course, to divide the House. It is quite obvious that the reception that my hon. Friend has given to this new Clause is not very welcome on the other side of the House.
    I am quite sure when the Government introduce their next Finance Bill my hon. Friend will find a means of embodying in it the principle with which this House agrees. All I can say is that it does not commend itself to the right hon. Gentleman and his Friends. I realise that as soon as they have divided the House the troops will be out all over the country trying to explain that the Conservatives— [Laughter.] I always enjoy the laughter of hon. Gentlemen opposite. When they have got nothing else to do they laugh. Good luck to them.
    The troops will travel around the country to explain to every amateur operatic, ballet and theatrical society that the Conservative Party would not accept this very small amendment of the law. All I can say is that there was more in the speech which has been made by the Financial Secretary tonight than there has ever been from hon. and right hon. Gentlemen opposite.
    Mr. Blenkinsop: Surely the hon. Lady recalls that during the last five years more concessions have been made to amateur dramatic societies than they ever had in their experience?
    Miss Ward: I am delighted to pay tribute to that. We are always delighted when we get a non-party approach to matters of this kind and I was delighted that my hon. Friend the Financial Secretary showed that he has got a broad mind and was willing to consider the terms of the Clause and the idea behind it. I am bound to say that the speech of the right hon. Gentleman was made entirely for political purposes. [HON. MEMBERS: "Oh."] Oh, indeed, yes. I am quite certain of that.
    Mr. Blackburn: Could the hon. Lady tell us whether she is speaking for or against the Clause?
    Miss Ward: I am sorry that the hon. Gentleman has only just come to life. I am not difficult to hear and if he had been listening to what I was saying he would have heard what I said in support of the principle behind the Clause. I do not intend to detain the House any longer. [An HON. MEMBER: "Why not?"] An hon. Member asks, "Why not?" It is my choice, not his. If I wished to continue making a speech, I can assure my hon. Friends that I can speak for a very long time.
    10.0 p.m.
    I could not allow the approach which has been made by the Financial Secretary to this very important matter to pass uncommended and unwelcomed on this side of the House. I look forward to the introduction of the next Finance Bill, when my hon. Friend will, I hope, bring forward an Amendment which will achieve the objective which I am sure the whole House has in mind—to assist all these amateur societies to make the best contribution they can to the very interesting life which the country so appreciates and enjoys.
    Lieut-Colonel Marcus Lipton: The Financial Secretary will have heard with mixed feelings the unexpected reinforcement we have just had from the hon. Lady the Member for Tynemouth (Miss Ward). It will come as a sore blow to the many dramatic societies which exist in Tynemouth that the hon. Lady is quite willing that their future prospects of improvement should be delayed by 12 months and that she is not prepared to do anything at all about the matter now. That is an even
    1128
    greater disappointment to hon. Members on this side of the House, and I hope that in the few moments which remain before the Division takes place she may think better of what she has said and strike a blow for the dramatic societies of Tynemouth which should not be delayed for as long as 12 months.
    I must declare an interest in this matter, because I happen to be the president of an amateur operatic society. Before becoming the honorary president of this society, in the dim and distant past I was also an amateur actor. The society with which I am particularly acquainted does a regular performance of Gilbert and Sullivan operas and for that purpose, in order to ensure their success, an orchestral accompaniment is required. It may come as a surprise to the hon. Lady and to other hon. Members that a Gilbert and Sullivan opera is difficult to produce without an orchestral accompaniment.
    Miss Ward: I wanted to let the hon. and gallant Gentleman know that I was an amateur actress.
    Lieut.-Colonel Lipton: Before any more alarming revelations are made by the hon. Lady I should like to get to the point. The point is that no case whatever has been made out for the postponement of the operation of this Clause. The Financial Secretary has been below his usual level in this matter and has hardly treated the House with the respect to which it is entitled in discussing a matter of this kind.
    I welcomed the statement made by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) that we shall take advantage of this opportunity to expose the lowbrow character of the Government we have at the present time, a Government which not only closes down museums and art galleries but which puts all kinds of niggling and meaningless difficulties in the way of a concession to amateur dramatic societies. I am quite sure that the Financial Secretary will, on reflection, agree that his speech tonight has done nothing to encourage such societies.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 235; Noes, 246.

    Division No. 164.]

    AYES

    [6.46 p.m.

    Acland, Sir Richard

    Foot, M. M

    Mainwaring, W. H.

    Adams, Richard

    Forman, J. C.

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

    Albu, A. H.

    Fraser, Thomas (Hamilton)

    Mann, Mrs. Jean

    Allen, Arthur (Bosworth)

    Freeman, John (Watford)

    Manuel, A. C.

    Allen, Scholefield (Crewe)

    Freeman, Peter (Newport)

    Marquand, Rt. Hon. H. A

    Anderson, Alexander (Motherwell)

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

    Mayhew, C. P.

    Anderson, Frank (Whitehaven)

    Gibson, C. W.

    Mellish, R. J.

    Attlee, Rt. Hon. C. R.

    Glanville, James

    Messer, F.

    Awbery, S. S.

    Gordon Walker, Rt. Hon. P. C

    Mitchison, G. R.

    Ayles, W. H.

    Grenfell, Rt. Hon. D. R-

    Monslow, W.

    Bacon, Miss Alice

    Grey, C. F.

    Moody, A. S.

    Balfour, A.

    Griffiths, David (Rother Valley)

    Morgan, Dr. H. B. W.

    Barnes, Rt. Hon. A. J

    Griffiths, Rt. Hon. James (Llanelly)

    Morley, R.

    Bartley, P.

    Hale, Leslie (Oldham, W.)

    Morris, Percy (Swansea, W.)

    Bellenger, Rt. Hon F. J

    Hall, Rt. Hon. Glenvil (Colne Valley)

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

    Bence, C. R.

    Hall, John (Gateshead, W.)

    Mort, D. L.

    Benn, Wedgwood

    Hamilton, W. W.

    Moyle, A.

    Benson, G.

    Hannan, W.

    Mulley, F. W.

    Beswick, F

    Hardy, E. A.

    Murray, J. D.

    Bing, G. H. C.

    Hargreaves, A.

    Nally, W.

    Blackburn, F.

    Harrison, J. (Nottingham, E.)

    Neal, Harold (Bolsover)

    Blenkinsop, A.

    Hastings, S.

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

    Blyton, W. R.

    Hayman, F. H.

    Oldfield, W. H.

    Boardman, H.

    Healey, Denis (Leeds, S.E.)

    Oliver, G. H.

    Bottomley, Rt. Hon. A. G

    Henderson, Rt. Hon. A (Rowley Regis)

    Orbach, M.

    Braddock, Mrs. Elizabeth

    Herbison, Miss M.

    Oswald, T.

    Brockway, A. F.

    Hobson, C. R.

    Padley, W. E.

    Brook, Dryden (Halifax)

    Holman, P.

    Paling, Rt. Hon. W. (Dearne Valley)

    Broughton, Dr. A. D. D.

    Houghton, Douglas

    Paling, Will T. (Dewsbury)

    Brown, Rt. Hon. George (Belper)

    Hoy, J. H.

    Panned, Charles

    Brown, Thomas (Ince)

    Hudson, James (Ealing, N.)

    Pargiter, G. A.

    Butler, Herbert (Hackney, S.)

    Hughes, Cledwyn (Anglesey)

    Parker, J.

    Callaghan, L J.

    Hughes, Emrys (S. Ayrshire)

    Paton, J.

    Carmichael, J.

    Hughes, Hector (Aberdeen, N.)

    Pearson, A.

    Champion, A. J

    Hynd, H. (Accrington)

    Peart, T. F.

    Chapman, W D

    Hynd, J. B. (Attercliffe)

    Plummer, Sir Leslie

    Chetwynd, G. R

    Irvine, A. J. (Edge Hill)

    Poole, C. C.

    Clunie, J.

    Irving, W. J. (Wood Green)

    Popplewell, E.

    Cocks, F. S.

    Isaacs, Rt. Hon. G A.

    Porter, G.

    Coldrick, W.

    Janner, B.

    Price, Joseph (Westhoughton)

    Collick, P. H

    Jay, Rt. Hon. D. P. T.

    Price. Philips (Gloucestershire, W.)

    Cove, W. G.

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

    Proctor, W. T.

    Craddock, George (Bradford, S.)

    Johnson, James (Rugby)

    Pursey, Cmdr. H.

    Cullen, Mrs. A.

    Johnston, Douglas (Paisley)

    Rankin, John

    Daines, P.

    Jones, Frederick Elwyn (West Ham, S)

    Reid, Thomas (Swindon)

    Dalton, Rt. Hon. H.

    Jones, Jack (Rotherham)

    Reid, William (Camlachie)

    Davies, A. Edward (Stoke, N.)

    Jones, T. W. (Merioneth)

    Rhodes, H.

    Davies, Ernest (Enfield, E.)

    Keenan, W.

    Robens, Rt. Hon. A.

    Davies, Stephen (Merthyr)

    Key, Rt. Hon. C. W

    Roberts, Albert (Normanton)

    de Freitas, Geoffrey

    King, Dr. H. M.

    Roberts, Goronwy (Caernarvonshire)

    Delargy, H. J.

    Kinley, J.

    Rogers, George (Kensington, N.)

    Dodds, N. N.

    Lee, Frederick (Newton)

    Ross, William

    Donnelly, D. L.

    Lever, Harold (Cheetham)

    Royle, C.

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

    Lever, Leslie (Ardwick)

    Schofield, S. (Barnsley)

    Ede, Rt. Hon. J. C.

    Lewis, Arthur

    Shinwell, Rt. Hon. E

    Edelman, M.

    Lindgren, G. S.

    Short, E. W.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Lipton, Lt.-Col. M

    Shurmer, P. L. E.

    Edwards, W. J. (Stepney)

    Logan, D. G.

    Silverman, Julius (Erdrington)

    Evans, Albert (Islington, S.W.)

    MaeColl, J. E.

    Silverman, Sydney (Nelson)

    Evans, Stanley (Wednesbury)

    McGhee, H. G.

    Simmons, C. J. (Brierley Hill)

    Ewart, R.

    McGovern, J.

    Slater, J.

    Fernyhough, E

    McKay, John (Wallsend)

    Smith, Ellis (Stoke, S.)

    Field, W. J.

    McLeavy, F.

    Smith, Norman (Nottingham, S.)

    Follick, M.

    MacPherson, Malcolm (Stirling)

    Snow, J. W

    Sorensen, R. W.

    Turner-Samuels, M.

    Williams, Rev. Llywelyn (Abertillery)

    Soskice, Rt. Hon. Sir Frank

    Ungoed-Thomas, Sir Lynn

    Williams, Ronald (Wigan)

    Sparks, J. A.

    Viant, S. P.

    Williams, Rt. Hon. Thomas (Don V'll'y)

    Stewart, Michael (Fulham, E.)

    Wallace, H. W.

    Williams, W R. (Droylsden)

    Strachey, Rt. Hon J.

    Watkins, T. E.

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

    Summerskill, Rt. Hon. E.

    Weitzman, D.

    Wilson, Rt. Hon. Harold (Huyton)

    Sylvester, G. 0.

    Wells, Percy (Faversham)

    Winterbottom, Richard (Brightside)

    Taylor, Bernard (Mansfield)

    West, D. G

    Woodburn, Rt. Hon. A.

    Taylor, John (West Lothian)

    Wheatley, Rt. Hon. John

    Wyatt, W. L.

    Taylor, Rt. Hon. Robert (Morpeth)

    White, Henry (Derbyshire, N.E.)

    Yates, V. F.

    Thomas, David (Aberdare)

    Whiteley, Rt. Hon. W.

    Thomas, Iorwerth (Rhondda, W.)

    Wilcook, Group Capt. C. A. B.

    TELLERS FOR THE AYES:

    Thomas, Ivor Owen (Wrekin)

    Wilkins, W. A.

    Mr. Bowden and

    Thorneycroft, Harry (Clayton)

    Willey, Octavius (Cleveland)

    Mr. Kenneth Robinson.

    Tomney, F.

    Williams, David (Neath)

    NOES

    Aitken, W T.

    Erroll, F. J

    Legh, P. R (Petersfield)

    Allan, R. A (Paddington, S)

    Fell, A.

    Linstead, H. N.

    Alport, C. J. M.

    Finlay, Graeme

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

    Amery, Julian (Preston, N.)

    Fisher, Nigel

    Lloyd, Maj. Guy (Renfrew, E.)

    Amory, Heathcoat (Tiverton)

    Fleetwood-Hesketh, R. P

    Lockwood, Lt.-Col. J. C.

    Anstruther-Gray, Major W. J.

    Fletcher-Cooke, C.

    Longden, Gilbert (Herts, SW.)

    Arbuthnot, John

    Fort, R.

    Low, A. R. W.

    Ashton, H. (Chelmsford)

    Foster, John

    Lucas, Sir Jocelyn (Portsmouth, S)

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

    Fraser, Hon. Hugh (Stone)

    Lucas, P. B. (Brentford)

    Astor, Hon. J. J. (Plymouth, Sutton)

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Lucas-Tooth, Sir Hugh

    Baldock, Lt.-Cmdr J. M.

    Galbraith, Cmdr. T. D. (Pollok)

    McAdden, S. J.

    Baldwin, A. E.

    Galbraith, T. G. D. (Hillhead)

    Macdonald, Sir Peter (I. of Wight)

    Banks, Col. C

    Gammans, L. D.

    McKibbin, A. J.

    Barber, A. P. L.

    George, Rt. Hon. Maj. G. Lloyd

    McKie, J. H. (Galloway)

    Barlow, Sir John

    Godber, J. B.

    Maclean, Fitzroy

    Baxter, A. B.

    Gomme-Duncan, Col. A

    MacLeod, Rt. Hon. Iain (Enfield, W.)

    Beach, Maj. Hicks

    Gough, C. F. H

    MacLeod, John (Ross and Cromarty)

    Beamish, Maj. Tufton

    Gower, H. R.

    Macmillan, Rt. Hon. Harold (Bromley)

    Bell, Philip (Bolton, E.)

    Graham, Sir Fergus

    Macpherson, Maj. Niall (Dumfries)

    Bell, Ronald (Bucks, S.)

    Gridley, Sir Arnold

    Maitland, Patrick (Lanark)

    Bennett, F. M. (Reading, N.)

    Grimond, J.

    Manningham-Buller, Sir R. E.

    Bennett, Sir Peter (Edgbaston)

    Grimston, Hon. John (St. Albans)

    Markham, Major S. F

    Bennett, Dr. Reginald (Gosport)

    Grimston, Sir Robert (Westbury)

    Marshall, Douglas (Bodmin)

    Bennett, William (Woodside)

    Hare, Hon. J. H.

    Marshall, Sir Sidney (Sutton)

    Bevins, J. R. (Toxteth)

    Harris, Frederic (Croydon, N.)

    Maudling, R.

    Birch, Nigel

    Harris, Reader (Heston)

    Medlicott, Brig. F.

    Bishop, F. P.

    Harrison, Col. J. H. (Eye)

    Mellor, Sir John

    Black, C. W.

    Harvey, Air Cdre. A. V. (Macclesfield)

    Molson, A. H. E

    Boothby, R. J. G

    Harvey, Ian (Harrow, E.)

    Mott-Radclyffe, C E

    Bowen, E. R.

    Harvie-Watt, Sir George

    Nabarro, G. D. N

    Boyd-Carpenter, J. A.

    Hay, John

    Nicholls, Harmar

    Boyle, Sir Edward

    Heald, Sir Lionel

    Nicholson, Godfrey (Farnham)

    Braine, B. R.

    Heath, Edward

    Nicolson, Nigel (Bournemouth, E.)

    Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)

    Henderson, John (Cathcart)

    Nield, Basil (Chester)

    Bromley-Davenport, Lt.-Col. W. H.

    Higgs, J. M. C.

    Noble, Cmdr. A. H. P.

    Brooke, Henry (Hampstead)

    Hill, Mrs. E. (Wythenshawe)

    Nugent, G. R. H

    Browne, Jack (Govan)

    Hinchingbrooke, Viscount

    Nutting, Anthony

    Buchan-Hepburn, Rt Hon P. G T

    Hirst, Geoffrey

    Odey, G. W.

    Bullard, D. G.

    Holland-Martin, C J

    O'Neill, Rt. Hon. Sir H. (Antrim, N.)

    Bullock, Capt. M.

    Hollis, M. C.

    Orr, Capt, L. P. S.

    Bullus, Wing Commander E. E.

    Holmes, Sir Stanley (Harwich)

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

    Burden, F. F. A

    Holt, A. F

    Osborne, C.

    Butcher, H. W.

    Hope, Lord John

    Partridge, E.

    Butler, Rt Hon. R A. (Saffron Walden)

    Hornsby-Smith, Miss M. P.

    Peake, Rt. Hon. O

    Carson, Hon. E.

    Horobin, I. M.

    Peto, Brig. C. H. M.

    Cary, Sir Robert

    Horsbrugh, Rt. Hon. Florence

    Pickthorn, K. W M.

    Clarke, Col. Ralph (East Grinstead)

    Howard, Greville (St. Ives)

    Pilkington, Capt. R. A

    Cole, Norman

    Hudson, Sir Austin (Lewisham, N)

    Pitman, I. J.

    Conant, Maj. R. J. E.

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

    Powell, J. Enoch

    Cooper, Sqn. Ldr. Albert

    Hurd, A. R.

    Price, Henry (Lewisham, W)

    Craddock, Beresford (Spelthorne)

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Prior-Palmer, Brig. O. L.

    Cranborne, Viscount

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

    Profumo, J. D.

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

    Hyde, Lt.-Col. H. M.

    Raikes, H. V.

    Crosthwaite-Eyre, Col. 0. E

    Hylton-Foster, H B. H

    Redmayne, M.

    Crouch, R. F.

    Jenkins, Robert (Dulwich)

    Remnant, Hon. P.

    Crowder, Sir John (Finchley)

    Jennings, R.

    Renton, D. L. M.

    Crowder, Petre (Ruislip—Northwood)

    Johnson, Eric (Blackley)

    Robertson, Sir David

    Darling, Sir William (Edinburgh, S.)

    Johnson, Howard (Kemptown)

    Robson-Brown, W

    Deedes, W F.

    Jones, A. (Hall Green)

    Rodgers, John (Sevenoaks)

    Dodds-Parker, A. D.

    Joynson-Hicks, Hon. L W

    Roper, Sir Harold

    Doughty, C. J. A.

    Kaberry, D.

    Ropner, Col. Sir Leonard

    Drewe, C.

    Kerr, H. W. (Cambridge)

    Ryder, Capt. R. E. D.

    Dugdale, Maj. Rt. Hn. Sir T.(Richmond)

    Lambert, Hon. G.

    Salter, Rt. Hon. Sir Arthur

    Duncan, Capt. J. A. L

    Lambton, Viscount

    Sandys, Rt. Hon. D.

    Duthie, W. S.

    Lancaster, Col. C. G.

    Savory, Prof. Sir Douglas

    Eccles, Rt. Hon. D M

    Legge-Bourke, Maj. E. A. H

    Schofield, Lt.-Col. W. (Rochdale)

    1068

    1069

    Scott, R. Donald

    Taylor, Charles (Eastbourne)

    Wakefield, Sir Wavell (Marylebone)

    Scott-Miller, Cmdr. R.

    Taylor, William (Bradford, N.)

    Walker-Smith, D. C.

    Shepherd, William

    Teeling, W.

    Ward, Hon. George (Worcester)

    Simon, J. E. S. (Middlesbrough, W.)

    Thomas, P. J. M. (Conway)

    Ward, Miss I. (Tynemouth)

    Smiles, Lt.-Col. Sir Walter

    Thompson, Kenneth (Walton)

    Watkinson, H. A.

    Smithers, Peter (Winchester)

    Thompson, Lt.-Cdr. R. (Croydon, W.)

    Webbe, Sir H. (London & Westminster)

    Smithers, Sir Waldron (Orpington)

    Thorneycroft, Rt. Hn. Peter (Monmouth)

    Wellwood, W.

    Soames, Capt. C.

    Thornton-Kemsley, Col. C. N.

    White, Baker (Canterbury)

    Spearman, A. C. M.

    Tilney, John

    Williams, Rt. Hon. Charles (Torquay)

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

    Touche, Sir Gordon

    Wiliams, Gerald (Tonbridge)

    Spens, Sir Patrick (Kensington, S.)

    Turner, H. F. L.

    Williams, Sir Herbert (Croydon, E.)

    Stevens, G. P.

    Turton, R. H.

    Williams, R. Dudley (Exeter)

    Stottdart-Scott, Col. M

    Tweedsmuir, Lady

    Wills, G.

    Storey, S.

    Vane, W. M. F.

    Wilson, Geoffrey (Truro)

    Strauss, Henry (Norwich, S.)

    Vaughan-Morgan, J. K.

    Wood, Hon. R.

    Stuart, Rt. Hon. James (Moray)

    Vosper, D. F.

    Summers, G. S.

    Wade, D. W.

    TELLERS FOR THE NOES:

    Sutcliffe, H.

    Wakefield, Edward (Derbyshire, W.)

    Mr. Studholme and Mr. Oakshott.

    Division No. 165.]

    AYES

    [10.7 p.m.

    Acland, Sir Richard

    Griffiths, Rt Hon James (Llanelly)

    Paling, Will T. (Dewsbury)

    Adams, Richard

    Grimond, J.

    Pannell, Charles

    Albu, A. H.

    Hall, Rt. Hon. Glenvil (Coins Valley)

    Pargiter, G A.

    Allen, Arthur (Bosworth)

    Hall, John (Gateshead, W.)

    Parker, J

    Allen, Scholefield (Crewe)

    Hamilton, W W

    Paton, J.

    Anderson, Alexander (Motherwell)

    Hannan, W.

    Peart, T. F.

    Attlee, Rt. Hon. C. ft

    Hardy, E A.

    Plummer, Sir Leslie

    Awbery, S. S.

    Hargreaves, A.

    Porter, G.

    Bacon, Miss Alice

    Harrison, J. (Nottingham, E)

    Price, Joseph T. (Westhoughton)

    Balfour, A.

    Hayman, F. H.

    Price, Philips (Gloucestershire, W.)

    Barnes, Rt. Hon. A. J

    Healey, Denis (Leeds, S.E.)

    Proctor, W. T.

    Bellenger, Rt. Hon. F. J

    Henderson, Rt. Hon. A (Rowley Regis)

    Pursey, Cmdr. H

    Bence, C. R.

    Herbison, Miss M.

    Rankin, John

    Benn, Wedgwood

    Hobson, C. R.

    Reid, Thomas (Swindon)

    Benson, G.

    Holman, P.

    Rhodes, H.

    Beswick, F.

    Holt, A. F

    Robens, Rt. Hon A.

    Bing, G. H. C.

    Houghton, Douglas

    Roberts, Albert (Normanton)

    Blackburn, F.

    Hoy, J. H.

    Roberts, Goronwy (Caernarvonshire)

    Blenkinsop, A

    Hudson, James (Ealing, N.)

    Robinson, Kenneth (St. Pancras, N.)

    Blyton, W. R.

    Hughes, Emrys (S, Ayrshire)

    Rogers, George (Kensington, N.)

    Boardman, H.

    Hughes, Hector (Aberdeen, N.)

    Ross, William

    Bottomley, Rt. Hon. A. G

    Hynd, H. (Accrington)

    Royle, C.

    Bowden, H. W.

    Hynd, J. B. (Attercliffe)

    Schofield, S (Barnsley)

    Bowen, E. R.

    Irvine, A. J. (Edge Hill)

    Shinwell, Rl. Hon E

    Braddock, Mrs. Elizabeth

    Irving, W. J. (Wood Green)

    Short, E. W.

    Brockway, A. F.

    Isaacs, Rt. Hon. G. A

    Shurmer, P. L. E

    Brook, Dryden (Halifax)

    Janner, B.

    Silverman, Julius (Erdington)

    Broughton, Dr. A. D. D.

    Jay, Rt. Hon. D. P. T.

    Simmons, C. J (Brierley Hill)

    Brown, Thomas (Ince)

    Jeger, George (Goole)

    Slater, J.

    Burton, Miss F. E

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

    Smith, Ellis (Stoke, S)

    Butler, Herbert (Hackney, S.)

    Johnson, James (Rugby)

    Smith, Norman (Nottingham, S)

    Callaghan, L. J.

    Johnston, Douglas (Paisley)

    Snow, J. W

    Carmichael, J.

    Jones, David (Hartlepool)

    Sorsnsen, R. W

    Castle, Mrs. B. A.

    Jones, Frederick Elwyn (West Ham, S.)

    Soskice, Rt. Hon Sir Frank

    Champion, A. J.

    Jones, Jack (Rotherham)

    Sparks, J. A.

    Chapman, W D.

    Jones, T. W. (Merioneth)

    Stewart, Michael (Fulham, E.)

    Chetwynd, G. R

    Keenan, W

    Strachey, Rt. Hon J.

    Clunie, J.

    Kenyon, C.

    Strauss, Rt. Hon George (Vauxhall)

    Coldrick, W

    Key, Rt. Hon. C. W.

    Summerskill, Rt. Hon. E

    Collick, P. H.

    King, Dr. H. M.

    Sylvester, G. O.

    Cove, W. G.

    Kinley, J.

    Taylor, Bernard (Mansfield)

    Craddock, George (Bradford, S)

    Lee, Frederick (Newton)

    Taylor, John (West Lothian)

    Cullen, Mrs. A

    Lever, Leslie (Ardwick)

    Taylor, Rt. Hon. Robert (Morpeth)

    Daines, P.

    Lewis, Arthur

    Thomas, David (Aberdare)

    Dalton, Rt. Hon H.

    Lindgren, G. S.

    Thomas, George (Cardiff)

    Darling, George (Hillsborough)

    Lipton, Lt.-Col. M

    Thomas, Iorwerth (Rhondda, W)

    Davies, A. Edward (Stoke, N.)

    Logan, D. G.

    Thomas, Ivor Owen (Wrekin)

    Davies, Ernest (Enfield, E.)

    MacColl, J. E.

    Tomney, F.

    Davies, Harold (Leek)

    McGhee, H. G.

    Turner-Samuels, M.

    Davies, Stephen (Merthyr)

    McGovern, J.

    Ungoed-Thomas, Sir Lynn

    de Freitas, Geoffrey

    McKay, John (Wallsend)

    Viant, S. P.

    Delargy, H. J.

    McLeavy, F.

    Wade, D. W.

    Dodds, N. N.

    McNeil, Rt. Hon. H.

    Wallace, H. W

    Donnelly, D. L.

    MacPherson, Malcolm (Stirling)

    Watkins, T. E

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

    Mainwaring, W. H.

    Weitzman, D.

    Ede, Rt. Hon. J. C

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

    Wells, William (Walsall)

    Edelman, M.

    Mann, Mrs. Jean

    West, D. G.

    Edwards, John (Brighouse)

    Manuel, A. C.

    Wheatley, Rt. Hon John

    Edwards, fit. Hon. Ness (Caerphilly)

    Marquand, Rt. Hon. H. A

    White, Henry (Derbyshire, N.E)

    Edwards, W. J. (Stepney)

    Mayhew, C. P.

    Whiteley, Rt. Hon W

    Evans, Albert (Islington, S.W.)

    Mitchison, G. R.

    Wigg, George

    Evans, Edward (Lowestoft)

    Monslow, W.

    Wilcock, Group Capt. C.A.B

    Evans, Stanley (Wednesbury)

    Moody, A. S.

    Wilkins, W. A.

    Ewart, R.

    Morgan, Dr. H. B W

    Willey, Frederick (Sunderland, N.)

    Fernyhough, E.

    Morley, R.

    Willey, Octavius (Cleveland)

    Field, W. J.

    Morris, Percy (Swansea, W.)

    Williams, David (Neath)

    Finch, H. J.

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

    Williams, Rev. Llywelyn (Abertillery)

    Follick, M.

    Mort, D. L.

    Williams, Ronald (Wigan)

    Foot, M. M.

    Moyle, A.

    Williams, Rt. Hon. Thomas (Don V'll'y)

    Forman, J, C.

    Mulley, F. W.

    Williams, W. R. (Droylsden)

    Fraser, Thomas (Hamilton)

    Murray, J. D.

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

    Freeman, John (Watford)

    Nally, W.

    Wilson, Rt. Hon. Harold (Huyton)

    Freeman, Peter (Newport)

    Neal, Harold (Bolsover)

    Winterbottom, Richard (Brightside)

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

    Oldfield, W H.

    Woodburn, Rt. Hon A

    Gibson, C. W.

    Oliver, G. H.

    Wyatt, W. L.

    Gordon Walker, Rt. Hon. P. C

    Orbach, M.

    Yates, V. F.

    Grenfell, Rt. Hon. D. R.

    Oswald, T.

    Younger, Rt. Hon. K.

    Grey, C. F.

    Padley, W. E.

    Griffiths, David (Rother Valley)

    Paling, Rt. Hon W. (Dearne Valley)

    TELLERS FOR THE AYES:

    Mr. Pearson and Mr. Popplewell.

    1130

    1131

    NOES

    Aitken, W. T.

    Graham, Sir Fergus

    Oakshott, H. D.

    Allan, R. A. (Paddington, S.)

    Gridley, Sir Arnold

    Odey, G. W.

    Amery, Julian (Preston, N.)

    Grimston, Hon. John (St. Albans)

    O'Neill, Rt. Hon. Sir H (Antrim, N.)

    Amory, Heathcoat (Tiverton)

    Grimston, Sir Robert (Westbury)

    Ormsby-Gore, Hon. W. D.

    Anstruther-Gray, Major W. J

    Harris, Frederic (Croydon, N.)

    Orr, Capt. L. P. S.

    Arbuthnot, John

    Harris, Reader (Heston)

    Orr-Ewing, Chares Ian (Hendon, N)

    Ashton, H. (Chelmsford)

    Harrison, Col. J. H. (Eye)

    Osborne, C.

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

    Harvey, Air Cdre. A. V. (Macclesfield)

    Partridge, E.

    Astor, Hon. J. J. (Plymouth, Sutton)

    Harvey, Ian (Harrow, E)

    Peake, Rt. Hon. O

    Astor, Hon. W. W. (Bucks, Wycombe)

    Hay, John

    Peto, Brig. C. H. M.

    Baldwin, A. E.

    Heald, Sir Lionel

    Peyton, J. W. W.

    Banks, Col. C.

    Heath, Edward

    Pickthorn, K. W. M.

    Barber, A. P. L.

    Henderson, John (Cathcart)

    Pilkington, Capt. R A

    Barlow, Sir John

    Higgs, J. M. C.

    Pitman, I. J.

    Baxter, A. B.

    Hill, Dr. Charles (Luton)

    Powell, J. Enoch

    Beach, Maj. Hicks

    Hill, Mrs. E. (Wythenshawe)

    Price, Henry (Lewisham, W)

    Beamish, Maj. Tufton

    Hinchingbrooke, Viscount

    Prior-Palmer, Brig, 0. L.

    Bell, Philip (Bolton, E.)

    Hirst, Geoffrey

    Profumo, J. D.

    Bell, Ronald (Bucks, S.)

    Holland-Martin, C. J.

    Raikes, H. V.

    Bennett, F. M. (Reading, N.)

    Hollis, M. C.

    Redmayne, E.

    Bennett, Sir Peter (Edgbaston)

    Hope, Lord John

    Remnant, Hon. P.

    Bennett, Dr. Reginald (Gosport)

    Hopkinson, Henry

    Renton, D. L. M.

    Bennett, William (Woodside)

    Hornsby-Smith, Miss M. P.

    Roberts, Peter (Heeley)

    Bevins, J. R. (Toxteth)

    Horobin, I. M.

    Robertson, Sir David

    Birch, Nigel

    Horsbrugh, Rt. Hon. Florence

    Rodgers, John (Sevenoaks)

    Bishop, F. P.

    Howard, Greville (St. Ives)

    Roper, Sir Harold

    Black, C. W.

    Hudson, Sir Austin (Lewisham, N)

    Ropner, Col. Sir Leonard

    Bossom, A. C.

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

    Russell, R. S.

    Boyd-Carpenter, J. A.

    Hurd, A. R.

    Ryder, Capt. R. E. D.

    Boyle, Sir Edward

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Salter, Rt. Hon. Sir Arthur

    Braine, B. R.

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

    Savory, Prof. Sir Douglas

    Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)

    Hyde, Lt.-Col. H. M.

    Scholfield, Lt.-Col. W. (Rochdale)

    Bromley-Davenport, Lt.-Col. W. H.

    Hylton-Foster, H. B. M,

    Scott, R. Donald

    Brooke, Henry (Hampstead)

    Jenkins, Robert (Dulwich)

    Scott-Miller, Cmdr. R.

    Brooman-White, R C.

    Johnson, Eric (Blackley)

    Simon, J. E. S. (Middlesbrough, W.)

    Buchan-Hepburn, Rt. Hon. P. G. I.

    Johnson, Howard (Kemptown)

    Smithers, Peter (Winchester)

    Bullard, D. G.

    Jones, A. (Hall Green)

    Smithers, Sir Waldron (Orpington)

    Bullock, Capt. M.

    Joynson-Hicks, Hon. L. W

    Soames, Capt. C

    Bullus, Wing Commander E. E.

    Kaberry, D

    Spearman, A. C. M.

    Burden, F. F. A.

    Kerr, H. W. (Cambridge)

    Speir, R. M.

    Butcher, H. W.

    Lambert, Hon. G.

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

    Butler, Rt. Hon. R A. (Saffron Walden)

    Lambton, Viscount

    Spens, Sir Patrick (Kensington, S.)

    Carson, Hon. E.

    Lancaster, Col. C. G.

    Stevens, G. P.

    Cary, Sir Robert

    Langford-Holt, J. A.

    Stoddart-Scott, Col M

    Channon, H.

    Legge-Bourke, Maj E. A. H.

    Storey, S.

    Churchill, Rt. Hon. W. S.

    Legh, P. R. (Petersfield)

    Strauss, Henry (Norwich, S.)

    Clarke, Col. Ralph (East Grinstead)

    Lennox-Boyd, Rt. Hon. A. T.

    Stuart, Rt. Hon. James (Moray)

    Cole, Norman

    Lindsay, Martin

    Summers, G. S.

    Conant, Maj. R. J. E.

    Linstead, H. N

    Sutcliffe, H.

    Cooper, Sqn. Ldr. Albert

    Lloyd, Maj. Guy (Renfrew, E.)

    Taylor, Charles (Eastbourne)

    Craddock, Beresford (Spelthorne)

    Lockwood, Lt.-Col. J. C

    Taylor, William (Bradford, N.)

    Cranborne, Viscount

    Longden, Gilbert (Herts, S.W.)

    Teeling, W.

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

    Low, A. R. W.

    Thomas, P. J. M. (Conway)

    Crosthwaite-Eyre, Col. O. E

    Lucas, Sir Jocelyn (Portsmouth, S)

    Thompson, Kenneth (Walton)

    Crouch, R. F.

    Lucas, P. B. (Brentford)

    Thompson, Lt.-Cdr. R. (Croydon, W.)

    Crowder, Petre (Ruislip—Northwood)

    Lucas-Tooth, Sir Hugh

    Thorneycroft, Rt. Hn. Peter (Monmouth)

    Darling, Sir William (Edinburgh, S.)

    McAdden, S. J.

    Thornton-Kemsley, Col. C. N.

    Deedes, W. F.

    Macdonald, Sir Peter (I. of Wight)

    Tilney, John

    Dodds-Parker, A. D

    McKibbin, A. J.

    Touche, Sir Gordon

    Doughty, C. J. A.

    McKie, J. H. (Gailoway)

    Turner, H. F. L

    Drayson, G. B.

    Maclean, Fitzroy

    Turton, R. H.

    Dugdale, Maj. Rt. Hn. Sir T (Richmond)

    MacLeod, Rt. Hon Iain (Enfield, W.)

    Tweedsmuir, Lady

    Duncan, Capt. J. A. L.

    Macmillan, Rt. Hon. Harold (Bromley)

    Vane, W. M. F.

    Duthie, W. S.

    Macpherson, Maj. Niall (Dumfries)

    Vaughan-Morgan, J. K.

    Eccles, Rt. Hon. D. M

    Maitland, Patrick (Lanark)

    Vosper, D. F.

    Erroll, F. J.

    Manningham-Buller, Sir R. E.

    Wakefield, Edward (Derbyshire, W.)

    Fell, A.

    Markham, Major S. F.

    Wakefield, Sir Wavell (Marylebone)

    Finlay, Graeme

    Marshall, Douglas (Bodmin)

    Walker-Smith, D. C.

    Fisher, Nigel

    Marshall, Sir Sidney (Sutton)

    Ward, Hon. George (Worcester)

    Fleetwood-Hesketh, R F.

    Maudling, R.

    Ward, Miss I. (Tynemouth)

    Fletcher-Cooke, C.

    Maydon, Lt -Comdr S L. C

    Waterhouse, Capt. Rt. Hon. C.

    Fort, R.

    Medlicott, Brig. F

    Webbe, Sir H (London & Westminster)

    Fraser, Hon. Hugh (Stone)

    Mellor, Sir John

    Wellwood, W.

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Molson, A. H. E

    White, Baker (Canterbury)

    Galbraith, T. G. D. (Hillhead)

    Morrison, John (Salisbury)

    Williams, Rt. Hon Charles (Torquay)

    Gammans, L. D.

    Molt-Radclyffe, C E

    Williams, Sir Herbert (Croydon, E)

    Garner-Evans, E. H

    Nabarro, G. D. N.

    Williams, R. Dudley (Exeter)

    George, Rt. Hon. Maj. G. Lloyd

    Nicholls, Harmar

    Wills, G.

    Glyn, Sir Ralph

    Nicholson, Godfrey (Farnham)

    Wilson, Geoffrey (Truro)

    Godber, J. B.

    Nicolson, Nigel (Bournemouth, E)

    Wood, Hon. R.

    Gomme-Duncan, Col. A.

    Nield, Basil (Chester)

    Gough, C. F H.

    Noble, Comdr, A. H P

    TELLERS FOR THE NOES:

    Gower, H. R,

    Nugent, G. R. H

    Mr. Drewe and Mr. Studholme

    New Clause—(RELIEF FROM TAX IN RESPECT OF PAYMENTS TO LOCAL AUTHORITIES AND BUILDING SOCIETIES.)
    (1) Subject to the provisions of subsection (4) hereof if any claimant has borrowed money on mortgage from a local authority or building society, the principal whereof is repayable by periodical instalments extending over a term of not less than ten years, he shall be entitled upon proof of payment of any instalment to a deduction from the amount of income tax with which he is chargeable equal to tax at two-fifths of the standard rate on the amount of the instalment.
    (2) The instalment referred to in subsection (1) of this section is any instalment of capital repaid by the claimant in respect of the said mortgage.
    (3) Where an instalment is paid by a wife out of her separate estate in respect of money borrowed by her on mortgage, the same relief shall be given as if the instalment were an instalment paid by her husband in respect of money borrowed by him on mortgage and this section shall apply accordingly.
    (4)Any reference to an amount, tax on which falls to be deducted under this section, hall in relation to an instalment in which by virtue of this section a deduction falls to be made at two-fifths of the standard rate, be construed as a reference to two-fifths of the amount of the instalment.
    (5)This section shall only apply to a mortgage where it has been shown to the satisfaction of the Commissioners that the money borrowed has been or is being used by the borrower for the purchase or erection of a house for his occupation thereof.—[Mr. Erroll.]
    Brought up, and read the First time.
    Mr. F. J. Erroll: I beg to move, "That the Clause be read a Second time."
    This Clause seeks to provide a modest relief to those who are making payments to local authorities and to building societies in respect of house purchase. Many classes of home occupiers are receiving a benefit in the matter of their dwelling. Those who are fortunate enough
    1070
    to live in rent-restricted properties are getting all the benefits of the restriction of their rents to the pre-war level.
    Those who live in council houses, particularly those council houses which were built after the war, are given the benefit not only of certain subsidies from the local rates but, of course, the equally important Treasury subsidy supplied for the construction of their houses—a subsidy which has recently been increased so as to offset the increased burden of the higher money rates.
    There is one very important class of home occupier who is receiving no such benefit, namely, the would-be home owner. The person who wishes to own his own house has to carry personally the full extra burden of the increased money rates now in force. In fact, it is clearly becoming very difficult indeed for younger married couples to be able to afford to own a home of their own because the charges involved are so considerable. They alone will receive no relief at all from the Treasury or the Exchequer.
    I feel that this new Clause, which is, as I shall explain in a little more detail, designed to give them a measure of relief, should be welcomed by my hon. Friends on this side of the House since we are such fanatical believers in a property-owning democracy. We should live up to our aims and help where possible those who are trying and are anxious to own homes of their own.
    It is rightly accepted that all forms of transfer of income to capital shall only be out of income after it has been taxed. It might therefore be argued that the repayments of a local authority loan or a building society advance should be made wholly out of the taxed income. But there is one most important exception in this field—in the matter of assurance

    1071
    policies. One may get an important tax relief on endowment assurance policies, which is, in fact, a means of giving income relief to all those who wish to save a capital sum.
    One even hears it said that the only possible way to save is by means of an assurance policy because of the tax relief which one gets on the insurance premiums. My Clause seeks to extend this relief to an extent equal only to the capital portions of the repayments of building society advances and local authority loans. That is putting a person who wishes to accumulate capital in the form of a home of his own on exactly the same footing as a person who wishes to accumulate a capital sum by means of an endowment assurance policy.
    Each building society repayment comprises two elements—an interest payment and a portion of capital repayment. Although the annual sum may be the same throughout the period of the arrangement with the building society, the amount of the interest payment naturally diminishes each year as the amount of the capital repayment increases. The fact, however, that the proportions vary from year to year need not and, indeed, does not alter the principle behind my Clause, which is to make the capital portion of the repayments eligible for tax relief on the same basis as that at present allowed in respect of life assurance premiums.
    The interest portion of the payment is, of course, already tax relieved by a system of accounting which will be familiar to my right hon. Friend or to my hon. Friend who is to reply. Indeed, in certain cases it already pays an individual to purchase a house by instalments by the purchase of an endowment assurance policy, which he pays over a period of years, the tax relief being sufficient to give him an advantage over purchasing the house in the ordinary direct way, by means of a building society advance or a local authority loan.
    Mr. Houghton: That depends on the rate of tax which he is liable to pay.
    Mr. Erroll: I fully appreciate that, and while I do not propose to burden the House with detailed examples I have worked out my examples on the basis
    1072
    that a person is paying the standard rate or a lower rate. I am not proposing in this Clause to give any additional relief to a Surtax payer, for example, nor to give anyone a relief greater than he would get if he was putting aside each month or year the same sum to accumulate in an endowment assurance policy.
    7.0 p.m.
    Mr. Glenvil Hall: But the hon. Gentleman's new Clause does not place that same limit on someone who gets this relief. There is no limit here, as there is in the case of endowment policies.
    Mr. Erroll: I think it will be found that the limit is adequately covered by subsection (4). That was certainly my intention, and if it is not adequately covered, and if the new Clause is accepted by the Government, I am quite sure that the Government draftsmen will so modify the subsection as to take care of that point.
    I want to refer in particular to subsection (5) because I am anxious that this Clause, if it is accepted, should not apply to other forms of building society transactions, namely, those covering commercial and industrial property. I intend the Clause to apply only to those who wish to own homes of their own and who seek to do so by taking advantage of local authority loans or building society advances.
    I hope that my hon. Friend can accept the Clause and thus afford a real measure of relief to those who wish to own their own homes, and so help to bring about a further stage in the property-owning democracy which we all so much desire.
    Mr. Black: I beg to second the Motion.
    I want at the outset to declare an interest in as much as I am a director of a building society and also a director of an insurance company. As my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) has pointed out, the purpose of this Clause is to provide an incentive for saving and for the specialised form of saving which I suggest is a type which the House ought to encourage— namely, the saving which is represented by the purchase of a home by a family for its own occupation.
    It is not my intention to develop the general argument, because my hon. Friend has done that admirably already, and I

    1073
    want to detain the House for only a few minutes to give two examples to illustrate the extraordinary results which arise from the fact that, under the present law, this tax concession is granted in the case of insurance company premiums but no similar or corresponding concession is made in the case of capital sums repaid on building society or local authority loans.
    I assume, for the purpose of the example which I shall give to the House, what I think would be agreed is a typical case—that of a man, 30 years of age, who wishes to borrow £2,000 for the purchase of a home. The current rate of interest is 4½ per cent., and he has to choose between taking out a mortgage repayable by an endowment policy on his life or, alternatively, taking out a normal building society mortgage with repayments periodically of capital and interest. In each case I assume the life of the mortgage as being 20 years.
    In the case of a mortgage which is to be repaid by means of an endowment policy on the purchaser's life, in the circumstances which I have indicated the total payments that he would make over the life of the mortgage, both as interest on the principal money and the insurance premiums which he would pay, would amount to £3,615, but the Income Tax relief on the interest factor is £855 and the Income Tax relief on the insurance premium factor is £345, making a total Income Tax relief of £1,200. If that is deducted from the gross payments of £3,615 it leaves a net cost of £2,415. That is the net cost in the case of an endowment mortgage.
    If he chooses the other alternative of a normal building society mortgage, repayable by instalments which include interest and capital, these are the corresponding figures. The total gross payments which he makes are £3,080—a smaller amount than in the case of the first example. The tax relief which he is allowed on the interest content of the repayments is £514, so that his net payments, after tax relief is allowed, amount to £2,566.
    Thus we have what I seriously suggest is the ludicrous position that a man who forgoes the advantage of life insurance in connection with his mortgage, and who repays his mortgage over a period of 20 years by the conventional building
    1074
    society or local authority method, pays, over the period of 20 years, £2,566, or exactly £151 more than the man who buys the next door house through an endowment policy and who has all the advantages of the first man, with the additional advantage that if he dies after the first instalment has been paid the whole debt is cleared by means of the insurance policy and the property, unencumbered and freed from debt, remains for the benefit of his wife and family.
    Mr. Houghton: In that case, perhaps the hon. Gentleman will tell us how his building society gets any business.
    Mr. Black: I think it would be wholly inappropriate to endeavour to answer that intervention, although I should be very glad to see the hon. Member, for Sowerby (Mr. Houghton) on another occasion elsewhere, when I will endeavour to enlighten him about it.
    Quite seriously, if I may return to the argument which I was developing—and I am about to conclude—it is ludicrous that the operation of the present system, whereby a tax concession is granted in the case of the endowment mortgage on the life insurance premiums, but no tax concession is granted in the case of the repayments of capital on a normal mortgage, should bring about the result that the man who insures his life, in connection with the purchase of his home, has the benefit of the life insurance and, in addition, pays a very much smaller sum in order to have that benefit.
    Mr. Sydney Silverman: I think the hon. Gentleman is making a very attractive case indeed, but there are two questions I want to ask. Could not the matter be put right without legislation if only the people who borrowed money from building societies took out endowment policies as well? Secondly, and while I am on my feet, if the Government were to accept his proposal would not the effect be to discourage people from taking out endowment policies?
    Mr. Black: The answer, quite briefly, is that there are a great many people who, on account of age or ill-health, cannot secure life cover, so that the penalty for their ill-health is the fact that not only can they not get life cover, and not only do they forgo the benefit of the life cover,

    1075
    but, in the illustration I have given, it costs them £151 more to buy their home than in the case of the other man.
    Mr. Silverman: The hon. Gentleman took as his illustration a young man aged 30. Age and infirmity would not prevent him from paying life cover.
    Mr. Black: There are a great many men of 30 who cannot get cover for life purposes because of some incapacity, perhaps arising from war service. I submit that the main theme which I am putting before the House remains unshaken, that it is ludicrous that there should be this disadvantage to a man who buys his home by one method which does not pertain in the case of a similar and corresponding transaction carried out by means of an endowment policy. The only way in which this obvious justice— as I contend it is—can be rectified is by acceptance of the formula contained in the new Clause, or some similar formula —namely, to extend to the case of the other type of mortgage the tax concession which is extended in the case of the endowment mortgage.
    Mr. Boyd-Carpenter: My hon. Friend the Member for Altrincham and Sale (Mr. Erroll) put down this proposal on the Committee stage when he did not have the good fortune, on which I congratulate him today, of having to find favour in the eyes of the Chair. He has also been good enough to write to my right hon. Friend the Chancellor and give him the advantage of his views upon this somewhat difficult subject. Thanks, therefore, to that concatenation of events, my right hon. Friend has had rather more opportunity than is sometimes the case with these Clauses to go carefully into the merits of what I think most hon. Members will agree is a matter that is not wholly free from difficulty.
    With the general purposes of this Clause I hope I do not need to say that I am wholly in accord. It is desirable, on the highest social grounds, that no undue difficulty should be put in the way of those who desire to have a house of their own. That is a purpose which certainly appeals to hon. Members on this side of the House. However, the matter goes a good deal further than that, and some of the proposals of my hon. Friends give rise to considerable practical difficulties.
    1076
    The hon. Member for Wimbledon (Mr. Black), in an agreeable speech, drew an analogy between the position in respect of mortgages and in respect of life insurance premiums. It is the case I think, from a study of the terms of this Clause, that my hon. Friends have attempted to model the draft of it upon, mutatis mutandis, the life insurance provisions.
    It is true that there is some degree of anomaly where an attempt is made to purchase a house through the machinery of life insurance. However, I do not know that the analogy between the two forms of saving is, in general, quite as close as my hon. Friends were suggesting. In the first place, there is the fact that the life insurance provision is a very old one. I am inclined to think 'that in strict principle it is probably anomalous to attach a particular kind of tax concession to a particular kind of saving. Be that as it may, it is the fact that insurance in this context is a permanent form of saving. Indeed, there must be, to attract the concession at all, some provision in the policy for a payment to be made on death.
    Therefore, though it may sound paradoxical to describe as permanent something which comes to an end with the end of life, there is an element of long duration about life insurance which is quite clearly not to the same extent true in the case of mortgage payments. Though I am not inclined to argue that there is not, where life insurance machinery is used to finance the purchase of a house, some degree of anomaly, I do not think that my hon. Friends can push the argument quite as far as they did, and suggest that there is a very strong case for putting those two forms of saving upon all fours.
    Now I come to the precise provisions of the Clause. My hon. Friends have attempted, most laudably, by subsection (5) to prevent this concession going beyond the actual cost of purchase of a house. But I am advised that, neither as they have drafted it nor as it would be possible with expert assistance to draft it, is it possible along these lines so to limit the advantage of the concession which they seek to give. In practice, it would not be easy to ensure that a taxpayer did not borrow more than he really needed for the purpose of the construction of a house. He would be

    1077
    able then to use the balance for the purchase of such agreeable items as, shall we say, a television set.
    7.15 p.m.
    Both this evening, and in the letter which my hon. Friend the Member for Altrincham and Sale was good enough to send to my right hon. Friend, an argument was adduced in favour of this concession on the grounds of the increased subsidies in respect of council houses. Again, that is a superficially attractive argument, but if one looks at it, it is subject to two or three difficulties. In the first place, if this House decides that there is to be a subsidy to private house building, it would not be in accordance with what is well understood tax practice to give it by way of Income Tax concession. If there were to be any question of such subsidy it would be much more in accordance with the general custom followed in this country to make it an overt subsidy.
    However, it is subject to far more difficulty than that. This would assist the person who buys a house on mortgage, but it would give no assistance to the equally admirable citizen who buys a house by realising his savings. I am glad to say that there are still quite a number in this country who save through National Savings, or in any other way, a sufficient sum to buy a house. Those persons would receive no advantage.
    Therefore, in remedying some degree of anomaly to which my hon. Friend has referred, as between those who buy on mortgage and those who buy through the machinery of life insurance, he would be creating an even more severe anomaly between those who buy on mortgage and those who first save and then buy a house out of the produce of their savings. That is a serious difficulty and it would create a serious discrimination between citizens who buy their houses. It would of itself be an overwhelming objection to the proposal in this Clause.
    Then there is the effect that this Clause would have in the present economic situation. Clearly, it would have an inflationary tendency. We would be giving a very strong inducement to almost anybody who contemplated buying a house to borrow for that purpose the maximum sum he could get on mortgage instead of using other forms of finance. That is inflationary in tendency, and the House
    1078
    will appreciate that in our present economic situation it is a serious objection.
    Mr. S. Silverman: Why is it more inflationary than realising savings to buy a house?
    Mr. Boyd-Carpenter: Because it involves the release of some degree of further credit and, therefore, the manufacture of further purchasing power. I do not wish to enter into an argument with the hon. Gentleman on this point, nor indeed to encourage the realisation of savings, but the manufacture of additional purchasing power in this way is distinctly more inflationary in effect than the realisation of savings.
    For that reason it would be difficult to take the action recommended in this Clause at a time when my right hon. Friend is anxious not to set loose excessive inflationary pressures. I am sure hon. Members on both sides of the House will realise that that is an aspect of the matter which again requires to be approached with a good deal of caution.
    I cannot tell the House what would be the cost of this new Clause. It is clear from what I have submitted that the effect of its adoption would be greatly to increase new mortgage business. To the extent that the process developed, so much greater would be the loss in taxation. However, I can tell the House that the amount involved would be substantial. That is a further difficulty which we see in accepting this proposal. In the present economic position of the country, it is, unfortunately, the gloomy duty of the Member to whom it falls to speak from this Box to urge again and again upon the House the undesirability of proposals which, however attractive in themselves, would involve appreciable reductions in revenue.
    Therefore, although, I hope, I do not need to emphasise my sympathy and the sympathy of the Government with the intentions which have moved my hon. Friends to put forward this proposal, we are far from happy about the difficulties which face those who desire to set out on a course of home ownership. We realise that there are difficulties in their way, and we should very much like to help them, but for the reasons I have given, if they are to be helped, we are convinced that this is not the right way, that it would create more anomalies,

    1079
    perhaps, than it would remedy, and that it would be a substantial cost to the Revenue and inflationary in effect.
    Nothing that I have said indicates any lack of understanding of the problem and of a desire to assist home ownership. It may well be that more effective methods than an Income Tax concession of this sort might be possible to be evolved, but after detailed consideration, which my hon. Friend's courtesy has enabled us to make of his proposals, I am sorry to have to say that I shall have to ask the House not to accept this proposal, which has been put forward with so much care and moderation.
    Mr. S. Silverman: The Financial Secretary has made a most astonishing speech. I did not think that there was a great deal of positive merit in the new Clause, because it seemed to me that the anomaly it was sought to cure could, in the great majority of cases, have been cured by the taking out of an endowment policy, which would meet the situation and cure most of the evil that was aimed at—not all of it, because I appreciate that there was some force in the hon. Gentleman's reply to my intervention that there were cases in which even a younger man might not be able to get the appropriate cover.
    But I do not think that if that were the only evil to be cured the hon. Gentlemen opposite would have put down the Clause. Most of the mischief could be cured by individuals being properly advised how to raise the finance to make the purchase of small or medium sized dwelling houses.
    What brought me to my feet was the extraordinary lengths to which the Government have gone in giving away a large part of the rest of their case in order to meet this very small case that was put to them for curing an obviously anomaly. I gather now that the Government are saying, through the mouth of the Financial Secretary to the Treasury, that they are not in favour at the moment of encouraging people to buy houses on mortgage.
    Mr. Boyd-Carpenter: I said nothing of the sort.
    Mr. Silverman: Then I have not understood the hon. Gentleman. Let me say what was the foundation of my misapprehension. I thought that the
    1080
    Financial Secretary was saying that if we were to adopt this proposal, we would be encouraging people to borrow oftener than they now do, on mortgage, moneys with which to buy houses and that that was inflationary; and that since that would encourage them to do an inflationary thing, the Government ought not to do it.
    Mr. Horobin: My hon. Friend did not say that they would borrow more often, but that they would borrow larger sums than they would otherwise need.
    Mr. Silverman: No; that is a separate point, and I am coming to it. The Financial Secretary said that, but not in this connection. What he said, quite clearly, was that it would be anomalous to encourage people to borrow on mortgage rather than to sell their savings and to buy houses that way, which is another part of the same argument.
    Both those arguments only make sense if the Government are saying that it is an inflationary thing, to be discouraged, that people should borrow money to buy their houses. I gather that the Financial Secretary is as surprised as I am at the implications of his argument, but it was his argument and not mine. It does not make any sense unless that is what he means. All that part of his argument was directed to saying that if we did this we would encourage people to borrow money on mortgage to buy houses, but that we do not want them to do that because it would be inflationary.
    How, then, would the hon. Gentleman defend the proposals to sell council houses? To whom does he propose to sell them? To people who have savings that they can liquidate in order to buy them, or to people who have enough ready cash to buy them and who do not need to go to building societies to raise money on mortgage which they would have to repay by instalments?
    It is most curious how the Treasury, in order to resist a very small point, give away, without even knowing that they have given it, so large a part of the policy which my right hon. and hon. Friends on this side have been opposing ever since the Chancellor of the Exchequer made his statement at the beginning of this Parliament after the last General Election.
    Mr. Boyd-Carpenter: The hon. Member appears clearly to have misapprehended my argument. On the point to which, I think, he has been trying to refer, my argument was that it was unfair and anomalous to confer a substantial benefit on the person who used one method of financing the purchase of his house—to wit, mortgage—while no compensating provision gave equal assistance to the person who financed it in the other way by the realisation of savings. My argument was no more than that.
    Mr. Silverman: It is quite true that the Financial Secretary said what he has just intervened to say, but when he adds "no more than that" I beg him to read HANSARD tomorrow morning, when he will find that he said a great deal more than that; and it was that great deal more that prompted me to make this intervention.
    The only other point that he made was that this would encourage people to borrow more than they need. I do not know what experience he has, either himself or through friends or clients, of borrowing money from building societies with which to buy small dwelling houses. It would be difficult to persuade building societies to lend more than the security was worth. I know that that is not what was said; what was said was "more than was needed." My experience, I think, is the experience of everybody who has ever advised people in the handling of these matters: that the difficulty of the ordinary middle-class and lower-class people is that their security is usually worth very much less than they need, rather than the other way round.
    Mr. Erroll: We have had the benefit of a most closely reasoned and courteous reply from my hon. Friend the Financial Secretary, for which I thank him. As I should like to have the opportunity of studying his reply in greater detail, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(NEW PURCHASE TAX RATES.)
    The provisions of section twenty of the Finance Act, 1948 (relating to purchase tax), and of the Eighth Schedule to the said Act, shall hereafter have effect as if the second rate of the purchase tax is fifty-five per cent. of the wholesale value of the goods and as if all articles at present chargeable to the first
    1082
    rate of purchase tax are hereafter chargeable to twenty-six per cent. of the wholesale value of such goods.—[Mr. Jay.]
    Brought up, and read the First time.
    Mr. Jay: I beg to move,"That the Clause be read a Second time."
    You have done a service, Mr. Speaker, not merely to the House but to the Government, in calling this new Clause, because you have given the Government an opportunity to make rather more plain than they have done hitherto their future policy in the matter of Purchase Tax generally.
    The purpose of the Clause, as we explained during the Committee stage, is not mainly to alter the rates of tax precisely to those included in the Clause, but rather to ask the Government what their intentions are about Purchase Tax, as well as to give to Members by illustration certain commodities which are now subject to it. I asked the Financial Secretary on the Committee stage what the Government intended to do in the future about Purchase Tax and why, in particular, they had not done in the present year what we did last year and exempt certain household necessities from the tax altogether.
    7.30 p.m.
    The Financial Secretary did not then give any answer that I can discover as to why no such exemption has been made this year, nor as to what ideas the Government had for the future development of the tax. He did say that a very full discussion on Purchase Tax had been enjoyed in the various stages of the Finance Bill this year. That is perfectly true, but it was not discussion at that stage for which we were asking; it was action by the Government in reducing the tax on certain essential goods.
    We want to know in the first place why it is that the Government took no action of that kind this year. It will be remembered that last year we removed the tax from a batch of household goods like bootlaces, toothbrushes and so on. There are still quite a number of other goods, including cutlery, certain types of soap and so on which are still liable to tax. As I said, it would have been our intention this year to see if further progress could not be made in that direction. I hope the Financial Secretary may be able to give us some idea

    1083
    of how in his view and that of the Government Purchase Tax ought to evolve in the future.
    There are different ideas as to how this tax should develop. Our view, which we have tried to make clear on several occasions, is that there is a future for an indirect tax of this kind falling mainly on luxury goods. That is the direction in which the tax developed over the last five or six years, since 1945 up to this year. There is a case for having a tax on certain out-and-out luxury goods, such as furs, jewelry and, in some cases, the very expensive clothes of the type which were non-Utility before the Government introduced the D scheme. There is, indeed, just as good a case for a tax on these things as there is for a tax on tobacco or petrol as a method of raising revenue, and perhaps an even better case.
    At the same time, in our view the tax on remaining necessities, particularly 66⅔ and 33⅓ rate, which we suggest should be amended by this Clause, could well be exempt altogether. On the one hand such a tax can serve a useful purpose in raising revenue on luxury type of goods, and on the other there is still useful work to be done in the general campaign to get down the cost of living by the removal of the tax from the remaining items of necessity on which it falls at present. It is not, of course, possible to make a major attack on the cost of living by further exemptions from Purchase Tax. It has been removed from so many goods already that the total revenue still raised by the tax on goods of the household necessity type is comparatively small.
    Nevertheless, some further progress can be made, and I should have thought that in a period of full employment—and I take it it is still the Government's intention, in spite of the events of the last few months, to maintain a policy of full employment—when there is likely to be some upward pressure on the cost of living, that we should all welcome any measure which would help in the general campaign to get down living costs.
    Before some of my hon. Friends confront the Financial Secretary with questions relating to particular commodities, I should like the Financial Secretary to tell us what sort of tax the Government want
    1084
    to see. Do they want to go back to the idea of a general sales tax falling at a flat rate over all types of goods, including children's shoes, children's clothes and so forth, which were included in the scheme when it was originally introduced in April, 1940. That, I gather, is the conception favoured by the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton). Is that their idea, and is it for that reason that they did not introduce any exemptions this year?
    On the other hand, do they accept our conception and look forward to retaining a luxury tax on the one hand and exempting necessities on the other? Finally, do they believe in the total and early abolition of Purchase Tax altogether? If so, we naturally should like to know how they intend to replace the very large amount of revenue which would be lost. Is it their idea that this tax should go and that the revenue should be raised by higher direct taxation instead?
    I dare say that the Financial Secretary will not be able to answer all the questions I have put, but I hope, after he has listened to what my hon. Friends may say about particular goods which are household necessities and not in any sense luxuries, he may be able to give us a little more idea than he did on the Committee stage as to how the Government, if they are still in power, would like to see this tax evolving over the next year or two.
    Mr. F. Blackburn: My right hon. Friend has explained the reason for this Clause and, as this is the last opportunity we shall have on this Finance Bill to discuss the problems arising from Purchase Tax, I feel we should take advantage of it. I know there is no hope of persuading the Chancellor to make further concessions than those he has already made. He looks upon himself as a prince bountiful because he has made some slight concessions on Purchase Tax on textiles. The Chancellor himself said that a Chancellor must expect to be unpopular. I do not think he need fear that he is suffering from a surfeit of popularity at the present time in the textile areas because of the concessions he has made.
    The whole problem of this Purchase Tax needs to be investigated. As was said on a previous occasion, it is a question of Purchase Tax serving a dual

    1085
    purpose. First it is a revenue raiser, and, secondly, it reduces consumption. It was well pointed out that these two purposes conflict, because the more the one succeeds the greater the failure of the other. When we are discussing this tax it is well to go back to its origin and find that it was imposed during the war in 1940 in order to reduce consumption.
    Viscount Simon, who was then Chancellor of the Exchequer, said, on 23rd April, 1940:
    "Let me point out the significance and appropriateness of the proposal.. It is, of course, of the greatest possible importance to restrict internal spending at this time."
    Later he said:
    "…we must be resolute in reducing consumption at home."—[OFFICIAL REPORT. 23rd April, 1940; Vol. 360, c. 77.]
    That was the purpose for which Purchase Tax was put on.
    Since that time there has been a tendency to look upon Purchase Tax primarily as a revenue raiser. It is important to consider the question of Purchase Tax first in relation to war, secondly, in relation to a sellers' market, and thirdly, in relation to a buyers' market. In the case of war, obviously it was in order to reduce consumption. In the case of a sellers' market, since we wanted to concentrate on exports, the more we could restrict consumption in this country the better was the chance of increasing exports. But a different state of affairs comes about when there is a buyers' market and when, as at present, not only is there a buyers' market but, in many respects, a buyers' resistance market. As one hon. Friend said, at present even those who never intended to pay are not putting in orders.
    In such a case, surely, we have to consider the whole question of Purchase Tax. Today it is merely being used for the purpose of raising revenue. Looking at the structure of the Budget, we can quite understand that the Chancellor would have great difficulty in making concessions that we should like, but at present there is no need to use artificial means to reduce consumption. I think the Chancellor will agree that, if we leave aside that part of his Budget which he calls the incentive part, for more than 4 million people who were not paying Income Tax before the Budget, purchas-
    1086
    ing power has been reduced because of this Budget. Therefore, at present we do not need to take any measures for the reduction of consumption; in fact, we need new methods in order to put greater purchasing power in the hands of the poorest section of the community.
    Everyone will agree that a healthy export trade is possible when the home demand is sufficient to make production an economic proposition. There has been a serious reduction in demand in a great number of commodities in this country because of the lack of purchasing power in one section of the community. It is always better to maintain high consumption when the purchasing power is more evenly spread throughout the community.
    Purchase Tax is very often a charge upon industry and, when we are trying to reduce costs of production and bring down the price of commodities, it is wrong to have a tax which is increasing industrial costs. That is of great importance in a highly competitive world. Purchase Tax increases the cost to local authorities and to other public bodies. It sends up the rates and increases the costs which the Government have themselves to pay, either directly or indirectly.
    7.45 p.m.
    When we were discussing this problem on Committee stage a number of examples were brought forward of the incidence of the tax on various industries. I referred to the tax on elastic and on commercial and educational stationery. I do not wish to go over the arguments I used at that time, but anyone who has gone through the Schedule to the 1948 Finance Act, with its 35 different groups of commodities included in the Purchase Tax Scheme, must be amazed at the ingenuity of whoever it was who sorted these things out. Under group 10 we find:
    "Window display papers, being fancy papers coated, stained, printed, embossed, laminated or otherwise decorated, including coated poster papers, but not including such papers cut to size suitable for use as box papers or as printing paper."
    Here is a great field in which the Chancellor can see what help he can bring to industry.
    A matter which I did not raise in the previous debate is in regard to Purchase Tax on electric vehicles, a tax

    1087
    which was first imposed in July, 1950. I do not want anyone to get up and say that it was my party which imposed it. It was, but in 1950 they did not have the benefit of my advice. Since that tax was imposed there has been a very serious reduction in the manufacture and production of electric vehicles. Electric vehicles have the advantage that they are operated by a battery normally charged during the night hours and the current consumed while charging is welcomed by the generating authority as it helps in the efficient utilisation of generating plant during the off-peak periods.
    Mr. Gerald Nabarro: Would the hon. Member agree that the amount of load used in charging the battery on account of the point he is making represents about one-thousandth part of 1 per cent.?
    Mr. Blackburn: That is a very good point. I thank the hon. Member for making that point. It helps considerably.
    Mr. Nabarro: It explodes the argument of the hon. Member.
    Mr. Blackburn: No, it does not. Nothing is added to the load during the peak hours. I am sure the hon. Member will agree there.
    Mr. Nabarro Mr. Nabarro rose——
    Mr. Blackburn: It is all right, the hon. Member will have a go later. I was pointing out the reduction there has been in the production of electric vehicles since the imposition of the tax in 1950. In 1950 there was a fall of 22.8 per cent. compared with 1949. The number dropped from 2,002 to 1,545. In 1951 there was a fall of 38.6 compared with 1949, and in January of this year—the only month for which I have figures of production—only 43 vehicles were produced.
    The very heavy tax on electric vehicles places them at a serious disadvantage in competition with petrol-driven motors. The price of a 10 cwt. electric vehicle in 1950 was £614 and of a petrol vehicle £365. If we add the Purchase Tax, in the case of the electric vehicle the price goes up to £1,073 and, in the case of the petrol vehicle, to £494 10s. I am sure
    1088
    that other hon. Members will be able to produce numerous cases in which Purchase Tax is working very unfairly towards a certain industry. It may be working unfairly in regard to industry generally by putting a general tax on costs and unfairly as far as local authorities are concerned.
    This is a field which could rightly engage the attention of the Chancellor between now and next year. That is, assuming that the present Chancellor is still in office. But I should also like my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) to look at it because, being hopeful, it is possible that between now and the Finance Bill of next year we may have a different Chancellor of the Exchequer and a different Government. Therefore I want to make my appeal to both sides, so that both sides will be looking into these anomalies in order that between now and the time of the Finance Bill next year a good many of them can be removed.
    Mrs. Jean Mann: I should like to support my right hon. Friend in asking the Government Front Bench to declare their intentions with regard to Purchase Tax. A year ago their intentions were exceedingly good, even honourable. They were very impressed with the burdens that the housewife was bearing in regard to Purchase Tax; so impressed that there were scores of Tory Members filling these benches at all hours of the day and night, and the early morning.
    Tonight there are a whole five of them here to exhibit their interests in the harsh burden that the housewife is bearing because of Purchase Tax. Perhaps it is that on these benches there is always more light. Perhaps it is that these benches are much more comfortable than the benches opposite. At any rate, the speeches made on Purchase Tax by hon. Members opposite when they occupied these benches were most enlightened. Today they are entirely silent.
    For example, when we were discussing the Finance Bill last year, from this side of the House and from the mouth of hon. Members opposite we heard about the Purchase Tax on pins, hat-pins, hat ornaments, boot laces, socks for shoes, elastic, butter muslin, gas water heaters, refrigerators, domestic heating appliances, radio and television sets, valves and cathode ray

    1089
    tubes, tooth brushes, nail brushes, toilet brushes, hair brushes, hat and shaving brushes, etc., etc. And today we do not hear a word. There is absolute silence from hon. Members opposite.
    Was that what was meant when they put up posters announcing, "Time for a change"? Did they mean, "A change when we shall cease talking about these burdens of Purchase Tax; when we shall allow you to bear them without ever mentioning them or when we intend to get rid of them"? Was that the change that was meant? I noticed that in his speech last year the right hon. Member for Leeds, North (Mr. Peake) said that
    "…had we been in office during the last six years Purchase Tax would long ago have disappeared."—[OFFICIAL REPORT, 19th June, 1951; Vol. 489, c. 362.]
    Well now, will they remove one-sixth this year? That is a modest sum to ask? If according to the right hon. Member for Leeds, North, the party opposite could have removed Purchase Tax entirely could have wiped it out in six years, is it too much to ask that the proportion of one-sixth be removed this year? Will he tell us?
    I remember the hon. Member for Tyne-mouth (Miss Ward) talking about the burden on the housewife because of the tax on Hoovers, on the cost of water heaters, because of the tax on refrigerators and on domestic heating appliances. Where are the hon. Ladies opposite tonight? Are not the burdens just as onerous as they were last year? And why are the hon. Members opposite saying nothing at all about them? I remember an hon. Gentleman opposite, when he was on this side of the House last year, talking of the burden on radio and television sets because of the Purchase Tax, and the Purchase Tax on valves and cathode ray tubes, and the possible unemployment which would ensue if Purchase Tax was retained on radio valves and cathode ray tubes.
    Mr. Stephen McAdden: In reply to the representations made by the hon. Lady on the question of radio and television sets, the retort of the then Government was to double the tax.
    Mr. Nabarro: Thoroughly unsatisfactory.
    Mrs. Mann: It was only because the then Government had doubled the tax that hon. Members opposite made protests and talked of unemployment. Do not for one moment think I am trying to evade that issue. I should like hon. Members opposite to square up to their responsibilities and to the things they said last year. They asked for this last year. They are not even asking for it this year although, as the hon. Member for Southend, East (Mr. McAdden) said, the tax was doubled. Everything was to be better, was it not? There was to be a removal of the onerous Purchase Tax on these items, and surely since we are concerned about the increased unemployment problem, now is the time to give us more employment, or at least to prevent unemployment spreading outwards and inwards through our whole domestic economy.
    There were talks from hon. Members opposite, who kept us till the early hours of the morning, about the tax on tooth brushes, nail brushes, toilet brushes, hair brushes and hat and shaving brushes. My right hon. Friend gave way in regard to some of these. He gave way to the tune of £2½ million and gave relief in regard to tooth brushes, hot water bottles, air pillows, air cushions, toilet paper, water beds, boot laces and several other items like insoles for shoes and elastic.
    What is the right hon. Gentleman opposite going to do tonight? Surely he will listen to at least one small plea for some added relief to the over-burdened housewife—so over-burdened not only because of the Chancellor's 1s. 6d. per head extra, because of the removal of food subsidies, but also because of the 27 items of groceries which have been increased in price in addition to the increase in the rationed goods through the removal of controls.
    Surely all these burdens now thrown on the housewives is sufficient to cause a crusade among them, since we no longer have the members of the Housewives' Leage raising their voices. Could I represent them and plead with hon. Members opposite to do some little thing for the housewife in this Budget?
    8.0 p.m.
    All that has been done so far has been to increase the burden on the housewife. During the Election many pleas were made about Purchase Tax. I can remem-

    1091
    ber hon. Members taking piles of napery and linen goods on to the platforms and giving the exact Purchase Tax on each item—on soap, notepaper, towels, dish cloths, toilet cloths and so on. They gave the impression that they intended to remove the tax. There was a campaign, no doubt calculated to help hon. Members opposite into power, by one of the leading newspapers which showed details of Purchase Tax day after day.
    Many candidates for the Conservative Party who have come to this House as M.P.s promised in the columns of that newspaper that their voices would be heard on behalf of the housewives in an endeavour to remove this tax. Where are the voices? Probably at 8 o'clock those hon. Members are busy in the Dining Room. Their voices have been eternally stilled.
    I remind the Minister of what his right hon. Friend said last year:
    "Had we been in office during the last six years, Purchase Tax would long ago have disappeared."
    I hope that he will tell us tonight just how much of it he intends to wipe out.
    Mr. Ralph Morley: I hope that the Financial Secretary will be able to make some concession on this new Clause, even if he does not grant all that it demands. It has already been said that in the first place Purchase Tax was levied for a sumptuary purpose. It was levied during the war to discourage the purchase of the articles concerned. But the sumptuary purpose of the Purchase Tax disappeared a long time ago. The tax is now levied, not to discourage people from buying, but to raise revenue.
    When requests have been put to successive Chancellors and to successive Financial Secretaries for some remission or reduction, the reply has usually been that the Chancellor or the Financial Secretary had the utmost sympathy with the demand but they could not afford to lose the revenue which a reduction in the tax would entail. If Purchase Tax has no longer any sumptuary purpose, and evidently it has not, and is levied merely to raise revenue, then in common fairness it should not be levied upon necessities. It should not be levied upon anything which everybody has to buy at one time
    1092
    or another. It should be levied only upon luxuries or semi-luxuries such as jewellery, furs, motor cars, television sets, and so on.
    The country in its wisdom has decided that it is necessary that all our children should have some sort of education in the 10 years between five and 15 years of age. It is not possible to give those children any kind of education without supplying them with school stationery. Every child and every school in the land requires exercise books, copy books, drawing books and foolscap paper. A great deal of school stationery is consumed every year.
    That school stationery bears a Purchase Tax. I believe that during a financial year about £600.000 is paid in Purchase Tax on school stationery alone by the local education authorities. Nor does the taxation on school requisites stop at stationery. There is a fairly substantial tax upon a common and necessary article in use in all our schools-chalk. The chalk is manufactured and sold to the wholesaler. The wholesaler puts his additional price upon it and Purchase Tax is levied upon the manufacturer's price plus the wholesaler's uplift.
    Years ago it used to be considered that the mark of a good teacher was the efficient way in which he used the blackboard. Today, there are many other visual and mechanical aids for teaching, and the blackboard is not used so much. But chalk is still an essential and every day part of the apparatus in our schools, and chalk is taxed. Something like £1 million a year is paid in Purchase Tax by education authorities upon school requisites. This tax upon school requisites seems to be particularly stupid.
    The local education authority pays the tax. Then it puts its expenses to the Ministry and gets a Ministerial grant if the expenditure is approved. Of the £1 million paid in Purchase Tax the local education authorities probably get something like £500,000 or £600,000 back in the form of grants from the Ministry of Education. I cannot see how the Treasury benefits from that. It receives a tax and it has to find the money to pay a grant in part payment of the tax which has already been paid. On balance, there is very little advantage to the Treasury.

    1093
    Therefore, I ask the Financial Secretary at least to say that some concession should be made on school stationery. It would not cost a great deal of money. As the debate last year showed, there is a fairly strong feeling on both sides of the House that stationery generally, and at least school stationery, should be exempt. A tax upon stationery generally is a tax upon production. Stationery is a necessary article used by every business.
    The Financial Secretary may say that he would be pleased to remit the tax upon school stationery but would be afraid that such a remission might be abused and that stationery for scholastic purposes on which tax had been remitted might be diverted to other purposes. I should have thought that the officials of the Treasury had sufficient ingenuity to find some method of marking tax-free stationery so that it could be used for school purposes only. That is not beyond the ingenuity of the Treasury officials who have successfully tackled much more difficult problems in their time. I ask the Financial Secretary to make at least this one concession. It would cost him little. It would be most acceptable to the local education authority and it would help the Ministry of Education.
    The Minister of Education recently sent out Circular 242 asking the local education authorities to curtail their expenditure in their forthcoming estimates, and, although I do not agree with Circular 242, if the Purchase Tax upon school requisites was abolished, it would help the local authorities to fall in line with Circular 242, without any reduction in educational efficiency as far as the supply of school requisites is concerned.
    I hope that the Financial Secretary, in his reply, will be more forthcoming on this occasion than he was on the last, and will be able to give us some concessions with regard to school requisites.
    Miss Alice Bacon: We are not asking in this new Clause for the abolition of Purchase Tax on all articles, because we have always maintained that it is better to have a tax on luxuries than to lose the revenue through the abolition of that tax and have to substitute a new tax, which would probably hit the poorer sections of the community
    1094
    more than did the Purchase Tax on luxuries.
    The previous Government was going through a gradual process of exempting from the tax many of the articles which were considered necessities, but now the tax is being imposed on many things which can still be regarded as essentials, and I want tonight to indicate some of these articles which I believe are necessities and which I think the Chancellor ought to exempt from Purchase Tax.
    First of all, there is the soap which was referred to by hon. Members opposite last year, and the razor blades, brushes and combs. A tax on such articles is a tax on cleanliness, and I would put forward that group first if the Chancellor is to make any Purchase Tax concessions. Then, there is a very heavy duty on mirrors. Some people may argue that a mirror is not a necessity but something of a luxury, but maybe it is a good thing to see ourselves occasionally as others see us, and not to inflict ourselves on others without first having had a look in a mirror.
    Then, there are floor coverings, and I think there is an anomaly here. I was very surprised, when visiting a house a few weeks ago, to find that the people had chosen their new linoleum for their floors in squares, because, I was told, if they bought it in squares, there was no Purchase Tax on it, whereas, if they bought it by the roll, the Purchase Tax had to be paid. Perhaps the Financial Secretary will inform us whether or not that is so. There is a case for exempting all forms of floor coverings, and similarly, with regard to wallpaper. Many of these articles are very necessary to those who are setting up a home, and, nowadays, when there is much less purchasing power about, it is difficult to put into our homes all the new things that we would like.
    Then, there is a whole group of cutlery, which, again, is a necessity. There is also a fairly heavy Purchase Tax on umbrellas. I do not know whether we should argue that an umbrella is a necessity or a luxury. I suppose it depends where one lives, but it would be regarded as a necessity in Manchester. Again, that is something which I hope the hon. Gentleman will look at.
    I should like to mention one or two other items, particularly radio receivers, batteries and accumulators. There are

    1095
    still millions of homes without a supply of electricity, which means that many who are living in the depths of the country and dependent to a larger extent on the wireless than those of us who live in the more urban parts, have to pay a heavy tax from time to time on batteries and accumulators which they use with their radio receivers. I know that such people feel this burden very greatly, because they are not sufficiently lucky to have a mains supply of electricity.
    8.15 p.m.
    Then, of course, there are pedal cycles. My hon. Friend the Member for Southampton, Itchen (Mr. Morley) has indicated some of the things used in schools that are subject to tax, and, in these days of rising fares, it is essential that pedal cycles should' not be taxed, particularly children's machines. Many children depend on their cycles to take them to school. We must not forget that the right hon. Lady the Minister of Education has made the pedal cycle much more of a necessity for school children in these days than it was a year ago, because of her policy of cutting down on school transport. This makes it more necessary that this matter should be looked into.
    I should like to reinforce what my hon. Friend from Southampton has said about school stationery, although I would disagree with him on one point. It is very difficult indeed to distinguish between stationery and other articles used in schools and those articles used outside schools. Most of the things subject to Purchase Tax that are used inside schools are probably just as much of a necessity when used outside schools.
    Mr. Anthony Fell: Is it not just as difficult to distinguish in the case of many of the other articles which the hon. Lady has mentioned?
    Miss Bacon: No. I was merely saying that, with regard to children, it was more of a necessity than ever. Many of these things, such as stationery, which are used in schools are just as much a necessity outside school as inside, and I appreciate to a great extent the difficulty which there is in distinguishing between those articles used in schools and those used outside.
    I have indicated a few of the things which I regard as necessities and which
    1096
    I think we should have exempted from the tax had my party still been the Government. The previous Government was pursuing a policy of curtailing and abolishing the Purchase Tax on many necessities, but, this year, we have had no such concessions, I hope that, when the hon. Gentleman replies, he will indicate, that, to some extent, the party opposite will keep some of their Election promises in the abolition of Purchase Tax on these articles.
    Mr. Grimond: I wish, very briefly, to support the plea which has been made by the hon. Lady the Member for Leeds, North-East (Miss Bacon) for a reduction in or abolition of the Purchase Tax on bicycles and batteries.
    Batteries are essential to people living in the country who have no mains electricity, if they are to listen to the radio. I would add an additional reason to those given by the hon. Lady that it is just those people who live in the country, and are particularly dependent on the wireless for their entertainment, who deserve some concession. If the Financial Secretary can see his way to give some concession on these two articles, I think that it would be very welcome on all sides of the House.
    I really rose to say a few words about the principle involved, because it was the main purpose of the Clause to find out what is the general policy of the Government in relation to this tax. The Labour Party supports the Purchase Tax in so far as it is a tax on luxuries, but there are obvious difficulties about that, and they did not confine it to luxuries when they were in office.
    But who is to decide what is a luxury and what is not? Again, while it may be easy enough to say that the poorer people do not use the more expensive things like Rolls-Royce cars, there are many poor people who make these articles. In many industries there is a case to be made for the reduction of Purchase Tax on what are called luxury goods. Again, this country is very dependent too on its output of quality goods, and, even if they are made for export, that trade, as we know, is dependent to a very considerable extent on the home market and may soon have to depend on it even more than it has done to date.
    I am perturbed to think that this tax still falls very heavily on a number of

    1097
    articles in every day use. In all these debates we hear urgent pleas for a reduction in the rate of the Purchase Tax on such things as tooth brushes, batteries and bicycles. But, surely, the real conclusion to be drawn is that this is a very unsatisfactory tax.
    It was defended by the late Government and is defended by the present Government for perhaps the same reason, and I agree that in the situation which faces us today we are not in the position lightly to stop any source of revenue. But former debates on this tax have shown that it is an almost impossible tax to administer fairly, and in the changing state of our economy it is becoming more and more difficult to apply it only to luxuries or to use it only for revenue purposes without doing considerable damage to vital industries.
    The speech of the hon. Member for Southampton, Itchen (Mr. Morley) illustrated some of the difficulties. He said that originally this was a sumptuary tax, but that it is now a revenue raising tax and, therefore, should only be levied on luxury goods, which of course is to treat it again as a sumptuary tax. We must face the fact that this tax was introduced as a temporary tax in time of war and that it is certainly time that we decided what use it has to play in our economy in time of peace. It would be very useful if we could have some indication of what the Government are thinking on a long-term basis for its replacement by some other form of revenue raising measure.
    Mr. Coldrick: On the last occasion that we debated this tax we pressed, as has been suggested, for the complete elimination of the 33⅓ per cent. rate, but the terms of the new Clause have been somewhat modified. I have appreciated for some time that there is always a great transformation in the mental outlook of people when they pass from this side of the House to the other side, because we used to listen to the most eloquent arguments against the tax in general when the present incumbents of the benches opposite were sitting on this side.
    I think I can claim on behalf of most of the people we represent that we have consistently been opposed to the Purchase Tax because we believed right from its
    1098
    inception that its impact would be felt much more severely by the lower paid people than by those in possession of very substantial incomes. When it was first introduced we recognised, of course, that it had a twofold purpose. First of all, it was supposed, to use the common expression, to mop up a great deal of the surplus purchasing power, and, secondly, it was intended to restrict the consumption of scarce goods in order that labour and supplies should be diverted to the war effort.
    As time has gone on we have listened to a hundred arguments as to why the tax should be kept in existence for reasons totally different from those originally adduced in its support. Therefore, I want at this stage merely to enforce the plea that has been made to exempt from this tax the articles that have already been mentioned. For some time now we have been trying to get the various Governments to agree that, even if they could not remove the tax in its entirety, they should at least remove it from those articles deemed to be necessary in most of the households of this country.
    I pointed out on the previous occasion when we debated this tax that we were successful in getting the last Government to agree totally to exempt quite a considerable range of articles from the tax. I believe an important point has been overlooked in these debates and by the Treasury, which is that this tax is inclined to increase prices by more than the amount of the actual tax charged. Anybody familiar with business practice knows perfectly well that, whatever the pundits of economic theory may believe, in practice if a person has to spend, say, £1,500 owing to Purchase Tax in order to acquire stocks which otherwise he could buy for £1,000, then he has to find the interest on that extra £500 from somewhere. The result is that it becomes a factor in raising prices generally, quite independent of the tax itself.
    I believe one could find innumerable reasons for recasting the whole of the tax, but this particular Clause is asking not for its complete elimination, but merely for a reduction from 66⅔ to 55 per cent. for the one category and from 33⅓ to 26 per cent. for the other. I believe that the Chancellor or the Financial Secretary would find it extremely difficult to adduce any argument as to

    1099
    why the articles which have been mentioned, whether they be soaps, razor blades, bicycles or stationery, should be classified as luxuries.
    In so far as these articles are fundamentally needed by the mass of the people, I would appeal to the Chancellor to look at this matter again to see if he cannot grant the concession asked for. I do not know at this stage what such a concession would cost, but I am positive that it would confer very lasting benefits upon the people of this country. I sincerely hope that the Chancellor will find it possible at least to reduce the range of tax upon the articles which have been mentioned by hon. Members on this side of the House.
    Mr. Boyd-Carpenter: During the Committee stage the right hon. Member for Battersea, North (Mr. Jay) moved a Clause in substantially the same form. On that, as on this, he made it clear that he was not unduly concerned with the merits of his new Clause, but desired to use it as a perfectly legitimate Parliamentary peg on which to hang a discussion of certain aspects of the Purchase Tax. As I understand it, he has followed the same practice in this case.
    His first question related really to items which will be in next year's Finance Bill. Indeed, he talked of a year or two hence. That is a fascinating intellectual exercise for the right hon. Gentleman, but his own experience, of course, will confirm him in the knowledge that nobody speaking from this Box during the debate on one Finance Bill is going to be so foolish as to give confident forecasts of the contents of its successor.
    Apart altogether from the obvious trade disadvantages of any such suggestion, the tax proposals which my right hon. Friend will bring forward next year will be affected in general by the speed with which the Government's measures bring forward national recovery; and until we approach the formative period for the Budget next year it will not be possible to come to any firm decisions on this tax, or, indeed, of others; and I am sure that the right hon. Gentleman, from his own experience of the way these things are handled, will appreciate that that is the case.
    1100
    8.30 p.m.
    I would, however, in reply to him and to his general comments, make one general one. This year we have sought to confine our changes in the Purchase Tax to articles which fall within the zone of the old Utility scheme plus the rectification of certain anomalies on the margin of the scheme. That has been the theme and purpose of my right hon. Friend's Purchase Tax proposals in this Bill.
    If justification for that were needed it is, I think, clearly to be found in the state of affairs disclosed by the Douglas Committee, which, I would remind the House, was appointed by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), and the fact that, when one is dealing with so vast and complex a field as that embraced by the Purchase Tax, there are limits to the areas with which either Parliamentary time, or even that inexhaustible quality, the physical resilience of Members of Parliament, can enable us to cope. For that reason, quite deliberately my right hon. Friend confined this year his Purchase Tax changes to the very considerable sphere which the House—and the Committee before it—have discussed at considerable length on a number of occasions.
    Now, the hon. Gentleman the Member for Stalybridge and Hyde (Mr. Blackburn), not for the first time——
    Mr. Jay: I think the Financial Secretary is now leaving my questions. May I remind him of one which I asked him? Why did the Government not this year exempt any household necessities in the Budget at all? I do not think he answered that. Second, though, of course, he cannot give any details of future Budgets, surely he can say what is the general idea of the Government as to how Purchase Tax should evolve in the future?
    Mr. Boyd-Carpenter: On the first point, I think, I did answer the right hon. Gentleman by pointing out to him—and I will do so again, if I may—that my right hon. Friend this year confined his changes to articles within the old Utility schemes. In so far as household necessities of a textile character were concerned, then, of course, my right hon. Friend dealt with them in the D scheme, but, for the reasons that I have now twice given, my right hon. Friend decided

    1101
    not to make adjustments in the law outside the old Utility scheme area, save, as I said, for a few articles on the margin —rubber boots, I think, are an example.
    Miss Bacon: The Financial Secretary keeps quoting the fact that concessions have been made inside the Utility scheme. Surely we are not yet certain whether there is to be much less tax paid under the D Scheme, or more. There may not be a concession after all so far as some of these things are concerned.
    Mr. Boyd-Carpenter: The hon. Lady, I am sure, does not want to go into the argument of the D Scheme as a whole.
    Mr. Charles Pannell: She does.
    Mr, Boyd-Carpenter: I doubt whether she could at this stage within the rules of order, even if she does, but if she has an irresistible urge in that direction I will remind her that there are items within the ranges we have been discussing which are ordinary necessities to most people-rubber boots, I think, constitute a very obvious example—which have benefited from the change in the scheme. I would say once again, in reply to the right hon. Gentleman opposite, that that was my right hon. Friend's clear contention—not at this stage to make adjustments outside that area, but to confine his changes to the sphere of that area.
    As to general philosophical or metaphysical reflections upon the Purchase Tax, I very much doubt whether they would be of very great value, and for two reasons. In the first place, as I have said, what in fact will be done in next year's Finance Bill will be very seriously affected by the general tendencies in our economy manifest at the time when those proposals are being formulated. Second, to pass general comments which may very well have certain inferences drawn from them could be extremely damaging from the point of view of the trades concerned.
    As I was about to say to the hon. Gentleman the Member for Stalybridge and Hyde, when the right hon. Gentleman intervened, who did mention one or two particular articles, there really is great disadvantage in anyone from this Box making statements or allusions which may appear to indicate that changes in a particular product are being contemplated; because I think all of us who have had
    1102
    any experience of the way this system works will appreciate that the most damaging thing to the smooth flow of any of these trades is for the idea to get about that Purchase Tax changes are contemplated.
    When that happens, almost invariably buyers hold back; retailers are not unnaturally alarmed at the risk of being caught with stocks which have paid tax higher than the current rate, and for that reason serious dislocations result, in industry particularly.
    Mr. Jay: I do not want to intervene again, but does the hon. Gentleman not recall that in response to a request from the then Opposition I made a speech in the Finance Bill debates last year and two years ago on our general attitude to Purchase Tax, which did not have any of these evil consequences which he now fears?
    Mr. Boyd-Carpenter: I am not all sure that the right hon. Gentleman is not too optimistic in asserting that it did not have evil consequences. He really must allow us to make our own approach to this problem; and, if he will allow me to say so, the state of our national economy in which he left the nation is no justification of his methods of handling it.
    To the hon. Member for Stalybridge and Hyde, to whom I must return again, because I do not wish to show any discourtesy to his point of view, I would only say this. He has put forward on this occasion, as on others, particular cases which will obviously have to be considered on their merits. The fact that he has put them forward, as he always does, if he will allow me to say so, with cogency and clarity will enable them to be considered with great ease from time to time.
    The hon. Member for Southampton, Itchen (Mr. Morley) brought up, not again in his case, I think I am right in saying, but for the first time, the vexed subject of school stationery. Even if it were desirable to make a special exemption, there is an overwhelming difficulty in making a special case of stationery used for particular purposes. Although he was extremely courteous in his references to the administrative capacity of the Government Departments concerned, I can assure him that it is a matter of very great difficulty indeed to base Purchase

    1103
    Tax, not on the essential qualities and categories of the goods but upon the purpose to which they may be ultimately employed.
    It is a matter of commonsense knowledge that the notebooks, the writing pads and other items used in schools are also used in places other than schools. Then, says the hon. Gentleman, why not exempt the lot? There is a very substantial and material objection to doing that, which is that the Purchase Tax upon stationery generally brings in a yield of between £25 million and £30 million a year. That is a very substantial item in the yield of the Purchase Tax, and whatever may be the case in subsequent years, that is not a sum, I am afraid, which my right hon. Friend could contemplate sacrificing in the present state of our economy.
    The hon. Lady the Member for Leeds, North-East (Miss Bacon) again brought up a number of cases of particular items to which, in order not to weary the House with repetition, I will say that the general observations I made in reply to the hon. Member for Stalybridge and Hyde also apply. The hon. Lady has put these items on record, and they are there convenient for consideration from time to time.
    She also asked a question on the rather interesting point about floor coverings. The House did discuss this, I think, in the last Parliament. My information is that no action was taken at that time. The present position is that the rather curious situation she described applies only in a small section of the trade. We are going into the question, and I understand that representatives of the trade concerned are coming to see me in the fairly near future. That is the way it stands at the moment, but I quite agree, without committing myself any further, that there is here a matter which justifies looking into, because on the face of it it appears to produce a rather curious situation.
    The hon. Member for Orkney and Shetland (Mr. Grimond) referred to the well-known subject of electric batteries. I cannot add anything about that at the moment. He also made what I hope he will allow me to say were, I thought, extremely sensible comments on the difficulty of tying oneself to the idea that this should be a tax on what one might designate as luxuries because, as he
    1104
    pointed out, luxuries are not a matter about which, in some cases, it is possible to draw a very clear line.
    Certain articles may be luxuries to some people and not to others. It is not a very easy line of demarcation. There is also the very important consideration from the point of view of the export trade. There are quality articles which are traditional and valuable exports of this country, and one has to be careful not to cause the tax to be so severe as to deprive them altogether of the support of a reasonable home market. Therefore, although it is no doubt the case, and rightly the case, that certain articles which no one could describe as necessities carry a substantial rate of tax, and a number of articles in precisely that category bear a 100 per cent. tax, there is some social justification for taxing some higher than others.
    The simple classification of luxuries and non-luxuries is not a practical way of dealing with the matter, and I agree with a good deal of what the hon. Gentleman has said on that subject. The hon. Member for Bristol, North-East (Mr. Coldrick), who speaks with great knowledge on this subject and who has a distinguished connection with the Co-operative movement, also brought forward certain aspects of the tax which are extremely interesting and valuable. This is not, as he knows, a tax about which anyone in this House appears able to generate any undue enthusiasm. It is, on the other hand, a tax which, because of the substantial amount of revenue it brings in, has survived the vicissitudes of some 10 years of Parliamentary Government.
    May I repeat what I said a moment ago? My right hon. Friend does keep this tax under close observation. It is a tax which obviously from time to time must require adjusting, 'and my right hon. Friend is always ready to consider the aspects of the matter which are brought to his attention either by hon. Members on the Floor of the House or, as they are sometimes good enough to do, in correspondence. Certain suggestions, some new and some perhaps not so new, have been made in the course of this evening's debate, and they will all of them from time to time receive the consideration which, I think, hon. Members on both sides of the House appreciate that my right hon. Friend always gives to the views of the House of Commons.
    Mr. Ede: The Financial Secretary has given us a wonderful example of talking at some length and saying nothing. I believe that I am the only Member now physically present in the House who recalls his father at that Box in a similar capacity, and I am bound to say that this is the worst example I have ever seen of hereditary Government.
    What has the hon. Gentleman conveyed to us? That the Chancellor of the Exchequer has certain intentions and that these will be carried out. There is no need to argue as to whether they are right or wrong. They are the Chancellor's intentions and that is what is to happen. Then he tells us that anything he may say this evening may be gravely embarrassing not merely to the Government but to trade during the coming year. What a pity he did not adopt the same line last year.
    I wonder how long we should have sat last year if my right hon. Friend the Member for Battersea, North (Mr. Jay), in the hon. Gentleman's place, had made the same kind of speech that we have listened to this evening. We had, I think, the third longest Sitting in the history of the House, even with my right hon. Friend's courtesy and the suavity of my right hon. Friend the Member for Neepsend (Sir F. Soskice) to help us.
    8.45 p.m.
    The hon. Gentleman has virtually told the House of Commons that the Government will decide and that it is very impertinent, and even dangerous, to ask why they have decided and when they are likely to alter any decision they may have reached. As a result of the operation of the alterations made this year,. the tax is obviously one which will have to be considered in very considerable detail next year.
    I never understand why it is thought that, because my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) appointed the Douglas Committee, there is something almost shameful in our suggesting that all its recommendations ought not to be carried out. I have appointed many committees, but I have never felt that I was bound by the recommendations they made. It is as well when appointing a committee sometimes to see that it is likely to give one recommendations which will compel one, as the
    1106
    appointer of the committee, to think very seriously when one receives them.
    It would be a very shameful thing if a right hon. Gentleman on either side of the House, in appointing a committee, so chose the personnel that he was quite sure beforehand that he would get the advice he wanted. I sometimes felt in pre-war days that committees were appointed with that object, but I hope that we now live in more modern times. Even a party which calls itself Conservative without showing very great signs of carrying out that kind of policy might try to bring itself up to date on occasions.
    I am sorry that I did not hear the speech of my hon. Friend the Member for Southampton, Itchen (Mr. Morley). I am not at all convinced by what the hon. Gentleman says about the application of Purchase Tax to school stationery. Through the operations of the auditors appointed by the Minister of Housing and Local Government, the Government get an exact account of all the items upon which local authorities spend their money, and if there was a desire to relieve the education estimates of this burden it could quite well be done by making a rebate on the audited expenses of local authorities.
    I am no longer actively associated with educational administration, but I am sufficiently in touch with friends who are on both the administrative and the teaching sides to know that the operation of the tax is a most serious handicap to children, particularly seniors, in our schools today. If local education authorities were to increase their estimates to allow these children to use the stationery that is required it would mean such increases in the figures that I doubt if any finance committee in the country would be prepared to look at them. Yet a substantial amount of the money spent on stationery is raised in rates and is merely returned to the Exchequer in the form of Purchase Tax on school stationery and other articles of school equipment.
    That is a very serious matter in these days when, I hope, we are all anxious to see that the higher education of our people is made as real and as practical as possible. I cannot see why this rebate system I have suggested could not be adopted. After all, it would be the local government auditor who would deter-

    1107
    mine whether money had actually been expended, and it would not involve any trouble about this kind of article being used for other than school purposes.
    I hope that the hon. Gentleman will draw the attention of the Chancellor of the Exchequer to this suggestion of mine, because I am quite certain that it would be the one way in which the essential fabric of education, which is the only thing apparently with which the Government are concerned, could not merely be maintained but, in view of the experiences of recent years, slightly improved.
    I do not imagine that the hon. Gentleman expected to satisfy those of us on this side of the House. He does not have to trouble about those on the other side, because such as have returned from Ascot have all shown by their silence that they are quite prepared to allow him to play ducks and drakes with the education service and any other service of the country if that is the intention of the Exchequer. Let me assure the hon. Gentleman that we are not satisfied and that we look forward to renewing this battle next year. We do not expect that it will be with him, but should it be he may rest assured that next year we shall expect him to be a little more forthcoming and detailed than he has been tonight.
    Mr. Mulley: After the powerful arguments of my hon. and right hon. Friends I shall detain the House only for a few moments. We did not expect the hon. Gentleman to come to the Box and say that next year the Government would reduce the taxation or exempt it on certain items, and that the year following they would do so and so and something else. But he treated the House rather naively in that respect. What we expect from the Financial Secretary, and what he could assure the House about now is that Purchase Tax, its incidence and anomalies, is under constant revision. Surely he will agree that it is not necessary to wait for a Finance Bill to make alterations either in the tax schedules, or in the incidence of particular taxes on particular articles.
    If he will give us that assurance and if he is prepared to meet the cutlery trade to discuss not only the anomalies about the assessments, but the difficulties with which the industry is now faced as a
    1108
    result of the loss of export markets and the unemployment which is becoming a very serious problem in Sheffield, we would receive his remarks with greater acceptance.
    Mr. Boyd-Carpenter: I give the assurance that we shall gladly receive at the Treasury any body of persons who have proposals to make, and be glad to hear their point of view. That is constantly happening.
    Mr. Mulley: I am glad to have that assurance, but in addition to the courtesy of a visit—and I know that they will always be received with courtesy—we want any suggestions put forward to receive due consideration.
    It is well known that the cutlery industry has had a difficult time recently. A re-classification has been made which means that industrial scissors are taxed for the first time, but there has been no attempt in the Bill or anywhere else to re-classify them again so that they are exempt from tax, as they were until last April. If such an action as that were taken, we should understand that a serious attempt was being made in the Treasury to meet the difficult cases and in particular to try to assist industries which are meeting difficulties as a result of the loss of export trade.
    Mr. Boyd-Carpenter: I do not want to interrupt the hon. Gentleman, but it might help him if I did. In my original speech I said that we constantly watched the variations of this tax which circumstances made necessary; I went out of my way to say that. I have already told him that we continually see people concerned who have one point of view or another to express. I am familiar with the point to which he is referring, and probably the most convenient immediate course would be if the hon. Gentleman would discuss the matter with me. I am quite familiar with the issues involved.
    Mr. Mulley: I thank the hon. Gentleman for that, because my point is that there has been plenty of watching and plenty of concern about these matters but no outgoings in the way of new proposals before the House to deal with them.
    I make a special plea for consideration at a very early date of the problems of the cutlery industry and the associated industry of silverware.

    1109
    In addition to considering the problem of unemployment, we should also bear in mind that knives, spoons and forks are essential everyday articles which should be exempt from tax. In addition, there is the export problem, and I was pleased to note that the hon. Gentleman said special considerations should be given to those industries with valuable export potential so that they might have the necessary home market to continue the industry.
    The situation in Sheffield is that unless there is some reduction in Purchase Tax there is a great danger, if skilled workpeople leave the industry because of the present difficulties, that the industry may never again have enough craftsmen to take advantage of the export orders which may be received when, as we hope, the situation in Australia and elsewhere improves. I ask for special consideration in that connection.
    The revenue aspect of the tax has been stressed tonight, which we all appreciate. But it occurs to me, as it has occurred to the hon. Gentleman, that if there is a reduction in the rate of Purchase Tax it does not necessarily follow that there will be a reduced total return from the tax. In some cases—and again I have in mind cutlery and silverware—a reduction would probably lead to an increase in the total revenue. At the moment there is great difficulty because of the lack of purchasing power, and, in addition, we have to deal with tax evasion.
    The amount of Purchase Tax paid by Sheffield industry has steadily declined over the last three or four years. In certain fields we have seen articles renovated and sold in the second-hand market where no tax is payable, instead of their being sold as new articles. I urge the Minister to consider this matter not only in connection with the rates of tax but also in connection with whether, in certain cases, he might get an increase in revenue from Purchase Tax by reducing the rate of tax charged on some articles.
    Question put, and negatived.

    New Clause.—(AMENDMENT OF SCHEDULE 14 OF INCOME TAX ACT, 1952.)
    (1) Paragraph 4 of the Fourteenth Schedule to the Income Tax Act, 1952 (which provides that where a sale of any property is one to which paragraph (a) of subsection (1) of section three hundred and twenty-seven of the same Act applies, and paragraph (b) of that subsection does not apply and the parties to the sale by notice in writing to the surveyor so elect, the provisions of paragraphs 2 and 3 of the Fourteenth Schedule shall not apply) shall, in the case of a sale to which this section applies, have effect subject to the modification hereinafter specified.
    (2) If the purchaser or purchasers are outside United Kingdom jurisdiction but within the British Commonwealth and Empire and a sale is effected by a vendor within the jurisdiction of any property in circumstances in respect of which the Commissioners are satisfied that paragraph (b) of subsection (1) of section three hundred and twenty-seven does not apply, then if the Commissioners are satisfied that the sale arises from political or other similar circumstances in the country in which the purchaser is ordinarily resident and the vendor by notice in writing to the surveyor so elects the provisions set out in paragraph 4 of the Fourteenth Schedule shall have effect.
    (3) Provided that this section shall not apply to a sale of any property which in the opinion of the Commissioners is one of a series of transactions of which the sole or main benefit which might have been expected to accrue to the seller was the obtaining of such an allowance or deduction as is specified in paragraph (b) of subsection (1) of section three hundred and twenty-seven of the Income Tax Act, 1952. —[Mr. Stevens.]
    Brought up, and read the First time.
    10.15 p.m.
    Mr. Stevens: I beg to move, "That the Clause be read a Second time."
    I very much regret that I have to bring the House from the libretto of Gilbert and Sullivan to the more prosaic Act of 1952 and, in particular, Section 327 and the Fourteenth Schedule of that Act. That Section and Schedule deal with the transfer of capital assets, notably of plant and machinery, from a seller to a purchaser and, in particular, to cases where the buyer has a controlling interest over the seller, or the seller over the buyer, or a third organisation has a controlling interest over both.
    The Section and the Schedule envisaged a position whereby an attempt is made to obtain capital allowances by way of balancing allowances in excess of those to which a seller or a buyer could be entitled, whereby the seller transfers the property to the buyer at an artificially
    1134
    low price and thus gets a balancing allowance and the purchase by means of skilful book entries advised by an expert accountant writes up the price at which he takes over the capital assets and thus obtains larger capital allowances than those to which he should be properly entitled.
    Paragraph 4 of the Fourteenth Schedule provides that where the transaction is quite obviously an honest and open transaction, one in which the obtaining of improper capital allowances is quite obviously not the object of the exercise and the buyer and the seller both apply to the surveyor—who is a gentleman whose identity I have never been able to discover, as the surveyor disappeared 40 years ago—to the effect that the price to be used in the case of taxation calculations of both parties, both seller and buyer, shall be the written down Income Tax value, that value shall be used in calculating the capital allowance not only of the seller but also of the buyer.
    So far it seems to me that the law is sound, for there is a back door, an escape clause, whereby in transactions, legitimate and proper ones, both buyer and seller can appeal to the surveyor. So far, so good. But there is, it seems to me, one anomaly which is bad because of the hardship which may be inflicted. There is a severe penalty on persons whose transactions are perfectly legitimate and which indeed are forced upon them by the necessity of circumstances.
    I have in mind that for many years past it has been the practice of commercial undertakings to be formed in this country, the companies registered in the United Kingdom but which are none the less operating factories, plant and machinery overseas, notably in the Dominions and in the Colonies. It is obvious that where national feeling has arisen in those territories it may be that it is desirable for political rather than for economic or commercial reasons to transfer the registration of that company from the United Kingdom to the country overseas. Should such a thing happen, obviously a sale would take place within the legal meaning of the word "sale."
    It is not a sale such as I would have thought was contemplated by the Section or the Schedule to the Act. It is a transfer of property forced upon the persons who started the enterprise overseas by

    1135
    political circumstances in another country. It seems to me improbable that a purchaser in a country outwith the jurisdiction of the United Kingdom can jointly with the seller of the property write to the Surveyor of Taxes in this country and elect that the written-down Income Tax value should be used for the purposes both of the buyer and the seller. The consequence is that other provisions of Section 327 become operative and the Inland Revenue in this country require the seller, for the purposes of the transaction, to treat that sale as a genuine sale.
    Supposing the plant and machinery was bought before the war and therefore stands at a relatively low price in the books of the seller, the Inland Revenue require that the open market value price at the date of the transfer should be used and the consequence is that the seller of the property finds himself liable to a very substantial balancing charge. I cannot believe that was contemplated when this particular Section of the Act was formed and I have put in a Clause filled, as it seems to me, with ample safeguards.
    The seller, being in the jurisdiction of the United Kingdom, is required to satisfy the Commissioners that the transaction is bona fide. The seller is furthermore required to say that the transaction has taken place, not for commercial or economic reasons, but because of political circumstances in the country in which the plant and machinery is situated. I think that those safeguards would prevent any question of a wrongful application of the Section.
    I believe that this Clause, or something of the kind, is absolutely essential. All transactions of that kind require the consent of the Treasury. The transfer of the registration of a company from this country to the country overseas normally requires Treasury consent. It seems wrong and incongruous and hard that the Treasury can give its consent to this transaction on the one hand, for the reasons given, and that the Inland Revenue should step in and impose a very harsh taxation penalty by way of balancing charges on the other. I believe therefore that this Clause will not open any gateway to spivvery or fraud, but will do something to remove what seems to me
    1136
    very clearly to be an anomaly and a hardship.
    Mr. Erroll: I beg to second the Motion.
    I wish to point out that in many parts of the world our capital invested overseas is liable to be assailed from many quarters, especially for political reasons. An orderly retreat is occasionally necessary. When such a retreat has to take place it is important that the company or the persons concerned should not be subjected to a particularly unfortunate form of tax liability. The provisions of this new Clause are adequately safeguarded by subsection (3). I hope that the Chancellor will see his way to accept it.
    Mr. Maudling: My hon. Friends have spoken to this new Clause in most persuasive tones. I hope they will not think from anything I say that I minimise the importance which they have rightly stressed of enabling British enterprises operating overseas to comply with changing political conditions overseas. It is obviously of the greatest importance that we should assist our British enterprises to do that as much as possible, but I hope that I will be able to show to my hon. Friends that the method they proposed is not really acceptable.
    When one company transfers assets to another company, normally speaking, for the purposes of a balancing charge or a balancing allowance, the price at which those assets is calculated is based on the price at which the assets are actually sold. But the Fourteenth Schedule to the Income Tax Act, 1952, prescribes that in certain circumstances for the purpose of computing balancing charges and allowances it shall not be that value but the market value. Those circumstances are two: first, where there is a transfer between two companies within common control and, secondly, where the purpose of the operation is to gain certain special allowances or deductions specified in Parts X and XI of the Act of 1952.
    In those circumstances, the Fourteenth Schedule provides that the price at which the assets shall be deemed to have been transferred is the open market price and not the written down price. But paragraph 4 of the Schedule to which my hon. Friends referred provides that in the first instance

    1137
    —in other words, where there is a transfer between companies within common control and where there is no question of trying to get a special tax allowance or deduction—the two parties to the transaction can apply to the Surveyor and ask that the transaction shall be treated as having taken place at the written down value of the assets. Therefore, no balancing charge will arise for the company that disposes of the assets; but, on the other hand, the company acquiring the assets gets its depreciation allowance only on the written down basis.
    There is a further condition that if the second company should subsequently dispose of the assets, then the balancing charge can be raised not merely to the extent of the written down value accepted by the second company, but to the total value of the original allowances made to the first company plus the allowances made to the second company when acquiring it. The question may arise of whether such an application can be made to the Surveyor for the written down value to be taken in circumstances where the acquiring company is outside jurisdiction.
    Obviously, when both the selling and the purchasing company are within jurisdiction, the Schedule, operates and an application can be made. The question whether such an application can be made when the acquiring company is outside jurisdiction is very complicated. It has been before the Special Commissioners on more than one occasion. The position is obscure, and I understand that it is likely to be settled by the courts. Therefore, the matter, to that extent, remains sub judice.
    So far as this Clause is concerned, it would, of course, give an option to the vendor company to claim under Paragraph 4 of the Fourteenth Schedule, without needing a simultaneous claim to be put forward by the purchasing company. I think it is open to two major objections, for which reason my right hon. Friend cannot accept it.
    10.30 p.m.
    First of all, it would undoubtedly enable a company transferring or disposing of assets to another company outside the jurisdiction to avoid the balancing charge. My hon. Friend talked as if the balancing charge is a penalty. It is
    1138
    not a penalty, but a recoupment of what, in fact, has been an excessive allowance for depreciation in the past. The depreciation allowances are based on the fact that, in using the assets the company detracts from their value, in that they wear out. If it was shown that the assets had not worn out, but had been enhanced, there would be no case for the depreciation allowance, and the whole point of the balancing charge is that it recoups the Treasury for allowances which have been excessive, and, which, in point of fact, have been shown by experience to have been excessive.
    Mr. Stevens: Would my hon. Friend agree that it is only in countries where the transfer has been dictated by political circumstances, where the political circumstances did not allow the sale or transfer to the other company in this country, and, therefore, no possibility of a balancing charge would arise in this country, because there was no sale or transfer? Therefore, is it not the political circumstances of the other country which give rise to the possibility of the balancing charge?
    Mr. Maudling: That is perfectly true. If there was no sale or transfer of the assets, no question of a balancing charge would arise. The point I was making is that the balancing charge, when it is levied, cannot properly be described as a penalty.
    The other objection to the Clause is that the safeguards to which my hon. Friend referred, are not really adequate, in that a loophole would still be open to transactions designed to avoid the balancing charge. It is perfectly clear that there is, written into the new Clause, provision from the Fourteenth Schedule dealing with transactions the purpose of which is to get an allowance or deduction under Parts X and XI of the Act of 1952. but the phrase about allowances would not cover the balancing charge. Therefore, the precautionary phrase in the new Clause would not be adequate to cover a transaction designed mainly to avoid the balancing charge.
    My hon. Friend made the point that the Treasury have the power of control over the movement of companies, but whether that is to be a permanent or a transient feature of our economy is another matter. We must surely deal with

    1139
    this question as part of the Income Tax law, and the point I have been making is that there are two main disadvantages in this proposal. The first is that it would enable companies to transfer assets overseas to avoid the balancing charge, and, second, as drafted, it certainly would leave a loophole to transactions designed to avoid the balancing charge.
    The question whether a joint application by parties, one of whom is outside the jurisdiction, can be made to the surveyor is before the court and still sub judice. I ask my hon. Friend to await the decision of the court, and, in the meantime, for the reasons I have tried to explain, my right hon. Friend regrets that he cannot accept the new Clause.
    Mr. Stevens: Having regard to the fact that the matter is sub judice, and having no desire to prejudice it one way or the other, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(RELIEF TO CERTAIN PERSONS WHERE COPYRIGHT ASSIGNED FOR LUMP SUM OR LUMP SUMS.)
    Section four hundred and seventy-one of the Income Tax Act, 1952, shall have effect as if there were added after subsection (3) thereof the following subsection: —
    "(4) If the consideration for such an assignment or grant as is mentioned in subparagraph (b) of subsection (1) of this section consists wholly or partially of more than one lump sum payment, he may without prejudice to any other claim which he is by the preceding provisions of this section authorised to make, claim that this section shall apply as if for the words 'a lump sum payment' contained in the said sub-paragraph (b), there were substituted the words 'lump sum payments,' and as if for the words at the end of the said subsection (1) 'that payment,' there were substituted the words 'each of those payments';"
    and furthermore as if—

    (a) subsection (4) of the said section were renumbered subsection (5), and as if after the words "under subsection (1),"therein there were inserted the words" or subsection (4)"; and

    (b) in subsection (8) thereof there were inserted after the word "returnable" the words "and a payment in respect of accrued royalties":

    Provided always that this section shall be of no effect in any case in which the result of any person making a claim under section four hundred and seventy-one of the Income Tax Act, 1952, as amended by this section,
    1140
    or the result of the application of the said section of the Income Tax Act, 1952, as amended by this section, in consequence of such a claim would or might be to increase the amount of any tax payable by any person other than the person making the said claim. —[Mr. Wyatt.]
    Brought up, and read the First time.
    Mr. Woodrow Wyatt: I beg to move, "That the Clause be read a Second time."
    I should like to say at the outset that I should not be able to move this Motion at all if it were not for the unremitting labours of my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) in getting this previously intractable Clause into order, a task which has defeated many people in the past and which defeated us for a time even this year. The fact that this new Clause is now on the Order Paper will give pleasure to a great many people, many of them distinguished, as correspondence in the columns of "The Times" has shown, because there is a great deal of sympathy and support for this new Clause.
    Nobody, I think, will be more glad to see this new Clause now in order and called by you, Mr. Deputy-Speaker, than the present Chancellor of the Exchequer, because he himself in the past laboured in vain to get this new Clause in order so that it could be called in this House. Well, we have done the job for him. We have at least been able to get in order the new Clause which he himself last year put on the Order Paper, although, unfortunately, he did not have the skilled services of my right hon. and learned Friend the Member for Neepsend to assist him through this arduous course. We have done it for him, and we cannot but expect that he will accept this new Clause gladly by the time we have concluded the debate upon it, because it is his own child.
    My reasons for putting this new Clause down are exactly the same as those which actuated the present Chancellor last year, only I do have some additional reasons as well, about which I propose to tell the House. This new Clause seeks to amend Section 471 of the Income Tax Act, 1952. Very briefly, Section 471 of the Income Tax Act, 1952, enables authors, artists, composers and sculptors to get some equity in their Income Tax payments, but not very much. It enables them to spread back over the three

    1141
    previous years the advance lump sum payment they may have received for the book, or the piece of sculpture or painting concerned. This applies only where they have, in fact, taken three years to make the particular literary or artistic work. If they have taken only two years to make it, they may spread the advance lump sum back over the previous two years.
    That has a great defect in it, because the Section as at present in operation in the Income Tax Act, 1952, does not appreciate the method on which publishers, for example, work, because the system in the publishing business is that most authors receive quite a modest advance royalty, and the speculation as far as the publishers and the author is concerned is with regard to the subsequent royalties which may be earned upon the work. If an author is paid an advance royalty of, say, £200 and his book earns £6,000 for the first year, he is only allowed to spread back the first £200 and not the subsequent £6,000.
    What has been done by this curious system is to make authors, artists, painters, composers and sculptors pay more Income Tax than any other section of the community upon a similar average sum. In fact, we have penalised those who live by producing artistic works of one kind or another more heavily than those who do not.
    For example, supposing two men earn an average of £2,500 for seven years, the man who earns his £2,500 flat each year pays less Income Tax and Surtax than the man who earns it unevenly—and most authors who manage to keep up an average of £2,500 over a period of seven years will earn it unevenly. In one year it may be £5,500; in another year it will be only £1,000. The net effect of it is that the man who earns his average of £2,500 a year and actually earns £2,500 a year pays something like £350 less in Surtax than the man who earns it unevenly—the man, in fact, who lives by writing books, composing music or painting pictures.
    This not only applies to Surtax payers but to people of quite modest incomes. For example, somebody who earns an average income of £600 a year, who is married with one child, if he earns £600 a year each year pays £34 less Income Tax than the author who earns his
    1142
    income unevenly over, say, three years if he earns £400 in each of the first two years and £1,000 in the third year; the author would have been subject to paying £34 more Income Tax than the person earning the same amount each year. Surely this cannot be the intention of our Income Tax law, for it is putting a penalty on those who add to the artistic works of the nation.
    I could give a good many examples of how this operates in actual cases, but, as the hour is late, and I do not want to prolong the discussion, I will content myself with only one or two. Take the case of a novel which occupied about three years in writing, which produced £1,800 in advance payments from at home and abroad, for which, in the year of publication, an additional £4,000 was received by way of royalties. Under the operation of Section 471 of the Income Tax Act, 1952, that £4,000 is taxed as income for that single year, and the author can only spread back the advance of £1,800, although during the years when the book was in process of writing, the author's earnings were practically negligible.
    Another example is that of a historical work, and here there was a publisher who was not very generous, and the advance payment was only £100. In the year of publication royalties amounted to some £640, but, as in all such cases, the author could spread back only the £100. There is the case of a writer whose normal income was £300 a year from writing and who had an isolated success. He had written for a number of years without great commercial profit, although the critics considered his work as having considerable distinction. Then this writer produced this success, well written, and well received, and he received £6,000; but he could spread back only the small advance royalty which he had received.
    Such examples could be duplicated many hundreds of times. I am a member of the Executive Committee of the Society of Authors, and I know that many more examples could be quoted. I would, however, call attention to the fact that, under the operation of the law at present, the more scholarly type of book, which is not generally welcomed by commercial publishers because it is not likely to earn a great deal of money, may come from an author who then writes a great popular success. But, of

    1143
    course, he gets no benefit from the Section at all.
    The Chancellor knows all these arguments because it was he who last year promoted a similar Clause to that on which I am speaking. Therefore, I will not labour my points, because his acceptance of the Clause must be a foregone conclusion. But, to reinforce the argument, I would just add that this would not only help authors, but artists, composers of musical works, and sculptors who assign the copyright of their works. But, it helps authors most, because the majority of books take many months, or more than a year to write; yet the system of most publishers is that, after the original advance payment is made, subsequent royalties are paid every six months—two a year—and all the Clause seeks to do is to enable an author, and the other persons concerned, to get the benefit, not only for the original lump sum, but also for the accrued royalties paid in the first year of publication.
    10.45 p.m.
    Although this is only a very small and modest attempt to right wrongs which are at present done to authors and others by the Income Tax laws, I think it would be regarded as a very important step towards righting those wrongs, and I think that the Government, having begun the closing down of museums and art galleries and thus disappointed those who thought quite wrongly that the Conservative Party was the guardian of our culture, might seek to redeem themselves a little tonight by showing a genuine interest in culture rather than by trying to curtail its enjoyment.
    The author is not allowed to turn his works into capital as are most people in other trades. He has no pension rights; he cannot plough back his profits in order to ensure a continuity of product, and he has no means of providing for the day when his machine wears out because he is the machine, and he will reach a spent period at some point in his life.
    Today we have an arrangement by which we try not to tax knowledge. There is no Purchase Tax on books, but by some curious compensatory mechanism in the Treasury mind the tax falls on the authors instead. Therefore, the authors are taxed more heavily than those of
    1144
    comparable earning capacity. I have pleasure in moving this new Clause, and I am sanguine that the Chancellor will accept it.
    Sir Frank Soskice: I beg to second the Motion.
    The principle upon which the Clause, so ably moved by my hon. Friend the Member for Aston (Mr. Wyatt), is based has already been accepted for many years past as part of our tax code. The principle was first introduced into the Finance Act, 1944, and is now reproduced in Section 471 of the consolidating Income Tax Act, 1952. All this Clause does is to propose two very modest extensions to that principle in the existing code. My hon. Friend has explained what they are.
    The second one, which he took first, is that which would include royalties as well as payments on account of royalties in advance. My hon. Friend has explained the reason for that, which particularly applies to authors and the general method of payment which they receive. The other point with which the Clause deals is to provide that the existing Section shall be applicable not only where a single lump sum payment which the author desires to spread back is concerned, but where there is more than one lump sum payment which in a given year he receives as part of his remuneration
    The Clause seeks to compass those two objects which, as I have said, are really very modest extensions of the existing Section, and for the reasons which my hon. Friend gave I very much hope the Chancellor will be able to see his way to accept what is, in effect, his own Clause in a slightly different form.
    Mr. Beverley Baxter: I have not studied this Clause sufficiently to know whether or not this is the best way to handle this matter, but it seems to open up a bit of hope that we shall do something to treat the creative artist in a more civilised and kindly way than we do now. I do not think there is any country in the world where the creative artist has the cards stacked so heavily against him as here.
    The other day we saw the case of an author who wanted to sell even up to 20 years of publication the copyright of his novel and was not allowed to do so. That was regarded as income. The

    1145
    author cannot charge anything, for renewal of plant, and yet he has an engine in his head which needs rest and renewal. For a country of such great civilised standards as this, the creative artist is treated absolutely unfairly; and whether this is the best way or not, it is a move in the right direction.
    I think the Chancellor of the Exchequer is a Fellow of the Royal Society of Literature. He does not deny it and does not accept it. If he is not, I can arrange that he become one, for a payment of 4 guineas—I got it by paying 4 guineas. Therefore, I support this in atmosphere and climate, but no further.
    Mr. Christopher Hollis: I have a double interest to declare: that of an author and a publisher. In my capacity as an author I want authors to get as much money as possible; in my capacity as a publisher I want them to get as little money as possible. I approach this impartially, but I join with other speakers in hoping that the Chancellor of the Exchequer will either be able to accept this Clause or something to the same effect, because, whether or not this is the best way of dealing with the problems of authors, it is certainly an improvement, as Members opposite showed.
    There may be a great deal to be said for examining the whole legal basis of authorship. Here we are not being asked to do that, but to apply a principle already embodied in the law. It is fairly shown and proved that authors do suffer under an exceptional disability, or rather a number of exceptional disabilities, from the point of view of tax.
    First, as the hon. Member for Aston (Mr. Wyatt) said, everyone who earns his income unevenly has a rough passage with the Income Tax as things are at present. Secondly, as my hon. Friend the Member for Southgate (Mr. Baxter) said, authors cannot charge against expenses as other people can. I remember a distinguished author, Mr. X, once went to the Income Tax authorities and they agreed that it must be a very expensive thing to be Mr. X, and wrote down several thousand pounds in respect of his being that distinguished person. But that could not happen in these stricter days. Furthermore, it takes not merely three years to write a book. All artistic work is the product of a whole lifetime.
    1146
    Whistler once said that a picture had taken him a lifetime. Therefore, to charge the author the total Income Tax on the receipts of one particular year— receipts that accidentally fall in that year —is an extremely inequitable thing.
    What exactly, in this Clause, constitutes a lump or, still more, two lumps, I am not quite certain. I should have thought that payments against royalties were not lump sums at all; they might be crumbs, but not lumps. The point I want to make is that it would be, in general, very inequitable to charge an author his entire Income Tax simply in relation to the year in which he receives his income.
    The principle has already been conceded in allowing him to spread over three years his advance royalty payments. There cannot conceivably be any argument that it is right to allow him to spread advance royalty payments over three years and not to allow him to spread his accruing royalty payments over three years. That is all hon. Members are asking in this Clause, and it seems to me that it would be very hard indeed to deny what they are asking.
    The Chancellor of the Exchequer (Mr. R. A. Butler): The hon. Member for Southgate (Mr. Baxter) is not quite correct. I did not buy my Fellowship of the Royal Society of Literature at the cost of three guineas; I was elected President at no cost at all. Therefore, while in my present office I would willingly grant the hon. Member the dignity he so fully deserves, of a Fellow of the Society, even if he were to approach me in the right sense without undue financial sacrifice I could not say that our cases are exactly equal because his merit is greater than mine.
    The hon. Member for Devizes (Mr. Hollis) has spoken on a subject which he knows better than I and with the rank of publisher as well as author and has given us a very balanced view of the position. The hon. Member for Aston (Mr. Wyatt) has said that if a book is well written and well received it deserves proper attention from the Inland Revenue. I can only say that I was glad to congratulate him on his recent book on South-East Asia to which I would like to give this unsolicited publicity and say that it was well written and, by me, well received.

    1147
    I have sponsored this sort of Clause in the past. The only difference was that I was never able to get my Clause accepted by the Table, despite every sort of device and effort made in the last Finance Bill. But he, with the aid of his right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) has been able to get an immediate result. I am sorry to see that the "heavenly twins," the hon. Members for Stechford (Mr. Roy Jenkins) and for Gloucestershire, South (Mr. Crosland) are not present. I hope that they will resume their attendance because they have been so regular and permanent a feature of our debates. I will then be able to leave the hon. Member's speech to the hon. Member for Gloucestershire, South.
    Now we come to the merits of the matter. The position as I see it is that we are entitled to examine the Clause which, we are informed, is absolutely watertight thanks to that legal luminary the former Solicitor General, the right hon. and learned Member for Neepsend. One of my difficulties—and here I must apologise to the House for being slightly technical—is to understand the drafting of the Clause. I have taken great care to examine the legal aspects of the Clause, because I was so impressed that it was able to defeat the Chair. On examining the Clause I find that the arithmetic of the subsections is very badly done.
    For example, after inserting the new subsection (4), it re-numbers the original subsection (4) as (5) but omits to provide for the consequential re-numbering of subsections (5) to (8). That I should have thought quite sufficient to prevent the Table accepting the Clause. But not at all. The right hon. and learned Gentleman is able to bull-doze his way through and to succeed in passing the Table, while I tried to pass it the whole of last year. I am suffering from a deep sense of injustice which is a relic of a year ago before I assumed the heights I have now.
    I find there is great difficulty in construction regarding the time limit laid down by the right hon. and learned Member by the original subsection (4) which says that a claim under subsection (1) must be made within 12 months from the end of
    1148
    "the year of assessment mentioned in that subsection."
    This means the year mentioned in subsection (1)—to stick to the pure clarity for which the right hon. and learned Member is so famed, but not on this occasion—for that is the subsection which has just been referred to, if I am not mistaken. But paragraph (a) of the new Clause would set beside that reference an alternative reference to the new subsection (4). The new subsection (4) makes no mention of any year of assessment. In the case of a claim by virtue of the new subsection, what, I would ask the right hon. and learned Member, is the time limit?
    I think he will see that his Clause is riddled with difficulties and, were we able to accept the principle, we would find very great difficulty in accepting its practice and also for a further reason to which I shall come shortly, namely, that his definition of lump sum payment does not deal adequately with the question of royalties.
    11.0 p.m.
    Now I come to some of these other matters. The House will be aware, as has been stated, that the existing relief for authors was introduced by the then Chancellor of the Exchequer, now Lord Waverley. I hope that that name will cause no distress on the other side of the House. It was introduced, by a singularly inspired and intelligent Chancellor of the Exchequer, in 1944 by Section 24 of the Finance Act of that year. I anticipated that in putting forward this matter, hon. Members opposite would pretend that by using the introduction of Section 24 of the 1944 Act they were simply trying to persuade the House that they were pushing a little further into territory already mastered by an even greater intellect, namely, Lord Waverley. That is not the case.
    When we go into this matter and examine the 1944 Act, and Section 24 of it, we find that the right hon. and learned Gentleman by trying to push further is entering territory already fully explored by the Millard Tucker Committee, and territory in which the difficulties are very great. Let me take the technical matter of these lump sum payments. In the 1944 Act, under Section 24, lump sum payments for copyright are already

    1149
    allowed to be spread, and they are demonstrably in a class by themselves. They are a lump sum in return for the sale of copyright, and they do not resemble the ordinary increments which are represented by royalties. I do not think that one can make similitude between lump sum payments as described in the Clause, and the original intention of the 1944 Act. This is only a technical matter.
    The really difficult matter in dealing with the Clause is the question how we are to deal with persons other than authors, the problem of fluctuating rewards, the problem of amassing a large part of one's rewards in one year and then suffering tax on that. Amassing of rewards is not confined to authors, musicians, or to one section of the population. I will remind the House of what the Millard Tucker Committee said, speaking from memory, in paragraph 85. The Committee said that while it might be true that authors as a class are particularly exposed to vicissitudes of this nature, there are many other professional persons as well as owners of businesses whose profits are liable to wide fluctuations.
    The Committee went on to say that a farmer might enjoy an especially profitable year sandwiched between two bad ones, and indeed almost any class of profession or business may earn in one year a far higher rate of profit than in the years before and after. It concluded that any relieving provisions ought to apply to professions and businesses generally. I am afraid that that must be the case.
    I am myself personally interested in authors, and as has been previously stated in the House, I have attempted to move, and been unable to move, a Clause on these lines.
    Mr. Wyatt: Surely, when the right hon. Gentleman put down last year, as a Private Member, a new Clause, he must also have had these considerations in mind, namely, that other professions were involved. Nevertheless, he singled out authors, artists, composers, and so forth, and put down a Clause. We have done exactly the same as he did. Why should the situation have changed in this respect in one year?
    Mr. Butler: The hon. Member is saying what I have said myself. I did put down a Clause because I was then convinced in this matter. But one need only read paragraph 85 of the Millard Tucker Report which is a form of education I recommend to the hon. Member. Perhaps if he studies this matter as much as I have been able to do he will become as intelligent on the subject as I am now.
    Mr. Wyatt: May I read to the right hon. Gentleman another part of the paragraph he has quoted:
    "One class which is perhaps more exposed than most to fluctuation is that of authors …"
    Then it goes on to say that something ought to be done for authors in particular.
    Mr. Butler: I have not yet done with my case. I observe that in the case of many right hon. Gentlemen opposite the sweets of office have induced a greater education than is apparent in opposition. Since I have had an opportunity of studying this matter more closely I have improved my own knowledge of the difficulties, some of which I suspected.
    The hon. Gentleman has not improved his case by references to the Millard Tucker Report. In fact, if anything is to be adduced from that Report it is clear that they regard authors as being in a class which cannot be singled out and that this is a problem which affects many professions of many sorts and which cannot be dealt with on the subject of authors, musicians or artists alone.
    Now we come to an even greater difficulty which was referred to by my hon. Friend the Parliamentary Secretary to the Ministry of Civil Aviation, who has given us so much help in our debates. Speaking on Committee stage on a broadly analogous matter, he drew attention to the Millard Tucker Committee's restriction solely to trades and professions and said that they completely omitted all reference to the problem of accruing benefits in the case of employees, or, to put it in more simple language, workpeople.
    I do not think it would be equitable to deal with the question of accruing sums coming within one year and susceptible to tax if we confined it either to authors, or to trades and professions as the Millard Tucker Committee suggested, unless we extend it to all types and all

    1151
    classes susceptible to this particular difficulty. That is the weakness of the Millard Tucker Committee Report.
    The problem is even more complicated than the Report indicates. I do not believe that right hon. and hon. Gentlemen opposite would wish to restrict any application of legislation to one particular type, or class or profession or section. I therefore reiterate what was said by the Parliamentary Secretary to the Ministry of Civil Aviation. This matter should be dealt with in relation to the general principle, namely, the difficulty of persons whatever their occupation or calling or type of work, who have sums accruing to them in a particular year which suffer from the depredations of the tax collector, and which may in some convenient manner be spread out so that the tax collector may approach them more fairly.
    It is part of my duty in my present office to be absolutely fair to all sections. My personal predilection is still in favour of helping authors. I have read letters in the newspapers and from certain hon. Members of this House and from hon. Members who have left this House—A. P. Herbert and others—and I know there is strong feeling on this subject and that authors are having a hard struggle today, as are artists.
    I know that there are sections of the population who want to be helped, but I do not think we can deal with this matter by one section alone. The only remaining point in the argument which I must fulfil, to be dialectically complete, is why I did not do it in this Finance Bill. The answer is that I was not satisfied that the case was complete. I am very sorry to draw out again the old war horse of the Royal Commission on Taxation, but we are expecting some advice on the subject. As it extends beyond one section and class it will have to be dealt with in a comprehensive way, and I did purposely not include it in the Finance Bill this year, despite my personal predilection to do so.
    I can only ask the House to await a future Finance Bill. In the long and glorious future of this Government, and before the end of its tenure of office, I hope that this matter may be dealt with by myself or my successor in this
    1152
    Government so that we can be fair to all sections. I hope that the delay will not be too great because I am greatly interested, and I regard it as a duty to put it right in a much more homogeneous manner than that suggested by the hon. Gentleman.
    Sir F. Soskice: With the permission of the House I would like to speak again as I seconded the Clause rather briefly, and as the Chancellor referred to me I would be very glad to do so. The whole House must feel great sympathy with the Chancellor. Last year he did his best, unsuccessfully, to do precisely what he is being asked to do now. In that embarrassing situation he proceeds to try to pick holes in the drafting. Even if it is defective, which I do not accept, except in one minor detail, then, of course, that could be put right. The right hon. Gentleman has frequently said that when moving Clauses in the past.
    But the Clause fact is not open to the criticism which the right hon. Gentleman advanced. The time within which a claim must be made is precisely the same time as is provided in Section 24 of the 1944 Act. A lump sum payment can perfectly well, as a matter of principle, include an accrued sum of royalties. That is precisely what the right hon. Gentleman last year wanted it to include when he tried to draft this Clause unsuccessfully, and the only thing wrong with the Clause is that one subsection in section 24 has not been renumbered. That is a minor difficulty which can easily be put right.
    The right hon. Gentleman's answer on that point is entirely specious, and he knows that it is. He is, of course, in a difficult and embarrassing situation. Having referred to the drafting, and given an answer which is easily seen through, he then went to the matter of principle which is more substantial. What he said was that he could not isolate the position of authors. To begin with their position has already been accepted in principle. If it is now impossible to put authors in a separate category why was it that Lord Waverley thought it was possible to do so when the 1944 Act was passed?
    Mr. R. A. Butler: The right hon. and learned Gentleman knows perfectly well that Section 24 of the 1944 Act dealt solely with the lump sum in payment of

    1153
    copyright, and did not deal with royalties, and I do not accept his drafting, as followed out in this Clause.
    Sir F. Soskice: The lump sum payment referred to in Section 24 of the 1944 Act also included royalties. It did not include accrued royalties. It included a sum on account on royalties, and all that this does is to extend that expression in the 1944 Act to include royalties already accrued.
    We start with the position that it has been recognised by the noble Lord to whom the right hon. Gentleman refers, and accepted by this House, that we can fairly and properly regard as standing in a separate category the case of authors and artists and other persons included in Section 24 of the 1944 Act. If it was possible and proper then, it is equally possible and proper now. For the right hon. Gentleman to try to ride off on that distinction is hardly worthy of him.
    11.15 p.m.
    He says that viewed in its broad context this is not a problem which applies only to authors, but for the reasons given by my hon. Friend it does, because of the way in which they are paid, apply in particular to them. When I ventured to move a rather wider new Clause during the Committee stage I pointed out, and I repeat it now, that the question of uneven payments is one which needs a broad review. But let us take one matter at a time and deal with the case of authors who already as a matter of principle are regarded as standing in a separate category.
    The right hon. Gentleman says, in effect, "I tried as best I could last year to do what you are trying to do today. I did not succeed in doing it, because I could not find the appropriate wording. I now agree that you have found the appropriate wording, subject to one or two minor defects which are easily put right. The situation is now exactly the same as it was last year but this year, for some peculiar perverse reason known only to myself I refuse to do what I wanted to urge the Government to do last year."
    Mr. Butler: The right hon. and learned Gentleman is falling into a great error. As he was unable to hear my speech last year, he does not know what argument I might have used.
    Sir F. Soskice: I know perfectly well what the new Clause was that the right hon. Gentleman proposed, and I heard the speech this year in which he said that he tried to do what is now being done. He said that he felt under a sense of injustice because he could not get his Clause passed by the Table, whereas we had succeeded in doing so. That is the whole burden of his case. He admitted frankly that he failed where we have succeeded.
    Then he said, in effect, that he had changed his mind for some reason which he would not indicate, and he proceeded to refer to the Millard Tucker Report. It is true that that Report says that this is a broad problem. I can only repeat that it has been accepted, presumably for reasons which commended themselves to the House and, as no change has been made since 1944 continued presumably to commend themselves to the House, that it is fair and just to make an exception in the case of authors and artists.
    The reason has been indicated by my hon. Friend. They receive uneven payments. They have to work for a long time to create the work which ultimately may achieve success and, for that reason, they are regarded as standing in a different position from the person who, broadly speaking, year in year out, can expect to make an even income. I should have thought—and I gather that the Chancellor accepts this—that it is obviously unreasonable that if a person receives a large sum in one year he should have to pay much more tax than if he received the same sum in even amounts over a number of years.
    I urge upon the House that the answer to which we have listened is about the most unsatisfactory one given in the course of the whole of the debates on this Bill—and that is saying a lot. The Chancellor knows that this is a fair and reasonable proposal. For some reason or other he feels too lazy to do it and, therefore, he begins by carping at the drafting. That can easily be put right. He then has recourse to the universal haven—the Millard Tucker Report—and then he says that the matter is to be further considered. For those reasons, if they can be so described, he says that he does not propose to do anything. That is a completely unreasonable and stone-walling attitude, and, if it is all

    1155
    the right hon. Gentleman can do in reply to this very reasonable proposal, so obviously fair, I very much hope that the House will divide and register its disapproval by turning the Government out on this Clause.
    Mr. Wyatt: May I, by leave of the House——
    Hon. Members: No.
    Mr. Wyatt: —add a few words to the brilliant speech of my right hon. and learned Friend——
    Mr. Butler: I do not think it is reasonable that more than one hon. Member of the Opposition should speak twice in the debate.
    Mr. Deputy-Speaker: The right hon. and learned Gentleman spoke by leave of the House, and the present speaker has the right to speak again.
    Mr. Wyatt: As we all knew he would, my right hon. and learned Friend has proved to be a better lawyer than the Chancellor of the Exchequer, and I can only ask my hon. Friends, after the speech they have just heard, to take his advice and follow him into the Lobby to do exactly what he said—turn the Government out for this very unsatisfactory answer.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 198; Noes, 216.

    Division No. 166.]

    AYES

    [11.21 p.m.

    Acland, Sir Richard

    Fernyhough, E

    McLeavy, F.

    Albu, A. H.

    Field, W. J.

    McNeil, Rt. Hon. H.

    Allen, Arthur (Bosworth)

    Finch, H. J.

    MacPherson, Malcolm (Stirling)

    Allen, Scholefield (Crewe)

    Foot, M. M.

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

    Anderson, Alexander (Motherwell)

    Forman, J. C.

    Mann, Mrs. Jean

    Attlee, Rt. Hon. C. R

    Fraser, Thomas (Hamilton)

    Manuel, A. C.

    Awbery, S. S.

    Freeman, John (Watford)

    Marquand, Rt. Hon. Ft A

    Barnes, Rt. Hon. A. J.

    Freeman, Peter (Newport)

    Mayhew, C. P.

    Bellenger, Rt. Hon. F. J.

    Gaitskell, Rt. Hon. H. T. N

    Mitchison, G. R.

    Bence, C. R.

    Gibson, C. W.

    Moody, A. S.

    Benn, Wedgwood

    Gordon Walker, Rt. Hon. P. C.

    Morgan, Dr. H. B. W

    Benson, G.

    Greenwood, Anthony (Rossendale)

    Morley, R.

    Beswick, F.

    Grey, C. F.

    Morris, Percy (Swansea, W.)

    Bing, G. H. C.

    Griffiths, David (Rother Valley)

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

    Blackburn, F.

    Griffiths, Rt. Hon. James (Llanelly)

    Mort, D. L.

    Blenkinsop, A.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Mulley, F. W.

    Blyton, W. R.

    Hall, John (Gateshead, W.)

    Murray, J. D.

    Boardman, H.

    Hamilton, W. W.

    Naily, W.

    Bottomley, Rt. Hon. A. G

    Hannan, W.

    Neal, Harold (Bolsover)

    Braddock, Mrs. Elizabeth

    Hargreaves, A.

    Orbach, M.

    Brockway, A. F.

    Hayman, F. H.

    Oswald, T.

    Brook, Dryden (Halifax)

    Healey, Denis (Leeds, S.E)

    Padley, W. E.

    Broughton, Dr. A. D. D

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

    Paling, Rt. Hon. W. (Deame Valley)

    Burton, Miss F. E.

    Herbison, Miss M

    Paling, Will T. (Dewsbury)

    Butler, Herbert (Hackney, S.)

    Hobson, C. R.

    Pannell, Charles

    Callaghan, L. J.

    Holman, P.

    Pargiter, G. A

    Carmichael, J.

    Houghton, Douglas

    Pearson, A.

    Castle, Mrs. B. A.

    Hoy, J. H.

    Peart, T. F.

    Champion, A. J.

    Hudson, James (Ealing, N.)

    Plummer, Sir Leslie

    Chetwynd, G. R

    Hughes, Emrys (S. Ayrshire)

    Porter, G.

    Clunie, J.

    Hughes, Hector (Aberdeen, N.)

    Price, Joseph T. (Westhoughton)

    Coldrick, W

    Hynd, H. (Accrington)

    Price, Philips (Gloucestershire, W)

    Collick, P. H.

    Hynd, J. B. (Attercliffe)

    Proctor, W. T.

    Craddock, George (Bradford, S)

    Irvine, A. J. (Edge Hill)

    Pursey, Cmdr. H.

    Cullen, Mrs. A.

    Irving, W. J. (Wood Green)

    Reid, Thomas (Swindon)

    Daines, P.

    Janner, B.

    Rhodes, H.

    Dalton, Rt. Hon. H.

    Jay, Rt. Hon. D. P. T

    Roberts, Rt. Hon. A.

    Darling, George (Hillsborough)

    Jeger, George (Goole)

    Roberts, Albert (Normanton)

    Davies, A. Edward (Stoke, N.)

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

    Roberts, Goronwy (Caernarvonshire)

    Davies, Ernest (Enfield, E.)

    Johnson, James (Rugby)

    Robinson, Kenneth (St. Pancras, N.)

    Davies, Stephen (Merthyr)

    Johnston, Douglas (Paisley)

    Rogers, George (Kensington, N.)

    de Freitas, Geoffrey

    Jones, David (Hartlepool)

    Ross, William

    Delargy, H. J.

    Jones, Frederick Elwyn (West Ham, S.)

    Royle, C.

    Dodds, N. N.

    Jones, T. W. (Merioneth)

    Schofield, S. (Barnsley)

    Donnelly, D. L,

    Keenan, W.

    Shinwell, Rt. Hon. E.

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

    Kenyon, C.

    Short, E. W.

    Ede, Rt. Hon. J. C.

    King, Dr. H. M.

    Shurmer, P. L. E.

    Edelman, M.

    Lee, Frederick (Newton)

    Silverman, Julius (Erdington)

    Edwards, John (Brighouse)

    Lever, Leslie (Ardwick)

    Simmons, C. J. (Brierley Hill)

    Edwards, W. J. (Stepney)

    Lewis, Arthur

    Slater, J.

    Evans, Albert (Islington, S.W.)

    Logan, D. G.

    Snow, J. W.

    Evans, Edward (Lowestoft)

    MacColl, J. E.

    Sorensen, R. W.

    Evans, Stanley (Wednesbury)

    McGhee, H. G.

    Soskice, Rt. Hon. Sir Frank

    Ewart, R.

    McKay, John (Wallsend)

    Sparks, J. A.

    Stewart, Michael (Fulham, E)

    Tomney, F.

    Williams, Rev, Llywelyn (Abertillery)

    Stokes, Rt. Hon. R. R.

    Ungoed-Thomas, Sir Lynn

    Williams, Ronald (Wigan)

    Strachey, Rt. Hon. J.

    Wallace, H. W.

    Williams, W. R. (Droylsden)

    Strauss, Rt. Hon. George (Vauxhall)

    Watkins, T. E.

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

    Summerskill, Rt. Hon. E.

    Weitzman, D.

    Wilson, Rt. Hon. Harold (Huyton)

    Swingler, S. T.

    Wells, William (Walsall)

    Winterbottom, Richard (Brightside)

    Sylvester, G. O.

    West, D. G

    Woodburn, Rt. Hon. A.

    Taylor, Bernard (Mansfield)

    Wheatley, Rt Hon John

    Wyatt, W. L.

    Taylor, John (West Lothian)

    White, Henry (Derbyshire, N.E)

    Yates, V. F.

    Thomas, David (Aberdare)

    Whiteley, Rt. Hon, W

    Younger, Rt. Hon. K.

    Thomas, George (Cardiff)

    Wigg, George

    Thomas, Iorwerth (Rhondda, W)

    Wilkins, W. A.

    TELLERS FOR THE AYES:

    Thomas, Ivor Owen (Wrekin)

    Willey, Octavius (Cleveland)

    Mr. Bowden and Mr. Popplewell.

    NOES

    Aitken, W. T.

    Graham, Sir Fergus

    Nicholson, Godfrey (Farnham)

    Allan, R. A. (Paddington, S.)

    Gridley, Sir Arnold

    Nicolson, Nigel (Bournemouth, E.)

    Amery, Julian (Preston, N.)

    Grimond, J.

    Nield, Basil (Chester)

    Amory, Heathcoat (Tiverton)

    Grimston, Sir Robert (Westbury)

    Noble, Cmdr. A. H. P.

    Anstruther-Gray, Major W, J.

    Hare, Hon. J. H.

    Nugent, G. R. H.

    Arbuthnot, John

    Harris, Frederic (Croydon, N.)

    Oakshott, H. D.

    Ashton, H. (Chelmsford)

    Harris, Reader (Heston)

    Odey, G. W

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

    Harrison, Col. J. H. (Eye)

    Ormsby-Gore, Hon. W. D

    Astor, Hon. J. J. (Plymouth, Sutton)

    Harvey, Air Cdre A. V. (Macclesfield)

    Orr, Capt. L. P. S.

    Baldwin, A. E.

    Harvey, Ian (Harrow, E.)

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

    Banks, Col. C.

    Hay, John

    Osborne, C-

    Barber, A. P. L.

    Heald, Sir Lionel

    Partridge, E.

    Barlow, Sir John

    Heath, Edward

    Peto, Brig. C. H. M

    Baxter, A. B.

    Henderson, John (Cathcart)

    Peyton, J. W. W.

    Beach, Maj. Hicks

    Higgs, J. M. C.

    Pickthorn, K. W. M.

    Beamish, Maj. Tufton

    Hill, Dr. Charles (Luton)

    Pilkington, Capt. R. A.

    Bell, Philip (Bolton, E.)

    Hill, Mrs. E. (Wythenshawe)

    Pitman, I. J.

    Bennett, F. M. (Reading, N.)

    Hinchingbrooke, Viscount

    Powell, J. Enoch

    Bennett, William (Woodside)

    Hirst, Geoffrey

    Price, Henry (Lewisham, W.)

    Birch, Nigel

    Holland-Martin, C. J.

    Prior-Palmer, Brig. O. L.

    Bishop, F. P.

    Hope, Lord John

    Profumo, J. D.

    Black, C. W.

    Hornsby-Smith, Miss M. P.

    Raikes, H. V.

    Bossom, A. C.

    Horobin, I. M.

    Redmayne, M.

    Bowen, E. R.

    Horsbrugh, Rt. Hon. Florence

    Remnant, Hon. P.

    Boyd-Carpenter, J. A.

    Howard, Greville (St. Ives)

    Renton, D. L. M.

    Boyle, Sir Edward

    Hudson, Sir Austin (Lewisham, N)

    Roberts, Peter (Heeley)

    Bromley-Davenport, Lt.-Col. W. H.

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

    Robertson, Sir David

    Brooke, Henry (Hampstead)

    Hurd, A. R.

    Roper, Sir Harold

    Brooman-White, R. C.

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Ropner, Col. Sir Leonard

    Buchan-Hepburn, Rt. Hon. P. G. T

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

    Russell, R. S.

    Billiard, D. G.

    Hyde, Lt.-Col. H. M.

    Ryder, Capt. R. E. D.

    Bullock, Capt. M.

    Hylton-Foster, H. B. H.

    Salter, Rt. Hon. Sir Arthur

    Bullus, Wing Commander E. E

    Johnson, Eric (Blackley)

    Schofield, Lt.-Col. W. (Rochdale)

    Burden, F. F. A.

    Jones, A. (Hall Green)

    Scott, R. Donald

    Butler, Rt. Hon. R. A. (Saffron Walden)

    Kaberry, D.

    Scott-Miller, Cmdr. R.

    Carson, Hon. E.

    Kerr, H. W. (Cambridge)

    Shepherd, William

    Cary, Sir Robert

    Lambert, Hon. G.

    Simon, J. E. S. (Middlesbrough, W)

    Channon, H.

    Lambton, Viscount

    Smithers, Peter (Winchester)

    Churchill, Rt. Hon. W. S.

    Langford-Holt, J. A.

    Soames, Capt. C.

    Clarke, Col. Ralph (East Grinstead)

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

    Spearman, A. C. M.

    Cole, Norman

    Legh, P. R. (Petersfield)

    Speir, R. M.

    Cooper, Sqn. Ldr. Albert

    Lindsay, Martin

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

    Craddock, Beresford (Spelthome)

    Linstead, H. N.

    Stevens, G. P.

    Cranborne, Viscount

    Lloyd, Maj. Guy (Renfrew, E.)

    Storey, S

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

    Lockwood, Lt.-Col. J. C.

    Strauss, Henry (Norwich, S.)

    Crosthwaite-Eyre, Col. O. E.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Stuart, Rt. Hon. James (Moray)

    Crowder, Petre (Ruislip—Northwood)

    Lucas, P. B. (Brentford)

    Studholme, H. G.

    Darling, Sir William (Edinburgh, S.)

    Lucas-Tooth, Sir Hugh

    Summers, G. S.

    Deedes, W. F.

    McAdden, S. J.

    Sutcliffe, H.

    Dodds-Parker, A. D.

    Macdonald, Sir Peter (I. of Wight)

    Taylor, Charles (Eastbourne)

    Doughty, C. J. A.

    Mackeson, Brig, H. R.

    Taylor, William (Bradford, N.)

    Drewe, C.

    McKibbin, A. J.

    Teeling, W

    Duncan, Capt. J. A. L.

    McKie, J. H. (Galloway)

    Thomas, P. J. M. (Conway)

    Duthie, W. S.

    Maclean, Fitzroy

    Thompson, Kenneth (Walton)

    Eccles, Rt. Hon. D. M.

    Macmillan, Rt. Hon. Harold (Bromley)

    Thompson, Lt.-Cdr. R. (Croydon, W.)

    Erroll, F. J.

    Macpherson, Maj. Niall (Dumfries)

    Thorneycroft, Rt. Hn. Peter (Monmouth)

    Fell, A.

    Maitland, Patrick (Lanark)

    Thornton-Kemsley, Col. C. N.

    Finlay, Graeme

    Manningham-Bulter, Sir R. E.

    Tilney, John

    Fisher, Nigel

    Marshall, Douglas (Bodmin)

    Turner, H. F. L

    Fleetwood-Hesketh, R. F.

    Marshall, Sir Sidney (Sutton)

    Turton, R. H.

    Fletcher-Cooke, C.

    Maudling, R.

    Tweedsmuir, Lady

    Fort, R.

    Maydon, Lt.-Cmdr. S. L. C.

    Vane, W, M. F.

    Fraser, Hon. Hugh (Stone)

    Medlicott, Brig. F.

    Vaughan-Morgan, J. K

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Mellor, Sir John

    Vosper, D. F.

    Galbraith, T. G D. (Hillhead)

    Molson, A. H. E.

    Wakefield, Edward (Derbyshire, W)

    Gammans, L. D.

    Morrison, John (Salisbury)

    Wakefield, Sir Wavell (Marylebone)

    George, Rt. Hon. Maj. G. Lloyd

    Mott-Radclyffe, C. E.

    Walker-Smith, D. C.

    Gomme-Duncan, Col. A.

    Nabarro, G. D. N.

    Ward, Hon. George (Worcester)

    Gower, H. R.

    Nicholls, Harmar

    Ward, Miss I. (Tynemouth)

    1158

    1159

    Waterhouse, Capt. Rt. Hon. C

    Williams, Sir Herbert (Croydon, E.)

    Wood, Hon. R

    Wellwood, W.

    Williams, R. Dudley (Exeter)

    White, Baker (Canterbury)

    Wills, G.

    TELLERS FOR THE NOES:

    Williams, Rt. Hon Charles (Torquay)

    Wilson, Geoffrey (Truro)

    Mr. Butcher and Major Conant.

    Question put, and agreed to.

    11.30 p.m.
    Mr. Gaitskell: I would suggest to the House that we have now reached the stage when we might well adjourn. We have dealt with a number of topics, ranging over many subjects, from pool betting, Purchase Tax, and amateur dramatic societies, to, finally, the plight of authors. We have listened to a most brilliant performance by my right hon. and learned Friend the Member for Sheffield, Neepsend (Sir F. Soskice) and, no doubt, the Chancellor would feel that this is the moment to retire hurt, forget the Finance Bill, and come back to fight another day. I hope, therefore, that he will agree that we might now adjourn.
    Mr. R. A. Butler: I had hoped that the right hon. Gentleman's glowing references were to myself, and that would certainly have helped in persuading me to have agreed to his suggestion. But I am in a double difficulty; I am deeply wounded
    1160
    by the observations which have been made, but glowing with pride over the success due to the right hon. and learned Gentleman the Member for Sheffield, Neepsend (Sir F. Soskice); in the circumstances, however, perhaps it would be better for me to swallow my hurt pride, and agree to make further progress tomorrow.
    We have one new Clause left, and then we shall be on the Bill itself again, and I must warn the House that it is essential, for the transaction of business, that we should finish the Report stage tomorrow. Therefore, in rising at this hour, which is reasonable, I ask hon. Members to come forward and finish the Bill—which is quite within our power.
    Further consideration of the Bill, as amended, adjourned.—[Mr. Gaitskell]
    Bill, as amended (in Committee and on re-committal,) to be further considered Tomorrow.

  TAXICABS, LONDON (LIMITATION)
  Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Heath.]
  11.34 p.m.
  Mr. W. J. Field: The subject which I wish to raise tonight is the decrease in the number of taxicabs in London and the increase in the proportion of drivers to man those cabs. Claims for the limitation of taxicab drivers in London have been made for many years, even before the last war. In those days, drivers had to work some 60 or 70 hours a week to earn sufficient money to live; and, indeed, in those days, some 60 per cent. of the total mileage travelled by drivers was with empty cabs. After the last war, the claim was renewed to prevent a recurrence of the conditions obtaining before the war. The trade union concerned was willing to consider the limitation of drivers but, to be fair to the proprietors, it was prepared to limit the number of cabs.
  The present position is that the limitation of cabs has come about quite fortuitously, through present economic conditions. The number of drivers to man those cabs remains the same, and the difficulties of the drivers are increasing daily. Many of the larger garages in the Metropolis are going on to a rota system which forces drivers to take compulsory rest days. As the number of cabs is getting less so the number of these enforced rest days is likely to increase, and, of course, the time in which the drivers can earn money will become less and their position will get more acute.
  I realise, as do the drivers, that the foremost consideration in this problem must be the public interest. At the same time. I am sure that all people who use these vehicles would desire that the drivers who drive them should have a decent living standard. It by no means follows that an excess of cabs or an excess of drivers, or of both, means that the public are provided with a better service. It may be that each cab does less work with a longer wait between trips.
  For instance, 12 cabs on a rank may be doing the work that could be done by six with a shorter wait between journeys,
  1162
  and there are certainly no signs at present that the public are not well served by the number of cabs on the road at the moment. It is my opinion that the number of cabs in the Metropolis would have to fall very appreciably still before the public interest became affected.
  There has been a great deal of pressure brought to bear upon the Home Office and the last Home Secretary to deal with this problem. As a result, my right hon. Friend referred the matter to a working party with a request that it should urgently consider it and report as soon as possible. I understand that the working party recommended that there should be a limitation both of the number of drivers and of the number of cabs in the Metropolis, and I believe that the numbers recommended were 7,000 cabs and 9,200 drivers.
  Perhaps the Under-Secretary of State for the Home Office will confirm whether those figures are correct. Since the working party considered the matter and reported on it the number of cabs in the London area has been falling still further. The latest figure I have been able to obtain, that for 30th May, is the figure of 5,808 cabs, and there is every indication that this number is falling week by week.
  The reasons for the fall in the number of cabs are not, of course, far to see. First of all, the price of new cabs has gone up enormously since the war, and today stands at around £1,500. This means, of course, that the proprietors have their troubles, too. Not only has the cost of cabs gone up, but also the cost of servicing, repairs, tyres and replacements. At present, the hire purchase regulations make a big cash outlay inevitable when the proprietors want to replace their cabs.
  Then, of course, there is the latest addition in the price of petrol. When the House discussed this matter recently the Financial Secretary to the Treasury said he would give careful and sympathetic consideration to a proposal made by the hon. Member for St. Marylebone (Sir W. Wakefield) that there should be a partial rebate on the petrol duty paid by the taxicab trade. I do not know whether any decision has been reached by the Treasury yet, but it is an indication that the Treasury was cognisant of the difficulties that the cab trade was experiencing.

  1163
  On top of that, many cabs are approaching the end of their useful life, and under present conditions the proprietors do not feel like replacing them. Economic conditions are against them. Thus, the number of cabs in the Metropolis is falling and the proportion of drivers to cabs is increasing. The latest figures are 5,808 cabs to 9,228 drivers. That is more than 1,000 cabs fewer than the working party recommended and almost exactly the same number of drivers.
  It is not generally realised that the cab drivers work on a commission basis only. They get no money for reporting for duty. If the cab is not available—if, for instance, it is under repair—they earn nothing. They get nothing extra for night work and they get no overtime. They have to provide from their normal earnings for all the eventualities that might befall them, as well as for their holidays.
  The House will realise that the cab trade is very quickly affected by adverse economic conditions. When personal economies have to be made, then taxis are possibly the first things to go. Thus, in present conditions, with two rises in taxi fares in recent months, the taxi trade is feeling the adverse conditions very much. There is also an effect on the tips the drivers receive.
  I submit that the plight of the taxi drivers is getting worse. Under existing conditions there can be no fear that the number of cabs in the Metropolis will not adequately deal with the present public demand. The number of cabs and customers is limited by economic conditions, and that means that all new drivers coming into the trade merely share out the limited custom and each one gets less. I strongly suspect that the Ministry of Labour would soon find useful and possibly important work for any aspirants intending to enter the trade who might be turned away by any action that the Home Office might take by virtue of these representations.
  This evening I am not concerned with the particular methods that the Home Office may adopt to limit the number of drivers in the Metropolis. I merely contend that the present position for
  1164
  drivers is very precarious and soon may become desperate. I submit that it is the duty of the Home Office to order a standstill on the number of entrants into the cab trade.
  11.44 p.m.
  Mr. David Weitzman: I would add a few words in support of the case so very ably made by the hon. Member for Paddington, North (Mr. Field). I have in my constituency a considerable number of cab drivers who feel that the fact that no limit has yet been imposed is a real denial of justice. This is really an old problem, but it has become particularly acute in the days following the war. Unless something is done to deal with the problem it must become still more acute.
  There are two points I wish to emphasise. The hon. Member for Paddington, North has pointed out that the number of cabs is steadily diminishing and must continue to do so. That fact is clearly due to economic conditions. A new cab costs in the region of £1,500 and one remembers the enormous increase in overhead expenses, the two tariffs which have been imposed and the price of petrol. It is clear that it is most difficult for anyone to purchase a cab. One sees that the figures have steadily gone down. The result, inevitably, means that cab drivers are going on to short time if not actual unemployment.
  Reference has been made to the working party under the auspices of the Home Office. I understand that working party examined the position and expressed the view in favour of a limitation so that there ought to be 9,200 to 7,000 cabs. That was the position in the latter part of 1950. Today, there are 5,800 cabs and still more than 9,200 drivers. If my arithmetic is correct, on the figures of the working party on limitation, there ought not to be more than 7,800 drivers. If matters go on as they are we shall have unemployment and short working hours and drivers will suffer seriously.
  I ask the Under-Secretary to say what has happened to the working party. Why have their findings not been carried out in relation to limitation? This is a matter which requires urgent attention.
  11.47 p.m.
  The Under-Secretary of State for the Home Department (Sir Hugh Lucas-Tooth): I am sure that the House is grateful to the hon. Member for Paddington, North (Mr. Field) for raising this subject tonight, because the Government recognise that there is here a real and urgent problem. It might be convenient if I give the House some figures which will illustrate the problem. In March, 1950, there were licensed in London 6,746 cabs. By the following year that number had fallen to 6,516 and by May, 1952, just over a month ago, the number had fallen again to 5,808. That was a fall of not far short of 1,000 cabs in just over two years.
  The corresponding figures for drivers are as follow: March, 1950, 8,843; March, 1951, 9,168, May last 9,228, an increase of not far short of 400 drivers. That figure needs the qualification that there has recently been a slight fall. The figure for drivers at the end of December last year was 9,278, so the House will see that in the first four months there has been a fall of 50. Nevertheless, the broad figures show that there has been a marked increase in the ratio of drivers to cabs.
  This is not a new problem. The trade union concerned, the Transport and General Workers' Union, have been making representations for many years to Home Secretaries asking them to set a limit on the licensing of drivers in the Metropolitan area. In reply to a Question on 3rd May, 1951, the former Home Secretary said that the Government had come to the conclusion that they would not be justified in present circumstances, and on the information before them in introducing legislation for the purpose of imposing a limit on the number of taxicabs and drivers which might be licensed by the Commissioner of Police for the Metropolis. That is a statement with which the present Home Secretary cannot disagree.
  The hon. Members who have spoken have asked for particulars about the report of a working party set up by the former Home Secretary. It consisted of civil servants and, therefore, their report was in the nature of internal advice which officials generally give the Government. In accordance with precedent that report has not been published and
  1166
  it would not be right for me to comment on it.
  The present Home Secretary recently received a further deputation from the Union and the Home Secretary has been giving very careful consideration to the representations which this deputation made to him. I think it is generally known it was represented that it would be within the power of the Home Secretary at present to set a limit on the number of new drivers, but I must tell the House that the Home Secretary has been unable to satisfy himself that he has that power.
  Mr. Weitzman: The Motorcar Order of 1934 is relevant and under that Order the Commissioner of Police has certain discretion. One of the points of discretion he has is in paragraph 27 (1, a) in which he may limit in such a manner as he thinks fit the types of cabs which the licensee may be permitted to drive.
  Sir H. Lucas-Tooth: I have little time left in which to reply and I cannot argue the legal point. I do not say that the Home Secretary has no such power, but that he is unable to satisfy himself that he has. It is a doubtful question which could only be settled in the courts. It is undesirable to take action on the footing that he has such power and then for that action to be reversed by the decision of the court. It would require legislation and that being so it would be out of order for me to pursue it now.
  The taxicab service is an important service and we recognise that there are real difficulties affecting it at the present time. The solution has so far proved most elusive. No one has been able to formulate a definite plan. In those circumstances the Government have decided to set up a small independent committee to examine the problem. Their terms of reference are to consider the effect of the present fiscal and economic circumstances on the taxicab service, particularly in London and to report what changes, if any, in the present system of taxation are desirable in the public interest. These are wide terms of reference, and will enable the committee to examine this matter thoroughly. It will not be an official working party, as was the committee which has been referred to. It is to be an independent committee; that is to say, it will not

  1167
  consist of officials of the various Departments.
  It will be able to consider whether any changes are desirable in the present system of licensing, both of cabs and drivers; and it will be able to look at the particular problem of London against the whole background of the control and organisation of the cab service. The problems which have been mentioned will be those which the committee will consider. The question of limiting the right of entry into any occupation must be one which bristles with controversy, and also with practical difficulties in administration. In the circumstances, it would be better not to go into these questions now, but to leave the matter for consideration by the committee. We shall then know what is the best action which can be taken to meet the difficulties facing the taxicab service.
  11.55 p.m.
  Sir Wavell Wakefield: Can my hon. Friend say how soon he expects this committee to be appointed, and can he give the names of any of its members? Can he, also, say that the committee will start its work very soon, because he will appreciate that one of the reasons for the decline in numbers is the fact that a cab operating in London at present loses £200 per annum? Therefore, it is a matter of extreme urgency that this committee should be set up and that action should be taken, at the earliest possible moment.
  Sir H. Lucas-Tooth: I cannot give names, because the committee has not yet been set up. I hope that it will be set up very soon. The matter will certainly be dealt with as quickly as possible. How long the committee will take over examining the matter I cannot say, but it is the Government's wish that its recommendations shall be forthcoming as soon as they can be.
  11.56 p.m.
  Mr. Michael Stewart: Will the hon. Gentleman, or his right hon. and learned Friend, impress on the committee the need for all possible speed, consistent with the job being done properly, because this difficulty has been going on for a long time? As the hon. Member for Paddington, North (Mr. Field) pointed out, it has recently become of acute interest
  1168
  to men making a livelihood in this way. I would draw attention to some of the elderly taxicab drivers faced with the problem of making an adequate livelihood, and to whom it would be impossible to suggest entering any other occupation.
  While I accept some part of what the hon. Gentleman has said about the difficulties of restricting entry into an occupation, I would point out that at the present we are short of manpower in important parts of the national economy. Why should there be young entrants into this occupation at such a time, and when some of the older occupants are finding it extremely difficult to make a living? I hope that that point will be in the minds of members of the committee, and that they will do their work as speedily as possible.
  12 m.
  Mr. Albert Evans: I should like the Parliamentary Secretary to know that it is gratifying to learn that his right hon. and learned Friend has decided to set up this small independent specialised committee. That is a positive step forward after so many years of trying to get this matter satisfactorily settled. It would help if the Parliamentary Secretary could say whether or not the various interests in the trade are to be allowed to make their representations, or perhaps have a representative on this committee. We are rather in the dark as to how this committee will be composed.
  The Parliamentary Secretary will, no doubt, we aware that all sections of the trade, proprietors, the men, the unions, and, I believe, the owner drivers, agree with the working party that some scheme of limitation is desirable. I trust that when this committee meets and tries to grapple in a practical way with this problem it will not fail to take into account the views of all sections of the industry.
  Sir H. Lucas-Tooth: In the time that remains I think that the best I can say is that the observations of hon. Gentlemen will be noted, and will no doubt be the first matter to which the committee will turn its attention when it meets.
  Adjourned accordingly at Two Minutes past Twelve o'Clock a.m.

NATIONAL FINANCE
  Millard Tucker Committee
  Millard Tucker Committee
  Purchase Tax (Unsold Stocks)
  Purchase Tax (Unsold Stocks)
  Military Expenditure, Germany
  Military Expenditure, Germany
  Post-War Credits
  Post-War Credits
  Defence Expenditure
  Defence Expenditure
  Old Age Pensioners (Milk Vouchers)
  Old Age Pensioners (Milk Vouchers)
  Voluntary Organisations (Grants)
  Voluntary Organisations (Grants)
  CIVIL SERVICE (EXAMINATION FORMS)
  CIVIL SERVICE (EXAMINATION FORMS)
MINISTRY OF WORKS
  Cement Supplies, North-East Area
  Cement Supplies, North-East Area
  NATIONAL SERVICE (RACING APPRENTICES)
  NATIONAL SERVICE (RACING APPRENTICES)
  Trafalgar Square (Trading Licences)
  Trafalgar Square (Trading Licences)
EMPLOYMENT
  Remploy Factories (Wage Claim)
  Remploy Factories (Wage Claim)
  Hillington Training Centre (Travelling Expenses)
  Hillington Training Centre (Travelling Expenses)
SCOTLAND
  Shetland (Trondra and Burra Isles)
  Shetland (Trondra and Burra Isles)
  Hospital Treatment (Travelling Expenses)
  Hospital Treatment (Travelling Expenses)
  Housing (Wooden Flooring)
  Housing (Wooden Flooring)
  Herring Trade Association (Dispute)
  Herring Trade Association (Dispute)
MINISTRY OF PENSIONS
  Limbless Ex-Service Men
  Limbless Ex-Service Men
  Motor-Propelled Tricycles and Cars
  Motor-Propelled Tricycles and Cars
  Hardship Cases (Appeals)
  Hardship Cases (Appeals)
  War Widows (Welfare Service)
  War Widows (Welfare Service)
BRITISH ARMY
  Harvesting (Releases)
  Harvesting (Releases)
  B.A.O.R. Expenditure (Contractual Agreements)
  B.A.O.R. Expenditure (Contractual Agreements)
  Korea (Pay and Allowances)
  Korea (Pay and Allowances)
  Personal Case
  Personal Case
  Land Sale, Aycliffe
  Land Sale, Aycliffe
  R.E. Records Office (Extensions)
  R.E. Records Office (Extensions)
  Boys' Battalion
  Boys' Battalion
  Artistes (Messing Facilities, Singapore)
  Artistes (Messing Facilities, Singapore)
TRADE AND COMMERCE
  Exports to Russia (Rubber)
  Exports to Russia (Rubber)
  Decorated Pottery (Sale)
  Decorated Pottery (Sale)
  War Damage Act (Business Scheme)
  War Damage Act (Business Scheme)
  Raw Cotton Purchasing
  Raw Cotton Purchasing
  Development Areas (Factory Extensions)
  Development Areas (Factory Extensions)
  Softwoods
  Softwoods
  TECHNICAL COLLEGES (FINANCIAL ASSISTANCE)
  TECHNICAL COLLEGES (FINANCIAL ASSISTANCE)
  SHIPBUILDING, SUNDERLAND (STEEL)
  SHIPBUILDING, SUNDERLAND (STEEL)
  SUGAR (JAM MAKING)
  SUGAR (JAM MAKING)
  HOSPITALS (BUILDING AND MAINTENANCE)
  HOSPITALS (BUILDING AND MAINTENANCE)
  TROOPING THE COLOUR REHEARSALS
  TROOPING THE COLOUR REHEARSALS
HOUSING
  Estate Agents (Licences)
  Estate Agents (Licences)
  Land Acquisition (Notifications)
  Land Acquisition (Notifications)
  TELEVISION (MEMBERS' BROADCASTS)
  TELEVISION (MEMBERS' BROADCASTS)
  TELEPHONE SERVICE, CHELTENHAM
  TELEPHONE SERVICE, CHELTENHAM

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Lord Napier of Magdâla—Took the Oath.
The Lord Mowbray and Stourton—Took the Oath.

BUSINESS OF THE HOUSE
2.36 p.m.
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (THE MARQUESS OF SALISBURY): My Lords, before we proceed with the Business of the day, I have an announcement which I wish to make to your Lordships. The Prime Minister will be making a statement in another place this afternoon on the visit of the Prime Minister of Australia to this country, and I feel that this House too would wish to hear the statement. I therefore propose, by leave of the House, to interrupt the debate at about 3.45 this afternoon to enable the statement to be made. I hope that that course will meet with the approval of the House.

RENT RESTRICTION
2.37 p.m.
VISCOUNT BUCKMASTER: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in view of the acute housing shortage and the fact that existing legislation makes it economically impossible for many landlords to keep their property in repair, they will at an early date undertake a revision of the Rent Restrictions Acts.]
LORD LLOYD: My Lords, the Government have under consideration the question of the revision of the Rent Restrictions Acts, but they are at present unable to give any undertaking as to when legislation will be introduced.
VISCOUNT BUCKMASTER: My Lords, while thanking the noble Lord for that reply, I should like to ask, arising from it, whether Her Majesty's Government are fully aware of the danger, if the value of the pound falls further, of the cost of repairs becoming even more prohibitive and of a situation being reached in which relief may be almost impossible.
LORD LLOYD: My Lords, this is a very complicated question. The Government are aware of that: fact and of the many considerations which apply to it; and these are being considered at the present time.

CREMATION BILL
House in Committee (according to Order): Bill reported without amendment.
ELECTRICITY SUPPLY (METERS) BILL
House in Committee (according to Order): Bill reported without amendment.
FAMILY ALLOWANCES AND NATIONAL INSURANCE BILL
Read 3a (according to Order), and passed.

PRISON BILL [H.L.]
2.40 p.m.
Order of the Day read for the House to be put into Committee on re-commitment of the Bill.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL OF DROGHEDA in the Chair]
THE LORD CHANCELLOR (LORD SIMONDS): I understand that the usual practice is to move these Amendments en bloc, and I therefore; move that the Amendments proposed by the Joint Committee on Consolidation Bills be made.
Moved, That the Amendments proposed by the Joint Committee be made.—(The Lord Chancellor.)
On Question, Motion agreed to.
Clauses 1 to 35, as amended, agreed to.
Clause 36 [Acquisition of land for prisons]:
THE LORD CHANCELLOR: The Amendment which stands in my name on Clause 36 is purely a drafting Amendment. It is made necessary by the expiry of certain preceding legislation which makes a proviso unnecessary; and the Amendment accordingly secures its deletion. I beg to move.
Amendment moved—
Page 14, leave out lines 39 to 42.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 36, as amended, agreed to.
Remaining clauses and schedules, as amended, agreed to.
House resumed.

COSTS IN CRIMINAL CASES BILL [H.L.]
House in Committee (according to Order) on re-commitment of the Bill: the Amendment proposed by the Joint Committee made.
TOWN DEVELOPMENT BILL
Brought from the Commons; read 1a; and to be printed.
DISTRIBUTION OF GERMAN ENEMY PROPERTY BILL [H.L.]
Returned from the Commons, agreed to.
LONDON COUNTY COUNCIL (GENERAL POWERS) BILL
Returned from the Commons with the Amendment agreed to.

CIVIL AVIATION
2.43 p.m.
LORD PAKENHAM LORD PAKENHAM rose to call attention to Civil Aviation with special reference to the proposals recently published by Her Majesty's Government with reference thereto; and to move for Papers The noble Lord said: My Lords, we have tabled a Motion that deals primarily with the recent Government statement concerning the proposed functions of the Corporations and the charter companies respectively, and we have done so in such a way as to allow complete freedom of discussion about all other aspects of civil aviation, most of them perhaps, happily, less controversial. I am afraid that I shall not be very brief. Even so, I shall take leave to confine myself almost entirely to the implications of the recent Government statement. Such highly interesting questions as the improvement of the rates received for air mail and the removal of the petrol tax, on which latter point I am sure the charter companies and the Corporations see eye to eye. I cannot even begin to deal with. Nor can I touch the still more vital issue of how we are to take advantage of our lead in civil aircraft to capture the export markets of the world. On these and other matters there are a number of noble Lords in this House who speak with much experience and no doubt a great deal better than I could.
I cannot, however, refrain from saying one deeply-felt word of congratulation. which I believe will be echoed throughout the House, to our national Corporations, to the managements, to the trade unions and to every member of the staffs on the immense strides made during the last few years. In 1947–48 the deficits amounted to about £11,000,000. Last year, 1951–52. they were just over £1,000,000, with B.O.A.C. showing a profit and the whole residual loss arising on the internal routes of B.E.A., in which, of course, a large element of social service is provided. In that period the output, judged in capacity ton miles, has more than doubled, and the output per employee (for there has been a big reduction in staff) has almost trebled. I should like to congratulate the charter companies and express my pleasure at the considerable improvement in their fortunes, which does them credit in every way. Finally, I hope that the debate will not be concluded without

197
the Secretary of State, who I am glad is going to reply, removing current misconceptions about the devoted work of the Ministry of Civil Aviation officials. I know, from past experience and, if you like, from past failures of my own, how difficult it is to remove these misconceptions; but where I have failed, perhaps the Secretary of State may succeed. I know that the noble Lord, Lord Clydesmuir (wherever he may be) is going to deal with this question much more authoritatively, but I cannot help saying one word at this stage to emphasise my continued interest in Prestwick, that glorious name written in letters of blood and tears on the heart of every Minister concerned with British aviation.
I propose to discuss the recent statement of the Government on civil air transport policy from one point of view only, if you like from a professional point of view—that of its effect on British civil aviation. I would only remind the House of what I said when we last debated this subject at length, on December 6, 1950. On that occasion I expressed my good will towards the charter companies. Speaking as Minister, I stated on behalf of the Government, our desire to assist them wherever we could within the framework of the existing policy, but I referred at the same time to our prime responsibility for the Corporations, in whom so much of our national resources is invested. That general attitude was reaffirmed, I submit, by the noble Lord, Lord Ogmore and myself, when for the first time we spoke in Opposition, in a general debate on civil aviation last December. I myself said on that occasion that I hoped that in an expanding era of civil aviation it would be possible to provide wider opportunities for the charter companies without damaging the Corporations, but that if the Corporations were damaged we on our side of the House would resist the proposals by every constitutional means in our power. It is in the light of criteria of that kind that we approach these recent proposals.
I have called this statement of the Government a statement of policy. In doing so I am paying it a compliment which perhaps it hardly deserves. Rather should I call it an attempt to ride two horses going in different directions—the horse which the present Government rode in Opposition, and the horse which they
198
are now beginning to realise is the essential one to ride: if our remarkable progress in civil aviation is to continue, and if, indeed, we are not to come crashing down at the very next fence in the international race. Let me say at once that we on this side of the House view this new statement of alleged policy with grave suspicion. I think it will hardly be disputed that no one can say, without further elucidation, what it amounts to. But it seems to us that it must he either eyewash or a splash of vitriol in the eyes; and on either hypothesis I am afraid we take a very poor view of it. However wisely it may be interpreted, it can do no good, and it may well do a great deal of harm—in the first place to the Corporations, and ultimately to the charter companies themselves. In the end, perhaps more harm may come to the charter companies than to the Corporations. I do not believe that the British people, who are becoming very proud of B.O.A.C. and B.E.A., will stand for it for long if they see them being ruined or (if I may use a colloquialism) "mucked about with" unnecessarily. If only in their own interest as well as in the national interest, which I know is as dear to them as to the rest of us, I beg the charter companies not to seek to make too much of what may seem a golden moment, and I beg them not to try to over-play their hand.
When we last discussed this matter the noble Marquess, Lord Salisbury, said, think with some justice, that much of my argument was no doubt intelligible to the noble Viscount, Lord Swinton. and to other experts, but that most members of the House had no idea what I was talking about. I am afraid there may have been an element of truth in that remark. At the risk, therefore, of delaying the House, I would venture to preface a close consideration of the Government's proposals with just a few words of historical background, but I shall not be anything like so long as on the last occasion. The Act of 1946 reserved all scheduled services to the Corporations, if they wished to run them. The charter companies were completely excluded from these scheduled services, unless the Corporations wished to use them as associates. That puts the matter quite broadly, but I think accurately. Again using broad terms which are fairly well understandable,

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though I know that there are a great many legal complications behind them, I would explain that by a "scheduled service" I mean a service which is run at regular intervals, for instance once a week, and one which is also open to the public. I leave over the various legal arguments which might arise under that second consideration. By "charter services" I mean services such as you obtain when you hire a private car. Under the Act of 1946, they were thrown open to competition between the Corporations and the charter companies. Statements made by Ministers when the Act was being passed indicated that the Government intended not merely to permit but to encourage charter companies in that field, and indicated also that charter work of that kind was to be only incidental to the main work of the Corporations.
I am anxious to avoid historical controversy, if possible, and I will therefore say only that a steady development of British policy had nationalised B.O.A.C. in 1939, and by 1945 the Government of the day, the Conservative "Caretaker" Government, had concluded that it was necessary to give exclusive rights to three Corporations on the routes which they were immediately prepared to operate. There was a difference of degree between the two policies (the policy which I think the noble Viscount, Lord Swinton, would have operated as Minister and the policy which we introduced), but I would submit that that difference concerned the marginal fringe, and not the bulk of the routes. On the bulk of the routes the principle of monopoly was accepted by the Conservative "Caretaker" Government which preceded us. When I talk of "monopoly" I do not, of course, mean protection from international competition, I mean protection from domestic competition, for on the main routes international competition was expected to prove, and has proved, extremely severe, and indeed is increasing all the time.
I think I should here pay my tribute if I have not already paid it sufficiently before, to the noble Lord, Lord Nathan, for the work that he performed during the earlier part of the period, and to the work which the noble Lord, Lord Winster, did before him. But by the time I became Minister, in the summer of 1948, aviation, both in this country and elsewhere, had
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proved much less profitable than expected. That was nothing to do with nationalisation or any thing else here; it was something that occurred everywhere. Charter work generally had been disappointing. B.E.A. had found themselves unable to operate a number of scheduled routes in which the charter companies expressed an interest. The Government did, in fact, preserve the framework of the Act, but they were not at all inclined to pursue a dog-in-the-manger attitude, such as "We cannot operate these routes, and you shall not." That was not at all in the mind of the Government. With the approval of my colleagues, therefore, I developed an idea which my predecessor, Lord Nathan, had initiated. We built up a system of associate agreements, of course within the framework of the Act, under which charter companies could operate scheduled services. They could operate such services on particular routes in association with the Corporations, provided that the Air Transport Advisory Council made a recommendation in their favour, and provided also that the Minister accepted it. That was the system which we established and operated.
The Air Transport Advisory Council had been presided over hitherto by the noble Lord, Lord Terrington. if I may say so, with much sagacity. I cannot see the noble Lord at the moment his famous sagacity may have led him to absent himself—on the contrary, I now notice that it has led him to endure my remarks. The noble Lord was assisted very effectively by his Council, including, in particular, the noble Viscount, Lord Runciman. I take this opportunity of tendering my sincere thanks to the noble Lords, Lord Terrington and Lord Runciman, and their distinguished colleagues. In doing so, I know that I shall be joined by the noble Lord, Lord Ogmore, in particular, who followed me, and indeed by my predecessors as Ministers of Civil Aviation. To secure recommendation from the Air Transport Advisory Council a charter company has hitherto had to satisfy certain all-important conditions. The first is that the associate must observe the safety standards with which the Corporations are required by the Minister to comply. I need not say any more about that, for I am sure that the force of it is obvious to every noble Lord

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here. Secondly, terms and conditions of employment are closely safeguarded. I could talk for some time on that subject. It is not a very easy one in this connection, but, at any rate, there is safeguarding procedure in the directive.
Thirdly—and here I must ask your Lordships to notice the words rather carefully because their general purport is essential to the whole argument from this side of the House—to quote the words of the directive:
"The Associate arrangements should be in respect of services … which do not overlap or compete with existing services and planned programmes of services of the Corporations."
There is a proviso which I will mention in a moment, but I venture to stress the words I have read, because they are all-important to the arguments which are to be submitted from here. There was added a proviso to the effect that
"services may be recommended on routes which the Corporations are not operating but intend to operate in the future for the period up to the planned date of the introduction of the services of the Corporation concerned."
In other words, if a Corporation say: "We are not going to operate a service on that route for about five years," it is open to the Council to allow a charter company to operate the route for the five years in the meanwhile. There were other conditions, among which I would mention the limitation of the associate agreement to live years. But there was never anything at all rigid in my own mind about that limit, and after my time my noble friend Lord Ogmore granted at least one licence—and if I may say so, he was absolutely right in doing so—for ten years; that was to the Silver City Company for their admirable ferry service which some of your Lordships may have used.
Having disposed of history let me come to the present. How far do the proposals of the Government differ from the arrangements which we worked out and operated? Two points in the new statement I will not quarrel with, though they are capable of abuse. The first is the extension of the agreements to seven-year periods, or to ten-year periods in special cases, and the second is the restrictions on the charter activities of the Corporations, while maintaining their right to engage in charter work where they have special facilities. I do not quarrel with those points in principle. In regard to the first—the extension of agreements to
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seven years, or in some cases to ten years—I must press the Secretary of State for an answer to the question which arose in our time and which becomes much more acute if the Government sign away a route for a period of anything up to ten years (I have given the noble Lord notice of this point), particularly if the route in question is not a luxury or an amenity service but one of real significance to the public. How is the Secretary of State going to satisfy himself that the charter company which obtains a route will be able and willing to operate it, not just at the beginning but over a long period like seven years? We ourselves had some disappointing results—which I need not specify unless am pressed to do so—in this connection. I must ask the Secretary of State to tell us whether the Government intend to impose an obligation of a legal character and, if so, how he proposes to see that that obligation is enforced?
So far, have not touched on a change of principle. When the Secretary of State made his statement on May 27 he was closely questioned by the noble Lord, Lord Ogmore, as to whether the Minister would retain the last word, or whether the new licensing authority would cease to be advisory and become executive. Neither in this House. nor in another place did the answer appear to be known at that lime. Certainly, if it was known it was not forthcoming; no answer was given. But since that time the Secretary of State has been courteous enough to write assuring Lord Ogmore that no change is contemplated at the present time in the relationship between the Minister and the A.T.A.C. I am sorry if I seem unduly suspicious, but I hope that the Secretary of State will be able to tell us to-day that that is not merely a transitional arrangement, pending legislation—the Secretary of State shakes his head, so I need go no further, because a shake of the head from him is equivalent to a long speech from some people. I need not press that point any further, for I gather that it is the firm intention of the Government. All I say to the Secretary of State is that there is nothing to which we should take stronger exception than the removal of the last word from the Minister.
In the same letter—to which the Secretary of State was good enough to say I could refer—he mentioned the revised

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terms of reference given by the Minister to the A.T.A.C. to give effect to the new policy. He will not be surprised if he is called on insistently this afternoon to give us some idea of the nature of this new directive. That is clearly the central point of this discussion. Above all—and this is cardinal—how far will the provision be maintained, whatever the precise wording of the associate agreements, that the associate arrangements should not overlap or compete with existing services and planned programmes of the Corporations.
Let us have a look at these proposals for a few minutes, from the point of view of the Corporations, in order to appreciate how everything, or almost everything, depends upon the nature of the directive. I say "almost everything" because, whatever the directive, the proposed licensing system seems bound to be a considerable nuisance to the Corporations. So far as I can make out—the Secretary of State will correct me if I am wrong—the Corporations will have to plead their own case before the licensing authority whenever they want to start a new route, either passenger or freight. Perhaps the Secretary of State will deal with that point and tell us if that is so. I mention only one disadvantage of the arrangement: already, negotiations between B.O.A.C. and foreign operators, when brought up to Government level, for bilateral agreements are a complicated business. If a "licence" is to be negotiated publicly, before such bilateral discussions start, not only will a great deal of time be occupied but disclosure of the intention will certainly strengthen the hand of the foreigner. rather than the hand of our own people.
That seems bound to happen anyway, if B.O.A.C. and B.E.A. have to come before the licensing authority every time they want to start a new route, but for the rest, all is uncertainty of a most damaging and crippling kind—at any rate so long as the system endures. The Government say they are determined to see that the comparative strength of the Corporations to operate both first and second or tourist class services on their present established networks will not be impaired. They also add a statement—though this is slightly more cryptic—to the effect that they do not mean to increase the cost of civil aviation to the
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taxpayer. That can be interpreted in various ways, because the cost of civil aviation is falling. I do not know whether they mean that they intend only to keep the cost at the level it is, or whether they mean that they will not interfere in any way which would increase the cost. At any rate, that is what they say: that they do not mean to increase the cost of civil aviation to the taxpayer. If civil aviation is still subsidised, this may be taken to mean that nothing will be done to impair the commercial success, actual or potential, of the Corporations. If so, that will be a most satisfactory statement. But is that the real meaning? I ask the noble Lord for an authoritative interpretation.
Three fields of new or wider opportunity are pointed out to the charter companies in the recent statement by the Minister in another place and by the Secretary of State here—first, new passenger routes; secondly, freight services (I am not clear whether the statement refers to all or only to a number) and, thirdly, third-class passenger services to the Colonies, so long as they are not directly competitive with the Corporations. The following considerations are only a few of those that arise. I cannot expect the Secretary of State to deal with every one of these points, though perhaps the noble Lord, Lord De L'Isle and Dudley, will round up the matter at the end. These are the questions that come into the mind of anybody looking at this from the angle of the Corporations. What is a new route? Does it involve the inability of the Corporation concerned to vary the sector call-points on an end-to-end route—for example on the London to Sydney route? Does it mean that the Corporation is bound to its present points of call in Europe on the way to Australia, or can they be varied according to the traffic from time to time? These are extremely practical points from the angle of the Corporations. If rigidity is imposed on the Corporations in this matter over a period of from seven to ten years, in order to give private operators the opportunity of running services over some of these London—European routes, with less modern equipment, then competition, vis-à-vis foreign operators is not likely to be effective, and in the end the result is bound to be that the British taxpayer will lose money. Is it forgotten that the forward equipment-ordering programme of the

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Corporations, under which they are committed to an expenditure of over £20,000,000, was based on an expected policy of expansion? I feel that that fact may be lost sight of and perhaps the Secretary of State will comment on it.
As regards freight, is it intended that the existing freight services of the Corporations should be cut into and, in any case, that the Corporations should be restricted in their search of new freight business? As regards third-class services, no definition exists of a service of this kind, and I feel bound to conclude that they will drain off some of the traffic from the Corporations. On the Nairobi service, for instance, it is hard to see how this result can be avoided. In short, whatever the directive, the Corporations, and with them the taxpayers, are likely to suffer. But the damage may well be fundamental and lasting unless the Air Transport Advisory Council are given an overriding directive that it is to be their specific task in the future, as it has been hitherto, to see that the prospects of the Corporations are in no way prejudiced.
Before I conclude, I beg leave to touch briefly on three more points. The first is that the Government statement leaves the whole future of the internal services completely obscure. The House may be aware that after really heroic efforts our international services, both of B.O.A.C. and of B.E.A., are just about paying their way. The whole loss at the present time, speaking broadly, arises from the internal services, which include the services to the Channel Islands, Northern Ireland and Scotland. In these services, particularly in the case of the Scottish Islands, there is a strong social service element. No one in this House is sanguine enough to suppose that the internal services as a whole, and particularly those in Scotland, as we know them, can be run at a profit in the immediate future. On these Benches we consider that the internal services are public services which should be run, taking them as a whole and not tying myself to each one in detail, whether profitable or not, although great efforts have been made, and still greater efforts must be made, to reduce the loss. Taking these Scottish services as an example, there is in fact no private company whose qualifications and experience approach those of B.E.A. for a purpose of this kind, though I ant well aware that there is at least one charter company in Scotland of
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the highest repute. Bat to a fair-minded person there is no operator to compare with the B.E.A. Leaving out any comparison of that sort, we regard it as unthinkable that a subsidy should be paid to a profit-making company under conditions of this kind. I must press the Secretary of State for an assurance in terms that the Government have no intention whatever of paying a subsidy to any charter company for running a scheduled service. I have given the noble Lord notice of this question, and we shall watch zealously for his answer.
Secondly, I would ask: can the Secretary of State say anything about the membership of the Air Transport Advisory Council and their staff? There is a certain air of mystery surrounding these distinguished gentlemen, some of them colleagues of ours. All the old members, including the Chairman, have been asked to resign. It is not known whether the resignations have been accepted or what has happened; all we know is that they have been asked to resign, for no reason known to me. Will the Secretary of State say why these gentlemen have been asked to resign? How will the new work differ in quantity and quality from that which they were doing so well? What type of work will it be? Is it beyond the capacity of these gentlemen, because we have a high opinion of the noble Lords concerned and their colleagues? Is it intended to increase the staff of the Air Transport Advisory Council? If so, I am hound to warn the Secretary of State of the obvious risk of duplication with the officials of the Ministry. The case might well become overwhelming for taking away the whole licensing machinery from the Council and handing it over to the Ministry, if only in the interests of economy. I assure the noble Lord that his reply will be closely studied to see whether, in fact, a new situation has arisen.
I have left to the last—but I certainly have no intention of missing it—the effect of the present policy or the morale of the Corporations. The achievements of the Corporations in the last three years have in my opinion, and in the opinion of better judges than myself, been all the more remarkable because of the reductions in staff that have been effected meanwhile. The strain on morale has been considerable, to put it mildly. I

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think the morale in the Corporations is, or was, until recently, higher than it has ever been, thanks to the splendid team work of all concerned but, above all, to the policy of joint consultation so wisely pursued by managements and trade unions and, may I add, to the moral courage shown by both. I implore the Government, through the Secretary of State, to do nothing to disturb the enthusiasm and pride which were growing with success. I implore him at all costs not to introduce what I can only call a fugitive outlook in place of the feelings of stability, security and brotherhood.
As I conclude, I would address a final plea to noble Lords who are with us this afternoon, or who read these words, whose general bias is in favour of private enterprise as against State activity but who are fair-minded enough to realise that there may be special considerations in the field of civil aviation. Even after all I have said, and after all the debates we have had in recent years, noble Lords in that position may still not be quite clear as to what these special considerations are. Intelligent and well-meaning people sometimes come up and say something of this kind: "If the Corporations are as efficient as you say, surely with all the national resources behind them they can stand a measure of competition from a few little men?"—if I may use that term in no spirit of disrespect about the charter companies. To ask that question is to misconceive the whole character of the responsibility which successive Governments, including the present one, have cast on the national Corporations, a responsibility vastly different and vastly greater from any that falls on the charter companies—not that I wish to say a word to underestimate the national contribution of the latter.
The National Corporations have been called upon, are being called upon and will, I hope and believe, still be called upon, to operate a world-wide network. They will be compelled to perform that task under intensive and ever-growing international competition. They are called upon to operate that network as profitably as possible but, by and large, to operate it whether it loses money or not. They are called upon to go on operating it, day in and day out. year in and year out, in good times and in bad. There can
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be no comparison between their position and that of a sharter company, which naturally wants to "nip in" on a particular route that seems profitable for the moment to skim the cream or, in a phrase once employed by that prince of phrase-makers, the noble Lord, Lord Beaver-brook, to "take the eyes out of the carcase." If the slogan of equality of opportunity were applied in practice without equality of responsibility, which is what would happen, I cannot say who would win. But one person would assuredly lose—namely, the British taxpayer; and, as I said earlier, he would not stand it for long.
I have put to the Secretary of State a number of questions, and of the most important I have given him notice. In particular, I would ask him once more—and I pool together these rather prolonged observations in putting these questions a second time: First, how will he ensure that charter companies actually operate for the full period the services allocated to them, and that they do not run out if they find them unprofitable? Secondly, will the new directive lay down in black and white that nothing must be done to impair the commercial prospects of the Corporations? Thirdly, will the Government guarantee that no subsidy will be paid at any time to the charter companies on scheduled routes? Fourthly, may we have an assurance that the final authority of the Minister will be preserved in relation to the recommendations of the A.T.A.C., or whomsoever considers the application? That assurance I have been given by the Secretary of State during the course of my speech. Fifthly, if it is intended, most unwisely, as we think, to extend the functions of the A.T.A.C., with what staff will they be equipped, and how will duplication with the staff of the Ministry be avoided'?
It would be humbug for me to suggest that it is within the power of the noble Lord who is to reply to give answers to all these questions which will avoid all criticism. Whether the new policy means much or little this seems to us a particularly ill-judged moment to establish a so-called licensing authority, and to cast a cloud over the prospects of our national Corporations, just when they are beginning, after struggling most gallantly in the face of many difficulties, to get their heads above water. But I assure the Secretary

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of State—and I feel sure he will believe this—that it is no part of our purpose to manufacture a bogus difference, or to magnify it. It still lies within the power of the Secretary of State to-day to allay some of our more serious anxieties. He can still avert the development of a prolonged antagonism which may otherwise envelop British civil aviation, to the ultimate loss and sorrow of all concerned, and to the clear detriment of the British people whom, according to our different lights, we are all equally anxious to serve.
3.26 p.m.
THE SECRETARY OF STATE FOR THE CO-ORDINATION OF TRANSPORT, FUEL AND POWER (LORD LEATHERS): My Lords, it is less than a month ago since I stated in this House the policy which Her Majesty's Government proposed to adopt towards civil aviation, and I need not cover that ground again. In general, I think I can say that our proposals have been well received.
LORD OGMORE: I do not want to interrupt unduly. but this is an important point. By whom have the proposals been well received?
LORD LEATHERS: I have had evidence of that in a number of directions which satisfied me that where the contrary was being said it had little to support it. What I can perhaps do this afternoon is deal with one or two questions or misunderstandings to which our proposals may have given rise. The noble Lord, Lord Pakenham, was kind enough to let me know some of the points which he was proposing to raise, and I will deal with them as fully as I can and if I cannot cover them all, my noble friend the Secretary of State for Air will deal with them when he speaks later this afternoon. I suppose the biggest misunderstanding—for misunderstanding it certainly is—is that of certain noble Lords opposite and some of their colleagues elsewhere, who think—or profess to think—that Her Majesty's Government's policy represents a severe, if not a mortal blow at the airways Corporations. There is nothing in the Government's recent statement which could be so interpreted, and, indeed, it is a complete misrepresentation of our intentions or desire. I yield to no one in my admiration of the work of the Corporations,
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or my conviction that they have a vital part to play in civil aviation in this country. I must confess that I rather resent any suggestion that the Labour Party have a proprietary interest in the Corporations' welfare.
In an attempt to understand the viewpoint of noble Lords opposite, I recently looked up a speech by the noble Lord, Lord Pakenham, in a debate in this House in December, 1950. The noble Lord stressed the point that in prescribing the respective roles of the Corporations and the independent companies the fundamental question was not the relative merits of State versus privately controlled air lines, but the form of organisation best calculated to secure expansion of our national air transport effort. He seemed to me to attach importance to a strong and prosperous private sector of the industry. In giving an account of the directions in which the Government had sought to assist the independent companies, the noble Lord was at pains to emphasise that he did not wholly exclude independent companies from participation in the operation of scheduled services, but that opportunities must be confined to routes outside the existing or planned networks of the Corporations.
Our policy, like that of the noble Lord, is to adopt a form of organisation best calculated to secure the expansion of our national air transport effort. But it is our view that the independent companies have a more important part to play, certainly than they have hitherto been accorded, in attaining that objective, without undermining the considerable international networks which the Corporations have established or impairing their international competitive strength. The policy of Her Majesty's Government will consolidate the position the Corporations have established, and will protect them in the expansion of the first-class and new tourist-class markets on the routes they have developed. We believe that the concentration necessary for these important tasks of expansion leaves room for other initiative in new development. Experience since the war has shown that exclusive monopoly does not allow enough flexibility.
Where, for example, independent companies have been admitted to certain Corporation routes for limited classes of

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cheap travel, not only have the Corporations not suffered, but air transport development and the public have benefited. Then again, experience in the United States suggests that the development of all-freight services can best be undertaken by organisations which are not hampered by the need to develop a regular network of passenger services. In this country, the development of car-ferry services by a private company has shown how special classes of traffic can be built up by a skilled operator.
This drawing on experience is in no sense a criticism of the Corporations. It merely reinforces the wisdom of the Government in providing opportunities for the independent companies to engage in developing without subsidy new routes and specialised forms of operation such as all-freight services, third-class services and non-competitive inclusive tours. But if we are to reap the benefit of the contribution which the independent companies can make in these directions to the development of our air transport, they must have security of tenure of their rights, without being fettered by the longterm plans of the Corporations, which have discouraged their initiative in the past.
Turning to internal services, I stated on May 27 that these are still receiving our consideration. Our objective is to reduce and, in the long run, to eliminate the relatively high cost of these services to the taxpayer. The best means of achieving this, with the maximum advantage to the public, both as the taxpayer and consumer, requires more examination. For the time being, therefore, the British European Airways will continue to provide the services on their existing networks, but independent companies will be able to maintain long-term associate agreements on routes outside this network for which such agreements have not already been granted. If it could be shown, for example, that an independent company was in a position to take over under satisfactory terms and conditions a group of routes at present operated by the B.E.A. at a loss, and run them without subsidy, that is something which we should consider very carefully. Special considerations, however, apply to the Scottish social services. I do not feel able to go beyond this at the present time
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since, as I say, the whole subject is wider consideration in the light of various factors to which I referred in my earlier statement.
An important question, and one which has been asked in a number of quarters, relates to the machinery for giving effect to our proposals. The independent companies will continue to be appointed as "Associates" of one of the Corporations for scheduled service operation. We accordingly envisage the continuance of the Associate Agreement Scheme introduced by Lord Pakenham in January, 1949. There will, of course, be modifications, about which I will say more in a moment, but in principle and constitution the new scheme will be similar to the old. The Air Transport Advisory Council will continue its task of considering applications and making recommendations to the Minister. We are not proposing to confer any statutory licensing duties on the Council or alter the statutory relationship between it and the Minister. The Council will continue to act in an advisory capacity and to make recommendations to the Minister under Section 12 of the Civil Aviation Act, 1949. Its functions and the Minister's responsibilities will remain as set out in that section. The Council will, however, be asked to make its recommendations in accordance with revised terms of reference which take account of the new policy. I cannot say in detail what the changes will be, but the significant points of difference between the new and the old scheme lie, first, in the wider scope which it is proposed to give to the independent operators. For example, the Corporations will no longer have the same protection on routes which they have not yet operated.
LORD PAKENHAM: Would the Secretary of State repeat those words, because they are so important?
VISCOUNT STANSGATE: And read them a little more slowly.
LORD LEATHERS: Certainly. The first is in the wider scope which it is proposed to give to the independent operators. For example, the Corporations will no longer have the same protection on routes which they have not yet operated.
LORD OGMORE: What protection have they now on routes that they have not yet operated?
LORD LEATHERS: They have a protection. It is that when the Council consider the application of other operators, if the Corporations have named the routes as some which they wish to develop, then they are given protection. Now they will have that protection only where they have actually operated the services. Secondly, the normal maximum period of associate agreements will be extended from five to seven years (or ten years in special cases), and, thirdly, the Corporations will be put on an equal footing with the independent companies in seeking permission to develop new routes. One thing I can assure your Lordships is that nothing will be done to impair the commercial prospects of the Corporations on the overseas routes they have developed. The new terms of reference will provide that on these routes the financial position of the Corporations should not be materially worsened. These changes will doubtless involve the Advisory Council in making certain changes in their procedure, but the resources of the Ministry will be used to obviate duplications of staffs. For example, the Ministry have technical and economic sections who can supply the Council with much of the necessary information required to examine applications.
LORD PAKENHAM: May I interrupt the Secretary of State on this very important point to ask whether or not it is contemplated that the Air Transport Advisory Council in the future will have a considerable staff? At present it has nothing but the Secretary.
LORD LEATHERS: I think it means a slightly increased staff, but there is much advice that the Council can obtain from the expert staff that the Ministry has within its own jurisdiction. I hope it will be clear from what I have said that the Minister will, as before, remain responsible for the decisions he takes as a result of the Council's recommendations. This is a procedure which has been found to work well in other fields and does not, I think, raise any novel questions of principle. There is no substance in the comment which I have seen made that our proposals will virtually take away from the Minister and from Parliament the control of the development of civil aviation in this country. That does not arise at all. At the same time, there is no doubt that the experience and advice
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of the Air Transport Advisory Council will be of immense assistance to the Minister.
Another question that has been asked is whether independent operators who are given approval to operate scheduled services on a particular route will be required to give any form of guarantee that they will continue to operate the services. The answer is that there can, of course, be no guarantee in an absolute or binding sense. This would be the case even under a statutory licensing system, and seems to me to be inescapable. However, before the Minister approves an associate agreement between an independent operator and one of the Corporations, he will satisfy himself that in the case of routes of public importance the applicant has the necessary financial resources to fulfil his obligations to the public on an enduring basis. The matter must obviously be: judged in relation to the route and the circumstances. For example, a more rigorous test of financial stability would be applied where a route served an important public need than where the existence of a service was of less importance to the public. It is contemplated that the Air Transport Advisory Council shall examine whether an applicant will be able to provide a satisfactory service from the point of view of continuity, safety, regularity of operation, frequency, punctuality, reasonableness of charges and general efficiency. Naturally, the Council would also take into account the manner in which the applicant had performed any services for which he had previously been authorised. These arrangements should go a long way to ensuring continuity of operation where this is essential in the public interest. I need hardly say that an approved applicant who defaults is likely to prejudice his chances in any further application which he may make.
Possibly the most serious question which has been asked in connection with our recent statement of policy is whether sufficient numbers of suitable aircraft are available to enable independent operators to make the fullest use of the wider opportunities now offered. I must frankly admit that this does create some difficulty, since there is, unfortunately, a shortage of modern aircraft. The Ministry of Civil Aviation have available for disposal a small number of Tudor land-planes suitable for freight work, and of

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Solent flying-boats. In addition the Air Ministry will have from time to time Dakota aircraft available for sale to suitable British operators. In accordance with the new policy for limiting the charter operations of the Corporations, the B.O.A.C. are already offering for sale two of their York freight aircraft. As far as more modern types are concerned, I am told that short or medium range aircraft can be supplied reasonably quickly. As I have said, we cannot deny that the supply of aircraft suitable for independent operators is not as good as we would wish; but the Government are examining, in conjunction with the aircraft industry, what measures can be taken to overcome these difficulties.
May I now turn to a different subject? The noble Lord invited me to say something on the question of the rates paid to the Corporations for the carriage of air mail. The reason why the air mail rates are fixed at their present level is, of course, that the noble Lord and his colleagues in the late Government decided last year that this was what the rates should be. As I understand this matter—though it is one on which I have no doubt the noble Lord knows much more than I do—the late Government gave careful consideration last year to a number of representations which have been made by the Corporations and in Parliament and elsewhere that the rates paid by the General Post Office to the Corporations for the carriage of air mail were unreasonably low. The noble Lord and his colleagues doubtless found this a most difficult question.
On the one hand, it can be argued that the rates should be based on what is loosely described as the Universal Postal Union international rate, as representing the value of the services rendered to the consumer. At the other end of the scale it can be argued that the rates should be based on the cost of conveyance, including an appropriate margin for profit. My impression, and I think it is confirmed by the results, is that the noble Lord and his colleagues did not feel that either of these principles was a satisfactory basis of settlement between the General Post Office and the Corporations; and they fell back on a more empirical method of approach. I think that this was probably the best way of
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achieving a fair result, notwithstanding the drawback that whatever rates are fixed by such a method can obviously not be proved by any precise yardstick to be right. The present rates are, therefore, as I have explained, those which were fixed last year on the responsibility of the late Government. In the case of B.O.A.C. they represent an increase of 27 per cent. over the previous rates and are considerably more than the rates (weight for weight) that are paid for freight or by passengers. In the case of B.E.A. the same method of approach involved no concurrent increase in the rate, which had been more recently increased than that of B.O.A.C.
I believe that the late Government's intention, with which we fully agree, was that the rates then fixed should run for two years, subject only to review in the event of any substantial Change in circumstances during that period. I do not think that anything has occurred which makes it necessary to reopen this question at the present time. I make no secret of the fact that this is a difficult question. All one can try to do is to ensure that the rates are fair as between the Post Office and the Corporations and to the public who pay the air mail postage rates. In a country such as our own, parent to a widespread Commonwealth, and a great centre of world trade, it is obviously of enormous importance to thousands of people to be able to correspond quickly and cheaply with other parts of the world. However, as I say, the problem is one of keeping a fair balance between all these factors, and this we shall attempt to do.
As a final word, I would say that the prospects of the civil aviation industry seem to me to be bright. Under our policy, which has been framed only after consultation with many interests concerned, the public and private sectors can both make their best contributions to the development of air transport. We hope that the Corporations, at whose achievements in the international field we all look with pride, will continue to go from strength to strength. We hope that the independent companies, given more opportunity and more security, will at last take their place in British civil aviation, developing the services they already fly and having a fair opportunity to enter new fields. The working out of this policy

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depends, of course, on the industry seizing its opportunity. We believe that it can and that it will.
3.46 p.m.
LORD BALFOUR OF INCHRYE: My Lords, the statement which the noble Lord made on May 27 and the statement which he has made to-day have revived discussion as to the scope and opportunity that private enterprise should have in the field of British civil aviation. The debate to-day is distinguished by the fact that there are taking part in it no fewer than four members of this House who are ex-Ministers of Civil Aviation, all of whom have made their mark in varying degree on civil aviation—varying of course only with the time during which they held the office. I should like at the outset to associate myself with the opening words of the noble Lord, Lord Pakenham, in congratulating the Corporations on their achievements. Though some of us on this side of the House have criticised the broad national policy followed by the last Administration, never have we in any way denied full credit—indeed we have gladly given it, from the lowest to the highest—to those operating the air services for the great things they have accomplished.
I intend to follow the noble Lord, Lord Pakenham and discuss this question of the Government's new statement of policy from one angle only—the same angle as did the noble Lord himself: the effect on the well-being of British civil aviation. That is my yardstick, though the noble Lord discussed the matter from a rather narrower point of view. His yardstick was whether the nationalised Corporations would or would not be damaged by this policy. The noble Lord's condemnation of this policy was very severe. He found cause for grave suspicion and said it could do no good and was much more likely to do harm. He talked of the Corporations being ruined and being "mucked about"—that was his expression. He finally begged the charter companies, in practice, not to take full advantage of every opportunity which came before them as a result of this new policy.
LORD PAKENHAM: My Lords, there is an element of misunderstanding. I was not suggesting that the charter companies should not take advantage of every commercial opportunity offered
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them under the new policy. I was saying that they would make a great mistake if they thought that now that the Conservative Government were in power they ought to take every possible political advantage.
LORD BALFOUR OF INCHRYE: The noble Lord has brought me to the very point I wished to make. He pressed the Secretary of State for the Co-ordination of Transport, Fuel and Power, or the Secretary of State for Air when he replies to the debate, for a reply to some question. Pressing is a two-way traffic, and I think we on this side are entitled to press for a statement by one of the noble Lords on the Front Bench speaking for the Opposition as to their int9ntions if and when they are returned to power as regards this civil aviation policy outlined by the present Administration. What we are entitled to press to know is this. Is there to be a reversal by the Socialist Party of the policy which is being enunciated to-day by Her Majesty's Government? Because, if so, if they made such a statement, from to-day on they would be doing a grave disservice to British civil aviation, in that they would be preventing an expansion of resources and skill which is absolutely necessary if we are to hold our own in a competitive air world. I do most earnestly urge (and in this I believe I have the support of noble Lords on this side of the House) that in all fairness we should have some clear, definite statement as to whether or not the Socialist Party would, in this case not of de-nationalising but of broadening the basis of approach to international aviation, walk backwards, as it were. Would they go back to a policy of restrictionism based on monopoly for the national Corporations alone in respect of the main scheduled routes?
In Britain, of course, the Corporations are here to stay, and we have an assurance from Her Majesty's Government that they will do everything in their power to foster the strength of the Corporations. I think our problem to-day is to consider private enterprise alongside the State Corporations, and how far prig ate enterprise can have a greater opportunity in the future than it has had in the past. The reason why personally, welcome these proposals of Her Majesty's Government is because to me they show that political dogma is not to be allowed to interfere

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with the greatest possible economic development of British air transport, as has been the case for the last four years. Under the last Government—and a very interesting and accurate history was given by the noble Lord, Lord Pakenham, of the events in past years leading up to the statement of policy by the present Administration—all overseas scheduled services were reserved to the Corporations, and the noble Lord thinks that is right. The noble Lord may be young, but he has old ideas—he really has. He believes in the doctrine of artificial restriction of supply and that it can hold down an ever-increasing demand. That is not so. I think it is wrong to try to restrict to the Corporations all future development on scheduled routes. I take that view for two reasons. First, I think it is wrong because there is a size limit in any air transport organisation, as has been admitted by senior executives of the Government Corporations, beyond which efficiency and economy deteriorate. That is the first reason. The second reason is that potential air traffic is now so big that Britain cannot afford to have what I call a political grounding of aircraft that might be flying the world's routes. The Socialist theory, as applied to civil aviation, really does mean in practice that the public must be deprived of facilities, or should be deprived of facilities, that could be supplied and made available. They must be deprived unless those facilities are made available through the nationalised State instrument.
LORD PAKENHAM: On a point of elucidation—I know how generous the noble Lord is in giving way—would he suggest that there should be competition between the charter companies and the Corporations on existing routes? Because, if he thinks that, it rather seems to indicate from his remarks that he is opposed to his own Government's policy.
LORD BALFOUR OF INCHRYE: Not at all. I think the Government have made a most admirable compromise between uncontrolled competition, on the one hand, and absolutely unrestricted monopoly on the other. Let the Corporations continue their monopoly on existing routes but, where new routes are to be developed, let there then be a bidding, as it were, based on efficiency and economy, between private enterprise and
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the State Corporations. I believe that the Corporations have on their plate all they can manage to develop their existing routes to cope with the potential traffic. The noble Lord has the idea that the State lines should be protected from actual or potential danger of traffic being removed from them on future scheduled routes. I believe that there is traffic for the Corporations, and that there is traffic for private enterprise—plenty of it. All over the world events are overtaking theory, and the efficacy of artificial restriction of supply in the interests of vested interest has been disproved on more than one occasion.
Let us look at two examples—and after all with this new business of civil aviation, we have to look at precedent where we can, because we have not much history behind us. We are all venturing into new realms of enterprise. Let us take Australia for a moment. For years the chief internal line of Australia was a private enterprise line, Australian National Airways. Along came a Labour Government in Australia—I am not criticising their actions; it is not for us to do so—who tried to nationalise that line. They failed to do so because of some legal constitutional difficulty, so what did they do? They set up a rival State line, to which they gave a most lucrative mail contract which the private enterprise concern had been enjoying for some time past. What was the result? Both the private enterprise firm and the State firm flourished. The traffic total of both those lines is to-day four times what it was when the State line was started as a rival to private enterprise. I think it would be a bold statement for anyone to make, that if the private enterprise line had been killed the State line would not have continued to hold to the past high traffic structure for years ahead; and the present growth of traffic would certainly not have taken place.
Let us turn for a moment to my second example, this time rather nearer home, in this country. About a year ago, B.O.A.C. protested, and protested in public, that certain charter lines were to be allowed to carry traffic from East Africa to Britain on a contract which was to carry Service families. The Corporation pleaded that this should not be allowed, and they said that, if it did happen, their traffic would be so hit that

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they would have to reduce their frequency of regular services to, probably, once a week. In the event, the Corporation in question took competitive measures. They introduced family concessions, lowered their prices; and in the result the Corporation frequency is up, and the charter companies' expectations have been exceeded. That same outworn restrictionist outlook we have seen in this country in freight, as well as in passengers. As the Secretary of State said, in the United States independent operators, in the face of fierce opposition, have established lines and confounded the forecasts of the regular operators who said that they were going to ruin industry—and, incidentally, ruin themselves in their attempt to establish these lines. Now, the regular lines are carrying more and these private companies are carrying more. If the United Kingdom policy can be framed on the development of charter work in this new era of carriage of freight, and we can get rid of the present restrictions which Section 24 of the Air Corporations Act imposes upon freight-carrying companies, which prevent them from collecting a whole series of small loads from one place, because it then becomes a scheduled service, then there is freight not only for the Corporations but for all. This freight development is one which will help us to build up a world-wide mercantile marine of the air.
The policy of Her Majesty's Government first on new scheduled routes, then on freight and, thirdly, on trooping seems certain to me to be going to give enormous opportunities for private enterprise without damaging the State-owned and run monopolies. I think it will result in our getting a reserve in time of war which we have not got at present and which will go some way towards making up the deficiencies of Transport Command. I believe it will give us a mercantile fleet of the Air of which we can be proud. But I would ask the Secretary of State to take note of this. I think we can achieve these ends, given two things: first, a rather better tenure than the seven years proposed in his statement of policy. With the high capital cost of aircraft to-day one has to reckon that an aircraft will last ten years, and to write it off over that long period. It is doubtful whether such a period as seven years would be sufficiently long to attract the subscription
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of capital which might have a chance of a reasonable return. The second requirement is that civil aircraft are made available, alongside our armaments programme. We should take full advantage of the golden opportunity that exists today with Britain in the forefront of jet development, a position we shall never occupy again. Let us take that opportunity now by giving a priority in construction to the Comet and the Viscount, just as high as to our combat aircraft.
Given those two things, I think this policy is a wise, reasonable and correct one. Some of us would like it to go a little further one way. The noble Lord opposite would like it not to go as far the other way as it does. But in the long run I believe it will prove to be a good policy. I only hope that we are going to receive the assurance that if and when they have the power and opportunity, the Opposition are not going to spoil the good work Her Majesty's Government have announced to-day.

TALKS WITH AUSTRALIAN PRIME MINISTER
4.2 p.m.
THE MARQUESS OF SALISBURY: My Lords, I beg leave to make a statement which is being made in another place by my right honourable friend the Prime Minister. It is as follows:
"Mr. R. G. Menzies, Prime Minister of Australia, concluded his visit to London to-day, when he attended a full meeting of the United Kingdom Cabinet. During the past three weeks he has had opportunities to meet a number of Ministers of the United Kingdom Government, and to discuss with them matters which are of common concern to the United Kingdom and Australia. These talks have covered a wide range of topics—including the whole field of international relations, with special reference to the position in the Far East and South East Asia, defence policy and the progress of our joint military Manning. Important conclusions were reached on the question of defence equipment required by Australia and the sources from which it should be obtained. We discussed the amount oil Australia's productive capacity which should be devoted respectively to food and to

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armament production, so as to reconcile the demands in the interests of both countries. On all matters the sympathy and understanding between Her Majesty's Governments in the United Kingdom and in Australia have been notably advanced by the exchange of views which has taken place.
"Mr. Menzies' visit has afforded an opportunity to review the impact of the Australian import restrictions on United Kingdom trade generally and on the particular industries which are most seriously affected. Mr. Menzies has been anxious to examine possible ways of alleviating our problems subject to the overriding necessity for the Commonwealth Government to safeguard the Australian reserves. Full discussions took place between Mr. Menzies and Her Majesty's Ministers concerned, and also between him and the representatives of a wide range of United Kingdom industries affected by the import cuts. The Australian Government have already declared their intention to give special consideration to goods manufactured or in process of manufacture at March 8, which were made to special specification for Australia and were not saleable elsewhere without severe loss. Other cases of real hardship would also receive special attention. Mr. Menzies said that the Australian Government is also prepared to take measures to ensure that Australian importers would normally use their quotas in category "B" to honour their outstanding commitments before applying them to new orders. Mr. Menzies' view was that having regard to Australia's balance of payments position, she would not be able to go beyond these measures at the present time, but he hoped that the difficulties of the industries affected by the Australian import cuts would be eased by the arrangements I have described."
VISCOUNT HALL: My Lords, in the absence of my noble and learned friend the Leader of the Opposition, I should like on his behalf and on behalf of my colleagues on this side of the House to express our gratitude to the noble Marquess for giving us the information contained in this statement. It is pleasing to know that these difficult matters which have been discussed have been
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approached from both sides with understanding and sympathy. It is what we all expect from Mr. Menzies, who is always a very welcome visitor to this country. We can be assured that he will create no difficulties in the relationship between our great countries.
VISCOUNT SAMUEL: My Lords, the House will be glad to know from the statement which has just been made by the noble Marquess that the visit of the Prime Minister of Australia to this country has served a useful purpose in forwarding the matters of common interest which he came here to discuss. But it has done more than that. It has afforded an opportunity for all Parties and all sections in this country to give Mr. Menzies a welcome and to pay him honour. This was given not only as a personal tribute to him, and especially to the eloquence, the humour and the friendliness of his speeches, which make them a pleasure to listen to, but also as an expression of the respect and affection in which the great and flourishing Dominion he represents is held throughout the Mother Country.

CIVIL AVIATION
4.7 p.m.
Debate resumed.
LORD OGMORE: My Lords, I should have thought there could be nothing more vague and confusing than the statement which was made in this House by the noble Lord the Secretary of State. But I was wrong in thinking that, because today the noble Lord, Lord Leathers, has made confusion even more confounded; and what was somewhat murky has now become completely opaque. He has made no reply whatsoever to the questions put to him by the noble Lord, Lord Pakenham, in spite of the fact that my noble friend gave him notice of those questions. Nothing new has emerged from the speech of the noble Lord, the Secretary of State, save for one matter with which I shall deal a little later.
There were two curious circumstances surrounding the birth of this particular statement, and they seem still to create confusion and uncertainty in the minds of those who have the necessity of implementing it. It was a seven-months baby. It took the Government seven months to produce it. Just before the

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time of its birth, we had a series of alarums and excursions as to the exact time when the birth would take place. Several times it was delayed, and eventually, when it was born and we had the statement before us, it was clear, I think (to change the metaphor), that the statement had been much watered down from its original form; that the various conflicting elements in the Conservative Party had played their part in formulating it, and that the present incoherent state of the Government policy is really a sign of the play of forces. If it had been intended to satisfy one element in the Conservative Party, of course they would have said, "Free competition: Set the people free. Let them fly wherever they want, in whatever sort of aircraft they want." That would have been the Prime Minister's point of view, and no doubt that was the original statement. But before the statement came to be delivered, other forces had exercised their influence, including those represented by the Chancellor of the Exchequer. So they said, "No; Socialism must go on. We must have planning." And this queer dichotomy between the two elements of the Conservative Party, which has affected so many things, in a similar way has resulted in this curious hybrid, this so-called policy that we now have before us. Lord Balfour of Inchrye has asked what we shall do, whether we shall reverse this policy. Quite frankly, before we make any statement on it we want to know what it is. We have not yet heard.
LORD BALFOUR OF INCHRYE: The noble Lord says he has not yet heard what the policy is. What was the noble Lord, Lord Pakenham, condemning so wholeheartedly? Was he condemning nothing? I thought he was condemning the policy.
LORD OGMORE: He was condemning the vagueness of the policy—
LORD BALFOUR OF INCHRYE: No, no.
LORD OGMORE: —and the implication that he thought lay behind it. No one can tell me that here before us is a finite and fixed policy on which the Government are going to act.
I would remind the House that much of Lord Pakenham's speech consisted of a series of questions, which were designed
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to try to elicit from the Government what the policy was going to be. It was because of these questions, or of this attack, as Lord Balfour of Inchrye said, that he reversed the process and suggested that we might answer a few questions as well. I would tell Lord Balfour of Inchrye this: that we shall do nothing when we come back to power which will in any way injure the Corporations in their struggle for traffic in the face of fierce international competition. We shall, in fact, assist them in every way we can to maintain their positions and increase their business. As to the charter companies, subject to those principles, we will help them in every way we can. And may I say now that we have helped them enormously? Anyone would think, listening to Lord Balfour of Inchrye, that this was a pure case of socialised industry or nationalised industry against private enterprise. It is nothing of the kind. The charter companies—private enterprises—have always had very considerable business as the result of Government interest, and perhaps I may mention two ways in which we have helped them.
First of all, we have helped them in the matter of the trooping contracts. Practically every soldier, sailor or airman who goes abroad by air—and a very large number do nowadays—is carried in a charter plane, so far as I am aware. There may be one or two very minor exceptions, but certainly all the main charters were given, in face of competition from the Corporations, by the late Government to the charter companies. If it had been a question of socialised industry, or nationalised industry, against private enterprise, one would have expected the late Government to say: "No; we will stand on our principles in this matter. We will give no business to the charter companies." But, in fact, all these millions of people who are being carried in the course of the years to the Middle East, to Malta, and so on, are being carried in charter company planes, under contracts given by the late Government. We have helped them to a lesser extent under associate agreements and in Army co-operation. My noble friend mentioned the Silver City company as one that has been and. I hope, still is, a successful company. We tried to help them with the licence we gave them, and we hope that their activities will continue.
THE SECRETARY OF STATE FOR AIR (LORD DE L'ISLE AND DUDLEY): Perhaps the noble Lord will forgive me for intervening in order to elucidate this point—I know that he is always willing to give way. I am very interested in what he is saying and I am encouraged by what he has said so far, apart from a few of his criticisms. Is he saying—as I hope he is—that the charter companies should be encouraged to expand their traffic and make profits out of aviation?
LORD OGMORE: Certainly, I agree with that idea entirely. I hope that the charter companies will play a very considerable rôle in civil aviation in this country in the future. I say that, in the first place, because I believe in a certain amount of competition and, secondly, because it gives a wider range of opportunities of employment to pilots and others. Thirdly, it ensures the maintenance of a great reservoir of machines and men—air crews and the like—which can be drawn on in case of war. That is why I am saying this about charter companies. I know that the noble Lord, Lord Balfour of Inchrye, has his heart in this matter just as much as anyone else. But it might appear to those who did not know him as well as we do that he was making this question one of socialised or nationalised industries against private enterprise. In fact, under the last Government there were very great developments of both. Once more, I emphasise that we should not do anything to encourage private enterprise which would materially affect the nationalised industries, nor do I think it is necessary. I do not think it is necessary at all. I think there is sufficient work in the various fields for both nationalised industries and private companies without their coming into conflict. Our fear in this case is that the Government's policy, without really benefiting the charter companies, may seriously affect the nationalised Corporations. That is our fear and I will tell the House why.
In the first place, the United Kingdom has very great prestige in the air to-day. Not only is B.E.A. the eighth largest carrier of passengers in the world, but the whole position of this country in the air world has changed from what it was only a few years ago, at the end of the war. From being merely on the periphery of Europe, and being one of the many countries dealing with civil aviation,
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Great Britain has largely become the hub of the wheel in international air routes and international air traffic. Experience has shown over the years that there can never be more than one British air line on one overseas route. We have never yet managed to maintain more than one British air line on an overseas route. Will the Government's proposals affect the position of B.O.A.C.? That is my great fear.
The Secretary of State has said in effect, and so has Lord Balfour of Inchrye: "Oh, well, that is all right; this question of the old privilege, the pattern, so far as B.O.A.C. and B.E.A. are concerned, has gone. They can no longer be prevented from allowing other and private air lines to operate on routes they are not using themselves; they are no longer protected"—that was the word the noble Lord used: "protected." But what does protection mean? He explained what it meant. He said that it meant that, if a route was to be opened up, the views of the particular Corporation concerned have to be obtained and their legitimate interests protected and looked after. But that does not mean that the Corporation have a power of veto. It means simply that the whole pattern of air line work is brought under review at that time. That is what it means. If you are going to allow other air lines to operate on routes which B.O.A.C. may not be using for the time being (I am talking about B.O.A.C. for the moment, because this statement does not distinguish between the two Corporations, although in fact they are very different—one operating overseas and the other operating internal traffic as well), and if you are not going to allow B.O.A.C. to have any say in the allocation of all routes which they do not use now but may want to use in the future, then you are undoubtedly restricting them to those routes which they now use. This will mean that there can be no flexibility, so far as they are concerned; and in changing times like these, when a new era is starting in the air, when new methods and machines—such as for instance the jet air liner—are rapidly being brought in, you cannot restrict the Corporation for the next ten years to routes that they have been using in the past.
LORD DE L'ISLE AND DUDLEY: My Lords, may I intervene again just to get

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the matter clear? The noble Lord speaks of the Corporation having no say. Perhaps the noble Lord can tell us what he means by "having no say" in this question of taking up new routes.
LORD OGMORE: I am merely taking the definition of "protection," the word used by Lord Leathers. He said that protection would no longer be promised and in an interjection I asked him what he meant by that. The noble Lord asks what I meant by saying that they would no longer have a say. Perhaps he will tell us what the Secretary of State meant.
LORD DE L'ISLE AND DUDLEY: I will deal with that in my winding-up speech. I wanted to make certain that we were explicit about terms. If the noble Lord could be a little more explicit about what he means, it would help me to reply to him.
LORD OGMORE: I can only say what I think the Secretary of State meant. He meant that they are no longer going to have the amount of protection they now have. The only protection they now have is that before a route is allocated, the views of the Corporations are ascertained and their future plans inquired into, and they may put up objections to the route for which an application is being made by a charter company to the Air Transport Advisory Council. If that no longer happens, the Corporations will no longer have a say in the allocation of routes. Let me put it in this way: they will not be able to bring any power to bear in regard to the allocation of new routes to somebody else. That may affect them severely. Whether internal or external, no civil air line in this country has ever been able to "fly on its own wings"—with very few exceptions, the Silver City line being one of them. "Flying on their own wings" is an expression which was used by Mr. Churchill in the early 1920's when he was Secretary of State for Air and took the disastrous decision that all aircraft should "fly on their own wings." As a result, the whole of British civil aviation had to be grounded. In one day at Croydon, the airfield then used for civil flying, not a single British aircraft took the air, though foreign aircraft were coming in and leaving the whole time. Following that disastrous decision, there had to be a volte face and we had to go back to the old principle of subsidising civil aviation.
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Wherever there is civil aviation, in whatever country, and whether public or private, there is always an element of subsidy. It may not be direct, but it is there. Civil aviation has never really paid for the development of aircraft. They have had that done for them by the military authorities, who develop aircraft at little cost to civil aviation. The Government also provide landing facilities and keep the highways clear, all of which is not fully paid for by civil aviation in landing fees. I am making no complaint about that. I think it is important that the State should provide these services. After all, the Merchant Navy did not pay for the Royal Navy which swept the seas—the taxpayer paid for it. I am not sure that the noble Viscount, Lord Runciman" would agree with me there. For various purposes—defence in case of war and for good air communications in peace time—it is necessary for the taxpayer to pay for certain services, such as air ports and the like.
I am not going to say much about the Government statement, because it is vague and because my noble friend Lord Pakenham made an excellent speech in which he dealt with every single point that could be made, and there are no points left for me to deal with. I should like to confirm what he said and say that I entirely support him in the arguments he put forward. But I should like to put one or two points to your Lordships on what I think the Government's policy should be. Now I am looking at the question from the larger point of view. We are at the beginning of a new era in flying. There are three types of aircraft made for three different types of work—first, the jet for long-range work; secondly, the turbo-prop for medium-range work, from 500 to 1,500 miles; and thirdly, the helicopter for short-range work under 500 miles, perhaps a little less. If I were a Minister I would say to myself, "How in the service of the nation am I to deal with these three classes of machine?"
In regard to the long-range class, Sir Harry Garner, the chief scientist of the Ministry of Supply, recently gave an interesting lecture. If any of your Lordships have read that, you may have been surprised at some of the things he said. He said the difficulties of transsonic and supersonic flight are largely overcome, or

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likely to be so in the near future. That means that flying is possible near and just beyond the speed of sound. This has been made easier because of swept-back wings and new methods of propulsion. It will not be long before the gap is bridged between aircraft and projectile. This will be well known to the Secretary of State. Noble Lords may ask what this has to do with civil aviation. It has a great deal to do with civil aviation, because if the gap will soon be bridged between aircraft and projectile—and any one who attended the last show of the Royal Aeronautical Society at Farnborough will know that that is so and that modern military aircraft look extraordinarily like projectiles—it becomes apparent that there will be a big gap between military and civil aircraft. No longer will civil aviation, whether nationalised or in the hands of charter companies, be able to rely on having types tested, prepared and developed for them by the Royal Air Force. When they are considering the whole question of civil aviation and the paucity of aircraft, how can the Government fail to take that into consideration? In other words, we are faced now with the fact that, for the first time in its history, civil aviation will have to develop their own 'planes without having the previous assistance of the Royal Air Force and the Ministry of Supply for the Royal Air Force.
According to Sir Miles Thomas, we have four years' lead over any other country in the world in jet aircraft. That was largely due to the fact that the late Government took a bold decision at the end of the last war, when they decided not to go on with piston engine types but to develop the jet engine. This four years' lead has been obtained not only by developing the jet engine, but also by the fact that the nationalised Corporations were the only authorities in the world, private or nationalised, prepared to take a lead and give an order for fourteen Comets Mark I to de Havilland and for a lesser number of turbo-prop Viscounts. No other Corporation was prepared to do that. I myself, when I was Minister, saw several of these private foreign corporations and discussed this question with them, and each of them said: "It is all very well for a nationalised corporation to take a risk of this kind. We cannot do it. We
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shall wait and see what sort of success they have. We are only a private corporation and cannot take a risk of this kind. Let them do it, and we will come in later on if it is successful." So the country is deriving the benefit of this tremendous prestige of the Comet, not only from the great firm of de Havilland's, or from Air Commodore Whittle who developed the jet, but also from B.O.A.C., who were the only corporation in the world prepared to take the risk.
I want the Government to show as much courage as the late Government showed: it will be difficult for them, but they must try to live up to the late Government in courage. We must keep the lead, because, although I do not want to talk in the disparaging way that the Home Secretary did of the people in the United States, we do know that while they are not nearly as inventive as we are, they surpass us. and possibly all other nations, in the way in which they apply new inventions to practical uses, and in their exploitation—I use the word in its most respectable sense—of new methods of production. It will not be long before the Americans catch up. Already—and this is a most interesting comment on the Government's statement—the private firms of aircraft manufacturers in America are going to the Government there and asking them for assistance in order to enable them to catch up with the British machines. So, while the British Government are trying to break down the great success which we have had here in the nationalised Corporations, the Americans are reversing the process in order to catch up with what has been done in this country.
I want the Government and the Ministry of Supply to give practical contractual assistance to the Mark III jet. The Mark I is in service—that is, the Comet with the Ghost engine: the Mark II is coming off the line and will have the Avon engine—that is an engine which will take the Comet across the Atlantic without a stop. I want the Government to look at the Mark III jet machine, which will be the next stage forward from the Mark II. They should now be giving contractual assistance to a firm—it may be de Havilland's. or some other firm—to further the prototype development work needed for this machine, which carries

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sixty passengers, or even a greater number, and has a greater range and staying power than the Mark II. It will take years to come into production, and that is why it is essential for the Government now to give this contractual assistance to the development work that is needed and also to help in the production aspect of the machine when the time comes.
The problems of the medium-range aircraft are somewhat the same, but not, I think, so acute as in the case of the jet. I believe that the medium-range machine will prove itself. Of course, it is a much cheaper machine than the jet, and there will not be the necessity for the same amount of Government assistance in that: case as there is in the case of the Mark III jet. However, they might look at it and ascertain whether it is necessary for them to give production and development facilities in the case of the turbo-prop. In the case of the short-range aircraft the Government have a great opportunity of bringing into being within a very few years the new two-engined helicopter, with wings and engines of propulsion as well as methods of suspension, by which they can revolutionise travel in this country. I believe that we shall really be able to enjoy travel when we can go from one city to another by air instead of having to go by rail. It is essential that this great city of London, the hub of the universe, should have a station of which we can be proud. People coming in for the first time by helicopter from Brussels, Paris, Amsterdam and other places on the Continent of Europe, and people coming from other parts of this country, should land at a centre which is worthy of a country which has made such a great contribution as we have to air travel. That site, without a doubt, is the South Bank. I have been making this plea for a considerable time, but I do not know what effect, if any, it has had on the Government. I hope they will not allow the South Bank site to be used for purposes which will prevent it from being used by helicopters as an air stop. I ask the Government to use imagination in this way.
That is all I have to say on this matter. I support my noble friend, Lord Pakenham. I am only sorry that the noble Lord, Lord Leathers, has not given us the answers that we desire—in fact, he has not given us answers, other than an answer to one question which we did not
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ask. However, I hope: that the Government, even at this late stage, will begin to look at this whole subject again; that they will realise that in this, as in so many other matters, the late Government were wise; and that they will follow wisdom, in the shape of the late Government's policy, instead of following folly in the shape of their own Right Wing.
4.37 p.m.
THE MARQUESS OF WILLINGDON: My Lords, year after year we debate a policy, which should be non-political, of how Government Corporations and private enterprise work together. I wonder whether it is not feasible to ask the private companies and the representatives of B.O.A.C. and B.E.A. to get together and produce for the Minister a scheme which they consider is workable. Would it not be possible to get together the men who from day to day, and year after year, work in and have experience of the industry to produce a scheme for the Minister? I wonder whether that would not have worked rather well with the road haulage policy put forward by the noble Lord, Lord Leathers, and also with regard to the subject of the debate that we had on the B.B.C., television and sponsored programmes;. There are so many young men in this country with experience in these matters that I believe we should take this right out of Party politics and get them to produce a scheme for the Minister.
With regard to this particular proposition, the Minister could give a guidance—perhaps 80 per cent. of the traffic going to the Corporations and 20 per cent. to private enterprise. Undoubtedly there is great room for all. I personally am not too impressed with the records of B.O.A.C. and B.E.A. as to profits up to date.
LORD PAKENHAM: May I interrupt for one moment? I am afraid that I must have missed something that was said by the Secretary of State. Am I to understand that the noble Lord the Secretary of State said—or was it said by the Minister elsewhere—that 80 per cent. of the traffic is to go to the Corporations and 20 per cent. to the charter companies?
THE MARQUESS OF WILLINGDON: No. It is my humble suggestion that

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the Minister might ask the whole-time workers in this industry to work out a scheme for him, and that he might give a directive saying that 80 per cent. of the traffic should go to the Corporations and 20 per cent. to the charter companies.
LORD PAKENHAM: Does the noble Marquess realise that that would mean a complete change in the present position in favour of the charter companies? If he is talking of traffic on the scheduled routes, should the charter companies get 20 per cent. and the Corporations 80 per cent., that would be revolutionary.
THE MARQUESS OF WILLINGDON: The point under discussion is the statement made by the noble Lord, Lord Leathers, some time ago: that he was going to open up new routes to private enterprise. My suggestion is based on that point. At the moment, 263,000,000 capacity ton-miles are being flown, and that figure could be trebled. Under free enterprise the United States fly twelve times that amount, and in overseas routes two and a half times. In fact, there is room for all, provided that the aircraft are available. I do not wish to tender either in auction or in open market for the Tudors, the Yorks or the Dakotas, but from the strategic point of view, and the aviation mercantile point of view, surely there is an answer in having a buying agency to purchase all the best aircraft for transport needs, and to allot them to Transport Command, to the Corporations and to private companies. Otherwise, I cannot see that these private companies, who are going to be given this magnificent seven years' run, will ever be able to operate. The cost is far beyond their means, and the delivery date is frankly out of sight.
I wish to ask the Secretary of State one question, of which I have not given him private notice, but I am certain that private notice is not required as it requires only the answer, Yes, or No. The question is: Would he advise any young man who came to him to enter a private company on a seven-year lease, or would he advise any firm with which he is connected in the City to finance a company on such a seven-year lease? In my opinion, it is not a business proposition. The noble Lord, however, knows a hundred thousand times more about the subject than I do, and I should like his
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answer. I know that in giving it he will bear in mind depreciation, the present rate of taxation, the difficulties of building and of hangarage, and the wages being paid by the industry, particularly by the nationalised companies, to unskilled labour.
There is one other question that I should like to ask. I hope that the Secretary of State is not going to be unapproachable as regards civil aviation. There are many of us here—including the three ex-Ministers who have spoken—whose heart and soul are in this matter, and who have been connected with it for a great number of years. I should like to ask the Minister whether, before making this statement, he has at any time seen the British Independent Air Transport Association, or any of its members individually, because I believe that these private companies should be consulted before an important step like this is taken. Finally, let us follow the advice of our Chancellor of the Exchequer. Let us go out into the world with free transport, trading all we can; and let these private companies have a fair deal to run in parallel or on the 20 per cent. basis with the B.O.A.C. and B.E.A. Corporations, of which we are rightly proud as the mercantile marine of the air.
4.44 p.m.
LORD NATHAN: My Lords, I should like to examine this matter quite dispassionately, from the point of view of a matter of business. Is this a sound business scheme or not? Is it likely to attract the necessary capital or not? As the noble Marquess, Lord Willingdon, asked just now, is the policy outlined by the Government likely to attract into its ranks pilots, crews, administrators and business men? Is it likely sufficiently to improve the range and scope of British aviation to justify the risks to the position of the Corporations? The Corporations have been discussed to-day as if they were some emanation of a public enterprise, and were to be looked upon merely from the standpoint of being public enterprise in contrast to private enterprise. In what I say to-day I have no particular interest, in that question. I look upon these Corporations—originally three, the third now being absorbed into the other two—as a business enterprise, a business enterprise in which no less than £42,000,000 and more of public money has been invested.

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As a taxpayer, I am concerned to know whether my investment is going to be improved or whether it is going to deteriorate as a result of the proposals put forward by the Government; and whether the whole range of civil aviation will be better served and will bring more credit to the country and more earnings to the country if the emphasis is upon the Corporations or if the suggested change is made in favour of the independent operators.
As I look back six years, to the time when I was appointed Minister of Civil Aviation within a few weeks of the passing of the Statute—which, with so much ingenuity and care, my predecessor the noble Lord, Lord Winster, saw through Parliament—I recall that when I arrived I found the Corporations in a situation which certainly did not enable them (how could it in that limited period of time?) to conduct business in the way in which one expects and hopes that business should be conducted. Apart from B.O.A.C., they had only just been created. My noble friend Lord Winster had brought together with great care bodies of men to operate those Corporations, but they had little or nothing with which to operate. There was an ill-assorted, heterogeneous collection of converted bombers. That was all they had until, some time later, there came upon the scene the ill-fated and inglorious Tudor, itself only an adaptation of a bomber. It is amazing to me, looking back at the situation in 1946 and surveying it to-day, to realise how well these Corporations have done in the face of these most difficult beginnings. Infinite credit is due to all ranks—if I may use that phrase—within the Corporations for the results which have been achieved. They have the advantage that £42,000,000 has been invested in those Corporations. They are showing that the money has been well spent.
I do not think we are at the end of the investment yet. The requirements of capital may well proceed quite a considerable distance further. But at least we can say this: that, whereas in the earlier times that investment looked precarious, we are now "out of the red," and that, to all intents and purposes and barring some unforeseen occurrences, we may look forward to the Corporations making a profit. That is a highly satisfactory situation within so very short a
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time. Is it wise in those conditions, is it a matter of business prudence, to create the instability, the uncertainty and the doubts which will inevitably be created by the proposals put: forward by the Government? The only way in which the Corporations have been able to make their startling progress has been by planning ahead. They have planned ahead with great foresight and wisdom, and naturally they have phased their programme of planning with a programme of aircraft production and of aircraft coming forward. Aircraft, as the Secretary of State said, are the central problem here. It takes a pretty long time for aircraft to be forthcoming. The Comet, the Viscount and the Ambassador were all initiated in my time, but they are only now really beginning to come forward. Even so, the Comet comes forward at the rate of only one per month, while the Viscount will not be coming at all until next October, and then only at one per month. Planning is a long process; in aviation, at least, I have no doubt that it is. I have no experience of the Royal Air Force, but I have certainly had experience from my observation of civil aviation.
Now what do the Government say? They say "We will take the present position and regard it as static." It is no good planning your programmes for the future, for you cannot be certain that you will be allowed to operate the routes planned and to use the aircraft that you have ordered, because others may come forward and be licensed for those routes and then take those aircraft. The A.T.A.C. may recommend that the planned programme of the Corporations be accepted, or they may recommend that it be sacrificed in favour of the independent operator. That would not have happened under the procedure as it was previously. It has been said, and it is true, that I invented the device of the associate agreement when I was Minister; and my noble friend, Lord Pakenham, developed that idea and produced the directive to the Air Transport Advisory Council. That directive particularly emphasised the very point that I am now trying to make to your Lordships and provided, accordingly, that no associate agreements were to be made which overlapped or competed with existing services whether in operation or as part of a planned programme. Part of

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the quarrel which, on business grounds, we have with the noble Lord, Lord Leathers, is that, according to the statement he has made to-day, the Air Transport Advisory Council is under no obligation to have regard to planned programmes. On the contrary, the indepen-rent operators are encouraged to apply to the Air Transport Advisory Council where the route is not actually operated over but is nevertheless planned. Thus, the Corporation may be excluded from the planned route not yet actually operated, notwithstanding any commitments which the Corporation may have undertaken regarding aircraft, ground works, personnel, equipment and so on. I am intensely interested to know what the directive is which is to be given to the Air Transport Advisory Council.
LORD DE L'ISLE AND DUDLEY: My Lords, when the noble Lord was responsible as Minister, how would he have defined a planned programme? Would it have been a programme where everything was already arranged, or would it be one which was merely a dotted line on the map? It is rather important to know what a planned programme is, and I should like to know the noble Lord's views on it.
LORD NATHAN: That is an extremely fair question. I would say that I know a planned programme when I see one, but I realise that that will be an insufficient answer to the noble Lord. I think that I could possibly improvise a definition which would satisfy the noble Lord, Lord Leathers, with all his wide business experience. What I regard as a planned programme is this: the stage which is reached when the board of a company have consulted their technical and other advisers, when a certain period of time has been set for their programme, and when they have decided that the programme should be along certain lines—perhaps the word "lines" is not quite the correct word here, being a little ambiguous—shall I say should take a certain shape? They then direct their minds to the phasing of that programme and its implementation by phases, such as the surveying of the routes, preparations for the ground staff, the ordering and delivery of the aircraft and the training of pilots and crews—the whole of the suitable and appropriate phasing, in
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anticipation of the programme to be pursued.
I have spent forty years in the City of London and I have in my time come across two or three industrial strategists. I have also come across a good many highly skilled administrators. I have found that they are two very different things. I am thinking of the business strategist—the man who has a touch of the statesman about him. He is a rare bird. I think we are fortunate in the Corporations in having on the boards men who qualify for the rare distinction of being business strategists, by having about them that touch of the statesman. They are much more than mere administrators. And when I say a planned programme, I mean a planned survey, first in outline and then a working out of it, first by the strategist and then by the tacticians and the other administrators. All this value is now to be denied to the Corporation, according to the interpretation given by Lord Leathers of the functions of the Air Transport Advisory Council. I think it is a great pity, because on that interpretation the Corporations cannot look ahead. They cannot decide how the successes which they have already had are to be maintained, or new successes achieved. They cannot make up their minds what additional capital resources they require—much less secure them—or, indeed, how to safeguard the capital resources which they already have. It is essential that the whole thing should be planned comprehensively.
I have no hostility towards the independent operators. On the contrary, I well remember calling them together after I had been appointed (it is now a long time ago) and asking them to form themselves into an association, so that the Minister would have someone to whom to talk. That was the origin of the organisation which has now, after some vicissitudes and some changes of name, taken the form of the British Independent Air Transport Association. My noble friends, Lord Pakenham and Lord Ogmore, have made it clear to-day that none of us has any antagonism or hostility towards the private operators. It is just a question of securing that they have a proper place, and that they can play their part in that place.
Before I pass from the A.T.A.C, I should like to ask the Minister who is

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to reply: Who are to be the members of the A.T.A.C.? The noble Lord, Lord Terrington, has been Chairman from the outset, and his colleagues, all of whom I appointed and who have done a great public service during the six years which have since intervened, have all either resigned or been asked for their resignations. What sort of people is it proposed to appoint in their place? What are to be their qualifications'? How will they be selected? What are the criteria by which, when selected, they are to make the decisions on the matters which will come before them in regard to this new policy? I think that the independent operators have done a very good job of work. They have a fine record as regards freight; they have done well as regards trooping, and there are a multitude of services within the whole sphere of civil aviation which they can perform usefully, to the public interest and profitably for themselves. But there are few, if any, of them who have aircraft either of the quality or in the numbers suitable for running a scheduled service, whether within these islands or on the overseas routes.
How are they to obtain those aircraft? Assuming that the A.T.A.C. consider their application worthy of support, how are they to obtain those aircraft? They can be obtained, so far as I can see, only by an acceleration in production or by diversion of orders already given to the Corporations. The noble Lord, Lord Leathers, truly said that the problem of aircraft is difficult and complex. So it is. But the Corporations are entitled to know where they stand, because it is they who have ordered these aircraft. They are committed to these aircraft. They have developed these aircraft. Who is going to pay the charges for the development of these aircraft now debited to the Corporations? Are the independent operators to come in and have all the advantages of the development work done by the Corporations, at the expense of the taxpayer? Or are they themselves to make some—and if so what—contribution to those development charges?
How are they to get their trained crews and their pilots for the scheduled services? Is that to be done at the expense of the Corporations? I am trying to put practical and not tendentious questions: they are questions which somebody has to answer, either to themselves or to
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somebody else, at some time or other. Where are the independent operators going to get their crews and pilots? Presumably, they will not get them from the Corporations because the Corporations are not going to have any routes taken from them. What is happening is that the Corporations are not to retain the same chance that they have at present of acquiring new routes. So there will be no surplus of pilots and crews, if I understand the position correctly—I see that the noble Lord, Lord Leathers, nods agreement. Where, I repeat, are these new pilots and crews corning from? Who is going to train them? Where is the school for training them such as that set up at such great expense by the Corporations?
Where is the capital coming from for the independent operator? I agree with the noble Marquess, Lord Willingdon, that it is going to be difficult not only to find the personnel in their various grades but also to find the capital required for a licence of seven years—or, if the operator is lucky, ten years. Moreover, as the noble Lord, Lord Leathers, has said, there is not even an undertaking or a guarantee that, when the capital is there, the company will do, or continue to do, its work, and will not fall down upon its obligations. Where is it going to get its capital from? Not by taking it from the Corporations, I assume. Therefore, it can be done: only either by reducing our exports or by using for civil aviation capital predestined for capital work on re-equipment in other branches of industry. What is the effect of this going to be on the capital investment programme which the Government have laid down? Is it proposed to divert from, for instance, the building of homes and houses, and from other capital purposes, the restricted capital which the Government have made available? I make no criticism—
LORD DE L'ISLE AND DUDLEY: May I intervene at this point? It will save time in my winding-up speech. Does the noble Lord not think that more capital should be invested in mercantile aviation—I am not saying whether it is a Corporation or not? Does he think it is not going to be invested either by the Corporations or by the mercantile private fleets?
LORD NATHAN: My argument is directed to this. In the first place, I think that the conditions which the Government offer for capital will be unattractive. Secondly, I think that this capital can become available only by an alteration in the declared policy of the Government and by a change in the directive to the Capital Issues Committee. So I ask whether there is to be any change and, if so, what, in the Chancellor of the Exchequer's directive to the Capital Issues Committee. Because as matters stand at present under the terms of the directive issued by the Chancellor of the Exchequer for the protection of the public finances, no company will be able to obtain capital for these purposes. There is no reason why that should not be altered if the Government be so minded—but are they so minded? If so, what else are they going to let in under the directive to the Capital Issues Committee? There are other competitors for capital in the City of London. What is the extension of the directive to be?
I come back to the Air Transport Advisory Council. I should like to know whether the A.T.A.C. are to be invited to consider each particular route taken by itself, where the application is made for such and such a route, or will it be open to any body to make a requirement upon the A.T.A.C., that it shall consider the bearing of the granting or refusal of an application upon the whole set-up, financial and technical, of a particular applicant, if the applicant be an independent operator, or of the Corporation, if the Corporation be the candidate. Are they to be limited to the detailed application or are they entitled to reflect upon the whole scene?
There can be no guarantee, as the noble Lord, Lord Leathers, has said. What happens if, contrary to what we would hope, the independent operator, having undertaken the operation, does in fact fall down upon his undertaking? Are the Corporations then to be asked to come to the rescue? If the route is a desirable route it ought to be flown. Have the Corporations to be available, willy-nilly, to pick up the pieces if the independent operator should fail? We ought to know that. Will the independent operator go to the Air Transport Advisory Council before he has his capital, and say to them, "if you will
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grant me this application I hope that I may be able to obtain my capital," or will he go first to the City of London and say, "Give me this capital, in the hope that I may be able to obtain a licence."? What are the underwriters of the City of London (I do not use this term in its technical sense) likely to say about that?
My Lords, the present situation of the Corporations was not achieved without a great deal of devotion and sacrifice in the stream-lining of the organisation and the staff. Many redundancies were declared, but a fine spirit was created and has prevailed. Those engaged in the Corporations have felt that they have something really worth while to work for. They are proud of the Corporations, and they are entitled to be. What is going to be the effect upon their morale when they are told that, although they are the "Queens" of the air, the standing of the Corporations is entirely altered? Not only are those engaged in the Corporations proud of their work for the Corporations and the results of it, but the public is proud of the Corporations. The terms "B.O.A.C." and "B.E.A." have become household words the world over. Suppose the standard of service which has been the distinguishing characteristic of B.O.A.C. and of B.E.A. becomes less good than at present. That is going to have a repercussion on British aviation all over the world. What does the noble Lord say about that? How are the Government going to overcome those risks? Perhaps safety, which ought always to come first, might not be so carefully observed. Perhaps the service, which has been so excellent, might be not quite so good. The repercussions will be not only on the independent operator, but also on the whole of British civil aviation. The Corporations have had a difficult struggle to make a profit, to get "out of the red." What is going to be the effect upon their overheads consequent upon this change? What is going to be the effect if, as hitherto, they are no longer able to operate either fill-up freight or spill-over freight, which has made a handsome contribution towards their financial results?
What is the position of employees so far as the pension scheme is concerned? This is not a Corporation scheme; it is a Minister's scheme. What is to be the

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position of those employees if they have to leave the Corporations as redundant and go into an independently operated organisation? They will want to know what their position is. As I say it, this is not an employers' scheme, it is a Government, or rather a Ministry of Pensions, scheme.
What is to be the relationship with the International Air Transport Association in order to prevent under-cutting in fares? Are B.O.A.C. and the independent operator to be sitting round the same table and at the same time competing with one another, in order that the independent operator may try to obtain some advantage over B.O.A.C.? The noble Lord says that air travel is going to be cheaper. How can it be cheaper for the passenger if the minimum rates are already prescribed? From the purely practical point of view of the administrator, of those concerned in the industry, whether in the Corporations or amongst the independent operators, or simply as business men, or those private citizens who, as taxpayers, have invested in this enterprise upwards of £40,000,000, I would say that this policy has not really been thought out, and I would ask the noble Lord to take it back and think again.
5.17 p.m.
LORD CLYDESMUIR: My Lords, your Lordships will agree that this has been a most interesting and, in some respects, a formidable debate—formidable because I have been looking at the list of speakers, and I find that five ex-Ministers and two serving Ministers have spoken or are yet to speak; so it is with some temerity that any humble layman raises his voice. Yet I venture to do so because I have one or two things that I want to say. In the first place, I hope that the noble Lord, Lord Pakenham, will forgive me if I disagree, gently and courteously as in all our exchanges, with his observations to-day. He appeared to feel that the policy of Her Majesty's Government as announced on May 27 was inopportune. On that I disagree with him, because I feel that it is giving and will give an increasing measure of impetus to civil aviation, a most important consideration at the present time. The policy is fraught with certain risks, but at the same time it is so full of safeguards that I should not regard the risks as dangerous.
LORD PAKENHAM: May I interrupt the noble Lord, with equal gentleness and courtesy, because I am bound to say that Mr. Rylands, who I like to think is a friend of mine and is a leading spokesman for the charter companies, did not extend a very warm welcome to this policy when it was announced. He treated it almost with derision. I think that is a point of which note should be taken.
LORD CLYDESMUIR: The noble Lord will admit that the policy has been hedged with so much care that this may have detracted from that welcome, but I believe that its intention will be fulfilled, namely, to give a stimulus to civil aviation in this country. Again, with great respect, I hold that some of that stimulus has been lacking up to now. Yet we value our great Corporations enormously and the noble Lord the Secretary of State has paid high tribute to them in his speech. Then the noble Lord, Lord Pakenham, asked where would we find in Scotland a charter company able to take the place of the Corporation. I feel that under the stimulus which is now going to be given it is not impossible that there will arise in Scotland a strong charter company able to play its part in the link services, and I look forward to that happening within measurable time. I hope that in the course of time the noble Lord will prove to be wrong in that regard; and if so it will be as a result of the policy which Her Majesty's Government are now setting on foot. Now, if I may be bold enough, I disagree with the noble Lord, Lord Nathan, who expressed great concern lest the Corporations should be "put back into the red"—that is, make losses. If the only method of keeping the great Corporations out of the red is to keep out every breath of competition from every quarter, then I am bound to say that I cannot agree with him.
LORD NATHAN: If I may interrupt the noble Lord, may I say that, of course, B.O.A.C. is throughout subjected to the most intense competition. So is B.E.A., except, I suppose, on the internal services.
LORD CLYDESMUIR: I was going to say that there are exceptions. There are safeguards which we hope are ample and I do not think that the great Corporations will be endangered by the steps to be

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taken, provided that they are taken with great circumspection and care.
It is some months since we had a debate on civil aviation. Although this Motion relates particularly to the statement made on May 27 about the policy of Her Majesty's Government, it is drawn in wide enough terms to enable me to raise another matter. On the last occasion when there was a debate on civil aviation—that was on December 5 last—the Secretary of State for the Coordination of Transport, Fuel and Power, Lord Leathers, used these words, speaking of airfields [OFFICIAL REPORT, Vol. 174, Col. 824]:
"Our biggest single problem is the development of airports in the London area. Of these, London airport is of prime importance for the progress of civil aviation. It is our intention that this great work shall go ahead as quickly as economic circumstances and the supply of materials permit. I can say, too, that we are all very conscious of the need of further development of Prestwick, which is, and will remain, the second international airport of the United Kingdom."
It is about Prestwick that I would speak for a few moments. It is a subject which is not only of great interest to Scotland—as any Scottish Peer will bear out—but one which is of vital interest to the United Kingdom as a whole, as evidenced by the words of the Secretary of State. We cannot afford to regard lightly the fact that the second airport of this Kingdom is not fully adequate, as it certainly is not at the present time.
This is not in any sense a Party question. Both the late Government and the present Government have expressed sympathetic views and given evidence of their intentions in the matter. But I think that the red light in the matter of capital expenditure has been showing. I propose to make some suggestions in that regard. I can say that while much has been done at the London airport to render it suitable, as it should be, for heavy traffic under any possible conditions, I have the impression that affairs at Prestwick are lagging considerably behind. If your Lordships will allow me for a moment to recapitulate a little recent history, I should like to do so. In February, 1951, I presented a report on Prestwick as Chairman of a Committee appointed by the Scottish Council (Development and Industry). This report was the subject of a statement in
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your Lordships' House on February 15 last year. We did an intensive year's work on Prestwick Aerodrome and our report was well received by the then Government. The then Minister of Civil Aviation, Lord Pakenham, referred to the document in sympathetic terms, and, what is more, he promised that a considerable part of the recommendations would be carried out. Since then, it is true, some work has been undertaken, and successive Ministers have visited the airport. Whether the proximity of an excellent golf course could have had anything to do with that or not I do not know, but it is within my recollection that three Ministers have visited the airport recently. But still the work which was recommended is hanging fire.
The main recommendations were the lengthening of the main runway to fulfil international standards, necessitating a diversion of the main road, and the speedy provision of a subsidiary runway. I have recently been to Prestwick and have been disappointed to see so little progress. It is true that temporary buildings are in course of erection for the greater comfort of passengers, and to facilitate Customs arrangements, and that some 400 feet have been added to the landward end of the main runway. But the extension on the seaward side has not yet been carried out; nor is there any sign of progress on the subsidiary runway. I am not attempting to offer criticism of events up to date, because I realise that capital expenditure is the limiting factor, but I am advised that at present neither Stratocruisers nor Constellations can take off when fully loaded or land in all wind conditions. This greatly lessens the value of Prestwick as a first-class airport; and should not the second airport of the United Kingdom be first-class? I earnestly make an appeal that progress should be more rapid if that is at all possible.
I have a suggestion to make and I make it with some temerity. I believe that the United States have a great interest in the preservation of Prestwick airport as the terminal of ferrying services, and I believe that America might be ready to help with the cost of the work. At any rate, I make the suggestion, and I ask whether the Government will

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explore with the United States authorities the possibility of such aid. In the past, Marshall Aid has been used for many purposes of less immediate benefit to the United States of America; in fact, I can think of little else that would be of more practical and immediate benefit to both the United States and Britain than to secure immediately a fully adequate second airport, available in all weather and in all conditions in a part of the Kingdom which is remote from the South.
My Lords, though this point may be further from the terms of the Motion, yet I do not think it will be altogether outside it. Is it not vital, from the point of view of defence, that there should be an adequate second airport for Transatlantic ferrying in all weather conditions? On February 15 last the noble Viscount, Lord Swinton, speaking of this airport at Prestwick, said:
"Whatever may be the value—I have no doubt it is great—of this airport as a transoceanic port, there can be no possible question, I submit, that in the event of another disaster such as the last war, this airport would be absolutely indispensable. I would therefore suggest that considerations of defence reinforce the need that the runway should be adequate to take the largest Service aeroplanes as well as civil 'planes. Those considerations also certainly enhance the need for proceeding with the work as rapidly as possible, as I gather the Minister himself desires."
The reference there to the Minister is to the noble Lord, Lord Pakenham.
Your Lordships will, I think, agree that those are two important quotations. Noble Lords on both sides of the House desire to see the improvements at this airport completed as soon as possible. Perhaps my noble friend the Secretary of State for Air may feel able, in his reply, to indicate whether the Air Ministry would consider the question of entering into the expense of this improvement on defence grounds. He may not be able to commit himself to-day, as I can well understand, but I strongly urge that the matter should be investigated from the angle which Lord Swinton stressed as being so important. That is all I have to say on the subject of Prestwick airport. I feel that this debate has been a valuable one, and I hope that the Government will not be deflected from the policy which they have set their hands to. I hope that they will press on with it and give that
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encouragement to civil aviation from which I think great benefits will flow to this country.
5.28 p.m.
LORD WINSTER: My Lords, I hope that the noble Lord, Lord Clydesmuir, will have good luck in getting from the Secretary of State for Air the reply for which he is hoping. I trust that he will not mind my saying that I rather doubt whether he will. I entirely agree with the noble Lord that Prestwick is a most admirable and important airport, and I entirely agree with the words he quoted as having been used by the noble Viscount, Lord Swinton. I do not know whether I can have an undertaking from the noble Lord that anything done at Prestwick in the way of the developments of which he speaks will not wreck the old Troon golf course. I hope very much that he will be able to give me some assurance on that, otherwise I am afraid that I shall be compelled to come to issue with him.
LORD CLYDESMUIR: If the recommendations of the Committee are carried out, the golf course will not be damaged in any way.
LORD WINSTER: Then I am all the more strongly in favour of giving support to those recommendations.
I should now like to add my tribute to the many well-deserved tributes which have been paid this afternoon to the work of the Corporations. Having known them and the men who guided those Corporations in their difficult days, I realise fully that perhaps the day is approaching when, to paraphrase Pitt, they may be able to say," Cork up that red ink bottle, we shall not want it again." In particular, may I say to those who guide the destinies of the B.O.A.C. that it is the most peculiar pleasure to me, remembering the time when we had to buy Constellations, without which there would have been no British trans-North Atlantic service, to see them now beginning to operate what is undoubtedly the finest commercial aircraft in the world? Having paid tributes to the Corporations, I am sure your Lordships would wish me also to pay tribute to the great firm of de Havilland for rendering this tremendous service to the country by giving us the Comet. The other night I was at a meeting of old "Brains Trusters" of the B.B.C., and one

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of the first questions was, "Can you think of any good news at the moment? "The answer came like a flash," Yes, the Comet." I think that is a fine tribute to the work of de Havilland.
LORD PAKENHAM: And the B.O.A.C.'s Board.
LORD WINSTER: Indeed. And we should remember that the Comet faces America with the most tremendous difficulty, involving a capital sum of approximately £50,000,000 which her air service companies have invested in machines of conventional types.
I should like to ask the noble Lord, Lord Leathers, one question. The noble Lord made it clear in his speech—I will paraphrase what he said—that the Government have the firm intention of fostering and assisting the work of the Corporations. May I ask whether that means that no new route will be allocated to a charter company to the detriment of a Corporation? That leads me to another point, for which I am much indebted to the advice and assistance of my noble friend Lord Lucas of Chilworth. Can the Corporations appear before the licensing authority to which a charter company applies for a licence to operate a route and object to the application? May I also ask whether the licensing authority will follow what I would term quasi-legal machinery, so that there would be an appeal from their decision to some higher authority? If these points could be cleared up by the Minister who is to reply, I think it would greatly strengthen the remarks of the noble Lord, Lord Leathers, to the effect that the Government intend to do nothing in any way to the detriment of the Corporations.
Before I come to the announcement of policy which has been the main subject of this debate, there are one or two other matters about which I should like to speak. First, there is crew complement. The immunity from accident which the British Corporations have enjoyed has been due to the fact that they have given safety the highest priority, to the wise manning system they have followed and to the high maintenance standard which has been adopted. The policy on crew complement appears to have changed since 1949. The effects of the change have not yet become apparent: there has not been
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time. The certificate of airworthiness sets out the minimum crew complement and licences required. We know that in some instances B.O.A.C. man-up in excess of the minimum statutory requirements, but the manning policy appears to have changed in regard to specialised navigators and engineers. I understand that the Corporations intend gradually to dispense altogether with specialised navigators and that there will be no further recruitment of them. This policy has been decided upon in face of representations from men very competent in this matter, who feel grave concern about it. Attention has been called to the need for a high degree of precision in navigation, a precision which can be but doubtfully obtained through having the pilot or first or second officer qualified. As regards the carriage of a flight navigator, paragraph 60 of the regulations at present requires that a flight navigator should be carried for flights which take aircraft more than a great circular distance of 1,000 nautical miles over water or on a non-stop flight more than a great circular distance of 1,500 miles. In these cases there have to be specialised navigators who cannot perform any other duties, except when a pilot and second pilot are carried and one of them has a flight navigator's licence as well as a pilot's licence covering the type of machine in use.
I am told that the Minister of Civil Aviation declined to listen to suggestions that these mileages are too great and should each be reduced by something in the nature of 500 miles. The use of new high-speed aircraft, such as the Comet, emphasises to my mind the necessity for extreme accuracy in navigation if these machines are to be operated with safety and with efficiency. Small errors in navigation are magnified in proportion to increased speed. The conventional aircraft cruises at, perhaps, 250 m.p.h.; the Comet cruises at 475 m.p.h. Again, such speeds as that of the Comet mean high fuel consumption and a navigational error might throw out fuel reckonings, with serious results. I understand that the B.O.A.C. originally intended to operate the Comet with two pilots, a navigator and radio officer, but that in fact the specialist navigator has been dispensed with, although a flight engineer is now being carried, no doubt as a result of representations about safety.

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May I remind your Lordships that it would be completely improper to refer to the details of the recent Hermes accident, because an inquiry is being held? I have no intention of doing so, but I think the remarks I am about to make are perfectly fair. Public concern has naturally been very much roused by that accident. The aircraft did not carry a specialised navigator. The pilot held a flight navigator's licence and the second pilot and first officer held commercial pilots' licences, which are not of the highest standard. But by the regulations the pilot is responsible for the pilotage of the aircraft. Can he really, in addition, do full-time navigation duties over distances which I have just quoted, and which it was suggested should be reduced? At the time of the accident, the Hermes seems to have been on a "leg" of 1,400 miles. Had the proposal to reduce the mileage been accepted, the aircraft would have had a flight navigator on board. I suggest that this question wants looking into carefully. It should be taken back and studied before the decision to do away with the flight navigator is finally and firmly put into operation.
The certificate of airworthiness for the Comet gives three possible alternatives about crew complement—first, three pilots; secondly, two pilots and one engineer; and thirdly, one pilot and two engineers. I cannot say that I very much like the look of the three pilots alternative. Here, again, I think that that should be carefully considered. There is perhaps not yet enough data for a final decision in regard to these high-speed aircraft, but what is certain—and I am sure that we can fully trust the Corporations in this matter—is that, as regards crew complement and specialised officers, expense considerations must not override questions of safety and efficiency. The travelling public has a vital interest in this matter, and should watch what is decided in regard to specialised officers with great care.
There is another question I should like to put about the Hermes inquiry. The names of the members of the B.O.A.C. who are to conduct the inquiry give the utmost confidence that what can be found out will certainly be found out and that ultimately the travelling public will get the benefit, possibly in the way of extra precautions or further safety regulations.
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The inquiry is to be private, and I have no quarrel about that. But according to the Aircraft Accident Inquiry Regulations of I.C.A.O., the State in which an accident occurs shall be responsible for the inquiry—in this case France, who are setting up an inquiry—but that State may delegate whole or part of the inquiry to the State of registry; and the State of registry is entitled to appoint a representative, who is present, but does not, I take it, sit as a member of the inquiry. I should like to know whether or not we thought fit to ask the French Government to delegate the inquiry to us, as they had power to do.
LORD LEATHERS: It does not arise in that way. It arises only if the country over which the plane is flying and in which the accident occurs desires some other country—that is, the ownership country of the aeroplane—to take up the inquiry.
LORD WTNSTER: I am grateful to the noble Lord for clearing up that point, which was not quite clear to me on a reading of the regulation which I quoted.
To come to the main subject of this debate, I cannot say that the announcement of policy by the Government has filled me with particular alarm or suspicion, although, naturally, any horse coming from the stable opposite must be viewed with considerable suspicion. This may be the thin end of a wedge, and accordingly must be watched carefully. But, as the statement of policy reads, I must say, to my disappointment, that I could not find very much straw out of which to make bricks to hurl at the Bench opposite. I do not feel that it really embodies tremendous concessions to the charter companies. At any rate, I cannot say that I have heard the representatives of charter companies uttering loud hallelujahs because they feel that the Golden Gates are at last opening up to them; they seem to have been rather quiet, and inclined, if anything, to look this gift horse in the mouth. It remains to be seen whether the charter companies feel that they can make a profit out of the services which are now opened up to them.
I have always wished well to the charter companies—this has been said by other noble Lords this afternoon—for strategic reasons, for defence reasons and from the point of view of air transport in a future

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war. I feel that the initiative and enterprise of young men in charter companies might well yield us valuable experience in the operation of civil aviation, and also that they could confer benefit upon the travelling public by opening up services to places which it is not feasible or practical for the Corporations to touch. I doubt whether the effects of the concessions will be great, certainly in the immediate future. We have seen in the past that many applications to operate charter companies are filed, but by no means all of them—perhaps it is a third—begin to operate. I think it has been a very tricky job indeed to make money out of the routes which have been open to the charterers. I feel that the position of the Corporations is largely secured, as it should be, by the provisions concerning them which we have heard this afternoon, and which may be reinforced by the answer which I shall receive about the proceedings before the licensing committee.
The charter companies may find openings in services not fully operated by the Corporations, which would be a benefit to the travelling public; and certainly experience has shown that the provision of additional amenities often results in considerable additional traffic. I believe that the charter companies can be particularly useful in regard to special and seasonal services. As regards special services, we have heard this afternoon how the late Government relied on them for trooping work—and I imagine that the present Government do, too In my view, in freight also it is probably open to charter companies, not only to make money, but also to render great service to industry. I would say, further, that if charter companies are to operate and try to render these services, it is right that they should be given a reasonable amount of security of tenure, in order that they may be able to go into business and apply for capital on a sound basis.
The internal services have been referred to this afternoon. There will always be difficulty with regard to these. In America the airway companies can finance and run their expensive overseas services out of the high profits they make from their amazing network of internal services. With us it is very different. The only internal service I can think of that I would ever want to take here is
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from London to Belfast or from London to Dublin, in order to get rid of that abominable sea-crossing and the general discomfort of that journey. But if I am in Glasgow or Edinburgh and wish to get to London there is no doubt that I shall get into that delightful sleeping compartment which British Railways supply, which is one of the most comfortable sleepers in the world, and come down in that manner. In Scotland the islands services must be maintained, whatever the cost, as a sort of life-boat service. We cannot leave the islands without air services, in case of sickness or other emergency.
I have one other remark to make about the charter companies. I have made some observations about the Corporations and air complement. I hope I have made it quite clear that the Corporations have tended to exceed statutory requirements, and that I question their policy only in regard to specialist officers. In the past I have not been entirely satisfied that some of the charter companies have not run things a little bit fine. I have with me here schedules of a charter company running services to the Far East. It is now defunct, but it was operating in conjunction with B.O.A.C. As I study those schedules, I am bound to say that they must have imposed great strain and fatigue upon the air crews, thereby, in my opinion, impairing the safety factor. I think the travelling public would like to know or to be reassured that charter companies will observe Corporation standards regarding crew complements, maintenance and flying hours per year. In that way the high reputation of British civil aviation will be maintained. If any corners are cut, who knows what may happen, very much to the detriment of British civil aviation, for which the Corporations have built up a reputation second to none?
The final remark I should like to make is this. In the debate this afternoon inevitably the question of nationalisation and private enterprise has reared—I will not say its ugly head, but has reared its head. Particularly where civil aviation is concerned, I believe it is a great mistake to regard nationalisation or any other method of running an industry as something sacred—a sort of Ark of the Covenant which must not be touched and which to criticise is blasphemy. Methods

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of running an industry ought to be regarded in an empirical spirit and not as political fetishes. What we are after is to find out how to run an enterprise so as to give the fairest possible deal to three parties—the State, the customer and those engaged in the industry. It is not at all difficult to find the way to give the maximum advantage to one of the three parties, but it is very difficult indeed to do justice to all three. It is admitted by the advocates of nationalisation—they make no bones about it—that nationalisation has not as yet by any means solved that particular problem of giving the best possible deal to the three parties concerned. On the other hand, we are learning very valuable lessons from nationalisation and gaining extremely valuable experience. It is too soon to say yet if it is a success or if it is a failure. We do not know enough about the system yet. My own opinion—for what it is worth—is that it will neither succeed nor fail 100 per cent. As a system it cannot represent finality. I believe that it will merge into and contribute to some other system which one reads about, such as, for instance, the State owning the assets and leasing them to an operator.
This process of learning by experience and of one system merging into another is called by the critics compromising, and in addition to being called a nation of shopkeepers and a nation of hypocrites we are frequently called a nation of compromisers. Well, I believe we ought to be proud of that, because it is not really compromise; it is a way of making things work, and I think that we have a national genius for making things work—for making the most apparently irreconcilable things work—just as the French have a genius for improvisation and the Americans for driving a project through regardless of money, life, time or anything else. The essential thing to "freeze on to" is that nationalisation must not be regarded as an inviolable acceptance of a certain school of political thought, but that it is the latest try in a long series of endeavours to find out how to make the best use of the nation's industrial resources.
I would say to the two Parties who advocate either private enterprise or nationalisation: "Do not be so violently for or against." Nationalisation is neither an industrial anti-Christ on the one hand,
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nor a "Beecham's pills cure all ills" panacea on the other. It has its advantages and its drawbacks, and by trying it out and by trying out other systems we shall arrive, in the end, at the best way of running civil aviation and running the other industries in this country.
5.56 p.m.
LORD SEMPILL: My Lords, I join with your Lordships who have spoken in this very interesting debate in congratulating the noble Lord, Lord Pakenham, on the splendid terms of just praise in which he referred to the grand work being done by the two Corporations. Those of us in the aeronautical community—many who are in that community have already spoken—would fully underline what the noble Lord said. The noble Lord, Lord Pakenham, had a great deal to say about lift in the psychological sense, taking lift in the aeronautical sense as all being in the hands of the aeronautical specialists. There is no doubt that there is a lot which can be done, and should be done, in a psychological way to which the noble Lord referred. I hope that I see a change of heart coming over him, since he was in some measure responsible for leaving the flying boats ashore. I shall have something to say about that subject later on.
The noble Lord referred to the charter services, and said that the future of the services was obscure, in so far as he could see, but that matter has already been touched upon by my noble friend Lord Leathers. I did not agree with the noble Lord when he suggested that no charter company in Scotland either could or should run any of the scheduled services and receive a subsidy for so doing, because I feel that our short distances in Scotland, where routes are often of several hundred miles, are admirably suited to the type of craft which charter companies either have or would acquire. With regard to the question of the charter companies, these should be treated by the State as partners in a great service and not as troublesome small boys. They should be given a sense of mission in what they are doing, and given the privilege that comes to the under-dog— because they are under-dogs.
Just to quote a small example, there is the reciprocity in booking fees. The State enterprises expect a standard rate of commission for any work which is done for them by the charter companies,

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but they are quite unwilling, or unable perhaps, to pay a similar amount when that operation is reversed. At the takeover by the State of civil air transport undertakings it was always an accepted principle that fair compensation should be paid to the operator. In many and, perhaps, in most cases, this has been done, but not in all—I repeat, quite definitely not in all. At this late hour I will not ask your Lordships to listen to a detailed exposé, but there were some important observations made in another place touching this matter by the then Lord Advocate, Mr. Reid—now the noble Lord, Lord Reid—showing that, despite all assurances, several who had spent two decades and all their savings, and those of their friends, in pioneering air transport in Scotland had been left penniless. Captain Fresson was one of these. I happen to know that he had for these reasons to withdraw his son from school. This is a wrong that must be put right, and I especially ask the noble Lord, Lord Leathers, to look into this matter and see that this obligation of honour—for it is an obligation of honour—is met with the least possible delay.
I have listened with close attention to all the speeches made this afternoon and in particular to those of the former Ministers of Air Transport. The immediate future of air transport lies in the subsonic field. It will pass, I suggest, to the supersonic within two decades. No Minister has done more to encourage subsonic transport—to wit the Comet—than the noble Lord, Lord Winster. Not for nothing is he descended from the Mac-an-leisters—in English it would be called "son of the arrow-maker" or Fletcher. The Fletchers, of course, were hereditary arrow-makers over the centuries to the MacGregors. I was really shocked that none of your Lordships had mentioned flying-boats. The noble Lord, Lord Ogmore, came near to it and I had hoped that he might redress the position when he referred to the recent Wilbur Wright Memorial Lecture (it is now over forty-nine years since Wilbur Wright made his first flight) before the Royal Aeronautical Society. The noble Lord apparently overlooked that one of the main recommendations of the lecturer, Sir Harry Garner, was "Do not neglect the flying boat."
LORD OGMORE: May I interrupt the noble Lord for one moment? I had not forgotten. I am fully conscious of the potentialities of the flying boat, but I did not think it came within the scope of this debate; nor did I think I ought to expand my speech to cover a subject which, although important, did not seem to me particularly relevant to this discussion.
LORD SEMPILL: I thank the noble Lord for his intervention and for showing his enthusiasm for the flying boat. The air transport future must, for technical and practical reasons, be ever more concerned with the flying boat. We have led in development in this type, but lately we have gone far from the brilliant design of the S.R.45, which lies on the slips more or less untended and unengined. Something must be done, and I have intimated previously that I shall raise the question of flying boats again in a future debate in your Lordships' House.
6.3 p.m.
LORD DE L'ISLE AND DUDLEY: My Lords, we have had a very long debate; a debate which has deeply interested me. My spirits have risen and fallen at various times during the discussion as I have listened to the various speeches from the Benches opposite and also from the Benches on this side. I think I must say, in fairness to the noble Lord, Lord Leathers, that I thought the noble Lord, Lord Ogmore, was rather less than fair to him about the answering of questions. Lord Leathers had replied to the questions put to him but I would remind the noble Lord that answering a question is not necessarily answering it as the questioner wants.
LORD OGMORE: Nor is it the same thing as giving the same information exactly, merely dressed up in some other form, as fresh information.
LORD DE L'ISLE AND DUDLEY: That is slightly tendentious. I must say that my noble friend, Lord Leathers, has always treated the House courteously and certainly has treated Lord Pakenham courteously in answering his questions— though not perhaps always in the way in which Lord Pakenham wanted the questions answered.
LORD PAKENHAM: May I bring out a specific point which I do not think the noble Lord. Lord Leathers, dealt with at

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all? Will the noble Lord who is now speaking to us answer the question I put as to whether the Government will give an assurance that no subsidies will be given to charter companies on scheduled routes?
LORD DE L'ISLE AND DUDLEY: I will answer that question at once. There is to be no subsidy for charter companies on internal routes, except possibly in the case of Scotland on the scheduled services.
LORD PAKENHAM: This is a sensational and novel statement which, of course, we shall study with interest; but it bears no relationship to anything that has reached my hearing.
LORD DE L'ISLE AND DUDLEY: I am sorry if I have not satisfied the noble Lord but I have done my best to answer his question, and I hope I shall not incur the reproach that I have tried to avoid it. May I add that he must not take me as meaning that the Government intend to give a subsidy to Scottish aviation? But they have not ruled it out, as they have in the case of other British internal services. We can discuss that later. I am being as frank and informative as I can, and I do not want to be misunderstood in saying that a subsidy to the Scottish services is under consideration.
As I listened to this debate I could not help feeling that on the whole we are in much more substantial agreement than the discussion might have led some of those who were listening to think, and that, despite Lord Pakenham's protestations, no very wide difference has existed, at any rate in principle. I think that where we can be said to differ is in the exclusive emphasis which the noble Lord placed on the Corporations. May I say again that it is not the intention of Her Majesty's Government to harm the Corporations? I cannot conceive of any Minister of Civil Aviation responsible to Parliament who would wish to do so. We acknowledge the great and valuable services which they render, and we wish to see their scope expanded. I wanted to say that at the beginning of my speech, because everything I say ought to be listened to in reference to that. But we do say that the Government, and, indeed, the Minister, has a responsibility for all aviation, and that it ought to be the policy of the Government to maximise civil aviation of all types. We believe,
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as Lord Ogmore seemed to believe, judging by his remarks in a previous debate, in a mercantile fleet of the air. And we do not believe that it should be confined to the Corporations. We believe that by too great caution we may lose opportunities which may exist in the future. We do not believe that these great fleets will come into existence until there is agreement between the Corporations and the charter companies.
We believe that the Corporations will continue to expand, and we do not want to see over-caution such as seemed to be expressed by the noble Lord opposite. I do not want to drag in any doctrinal prejudice. We cannot tell, we can only apprehend, when and where there will be the greatest development of air transport. But the trend of events and technological development have proved to us that there will be a great expansion in air travel and air freight. We do not believe that our great commercial position in the world was attained by that (if I may term it) exaggerated pessimism about the future displayed by the noble Lord, Lord Nathan. I do not believe that the first Elizabethan explorers would ever have got across the seas if they had asked themselves all the questions which the noble Lord, Lord Nathan, asked the Government to-day. I will do my best to answer the questions put to me, but if I try to answer every one explicitly we shall be here all night. If any noble Lord wishes a point to be answered while I am speaking, I will do my best to answer if he will interrupt me.
As I said, our aim and policy is designed to get more traffic for the whole of British civil aviation; so may I repeat what has been said, but I think largely misunderstood, as to the nature of our policy? I would first emphasis that the Minister is to have the last word. The A.T.A.C. will not become a licensing authority; they still, remain advisory and consultative. Therefore, to use the word "authority," which was used on more than one occasion, is really a misnomer. Of course, the Corporations will have a complete right of access to the Committee. The only change—and I admit it is an important one—is that they cannot claim a prescriptive right as to future routes. I listened with attention and interest to what the noble Lord, Lord Nathan, said about the planning of

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routes. I think he agreed it was most important to be precise about it. Obviously no Minister, responsible as he is to Parliament and to the taxpayers, would allow a Corporation to enter into great capital commitments and then finally rule, as he would have to rule because he has the last word, that they must pour all that down the drain to give way to a private operator. But we do say that the Minister, having appointed a responsible and informed Committee in which he has confidence—and after all, apart from the Chairman, who is appointed by the noble and learned Lord the Lord Chancellor, the Minister has the appointment of the Committee—is in a good position to examine the merits of the case and the wide issues involved.
I cannot believe that the Corporations, having so large a capital, having so large an enterprise and having the resources to call upon, will not in fact be in a very advantageous position anyhow. Perhaps the charter companies feel that they will still be in a too advantageous position. I think it is exaggerating fears of the future to imagine that the Corporations will now have all their future expansion lopped off because of a doctrinal preference for private enterprise. I thought that the words used by the noble Lord, Lord Winster, were most apt. This is not a form of enterprise which fits into any preconceived, doctrinal mould. It is new, it is vigorous, it is expanding. It owes a great deal to State development, it owes a great deal to military aviation; it still owes a great deal to the inventiveness and genius of designers and manufacturers of privately-owned industry. It owes much to the Royal Aeronautical Establishment which works under the Ministry of Supply. Do not let us manufacture antipathies where none exist. Because one thing that has struck me in my last six months since holding office is the harmony which exists between the manufacturers, the R.A.E., the Royal Air Force and the Corporations. Indeed, it seems to me that, whether they are in it for private profit, as servants of the Corporations or as officers of the R.A.F., there is a spirit in the air which invests them all, and it is for us to see that the spirit of the air is harnessed in the widest sense. We believe that our policy is right, that it is safeguarded and that the
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taxpayers' money is not to be put at risk.
I cannot help thinking that the noble Lord, Lord Nathan, has used a rather double-edged argument. First he said that our policy was a great threat to the Corporations, and then he said: "In any case, the charter companies have not the capital and will not get it, so they cannot expand." He cannot have it both ways. If everything he prophesied came true (which I do not think will happen), they would get an immense amount of capital and buy enormous numbers of aeroplanes and come along and put out poor little B.O.A.C. It will take some time for the charter companies to establish themselves. It takes a long time to build up a fleet, but in that process there will be a great expansion and intensification of the existing routes. There will be plenty of room for all. We ought to put more of the national capital into expanding our mercantile fleets.
I am not going into the technicalities of the Capital Issues Committee—I do not think we need go into that matter this evening—but I do say that we, as a nation, ought to back civil aviation in its widest sense. Noble Lords opposite have asked about the export of aircraft. It is a very valuable export indeed. I have not the figures here and noble Lords will not expect me to give them, but a ton of steel worked up in an aircraft is a very rewarding use of steel. Surely nothing can be more disastrous than to export our very fine aircraft and deny them to our private operators. Nothing could be more calculated to undermine the building up of a great air fleet than to deny your own people what you are giving or selling to your competitors.
Then I come to the question asked by the noble Lord, Lord Nathan, about prices. Of course, the private operators must pay the same competitive prices that are paid by the purchasers abroad. The aircraft companies cover their overheads on that. But do not let us imagine that it is not of great benefit to the whole of civil aviation that there is a great aircraft industry with one great customer, the Royal Air Force. Of course it is. But I do not think we should deny that benefit to any one class of user. There is research and development in the experience of flying, in the experience of jet operation and high speeds. Of

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course, the experience of the R.A.F. has been invaluable to the Corporations. It is a national asset. But do not let us narrow our minds and say: "The charter companies shall not benefit from this in common with other users."
That brings me to the military aspect, in which naturally I am particularly interested because it is my special responsibility. I believe that this nation and the British Commonwealth and Empire has an enormous amount to gain, both economically and militarily, by increased speed of communication, and that, in order to exploit it to the full, we should have the maximum carrying capacity that we can get. I am not going into the vexed question of Transport Command, the type and number of aeroplanes it should have and whether it should do any troop-carrying or not; at any rate, it cannot be large enough to rely upon its own resources in war. But I do not think we can or ought to expect to rely exclusively on the Corporations. None of us can foresee what will happen in war, but I do not think that the noble Lord, Lord Pakenham, if he were charged with the responsibility of civil aviation at that time, would be anxious to "cough up" all his air-liners for the R.A.F. He would say: "We must keep the traffic going or we shall lose it elsewhere." Of course. this is a hypothetical question, and none of us can say what we would do in a certain situation. But the fact is that to have a large charter fleet will be an immense asset in time of war, not only to the Air Force but to the Army.
That brings me to the question of types. I think that so far we have not got the kind of aeroplane which we ought to have and which I might call a modern Dakota, which was a useful, workable aeroplane, strong and capable of flying in difficult conditions. That is the sort of aircraft which would be an immense national asset, because it would be available to the Corporations, to the charter companies, to the Royal Air Force and for export. It is because there is such an intimate connection between all users and manufacturers in aircraft that we have really a common agreement—namely, that British industry and British air transport should be provided with the best available aircraft and fly them the world over. The opportunity for exporting aircraft which has been referred to by several
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noble Lords, is certainly great. It is no good our burking the issue. When you have a great Royal Air Force expansion programme, it is exceedingly difficult to fit everything in. But I assure noble Lords opposite that the Royal Air Force is certainly not adopting any obstinate attitude in regard to claiming all available capacity for building military aircraft. We know that it is in our interest, as it is in the national interest, to see that we capture and hold this market in the world, because, taking even the narrow view, it maintains the manufacturing capacity in this country.
I think we ought to aim at a stable aircraft industry. Nothing would be worse for the industry than to expand and contract, because that means instability of labour: you lose your skilled labour and the industry gets a bad reputation. We must use our best endeavours to see that the military and civil needs are fitted in. I am not going to be more specific to-day, but I assure noble Lords that I am in constant consultation on this particular subject with my right honourable friend the Minister of Supply, and we have already made way in one instance for a very important commercial aircraft. We saw that it would be absolutely wrong to insist on laying down a military line for a certain type, when the particular type of civil aircraft was so vitally important. Though I have no criticism of the late Administration in this matter, I may say that we did in fact reverse, in that particular, an order which they had instituted. They would probably have done the same had they been in office. I point that out only to illustrate our anxiety that the needs of civil aviation shall be met, and that every endeavour shall be used, by subcontracting and by bringing in engineering capacity from outside the industry, to see that aircraft will rot be denied to civil aviation by reason of the fact that we have a great Royal? Air Force expansion programme.
I do not want noble Lords to underestimate the difficulties that exist. I do not know, whether we shall be able to achieve all or nearly all that ought to be achieved, but we recognise the fact that if we can sell our aircraft abroad now, a goodwill is created and for technical reasons it is much easier to sell them again afterwards. I believe one

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noble Lord asked about the value of Service Department work to civil operators. I think that in 1951–52 it was £4,500,000.
LORD PAKENHAM: I am most interested to hear that answer. I did not put the question because my remarks were becoming rather long and drawn out but I gave notice of the question. That figure shows an enormous increase; and although we all regret the cause—the inevitable rearmament programme—I think we all must be pleased, from the point of view of the charter companies, that so much work is coming their way.
LORD DE L'ISLE AND DUDLEY: I am informed that it is now cheaper to fly a man to the Middle East than it is to send him by sea, apart altogether from the speed. I think £4 is gained by flying, which to me is symptomatic of what is going to happen in the future. Without going into too many technological details, what really matters is the power/weight ratio. That has improved enormously and I believe will go on improving. Noble Lords opposite stressed the importance of stability in planning for the Corporations. What is sauce for the goose is sauce for the gander, and it is our policy, and I think it ought to be the policy of any Government, to see that there shall be as much stability as can be created for the charter companies. They must not be regarded just as the fringe, which can contract and expand in sympathy with the needs of the Corporations. We must set out to give them sufficient stability to entitle them to manufacture aircraft. The noble Lord, Lord Ogmore, referred to this in the last speech but one which he made in this House. That is one of the objectives of the Government's policy.
My Lords, all experience of transport—not only air transport but other forms of transport—shows that traffic creates traffic. The more people are flying in the world, the more will the routes flown by the Corporations prosper, because more traffic will be brought into them. I do not believe that the competition will be cut-throat competition. I believe that it will be stimulating competition, not only to efficiency but to traffic.
Before I sit down I must reply to the remarks of the noble Lord, Lord Clydes-muir. Ever since I have been in Parliament, either in another place or in this
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House, like the great beat of a tom-tom from Scottish Members and Scottish Peers of all Parties, there has been the booming sound of "Prestwick." The noble Lord, Lord Pakenham, said, I think, that it was graven on his heart, and if persistence is a merit it is certainly enjoyed by those who live north of the Border. I think that the noble Lord, Lord Clydesmuir, is unduly pessimistic. I should like to tell him—
LORD CLYDESMUIR: The noble Lord will include in those booming notes those which I quoted from the Secretary of State and Lord Swinton?
LORD DE L'ISLE AND DUDLEY: I think they were stimulated by other booms. Work is proceeding on the new passenger transport accommodation. The first stage should be finished by the end of the month, and we hope that the whole job will be over by the end of July, although it is always unwise to prophesy as to building operations.
As to the over-run, the west end of the main instrument runway has been drained and levelled, and the work of sowing the grass will start as soon as the seed arrives. I do not know who is sending that. When the grass has been established, in 1953, the surface will be strong enough to meet the undertaking given by B.O.A.C. to provide a grass over-run capable of taking Stratocruisers at full load without damage to the aircraft. The effect will be, or should be, that the Corporation will not have to over-fly, as has often been the case in the past, and will be able to operate to and from Prestwick with a full load. As to the road, I think it is singularly unfortunate and inconvenient that it runs so close to the airport. Accordingly, discussions on the preliminary details have been proceeding steadily with the local authority about the supply of certain materials required for the provision of gas, water and electricity. Although I have tried to do so, I do not suppose that I have been able fully to satisfy the noble Lord. I must confess that no spokesman of any Government, to whatever Party he may have belonged, has so far fully satisfied any advocate of Prestwick. But perhaps that happy day will come.
If I have failed to answer any questions raised, it is certainly not through any intent to evade them. I have tried to put this whole matter into perspective; I have

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tried to show the House that it is the intention of the Government to adopt a policy which is calculated to maximise commercial flying. We believe that by maintaining a proper balance between the activities of the Corporations, which are so well established and performing their task so admirably, and giving opportunities to the charter companies we shall be carrying out, not only for those companies but for the nation at large—and indeed for the Corporations also—a great service. For civil aviation is larger than the Corporations; it is larger than the Ministry or the Minister. Civil aviation has become, or is becoming, what sea power used to be, and it is our desire to see that Great Britain has in this important and expanding field a share which is large, because a large share is our due.
LORD WINSTER: May I ask the noble Lord before he sits down whether he can say anything with regard to the machinery and the working of the licensing authority? I did put a question with regard to that.
LORD DE L'ISLE AND DUDLEY: I have dealt with that matter, and I am afraid that I cannot be more explicit than I have been. I want to emphasise that it is not an authority—noble Lords, if I may say so, must not use that word inexactly. It is a Council or a Committee appointed to consider these matters and to advise the Minister, who retains the last word. I assure the noble Lord that the Minister has the last word. Indeed, I think that in the late Administration the noble Lord did, on one occasion at least, reverse a recommendation of the A.T.A.C. The Minister will have exactly the same opportunities of doing that in the future. The Committee will review all factors of the situation, and both Corporations and charter companies will have access to the Committee. And, clearly—as I should like to stress again—the Minister, responsible, as he is, to Parliament for all civil aviation including the Corporations, obviously has a duty to see that there is no prejudice to the work or the expansion of the Corporations, should the Committee reach an inadvisable decision. It is obviously valuable for the Minister to have available, as he has had in the past, this advice from competent people. I am not going to anticipate anything in relation to my right honourable friend the Minister of Transport, but clearly he will wish to be
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advised, just as his predecessors have wished to be advised, by men competent to do it.
LORD WINSTER: I thank the noble Lord.
THE MARQUESS OF WILLINGDON: Can the Minister inform us whether the charter companies have been brought into the discussions and whether the charter companies are satisfied?
LORD DE L'ISLE AND DUDLEY: The charter companies have been brought into the discussions. Although the noble Lord, Lord Pakenham, has referred to a statement by one representative of the companies, I think I may say that the generality of these companies are satisfied with the Government statement.
6.35 p.m.
LORD PAKENHAM: My Lords, I have already addressed the House at inordinate length this afternoon, so I will detain your Lordships for only a few minutes now. Before the House loses the recollection of my last question, I am bound to say that I found the answer from the noble Lord the Secretary of State for Air a little surprising. I should have thought that Mr. Rylands was qualified to speak for the Charter Association as a whole, and that it would not be correct to treat him merely as one representative whose opinion can be swept aside in favour of that of some unspecified gentleman. Until we hear something more authoritative, surely his opinion is one of which we must take account.
I have so much regard for the two Ministers who have addressed us that it would give me the greatest pleasure if I could say that their speeches had clarified our minds and assisted the cause of British civil aviation. That, I fear, would be straining the truth as we see it and feel it. I hasten to say that I am sure that other noble Lords, and particularly Lord Ogmore, who alluded to the matter, would agree with me that, as always, the two Ministers concerned spoke to us with charm, courtesy and dignity. There is no sort of suggestion to the contrary from anyone on this side of the House. But I am bound to say that we cannot go away feeling that our questions have been answered. In some ways it may be that that is not altogether a bad thing. It may be that if they had been answered before the end of this debate the answers

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would have been worse than the answers we shall receive when more deliberations have taken place. I make the charitable assumption that the reason we have not obtained answers is that the Government have not completely made up their minds, and that they have not altogether closed the door. They are, in fact, lying low.
I draw a slight shred of consolation as regards the main point I raised because we did receive a definite answer to one question. It was answered, in the first place, by a private letter in which the noble Lord gave us a most satisfactory assurance, which has now been further confirmed by the Secretary of State for Air. We were told definitely this afternoon that the Air Transport Advisory Council and their recommendations will be subject to the Minister; the Minister will have the last word. We were taken to task—we were "ticked off," if I may use that colloquialism—for talking about a licensing authority at all. I am quite ready to accept that rebuke and to cease doing it. I am glad that the word has gone out of currency so quickly. I was not sure that I had invented it, but at any rate it has come and gone, and so much the better from our point of view. We were not, I am afraid, given a very definite answer, though the Secretary of State did touch on it, to the question of how duplication with the officials of the Ministry was to be avoided. I will not say more about that now. He did allude to that, but I cannot say that what he said has made me much clearer in my mind.
In the remarks of the Secretary of State for Air we were given a rather staggering answer, which may also have cropped up in the remarks of the noble Lord, Lord Leathers—I am not sure whether it did or not. The noble Lord, Lord Leathers, will forgive me if I say that he went rather fast. I know that that is a failing of my own so this is a case of "the pot calling the kettle black." I did not notice the statement in Lord Leathers' remarks—if, indeed, it was contained in them—but the noble Lord, Lord De L'Isle and Dudley told us that a subsidy for a Scots charter company was under consideration. That is the first I have heard of that particular idea, and I hope it will be the last. I hope that no such idea will be proceeded with. I tell the noble Lord, quite frankly,
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I can imagine nothing which is likely to cause more ultimate bitterness between—if you like—the two halves of the country. It will, in my opinion, arouse intense feeling. In my judgment, it will be rightly criticised. I beg the noble Lord, if this proposal is under consideration, to turn it down forthwith. I do not want to press him but I shall be glad of some clarification so that we may know whether he was referring only to new routes in Scotland or to existing routes. If he has not the facts available to reply to-night I will leave the matter there.
LORD CLYDESMUIR: May I ask whether it was not the case that the noble Lord referred to ambulance work and special social services?
LORD LEATHERS: The matter is under consideration whether a service similar to that enjoyed to-day can be secured for Scotland, but for a subsidy lower than is paid to-day. If not, it is not worth consideration. That may arise. I had to make a little reservation earlier. If money can be saved by the payment of a lower subsidy than is enjoyed by B.E.A., that is a matter which is worth looking at.
LORD PAKENHAM: I can only express my strong conviction, having had some opportunity of judging in these matters, that there is no charter company in Scotland qualified to render anything like the services which B.E.A. have been rendering during recent years. For that and other reasons I beg noble Lords to realise how strongly we feel about that matter.
There was another point which I put, and which the noble Lord failed to answer, no doubt because it was a difficult question. I know that he did not consciously or deliberately evade an answer. He did not reply to the question whether, if charter companies were given new routes for long periods, they would be able to operate them. The noble Lord did not answer. I do not say he wanted to evade the question, but it was not answered. Above all, I put an important question on the new directive and pressed for an answer, because so much—in fact, almost everything—depends upon this new directive. Although the noble Lord, Lord Leathers, said a few words, I am sure that no one goes away to-night with very much idea what the new directive looks like.

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Perhaps the Government are not altogether to blame. I will give them credit for wishing to study this debate before making up their minds, so do not let. me become too acrimonious at this stage. A great deal hangs on this directive.
The noble Lord said that nothing is going to be done to damage the Corporations, and the same conception which I alluded to occurs—not perhaps with great lucidity—in the original Government statement, where there is the announced intention of the Government not to increase the cost of civil aviation to the taxpayer. What in practice is that going to mean in terms of a directive? Let us concentrate for one moment on that. I will not keep the House for more than a few minutes. What is that going to mean, in practice, in relation to these new routes? When the Air Transport Advisory Council have to choose between a charter company and a Corporation on a new route, are they going to accept as an over-riding instruction that nothing is to be done that will damage the Corporation? In other words, if the Corporation would be damaged by the charter company obtaining a route instead of themselves, would that mean that the Council would refuse the application? I do not pause for a reply. I do not want the Government to give a less satisfactory reply to-night than on another occasion. What appears to be in the Government's mind is that, whenever competition or genuine rivalry exists between the Corporations and the charter companies, the Council will have to give new routes to the Corporations because they are determined not to damage them.
LORD DE L'ISLE AND DUDLEY: Oh, no. The noble Lord is putting a lot of hypothetical questions. What he is saying amounts to this: that the Corporations would have a prescriptive right to all new routes always. If that is his policy, let the noble Lord tell us so.
LORD PAKENHAM: That was the policy of the Act of 1946, and that was the intention of the Act. The idea of competition between the charter companies and the Corporations on scheduled
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routes was never dreamed of. Under our directive there was the overriding instruction that nothing must be done to interfere with the existing services or the plans of the Corporations. That was our policy. If that is being changed, I can only express to the noble Lord our strong regret and our determined criticism. I would leave the matter there because, here again, noble Lords may have second thoughts. But if they mean to insist on a policy of this kind, clearly not in the best interests of the Corporations, they cannot be desirous of giving the Corporations what they ask for. That is fairly simple logic. Will the charter companies really benefit if the Government adopt a policy which is not in the interests of the Corporations and which involves conflict? I do not think so, for one rather obvious reason—although I do not want to drag in politics at this stage. The charter companies, to whom I can only wish what is good, have to obtain finance for these enterprises by going to business houses of one kind or another. Will they obtain much finance for these projects if the policy of the Government of the clay appears to be the policy of one particular Party? Seriously, I should think they would obtain very little finance from business men on that policy.
In conclusion, it is surely in the interests of the charter companies, as of the Corporations and of Britain, that, whatever policy is adopted, it should be a national policy which can continue and which will not be chopped and changed about as one Government succeeds another. I am grateful to all the noble Lords who have taken part in this debate. I appreciate the trouble that the Ministers have taken in replying, and if I say that we are not very much wiser, I can only express the hope that it may be better so. I beg noble Lords opposite to realise that unless they can clarify, and from our point of view much improve on, anything said hitherto, then there is a very difficult and bitter struggle ahead. I hope with all my heart that it will not come to that. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

PORT OF LONDON BILL [H.L.]
Returned from the Commons, agreed to with an Amendment: the said Amendment considered and agreed to.
SCOTTISH MUTUAL ASSURANCE SOCIETY BILL
Brought from the Commons; read 1a, and referred to the Examiners.
BLACKPOOL CORPORATION BILL [H.L.]
Returned from the Commons, agreed to with Amendments: the said Amendments considered and agreed to.
CITY OF LONDON (GUILD CHURCHES)BILL [H.L.]
Brought from the Commons; read 1a. and referred to the Examiners.

KINGSTON-UPON-HULL CORPORATION BILL [H.L.]
The Queen's consent signified, and Bill reported, with Amendments.
House adjourned at twelve minutes before seven o'clock.