Sitting of 22 May 1952

Preamble
The House met at Half past Two o' Clock
PRAYERS
[Mr. SPEAKER in the Chair]
MESSAGE FROM THE QUEEN

  UNIVERSITY OF LONDON (STATUTES)
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that I will withhold my approval from the Statute made by the Senate of the University of London on 21st March, 1951, amending the Statutes of the University.
  I will comply with your request.

  EDUCATION AUTHORITIES' EXPENDITURE
  Return ordered,
  "of the percentage by which the forecast of expenditure for 1952–53 of each local education authority has been reduced or increased since the issue of Circular 242."—[Mr. Morley.]

PRIVATE BUSINESS
  FAREHAM URBAN DISTRICT COUNCIL BILL
  Read the Third time, and passed.
ORAL ANSWERS TO QUESTIONS
  AGRICULTURE

    Imported Bone Meal and Flour (Infection)
    Mr. G. Williamsasked the Minister of Agriculture what evidence he has as to the possibility that bone meal and flour imported into this country can carry infection; and what regulations have been made concerning importation.
    The Minister of Agriculture (Major Sir Thomas Dugdale): Samples of imported bone meal and flour have been analysed in the past, and some have been
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    found to contain anthrax, but there is no evidence that these particular products have been responsible for the introduction of other diseases. Bone meal and flour are covered by the Importation of Carcases (Prohibition) Order, which regulate their importation from certain European countries, but their importation is allowed under licence.
    Mr. Williams: Is the Minister aware that there is some concern about the possibility of fowl pest being brought in by this means, and have his scientists taken special care to go into this question?
    Sir T. Dugdale: I will certainly draw the attention of my technical advisers to this point. I am advised that it is not considered that there is any danger.
    Mr. Thornton-Kemsley: Will my right hon. and gallant Friend see that, where-ever possible, wheat is imported into this country whole, so that we may enjoy the benefits of its by-products, instead of being imported as flour?
    Sir T. Dugdale: That is another question.

    Fowl Pest, West Riding
    Colonel Sir Leonard Ropnerasked the Minister of Agriculture how many outbreaks of fowl pest occurred in the West Riding of Yorkshire in 1951.
    Sir T. Dugdale: Twenty-one, Sir.
    Sir L. Ropner: Can the Minister say how many outbreaks there have been so far this year?
    Sir T. Dugdale: One outbreak in the West Riding of Yorkshire.

    Farming, Kent
    Mr. Percy Wellsasked the Minister of Agriculture how many of the 64 farmers at present under supervision in Kent have been supervised previously.
    Sir T. Dugdale: None has been supervised before by the Kent Committee.
    Mr. Percy Wellsasked the Minister of Agriculture how many holdings there are in the county of Kent exceeding five acres; and how many of these are graded A, B, or C.
    Sir T. Dugdale: There are 8,196 holdings of five acres and over in Kent.

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    Five thousand and forty-three are graded "A," 1,821 are graded "B," 172 are graded "C" and 471 are unclassified. The remaining 689 holdings have still to be surveyed.
    Mr. Wells: Is the right hon. and gallant Gentleman satisfied that every reasonable care is taken to step up those in the lower categories?
    Sir T. Dugdale: That is my intention.

    Returns (Paper)
    Mr. Crouchasked the Minister of Agriculture what weight of paper was used in 1938 for the production of agricultural returns; and what weight of paper was used for the same purpose in 1951.
    Sir T. Dugdale: About 28 tons in each year.
    Mr. Crouch: How is it possible to produce four documents when only one was produced formerly and still use only the same amount of paper?
    Sir T. Dugdale: While the number of returns called for from all occupiers is no larger than it was in 1938, there has been substantial economy in the use of paper by printing the forms more closely, and in many other ways.
    Mr. G. Williams: Does the Minister realise that these forms need to be cut down? Is he aware that a farmer filled in a form saying that he had 2,000 acres when he had only 200, and that he had a herd of wapiti on his place, 200 zebras and two giraffes, yet no notice was taken by the Ministry of Agriculture?
    Lieut.-Colonel Lipton: Can the Minister say by how much he estimates that the quantity of paper will be reduced in 1952 compared with 1951?
    Sir T. Dugdale: I cannot answer that question at this stage.

    Pigs (Price)
    Mr. Crouchasked the Minister of Agriculture if he will consider having a supported price for pork pigs up to 100 lb. dead weight.
    Sir T. Dugdale: The prices paid by the Ministry of Food for fat pigs of all descriptions are guaranteed; but if my
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    hon. Friend is suggesting that the prices of pigs weighing up to 100 lb. dead weight should be made more attractive the answer is that the production for sale of pigs of such light weight as this would result in a wasteful use of our limited supplies of feedingstuffs.
    Mr. Crouch: In view of the wonderful response which the farmers have made by the production of more meat, especially pigs, does the Minister not agree that if greater freedom was given for the sale of pork that would further increase the number of pigs above the figure we have today?
    Sir T. Dugdale: Owing to the limited supply of concentrated feedingstuffs, it is considered that the production of light weight pigs would at present be wasteful.

    Quarantine Station, Glasgow (Capacity)
    Mr. Thornton-Kemsleyasked the Minister of Agriculture to what extent he will increase the quarantine facilities in Glasgow for pedigree cattle awaiting export to Canada and the United States of Amercia.
    Sir T. Dugdale: Plans for doubling existing accommodation at the Glasgow quarantine station are under consideration.
    Mr. Thornton-Kemsley: Does not the Minister agree that the capacity of quarantine is only about half the capacity of the ships in which the animals are exported, with the result that ships are leaving half empty and there is a tremendous hold-up of animals awaiting export?
    Sir T. Dugdale: Yes, Sir, but that consideration does not arise at the moment, because of various restrictions overseas. I am giving consideration to the question.
    Mr. Baldwin: In extending that accommodation, will my right hon. and gallant Friend see that the quarantine extension is formed into a double station, so that periods can be staggered and thus prevent the immobilisation of the whole station with what may sometimes be only a small shipment?
    Sir T. Dugdale: That point will be borne in mind.

    Tenant Farmers (Quit Notices)
    Mr. G. Jegerasked the Minister of Agriculture whether he will make regulations empowering agricultural tribunals to prevent a landowner repeatedly serving notice to quit on a tenant farmer after a case has been decided in favour of the tenant by the tribunal.
    Sir T. Dugdale: I have no power to make such regulations, but I will consider the question of repeated and unjustified notices to quit when an opportunity arises to amend the Agricultural Holdings Act, 1948.
    Mr. Jeger: May I thank the Minister for that sympathetic reply and ask him whether he realises that, to get full production from British farmers, it is necessary to guarantee them security of tenure against vindictive landlords who repeatedly give notice to quit, thus putting the tenant farmer to great expense in the protection of his holding.
    Sir T. Dugdale: Yes, Sir. But the evidence I receive is that there is some doubt in the minds of many people about whether or not the security provisions are rather excessive.
    Mr. Jeger: Will the Minister give special consideration to a recent case at Winchester which has brought to light the background of this matter, and which I think should be studied very carefully?
    Sir T. Dugdale: I think my reply covered that case.
    Mr. Janner: Will the Minister consult the Attorney-General, or some other appropriate Minister, with a view to amending the Rent Restriction Acts, because this is a provision which is quite different from any other provision in the Acts and it gives the landowner special powers which he ought not to possess and against which there is no appeal?
    Sir T. Dugdale: I will look at that point.

    Agriculture Act (Section 80)
    Mr. Snowasked the Minister of Agriculture if he will introduce legislation to amend Section 80 of the Agriculture Act, 1947, so as to permit investigation by Members of Parliament into allegations of under-employment on farms and where agricultural workers are evicted
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    from agricultural subsidised council houses because of their inability to find employment in agriculture.
    Sir T. Dugdale: No, Sir. I am not satisfied that such an amendment is necessary or desirable. The information collected under Section 78 of the Agriculture Act is required and used mainly for statistical purposes; and although Section 80 permits its disclosure for a few very limited purposes I consider it is important that farmers should feel assured that the information they give is treated as confidential save in these exceptional circumstances.
    Mr. Snow: Is the right hon. and gallant Gentleman aware that, while everybody agrees that the interests of the farmer must be protected, the interests of the agricultural worker must also be protected? Further, is he aware that, because I have been unable to get some information from him about two farms in my constituency, I must repeat to him, in the House, the allegation that two farms in my constituency, known as Pessal Pits and Broadfields Farms, alleged to be of approximately an aggregate of 800 acres, are alleged to employ only a total of five or six men; that men are not able to secure agricultural employment locally and that they are being evicted by the Lichfield Rural District Council because they have to leave agriculture?
    Sir T. Dugdale: I do not think that that is a question for this House. It is more a question for the Agricultural Executive Committee under Part II of the Agricultural Act.

    Starlings
    Sir H. Williamsasked the Minister of Agriculture whether he can now make a statement about the efforts being made to cope with the excessive number of starlings.
    Sir T. Dugdale: I have now consulted my colleagues concerned, and I am arranging, in collaboration with my right hon. Friend the Minister of Housing and Local Government, for immediate discussion on the problem with representatives of the National Farmers' Union, the Assocation of Municipal Corporations and the Metropolitan Boroughs Standing Joint Committee. In the light of this

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    examination we will then consider whether any action can be taken that is likely to be effective.
    Mr. Nicholson: Will my right hon. and gallant Friend take care not to go too far in this direction, as starlings are an integral part of London life? May I suggest that perhaps a statue of my right hon. Friend the Member for Croydon, East (Sir H. Williams), might do something to scare the starlings?
    Mr. Rankin: Can the Minister tell us what number of starlings constitutes an excessive number?
    Sir T. Dugdale: That is a rather hypothetical question.
    Mr. Rankin: But if the Minister proposes to take action in conjunction with his officials to deal with the excessive number of starlings, surely he should know what constitutes an excessive number?
    Sir T. Dugdale: First we should be sure exactly what the problem is. I think it is a complicated one.

    Agricultural Shows
    Major Anstruther-Grayasked the Minister of Agriculture whether he will make a statement with regard to the holding of agricultural shows.
    Mr. Hurdasked the Minister of Agriculture what advice he has given to show societies on the risks involved in gathering cattle, sheep, pigs and goats for exhibition while foot-and-mouth disease is still prevalent.
    Sir T. Dugdale: I see no need for a general prohibition of the holding of agricultural shows, as there is little risk of foot-and-mouth disease being spread at shows exhibiting local stock in areas where there has been no outbreak. The major agricultural shows are in a different category, since they involve the congregating not only of valuable animals from all parts of Great Britain, but also of farmers and others who can be mechanical carriers of the disease.
    No major shows are due to be held in the next two or three weeks, however, except the Bath and West, where the appropriate classes have already been cancelled because of infected area restrictions. If the promoters of other major shows will get in touch with my Depart-
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    ment I will arrange for them to be given advice in the light of the most recent developments.
    Major Anstruther-Gray: May we take it from that reply that the matter is constantly under review?
    Sir T. Dugdale: Yes, Sir, daily.
    Mr. Hurd: Will the Minister see that his technical officers give definite advice to the show organisers in good time so that no doubt remains in the minds of farmers and exhibitors?
    Sir T. Dugdale: Yes, Sir. The advice tendered in answer to any inquiries will be absolutely definite.

    Feedingstuff Prices
    Mr. F. Willeyasked the Minister of Agriculture how the estimated subsidy on animal feedingstuffs for 1952–53 of about £30 million affects the award to the farmers made in the Agriculture Price Review.
    Sir T. Dugdale: The Government's decision to stabilize the Ministry of Food resale prices for feedingstuffs for a further period was one of the factors taken into account at the recent Annual Review of the economic conditions and prospects of the agricultural industry. For a further explanation, I would refer the hon. Member to the White Paper on the Annual Review, which will be available to the House later this afternoon.
    Mr. Willey: While awaiting the White Paper, may I ask whether it was not assumed when the Price Review discussions began that this subsidy would be discontinued, so that this makes an extra call of £30 million on the Ministry of Food subsidy? Secondly, if the sum of £30 million comes out of the total of over £50 million recently announced, is it not quite clear that that sum was over and above the figure in the special review?
    Sir T. Dugdale: No, Sir. These figures are very complicated, and I must ask the hon. Gentleman to await the White Paper which will be available this afternoon.

    Farm Workers' Houses (Possession)
    Mr. Higgsasked the Minister of Agriculture whether he is prepared to take action in cases where there is a legitimate complaint about the decision of a

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    county agricultural executive committee to grant or refuse a certificate under paragraph (g) of the First Schedule of the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933.
    Sir T. Dugdale: The only subject a C.A.E.C. is authorisd to consider under the paragraph referred to is whether the worker for whom the landlord requires the dwellinghouse is or is to be employed on work necessary for the proper working of an agricultural holding or maintenance of an estate. As I told the hon. Member for Maldon (Mr. Driberg) on 15th May, the committee, when considering the issue of a certificate, have no power to take into account possible hardship to the sitting tenant or the fact that a cottage is situated some distance from the farm; and I have no power to require the committee to alter or withdraw their certificate. It is for the county court to consider all matters bearing on the reasonableness of granting an order for possession.
    Mr. Higgs: Is not my right hon. and gallant Friend aware that, once the certificate has been issued, the county court has very little option in the matter, and that there may be cases where the ground of complaint is the procedure which was adopted by the committee at the hearing? Is it not desirable that somebody should look into cases where it is suggested that the procedure at the committee's hearing was unsatisfactory?
    Sir T. Dugdale: I cannot accept all the implications of the question put to me by my hon. Friend, but I am looking into the whole position.
    Mr. Janner: Would the right hon. and gallant Gentleman reconsider this, particularly in view of the question which I put to him a few moments ago? Does he not realise that it is essential to have a right of appeal against the decision of the county agricultural executive committee—he will admit that, no doubt? In those circumstances, does he realise that at present the county court has no power at all, except on a legal point, to reverse the decision, and will he do something about this extremely serious matter?
    Sir T. Dugdale: No, Sir. I think the House is getting into difficulties here. If the hon. Member will refer to my answer, he will see that the first part of the business is the duty of the county agricultural executive committee. When that committee has decided whether a certificate is to
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    be granted or not, the question whether or not possession is to be granted is a matter for the county court.
    Mr. Janner: No.
    Sir Waldron Smithers: In general, where there is complaint about the decision of the county agricultural executive committee, will my right hon. and gallant Friend allow, or take steps to allow, that complaint to go to an independent court of common law?
    Sir T. Dugdale: That is a different question altogether from the one on the Order Paper, which does not deal with that particular aspect.
    Mr. G. Jeger: Is the Minister not aware that whenever a case is brought before the court and a certificate is produced in support of the application, the court invariably takes it as a formal matter, and, because a certificate is produced, grants possession right away?
    Sir T. Dugdale: No, Sir; I would not accept that.
    Mr. Higgsasked the Minister of Agriculture what guidance or directions have been given to county agricultural executive committees as to the procedure to be followed by them when considering applications for certificates under paragraph (g) of the First Schedule of the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933.
    Sir T. Dugdale: The instructions that have been sent to C.A.E.Cs. provide for a preliminary hearing of both parties to the application either by special panels or by the labour sub-committee of the C.A.E.Cs. I am sending a copy of the instructions to my hon. Friend.
    Mr. Higgs: In view of the answer to the last Question, does it not appear that, when the procedure to which my right hon. and gallant Friend has referred is not properly carried out, there should be means of going into the matter again? Will he be kind enough to look into the case of Mr. Mason, of Romsley, of which I have sent particulars to him, and in which it is suggested that the parties are not heard together, so that neither party has the opportunity of hearing what the other was saying?
    Sir T. Dugdale: Yes, Sir. I am inquiring into the particular case about which my hon. Friend wrote to me, and will reply to him later.

    Foot-and-Mouth Disease
    Mr. Hurdasked the Minister of Agriculture if the recent standstill order enabled his veterinary officers to trace all livestock which had been in contact at markets with animals infected with foot-and-mouth disease; if a reliable blood test has been evolved to discover potential carriers of the disease; and if he is satisfied that there will be no further spread of infection from these sources.
    Sir T. Dugdale: All livestock which may have been in contact with infection at markets from 24th April to 1st May have been traced and examined. I understand that there is no reliable blood test which would enable the disease to be diagnosed in animals showing no symptoms or at an early stage of infection. Normally, there is no need of a blood test, as livestock in Great Britain are so susceptible that the disease very soon becomes evident in animals which are infected. Young calves may occasionally fail to show characteristic symptoms. This did unfortunately happen with the calves which recently caused outbreaks of foot-and-mouth disease in Scotland. I am satisfied that no further spread of infection will arise from the markets held in the period mentioned.
    Mr. Hurd: Could not my right hon. and gallant Friend tell us what happens when these contact animals which have been in touch with infection are identified, and the farm is known? Is that farm completely closed and isolated, and are hikers and others prevented from crossing that land, because there is evidence that some further outbreaks have arisen from mechanical means?
    Sir T. Dugdale: This is a very complicated subject, and I should prefer not to commit myself to the House to answer these difficult questions. Every aspect of the matter is under examination.

  FISHING INDUSTRY

    White Fish Authority (Operations)
    Mr. Duthieasked the Minister of Agriculture when he expects to receive and publish the report of the first year's operation of the White Fish Authority.
    Sir T. Dugdale: I understand that the Authority hope to submit their report early next month. It will be published as soon as possible thereafter.
    Mr. Duthie: Is my right hon. and gallant Friend aware of the very considerable anxiety in the fishing industry about the fitness of this body?
    Mr. J. Hudson: Is the right hon. and gallant Gentleman aware that people are very anxious about their inability to get white fish, because of its wholesale destruction?

    Fishing Dispute, Iceland (British Losses)
    Major Anstruther-Grayasked the Minister of Agriculture if he will give an estimate of the annual loss to British fishing interests that will result from the Government of Iceland's proposals regarding Icelandic territorial waters.
    Sir T. Dugdale: It is not possible to give a close estimate, but the quantity of fish taken by British vessels in the waters off Iceland which have now been closed to them was probably about 25,000 tons per annum, or possibly rather more. Some of this loss will be made up by vessels fishing outside the new line or in other waters.
    Major Anstruther-Gray: In view of the fact that these are very considerable figures, can my right hon. and gallant Friend give the House an assurance that the last word in this matter has not been spoken between us and the Icelandic Government?
    Sir T. Dugdale: Certainly, Sir. The Icelandic Government's reply to the British Government's Note is at present under consideration, and further comment must be deferred until there has been time to study it. I cannot today go further than the reply given by my right hon. and learned Friend the Minister of State to the hon. Member for Leith (Mr. Hoy) on 19th May.
    Mr. G. R. Howard: Would my right hon. and gallant Friend consider some form of sanction against the Icelandic Government if we should not get a satisfactory reply, such as a limit to their vessels fishing off our coasts?
    Sir T. Dugdale: I cannot go further than what I have said today.
    Mr. Hoy: May I ask the Minister what he meant when he said that this loss might be compensated for by fishing in other grounds? What other fishing grounds will recoup this loss, in view of the fact that all fishing grounds are being over-fished at the present time?
    Sir T. Dugdale: As the hon. Member realises, new grounds for fishing are being found every day, and, in addition to this, of course, by closing certain waters round Iceland, it is probable that, just outside the territorial waters, the fishing will be better than it was in the past; but I cannot over-estimate the seriousness which we attach to the position.

  ACCIDENT PREVENTION (GRANTS)
  Mr. Jannerasked the Secretary of State for the Home Department why he has withdrawn the grant of £2,000 per annum, previously given to the Home Safety Committee of the Royal Society for the Prevention of Accidents.
  Mr. Shurmerasked the Secretary of State for the Home Department if, in view of the great number of persons killed each year by domestic accidents in the home, he will consider reinstating the annual grant of £2,000 to the Royal Society for the Prevention of Accidents.
  The Secretary of State for the Home Department (Sir David Maxwell Fyfe): When this grant was first paid for the financial year 1948–49 the Society were told that it would be of limited duration and that its continuance would be reconsidered after a period of, say, five years. In view of the need for the most stringent economy in Government expenditure, I reluctantly came to the conclusion that further payment of the grant must now be discontinued. I am at present considering representations made by the Society for the restoration of some financial assistance from the Exchequer for the purpose of their home safety work.
  Mr. Janner: Is not the Home Secretary aware that this Society is doing excellent work in saving the country expense arising out of hospitalisation and injuries? Would he not consider that in these circumstances it is really a false economy to refuse a small sum of £2,000 which has produced such excellent results in the past?
  Sir D. Maxwell Fyfe: I will take into consideration what the hon. Member has said.
  Mr. Shurmer: Is the Home Secretary aware that as a result of the withdrawal of this grant the Home Safety Committee of the Birmingham Accident Prevention Council will have to cease their work owing to lack of funds? Is he aware that 5,000 people are killed each year by domestic accidents, that this is a mean withdrawal and that lives cannot be measured in £ s. d.? Surely he will be prepared to reconsider his decision.
  Sir D. Maxwell Fyfe: I appreciate the interest of the hon. Member and perhaps he will be good enough to reserve the first part of his question dealing with Birmingham until I have answered Question No. 40, which also deals with that point. As I have said, I am considering the matter and I will take into account everything that has been said today.
  Mr. Noel-Baker: Is the right hon. and learned Gentleman aware that during the war an expert study by a distinguished economist of the Ministry of Transport showed that the material cost to the nation of road accidents was between £50 million and £60 million a year? Is he aware that this Society does very distinguished work in helping to prevent accidents and suffering and that a saving of £2,000 is really ridiculous in view of the results the Society has obtained?
  Viscount Hinchingbrooke: Is my right hon. and learned Friend aware that the Royal Society for the Prevention of Accidents are much more likely to be forthright in their recommendations without a Government grant than with one?
  Mr. Yatesasked the Secretary of State for the Home Department how many persons were killed by domestic accidents during the last year for which statistics are available; what was the proportion of fatal domestic accidents occurring to children under five years of age, and old people over 65 years of age; and if he will reconsider his decision to discontinue the grant of £2,000 to the Royal Society for the Prevention of Accidents.
  Sir D. Maxwell Fyfe: No accurate statistics of fatal accidents in the home are available, but figures extracted from

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  the Registrar General's Statistical Review indicate that in 1949 about 5,500 persons died as a result of accidents in the home, of whom about 1,000 were children under five and about 3,500 persons over 65. As regards the last part of the Question, I would refer to the answer I have given to Questions Nos. 21 and 34.
  Mr. Yates: In view of the gravity of these figures, has the Minister studied the Report of the inter-Departmental Committee on Accidents in the Home which was set up by the former Home Secretary in 1947, in which it is clearly stated that there are more children injured in the home than on the roads? Owing to the seriousness of the situation, I hope the Minister will reconsider his decision.
  Sir D. Maxwell Fyfe: I have considered the Report, and I have promised that I will look into this matter again.
  Mr. Yatesasked the Secretary of State for the Home Department if he is aware that the Birmingham Accident Prevention Council are no longer able to continue propaganda for dealing with home safety, or hold further exhibitions of home safety and safety precautions generally owing to lack of finance; and what steps he is taking to ensure that this important work is carried out.
  Sir D. Maxwell Fyfe: I have no power to give financial assistance to local organisations concerned with home safety: Section 136 of the Local Government Act, 1948, gives certain general powers to local authorities to contribute towards the expenses of such organisations, with the consent of the Minister of Housing and Local Government, and my right hon. Friend is always prepared to consider any application for his consent under this Section.
  Mr. Yates: In view of that statement, will the Minister give special consideration to this question in Birmingham? I understand that all the authorities have been co-operating in this propaganda work, which is so valuable because of the large number of children being killed as a result of accidents in the home. Will the right hon. and learned Gentleman help this work to be carried on? At the last exhibition, 7,000 people attended, and these exhibitions can—[HON. MEMBERS: "Speech."] I do not very often get up
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  to speak, and I am going to say what I want to say. It is very important for a city like Birmingham that the whole of this work should be continued.
  Sir D. Maxwell Fyfe: I will certainly consider the point. I think the hon. Gentleman has got the substance of my first answer, which is that the local authority can make a grant with the approval of my right hon. Friend. On the second point, of course, the Birmingham Accident Prevention Council does not receive any financial assistance from the Royal Society for the Prevention of Accidents' grant, but, as I have promised, and especially in view of everything that has been said today, I will look into the matter again.

  WORLD FEDERATION OF SCIENTIFIC WORKERS
  Mr. Fieldasked the Secretary of State for the Home Department on what grounds he refused to extend to foreign scientists facilities to attend a meeting of the World Federation of Scientific Workers which was to have been held at Cambridge on 22nd to 23rd March.
  Mr. Awberyasked the Secretary of State for the Home Department why the foreign members of the Executive Committee of the World Federation of Scientific Workers were not permitted to enter this country to attend a meeting of their committee at Cambridge on 22nd March.
  Sir D. Maxwell Fyfe: I decided that it would not be in the public interest to allow foreigners to come to this country to attend the proposed meeting of the Executive Council of the World Federation of Scientific Workers, which is one of the Communist-dominated international organisations whose primary object is to organise support, under various disguises, for Soviet policy.
  Mr. Field: Is the right hon. and learned Gentleman aware that there are points of view other than Communist represented on this World Federation, that in course of time those holding those views hope to gain the ascendancy and that his action does not help to that end? Did he see the agenda of the proposed meeting before he banned it?
  Sir D. Maxwell Fyfe: The line that I have taken is, I think, well known to the House. I am prepared to consider the admission of Communists to any bona fide British body that wants their attendance. I am not prepared to admit them to a body artificially constituted to make itself a vehicle of Soviet propaganda.
  Mr. S. Silverman: Can the right hon. and learned Gentleman say when it became part of the Home Secretary's duty, in exercising the discretion which is vested in him in these matters, to consider what he is pleased to call questions of public policy? Was it not always his duty not to put an "iron curtain" round our shores except in cases where the public safety was actually or primarily involved? Was it not always the case that questions of public policy are not to be determined by the Home Secretary of the day, and is not the greatest public interest of this country the preservation of its democratic tradition?
  Mr. Field: Did the Home Secretary see the agenda of the proposed meeting before he banned it?
  Sir D. Maxwell Fyfe: I did not see the whole agenda, but I was given a synopsis of it and I took that into account.
  Mr. Bevan: In view of the fact that it is now universally held that when the Red Army came so far to the West it discovered a state of affairs far better than Soviet propaganda gave reason to suppose, would it not be rather better to allow Communists to come here and see the more urbane standards which we enjoy as against the propaganda they get?
  Sir D. Maxwell Fyfe: I think I am right in considering the purpose for which these persons are coming. Persons who are coming with the purpose which I have mentioned are not likely to be affected by the considerations stated by the right hon. Gentleman. They do not come in that state of mind; they come in a state of mind to assist Soviet propaganda.
  Major Beamish: Was not the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) a leading member of the Government who refused to allow foreign Communists to attend the Sheffield Peace Conference?
  Mr. S. Silverman: Owing to the extremely unsatisfactory nature of the reply, I give notice that I will raise this matter at an early opportunity on the Adjournment.

  AUXILIARY FIRE SERVICE (COMPENSATION RATES)
  Captain Ryderasked the Secretary of State for the Home Department if he is aware that the rates of compensation for injury sustained while on duty in the Auxiliary Fire Service are lower than in the case of the regular Fire Service; and whether he will consider taking action to secure uniformity.
  Sir D. Maxwell Fyfe: I regret that I am not yet in a position to add anything to the reply which I gave to a Question on this subject by my hon. Friend the Member for Heston and Isleworth (Mr. R. Harris) on 6th December last.
  Captain Ryder: As I have not had the benefit of having seen that reply, will my right hon. and learned Friend bear in mind that this is a most unfair arrangement and that it is scarcely likely to encourage recruiting to the Auxiliary Fire Service?
  Sir D. Maxwell Fyfe: I am considering the matter, and will get in touch with my hon. and gallant Friend as soon as I am in a position to announce a decision.

  PALACE OF WESTMINSTER POLICE (OVERTIME)
  Mr. Fieldasked the Secretary of State for the Home Department whether he will make a statement about the cessation of overtime payments to police on duty at the Palace of Westminster.
  Sir D. Maxwell Fyfe: I assume that the hon. Member refers to the discontinuance as from 14th April of immediate payment for overtime performed by officers on duty at the Palace of Westminster. This results from a general change of practice with regard to the payment for overtime performed by members of the Metropolitan Police Force. Overtime payments may still be made in cases where it is impossible to compensate an officer by the grant of time-off.
  Mr. Field: Will the Home Secretary give very special consideration to the police who wait upon us in this House? Because of the unpredictable habits of the House in sitting, the police have very great difficulties. Is he aware that some of the policemen who wait upon us have over 100 hours to their credit and that it is extremely unlikely that they will be able to make those up by taking time off? Is he aware that if overtime is stopped those men will have waited upon and worked for us without any payment in lieu?
  Sir D. Maxwell Fyfe: I am sure that we all share the gratitude which the hon. Member would wish me to express to those who help us so much in our duties. I will certainly take into account what he has said.
  Mr. Pannell: Will the right hon. and learned Gentleman make a general inquiry into this matter? In the course of that inquiry, will he also inquire into the conditions of other servants of the House? [An HON. MEMBER: "It is not his job."] Will the right hon. and learned Gentleman confer with those who are responsible for the working conditions of other servants of the House? May I ask him whether, if he does so, he will not be led to the conclusion that many of those are worse off and that the whole of this matter of the working conditions of servants of the House and the police needs looking into very closely?
  Mr. Ellis Smith: Before the right hon. and learned Gentleman replies to that—we can see that he is sympathetic—will he also undertake to give his personal attention to this matter?
  Sir D. Maxwell Fyfe: I will certainly undertake to give it my personal attention. As to the preceding question, my first inquiry would have to be into the limits of my jurisdiction and power.

  TAXI-CABS, LONDON
  Mr. E. Fletcherasked the Secretary of State for the Home Department if he will place a limit on the total number of licences granted annually for driving taxicabs in the London area.
  Sir D. Maxwell Fyfe: I would refer to the reply given to the hon. Member for
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  Southampton, Test (Dr. King) on 24th April.
  Mr. Fletcher: Is the right hon. and learned Gentleman aware that there is very considerable concern about the unrestricted number of licences that are being granted?
  Sir D. Maxwell Fyfe: Yes, Sir. I have had the pleasure of meeting the trade union concerned and I am considering the matter very carefully. I must admit that I find it a most difficult question, but I am giving my best consideration to it.
  Mr. Rankin: Can the right hon. and learned Gentleman tell us when he expects that all existing taxi-cabs will have meters to register the new fares?
  Sir D. Maxwell Fyfe: That is another question, but if the hon. Member will put it on the Order Paper I will look into it.
  Mr. E. Fletcherasked the Secretary of State for the Home Department how many new licences for driving a taxicab in the London area have been granted since 1st January, 1952.
  Sir D. Maxwell Fyfe: One hundred and thirty-nine, Sir.

  CHILDREN (FOREIGN ADOPTION)
  Lieut.-Colonel Liptonasked the Secretary of State for the Home Department what precautions are taken to ensure adequate legal safeguards for British-born infants taken abroad by foreign nationals other than parents or near relatives.
  Sir D. Maxwell Fyfe: It is an offence to transfer, for legal or de facto adoption, the care and possession of a British child to a foreign national resident outside Great Britain other than a parent, guardian or near relative of the child.
  Lieut.-Colonel Lipton: Although the law on the subject is quite clear, is the Home Secretary aware that—as was revealed in the recent Kavanagh prosecution—it might be only too easy in less desirable circumstances for parents to arrange for their child to be taken abroad, on the pretext of a holiday or some other pretext, and, in that way, completely to sidestep all the laws that we have carefully devised for the protection of children?
  Sir D. Maxwell Fyfe: The prosecution which the hon. and gallant Gentleman mentioned should give publicity to the state of the law. I have no evidence that there is frequent disregard of that law.

  CIVIL DEFENCE

    Training Classes
    Mr. Coleasked the Secretary of State for the Home Department whether, in the interests of publicity and recruiting for Civil Defence, he will consider with the authorities concerned the establishment of the same night each week over the whole country for Civil Defence training and recruiting with a view to that night becoming popularly known as "Civil Defence Night"; and, if this is not practicable, whether it can be considered on a regional basis.
    Sir D. Maxwell Fyfe: Training classes are normally held on several nights in the week to suit the convenience of volunteers and to make the best use of the available training facilities. It would not be practicable to adopt my hon. Friend's suggestion, even on a regional basis.

    Recruiting Publicity
    Mr. Coleasked the Secretary of State for the Home Department whether, in the interests of publicity and recruiting for Civil Defence, he will consider with the authorities concerned the desirability of taking advantage, so far as can be arranged, of the opportunities provided by fetes, shows and other functions held by other bodies during the summer, for the dissemination of Civil Defence publicity by means of demonstrations, distribution of literature, etc., at those functions.
    Sir D. Maxwell Fyfe: I hope that local authorities will make the most of the opportunities for recruiting that these outdoor functions offer. Some authorities already do so and I am arranging for my hon. Friend's suggestions to be brought to the notice of others.
    Mr. Cole: While thanking my right hon. and learned Friend for that answer, may I ask if his Department would also
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    inquire into the other methods of making use of the facilities of local associations and societies whose co-operation, I am sure, would gladly be forthcoming?
    Sir D. Maxwell Fyfe: Yes, we are, and we shall be glad to extend our consideration of this matter.
    Mr. Lee: Is the Home Secretary aware that much is being done in this direction in some parts of the country and that in the North-West a quiz has been held between the different towns and cities in that area? On Sunday last Newton-leWillows soundly defeated Manchester.
    Sir D. Maxwell Fyfe: I congratulate the hon. Gentleman.

    Civil Defence Week
    Mr. Coleasked the Secretary of State for the Home Department whether, in the interests of publicity and recruiting for Civil Defence, he will consider with the authorities concerned the desirability of holding a Civil Defence Week throughout the country during the forthcoming summer.
    Sir D. Maxwell Fyfe: Many corps authorities have held civil defence weeks already or are planning to do so. Owing to varying local conditions I think it best to leave such a matter to the judgment of the local authorities concerned.
    Mr. Cole: Will some effort be made to make these weeks the same in particular areas, with a view to a concentration of effort—allowing for a more ambitious programme by that concentration of effort—and also the economies which can come from joint efforts?
    Sir D. Maxwell Fyfe: I will consider that point.

    Shelters, Liverpool
    Mrs. Braddockasked the Secretary of State for the Home Department if he is aware of the unrest of the tenants of Gerard Gardens and Gerard Crescent, Liverpool 3, due to the refusal by his Department to allow the air raid shelters to be demolished; that these shelters are a danger to the children of the area, are insanitary, and give off a bad smell; and if he will cause an inquiry to be made with a view to the area being cleared.
    Sir D. Maxwell Fyfe: It is the policy of Her Majesty's Government to build up our Civil Defence resources as part of the general defence programme, and it would clearly be unwise to demolish any serviceable shelters which we still have, unless they are structurally dangerous or constitute a danger to health. I am making further inquiries into this case, and I will write to the hon. Member when I have completed them.
    Mrs. Braddock: Is the Minister aware that within the last fortnight a four-and-a-half-year-old child in this area died suddenly after playing on this site, and that, in spite of the post-mortem and inquest, parents in the district are not convinced that the dangerous area in which the child was living was not responsible for its death? When the right hon. and learned Gentleman is next in Liverpool, and if he happens to be there at the same time as myself, will he come with me and look at this area, because the place literally stinks?
    Sir D. Maxwell Fyfe: As I said, I am trying to get exact information on the particular problem which the hon. Lady has raised, and I shall welcome any means of doing it.
    Mr. Shurmer: Is the Home Secretary aware that this problem appertains also to the City of Birmingham where there are many such shelters which are a menace to the health of the public?
    Sir D. Maxwell Fyfe: Ifthe hon. Gentleman can give me notice, I will look into the matter.

  CRIMINAL APPEAL COURT (NEW TRIALS)
  Lieut.-Colonel Liptonasked the Secretary of State for the Home Department whether he will introduce legislation to grant the Court of Criminal Appeal the power to order a new trial.
  Lieut.-Colonel Bromley-Davenportasked the Secretary of State for the Home Department if he will consider amending the Criminal Justice Act of 1948 to give the Court of Criminal Appeal power, in a proper case, to order a new trial.
  Sir D. Maxwell Fyfe: The general question is at present under consideration in the light of the comments recently
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  made in a debate in another place. In any event, I am not in a position, in view of the congested state of the legislative programme, to hold out any hope of legislation either now or in the near future.
  Lieut.-Colonel Lipton: When the right hon. and learned Gentleman says that the matter is under consideration, can he tell the House exactly what he means. in view of the important issues involved and in view of what sounded like a vague benediction by the Lord Chancellor in another place? Would he arrange for the whole matter to be investigated by an authoritative body so that the House could be told whether there is any reason or need for the suggested reform?
  Sir D. Maxwell Fyfe: When I said that the matter was under consideration I had in mind the fact that I listened to—and took part in—the debate on this question in the House, and I happen to know that hon. Gentlemen who took one view when it was discussed are now disturbed as to whether that view was right. I think it is a subject which we should all consider very carefully before we go further in the direction of legislation.

  COMIC PAPERS
  Mr. W. T. Williamsasked the Secretary of State for the Home Department, in view of the disturbing increase in the number of comics offered for sale which depict cruelty, crime and obscenity, what action he proposes to take to make illegal the sale of such literature, so harmful to children.
  Sir D. Maxwell Fyfe: I share the dislike of the hon. Member for this type of vulgar publication, but I have no evidence that delinquency or increased susceptibility to delinquency results from the circulation of this matter. I am, however, considering, in consultation with my right hon. Friends the President of the Board of Trade and the Minister of Education, whether any and, if so, what, action is called for on our part.
  Mr. J. Crowder: Is the right hon. and learned Gentleman aware that in various courts it has been suggested that these comic strips do a tremendous amount of harm? I have had many letters from

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  my constituents and I hope that the Home Secretary will do something to stop their publication and, in conjunction with the President of the Board of Trade, their importation. The position has become very serious and people are very worried about it.
  Mr. Williams: Is the Minister aware that, in addition to a spate of the most vicious comics from the United States, it is the growing practice of English publishers to publish comics of this kind? Large numbers have come on to the market in the last few months. Is the Minister also aware that the National Union of Teachers are desperately concerned about this matter and that the Canadian Government have been so concerned about it as to introduce a one-Clause Bill to make the sale of these comics illegal? In view of all this evidence will he consider doing the same thing here, because these things are very damaging?
  Sir D. Maxwell Fyfe: The matter is under consideration between the Departments I have mentioned. I will certainly take into account what the hon. Member has said.
  Colonel Gomme-Duncan: Can my right hon. and learned Friend say at what stage either crime or obscenity becomes comic?
  Mr. Ede: Will the right hon. and learned Gentleman circulate chief officers of police, drawing their attention to their existing powers for dealing with this matter?
  Sir D. Maxwell Fyfe: I will certainly consider that point.

  HOUSE OF COMMONS MOTORING CLUB (BADGE)
  Mr. G. Jegerasked the Secretary of State for the Home Department what instructions have been given to the Metropolitan Police about cars showing the badge of the House of Commons Motoring Club.
  Sir D. Maxwell Fyfe: Police are informed by notices displayed at stations in and around Westminster that the badge is designed to assist them to recognise Members' vehicles and to facilitate their passage to and from the House in accordance with the Sessional Order, but
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  that it does not confer any special privileges on members of the club or immunity from compliance with the ordinary law.
  Mr. Jeger: Is it not correct that one of the conditions attached to the obtaining of one of these badges is that it should not be displayed on the car if the Member of Parliament does not happen to be in it? Is not the Home Secretary aware that there is an abuse of the courtesy and assistance of the police by cars displaying the House of Commons motor badge being used by ladies who are shopping in the West End of London and obtaining priority in traffic queues because their cars display these badges?
  Sir D. Maxwell Fyfe: My responsibilities are manifold, but they do not extend either to interpreting the rules of the Club or controlling ladies who shop in the West End.

  MARRIAGE GUIDANCE COUNCIL (GRANTS)
  Mr. E. Fletcherasked the Secretary of State for the Home Department why he intends to reduce by approximately one-half the existing annual grants to the National Marriage Guidance Council and similar organisations.
  Sir D. Maxwell Fyfe: In view of the present need for stringent economy in public spending, I came to the conclusion that I should not be justified in proposing larger grants for the financial year 1952-53 than are provided for in the Civil Estimates.
  As regards the future, the question whether it would be possible to increase the grant in future years will receive my consideration in the light of the circumstances then obtaining.
  Mr. Fletcher: Does not the Home Secretary think that there is some inconsistency about the fact that, at a time when the State is spending about £1,200,000 a year on the legal aid system, and providing facilities for divorce, this quite small grant to this Council should be reduced?
  Sir D. Maxwell Fyfe: Part of the grant still remains. I am receiving a special report on a certain aspect of the matter and I am quite prepared to consider it again.

  DURHAM COUNTY COUNCIL (TEACHERS' COMPLAINT)
  Miss Wardasked the Prime Minister whether, in view of the threatened breakdown in public services in Durham County, he will make a statement on the action which the Government proposes to take to prevent this.
  The Prime Minister (Mr. Winston Churchill): My right hon. Friend the Minister of Education has already asked for the comments, at the earliest possible moment, of the Durham local education authority upon a formal complaint lodged by the National Union of Teachers under Section 68 of the Education Act, 1944. My right hon. Friend is awaiting their reply. She will not hesitate, if necessary, to use the powers of direction to the local education authority conferred upon her by the Act.
  Miss Ward: Can my right hon. Friend say how long a time it is proposed should elapse while the answer is being awaited, and when we might hope to know what is to be the final result?
  The Prime Minister: I think I have given a rather important answer on this matter, and I certainly do not think we should be pressed at this moment upon a detail like the actual time that should be allowed.
  Mr. Shinwell: May I ask the right hon. Gentleman whether he will exercise great care before taking any repressive action in this matter? White not expressing any opinion on the merits of the general situation in this particular regard, the council would appear to be justified because of an agreement reached a considerable time ago with the organisations concerned, and it would, perhaps, be better to be a little cautious before taking action.
  The Prime Minister: In the main, we are only proceeding on the same lines as were adopted by the late Government. A somewhat new version of the dispute has come up, but, nevertheless, the legal powers at the disposal of my right hon. Friend the Minister of Education, and the duties devolving upon her are unchanged.
  Mr. Shinwell: Yes, but is it not precisely because this is a quite new version
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  of the situation that care should be exercised before taking any grave action? Is it not desirable to use every possible means of effecting a compromise rather than to precipitate a situation which may cause great damage to everybody concerned?
  Mr. Murray: While agreeing with the Prime Minister that this is a very serious matter, would it not be better to ask for a deputation to come down and talk this matter out rather than fight it out?
  The Prime Minister: This is supposed to be a reasonable country, and if people want to come on deputations, and so on, to parley with Ministers and to discuss matters, that is not a matter which should be turned down at all. But, on the other hand, there are certain principles which have to be upheld.
  Miss Ward: Can my right hon. Friend give us any information about the health services and what line is to be pursued in that respect?
  The Prime Minister: There are various powers possessed in different degrees by the Ministries who may be concerned, but the Minister of Education has most clear and definite powers, and uses them.
  Mr. G. Thomas: Is the Prime Minister satisfied that it will be possible to prevent a breakdown in the education services of the County of Durham in view of the time factor involved?
  The Prime Minister: I think that is a matter which ought to be considered by all parties.
  Mr. Chetwynd: Is it not a fact that the dispute at present is centred on one question, that of extended sick pay, and would the right hon. Gentleman take care that no action of the Government embitters this situation, and that the interests of the children should prevail at all time?
  The Prime Minister: It happens that the sick pay is the only matter on which, in view of the previous agreement, it was open to the Durham County Council to act, but they are raising exactly the same issues on the only point left open to them after, as I understand it, the agreement made with the late Government.

  EMPLOYMENT

    Blind Persons (Physiotherapy)
    Captain Orrasked the Minister of Labour the number of persons undertaking courses in physiotherapy as blind students at the National Institute for the Blind Physiotherapy School in London; the total amount of grants payable for personal maintenance and the maintenance of students' families; and how far these grants make provision for travel to and from the school.
    The Minister of Labour (Sir Walter Monckton): Forty-six, of whom 31 are in receipt of grants from my Department; the total amount of grants payable by my Department is £6,292 per annum, individual grants varying in accordance with personal circumstances; special grants are payable to meet daily travel expenses in excess of 4s. per week.
    Captain Orr: Is my right hon. and learned Friend aware that these grants have not altered since 1948 and that some of these blind people, trying to fit themselves to be useful citizens, are experiencing great hardship? Will he receive a deputation?
    Sir W. Monckton: As my hon. and gallant Friend says, there are cases where the present rate of grants may be causing trouble. I am quite willing to receive a deputation on the matter.

    Paper Mill, Eynsford (Closing)
    The following Question stood upon the Order Paper:
    Sir W. SMITHERS,—TOask the Minister of Labour if he is aware that Messrs. Spicer's Paper Mill, at Eynsford, Kent, which has been in existence for 300 years, is to be closed down and will put many out of work; and what steps he is taking to find alternative employment for these people.
    Sir W. Smithers: On a point of order. Before Question time ends, Sir, may I ask if you will allow the Minister to answer Question No. 58 as a matter of urgent importance?
    Mr. Speaker: I have frequently ruled that unless the Minister asks for the right I cannot allow Questions to run over time.

    Relaxation of Customs Agreement (Dilutees)
    The following Question stood upon the Order Paper:
    Mr. HOLLIS,—Toask the Minister of Labour what communication he has received from the Amalgamated Engineering Union concerning the repudiation of the Relaxation of Customs Agreement; and what effect this will have on the position of dilutees in Air Ministry Maintenance Units.
    Mr. Lee: May I ask your guidance, Mr. Speaker, on what I think a very important matter? Owing to the time factor, the Minister of Labour has not had an opportunity of replying to Question No. 53, the inference of which is that a certain trade union has repudiated the Relaxation of Customs Agreement. If it went from the House that that were so, it would mean that many thousands of people would have to leave the engineering industry. May I ask how it is possible to obtain a reply, as the A.E.U. have not repudiated this Agreement?
    Mr. Speaker: The only way in which it can be dealt with is by the answer to the Question.
    Mr. Hollis: Further to that point of order. I would point out, Sir, that the Question in no way contains an implication that the Agreement has been repudiated.

  BRITISH ARMY (COMPASSIONATE LEAVE CASE)
  Mr. Bartley(by Private Notice) asked the Secretary of State for War to say why an application has been refused for compassionate leave for Lance-Corporal Dobson to enable him to see his brother, Eric Dobson, who is dangerously ill and considered to have only a few days to live.
  The Secretary of State for War (Mr. Antony Head): Compassionate leave is only granted in the case of death, imminent death, or dangerous illness of a wife, child, parent, or other recognised next-of-kin. This rule has been in operation for many years and is known and observed throughout the Army.

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  I deeply sympathise with Lance-Corporal Dobson and his parents in this sad case, but since both parents and his sister are now at home I much regret that I am unable to grant him leave since the case lies outside the scope of the scheme.
  Mr. Bartley: In view of the very serious and urgent nature of this case, will the Minister please exercise some humane considerations in this instance and give further consideration to the application with a view to granting it? Will he arrange as early as possible for Lance Corporal Dobson to be brought home to see his younger brother?
  Mr. Head: The scheme as it is operating at the moment produces a very big liability in the number of cases granted and if I extend the scheme to cover brothers and sisters, although, obviously, there are grounds for saying that that is desirable, it would immensely widen the scheme and the number of cases would rise astronomically.
  Mr. Shinwell: Although the right hon. Gentleman has stated quite accurately what the Regulations are, would he not agree that frequently at the War Office and in the other Service Departments they do extend compassionate consideration on the merits of the case presented to them? Would he agree to exercise his judgment and discretion and, I believe, his humanity in a matter of this sort?
  Mr. Head: I am only too anxious to exercise discretion and humanity, but every case where a brother or sister is dangerously ill and likely to die is sad and I can see no reason why if I granted this application I should not have to extend the scheme to all other cases.
  Major Anstruther-Gray: Could my right hon. Friend tell the House whether this man is serving at home or abroad, and in what theatre of operations, so that we can have a proper appreciation of whether the War Office are being reasonable or unreasonable?
  Mr. Head: This man is serving at Fayid, in the Canal Zone.
  Mr. Murray: Is the right hon. Gentleman aware that the whole of Washington Colliery is upset by the decision on this case? Does he not realise that they think the War Office have a heart of stone on questions like this? Will he
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  consider this case on its special merits? Here is a child of 11 years of age crying out for his brother to see him, yet it is absolutely turned down by the War Office; cannot the right hon. Gentleman reconsider the case?
  Mr. Head: I do not accept that in these cases my Department is very hardhearted. In the last three months the War Office alone have granted more than 2,000 cases of compassionate leave. This case is a very sad one, but all cases of brothers or sisters dying are extremely sad and if I extended the scheme to cover a far wider field it would create problems of movement and expense throughout the Army.
  Mr. Ellis Smith: If he were an officer he would be at home now.
  Mr. George Wigg: Would the right hon. Gentleman read the preamble of Queen's Regulations, which lays down quite clearly that, although the Regulations have to be applied, there are self-evident exceptions? Is this not one of them? Is not this a case where he ought to throw the Regulations overboard, accept the obvious will of the House, and grant this man leave?
  Mr. Head: I sympathise very much indeed with this question—[HON. MEMBERS: "Oh."]—but I see no reason at all to think that hon. Members opposite have a monopoly of sympathy. [HON. MEMBERS: "Exercise it."] Certainly I sympathise with this man, but what I am trying to explain to hon. Members opposite is that every case of a young brother or sister dying is extremely sad. Why should I grant it to this man and refuse it to others? [HON. MEMBERS: "Nonsense."] I can only grant it to all, or else I shall only make the scheme ridiculous.
  Mrs. Mann: The right hon. Gentleman is doing himself less than justice; he is held in very high respect on all sides of this House. If he wants to know why he should grant leave in one case and not in another it is surely because he must know of families that hold together very closely and other families that just seem to scatter and do not care about each other. Therefore, is there not room for the exercise of his discretion in the case of families such as the one in question?
  Mr. Head: I can assure the hon. Lady that, supposing neither of the parents was at home, or if they were dead, I would, of course, make this an exceptional case, but this is a case where I cannot judge between family and family. I must go on the facts of the case as I know them. Naturally, young brothers would like to see their older brothers who are away, but I do hope that hon. Members will realise that if I extended the "next-of-kin" to cover a large family I would have a large administrative problem on my hands which would get out of control.
  Mr. Bartley: While appreciating that the Secretary of State for War has at least had sufficient time to consider the case—I have been in correspondence with him for almost a fortnight, apart from personal interviews with his Under-Secretary—may I, as a last resort, ask the Prime Minister to give consideration to this case and to over-rule the Regulations and show he has some human sympathy and sentiment in this kind of case?
  The Prime Minister: I have every confidence in my right hon. Friend's discretion and sense of humanity and I have seen no reason, except the lively interest taken in the House, for making an exception.
  Mr. Bartley: On a point of order. As evidently the House, in all parts, is very much concerned about this case and as there is evidently deep sympathy in this case, will you, Mr. Speaker, accept a Motion for the Adjournment of the House so we can debate it?
  Mr. Speaker: I could not accept that Motion as falling within the rules of order.
  Later—
  Mr. Bartley: On a point of order. I beg to move the Adjournment of the House to call attention to a definite matter of urgent public importance, namely, the refusal of the Secretary of State for War to grant compassionate leave in the case of Lance-Corporal Dobson, whose brother is at the point of death. I do so under Standing Order No. 9.
  Mr. Speaker: The Motion does not fall under the Standing Order because it has been repeatedly ruled that actions taken
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  by a Government Department in pursuance of the ordinary course of the law are not subject to the Standing Order. Therefore, I cannot accept the Motion.
  Mr. Short: On a point of order. This boy has only a few days to live. If you refuse to accept this Motion for the Adjournment, Mr. Speaker, can you advise us how this matter can be raised?
  Mr. Speaker: The only way it can be raised is in the way in which it has been raised. I allowed the hon. Gentleman to put a Private Notice Question. There have been a number of supplementary questions on it. It is now out of my hands, and out of the hands of the House. There is nothing more, I am afraid, that I can do. The Secretary of State is well aware of what has been said.
  Mr. S. Silverman: Is it not the case that the rule about not granting or not recognising a Motion of this kind under this Standing Order is that it is not granted where a Minister is acting in the ordinary course of the law, but that that does not apply to such a case as this, where the Secretary of State for War recognises he has a discretion; that where there is involved an administrative action of a Minister, in a matter in which he has discretion to do a thing or discretion not to do it, it is not a matter which can fairly be called the due operation of the law?
  Mr. Speaker: I think that the discretion of a Minister is part of the ordinary process of the law.
  Mr. Ellis Smith: The House appreciates the position you are in, Sir, but it must be obvious to the Secretary of State for War that the whole House is very sympathetic to this case, so may I ask him if he will meet my hon. Friend the Member for Chester-le-Street (Mr. Bartley) immediately after Questions to consider what can be done in this case?
  Mr. Head: I am quite prepared to talk to the hon. Gentleman about this case, but I should be deluding the House if I were now to suggest that we could settle this matter. I would ask the House to remember that in the past, and ever since I have been at the War Office, many similar applications for compassionate leave, in identical circumstances, have been turned down. This has been

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  going on for many years—ever since the war. If we were suddenly to go against all this the people who have been turned down would feel a great sense of injustice.
  Mr. Smith: Will you allow a little latitude on this matter, Mr. Speaker, in view of the circumstances? The Secretary of State and the Prime Minister have indicated their sympathy, but their hands are tied because of the procedure. Because of that, and in view of the extreme sympathy that has manifested itself in the House, will the Secretary of State now reconsider this special case? It may be that the House will have to face up to amending the Regulations in order to deal with this kind of case.
  Several Hon. Members
  Mr. Speaker: I really cannot allow this to go on.
  Mr. Bartley: I beg to give notice that, in view of the unsatisfactory replies we have received, I shall raise the matter on the Adjournment at the first convenient occasion.

BUSINESS OF THE HOUSE
Mr. Attlee: May I ask the Leader of the House the business for next week?
The Lord Privy Seal (Mr. Harry Crookshank): Yes, Sir. The business for next week will be as follows:
MONDAY AND TUESDAY, 26TH AND 27TH MAY—Committee stage:
Finance Bill.
WEDNESDAY, 28TH MAY—We hope to conclude the Committee stage of the Finance Bill.
THURSDAY, 29TH MAY—Report and Third Reading:
Family Allowances and National Insurance Bill.
Electricity Supply (Meters) Bill.
If there is time, Second Readings of:
Distribution of German Enemy Property Bill [Lords];
Motor Vehicles (International Circulation) Bill [Lords].
FRIDAY, 30TH MAY—Adjournment for the Whitsun Recess.
I should remind the House that it is important for us to complete the Committee stage of the Finance Bill before Whitsun. We shall have devoted 11 days to this stage, which I think is a fair and reasonable amount of time. I hope that right hon. and hon. Members on both sides of the House will assist us to complete the Committee stage on Wednesday of next week. If this is not possible, we shall have to ask the House to resume after the Recess on Monday the 9th instead of Tuesday, 10th June, which, I feel sure, everyone hopes will be the day.
Mr. Gaitskell: Will not the Leader of the House agree that whether or not we finish the Committee stage of the Finance Bill next week depends upon the back benchers on the Government side of the House, and not on the Opposition?
Mr. Crookshank: I did say "right hon. and hon. Members on both sides of the House."
Mr. Shinwell: For the third and, I hope, the last time may I ask the Leader of the House when the Government propose to make a statement on the course of the military operations in Korea? Can the Leader of the House explain why there has been so much delay? Is he aware that when we, the Opposition, were the Government we were constantly pressed to make statements on this matter, and did so almost every month?
Mr. Crookshank: I think the short answer to all that is that it is hoped to make it on Wednesday.
Mr. Shinwell: Is that merely a pious hope? Can we have a definite assurance that that will be the day?
Mr. Crookshank: It was simply my turn of phrase. Wednesday is the day.
Mr. Edward Davies: While I appreciate the right hon. Gentleman's problem because of the time factor, may I ask him if he has noticed the dissatisfaction expressed by many hon. Members on the back benches at the amount of time allowed for the transport debate yesterday? We had seven hours and 24 minutes, of which four hours 57 minutes were taken up by Ministers and ex-Ministers. Does the right hon. Gentleman consider there was adequate time for the

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back benchers? In those circumstances, and in view of the importance of this problem to the economy of the country, will he devote further time at an early date to this matter?
Mr. Crookshank: The House came to a decision last night. I am not responsible for what happens in the course of debates. I only try to arrange the days on which to have debates.
Mr. Peart: As there is to be a new White Paper on the subject, will the right hon. Gentleman reconsider the question of having a debate on agriculture? Last week he indicated that he was against it.
Mr. Crookshank: I understand that the White Paper is being published this afternoon—at 3 o'clock. That would seem to me to be a suitable subject for debate on a Supply Day, but there is no opportunity for it next week, which is what I am dealing with now.

TRANSPORT WHITE PAPER (LEAKAGE)
The Prime Minister: I ask your permission, Mr. Speaker, to make a statement for which I have been several times asked on the question of leakages concerning the White Paper on Transport Policy.
The inquiries that have been made have not disclosed any source of leakage. Every precaution was taken to preserve secrecy.
Mr. I. O. Thomas: Will the Prime Minister arrange for the publication of a White Paper, in preparation for any contemplated legislation, explaining the Government's White Paper on Transport Policy?

POST OFFICE ROBBERY
The Assistant Postmaster-General (Mr. David Gammans): I should like with your permission, Mr. Speaker, and that of the House to make a short statement on the robbery with violence of a Post Office van containing packages of high value yesterday morning in Central London. Her Majesty's Government felt, in view of the serious nature of this outrage and the fact that it had followed closely on a similar crime on British Railways, that the House was entitled to an early statement.
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The facts so far as they are at present known are as follows. Yesterday morning a Post Office van left Paddington Station for the City. Owing to road repairs in Oxford Street, there was a diversion of traffic and when the van was in East Castle Street at about 4.20 a.m. it was attacked in the following way. A private car emerged slowly from a side street causing the Post Office driver to pull up without arousing his suspicions in any way; almost simultaneously a second car which had been following the Post Office van drew up quickly alongside it. Seven men, all masked, immediately got out of the two cars, attacked the driver and the two Post Office officials who were seated beside him, and left two of them lying unconscious on the pavement. I am glad to inform the House that happily they are making a good recovery.
The Post Office van was then driven away and was later discovered by the police in a yard near Regent's Park. The police were summoned in a short time by a member of the public whose attention had been drawn by the noise.
I had better explain to the House that the removal of very high value packages from Paddington and other stations is a regular part of the service provided by the Post Office for many years past. Two men are sent on these vans in addition to the driver, and the vans are fitted with an alarm siren which can be operated by the driver and which, when once pressed, cannot be stopped until either the battery runs down or is disconnected by an expert. It has since been discovered that this alarm bell had been tampered with. I am satisfied that all the normal precautions laid down in the case of these very high value packages were observed.
In the case of this particular van the contents were Treasury notes sent by banks in the West Country for delivery to their head offices in London; there were no jewels of any sort. The precise value of the money stolen is not yet accurately known but it is of the order of £200,000. In view of the statements in the Press that this loss falls upon the Post Office, I should perhaps make it clear that the liability of the Post Office is £5 for each of the 90 odd packages that are missing, but this fact must only increase the Post Office sense of responsibility.

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My noble Friend takes an extremely grave view of this robbery, coming as it does so soon after similar robberies in other parts of the country. He is not satisfied, however, that the procedure which has proved satisfactory in the past is adequate under present circumstances. Certain additional precautions of a temporary and short-term nature have already been put into operation and consultations are going on with the Commissioner of the Metropolitan Police as to what extent extra permanent safeguards may be required. The House will not expect me to be specific as to the details of such arrangements.
Mr. Ness Edwards: I am sure the House will be glad to hear that the two Post Office officials are recovering. I hope that the hon. Gentleman's noble Friend will suitably reward these two men for the excellent fight they put up against very great odds indeed.
I should like to ask three questions. First, is there any significance in the fact that this van was chosen on this particular morning for the robbery? Does it indicate that the contents of this van on this particular morning did contain a much greater quantity of money or valuables than on any other morning? Secondly, is the hon. Gentleman himself satisfied that, if the alarm siren had been set off by the driver, it is highly improbable that the bandits would have succeeded? Thirdly, although I do not ask him to detail the arrangements that have been made, is he now satisfied that adequate precautions will be available in future for Post Office officials who are in charge of such valuable cargoes?
Mr. Gammans: The investigations as to this particular van are not yet completed, but it is perfectly clear that this was a very carefully thought out job. So far as additional precautions are concerned, I can assure the right hon. Gentleman, as I have said, that they are already in operation. As to the permanent precautions, our consultations with the Commissioner of the Metropolitan Police have naturally not yet been completed.
Air Commodore Harvey: It is understood that these Treasury notes were being sent to the City for pulping. If that is the case, could they not be defaced, or cut in two pieces and posted in separate
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parcels to obviate even any intention on the part of such robbers? It would avoid a lot of trouble.
Mr. Gammans: That is one of the matters which I imagine the banks will consider in the light of this present outrage.
Mr. Bellenger: As it is now obvious that it is very dangerous to send such a large sum of money by a Post Office van of this nature, will the hon. Gentleman see to it in future that he spreads the risk and does not concentrate it, as he seems to have done on this occasion?
Mr. Gammans: I would prefer not to say what the future arrangements will be. I must point out that these arrangements have been in force successfully for many years past, but if we are to assume a different state of probity on the part of the public generally, then the Post Office vans and bank messengers carrying money will require quite a different degree of protection in future.
Sir W. Wakefield: Are the numbers of the notes known; and, if so, is there any possibility of tracing and possibly recovering them?
Mr. Gammans: I understand that almost all of them are either £1 notes or 10s. notes, and of course in these cases no numbers are kept.
Mr. Hobson: Were the Investigation Branch of the General Post Office informed of the transit of this valuable package of notes? If not, why not?
Mr. Gammans: The answer is that this was in no way a solitary or a unique transaction. The conveyance of currency notes and very highly valuable packages goes on every day of the week, so there was nothing particular about this consignment that would have demanded additional precautions.
Mr. W. R. Williams: Does the Assistant Postmaster-General agree that, having regard to what happened yesterday, he will now have to give serious consideration to these matters which have been raised by certain organisations with his administration in the past in regard to the need for more safety measures in connection with such valuable special deliveries? Secondly—and I appreciate that this is a very delicate

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question, but I am asking it advisedly-will he now consider whether he should not revert to the pre-war method of recruitment into the Post Office, whereby the administration had to be perfectly satisfied about the bona fides of all entrants into the Post Office, and that they knew something about them? Lastly, will he also consider paying some of these people in accordance with the responsibility of the work they have to perform?
Mr. Gammans: I am sure that the first point which the hon. Gentleman raised will come into our general investigation. With regard to the character of Post Office servants, there is no justification whatever for the hon. Gentleman to suggest that the probity of these particular men could be brought into question.
Mr. Williams: I appreciate that. I want to make it perfectly clear that I should be the last one in this House to make any suggestion either against these men or against postmen in general, but I think we have seriously to consider whether a thing like this could have occurred if it had not been possible for some detailed information to have become available to the people who made the attack.
Mr. Gammans: As I have already said, I have no doubt whatever that this was a very carefully planned job. There is certainly every indication of it.
Mr. Hobson: Is the Minister aware that it is the normal practice of the General Post Office to inform their Investigation Branch when a special consignment, such as the one which was the subject of the robbery, is taking place from depot to depot? Were they informed in this particular case, and if not, why not?
Mr. Gammans: This was not in any way a special consignment.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress, 20th May].
  [Colonel Sir CHARLES MACANDREW in the Chair]

Clause 32.—(SCOPE OF THE EXCESS PROFITS LEVY.)
Amendment proposed: In page 36, line 23, at end, insert:
(a) any body corporate satisfies the Special Commissioners that any profits earned in any accounting period in excess of the standard profits are not attributable directly or indirectly to re-armament.—[Mr. E. Fletcher.]
Question again proposed. "That those words be there inserted."
4.2 p.m.
Mr. Eric Fletcher: I rise to resume the debate on the Amendment which I moved when we were discussing this matter at a late hour on Tuesday evening. I think that all Members of the Committee will agree with me that it was a good thing that we broke off at that stage, and that in the short interval that has elapsed hon. Members have had an opportunity of considering the large series of Amendments to the Excess Profits Levy put down by the Chancellor of the Exchequer on Monday evening.
Not only have the Committee had an opportunity of seeing the precise implications of those Amendments, but we have had the advantage of very constructive and well-informed Press comment in the interval. I hope that the Chancellor will take the view that it has been of benefit not only to the Committee but to him to have seen and heard how the considered financial opinion of the country has responded to the suggestions which the Chancellor has made. I hope that the Chancellor will accept my statement when I say that this Amendment is intended to be helpful and to put forward a concrete suggestion.
I have read the very serious indictment that has been made, particularly in the "Financial Times," but personally I feel a great deal of sympathy with the Chancellor of the Exchequer in the position in which he finds himself today. I hope that the Chancellor will, therefore, bear

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in mind that the whole object of this Amendment is to make a further attempt to see whether the Excess Profits Levy can be confined to the single purpose for which, admittedly, it was originally proposed.
There is no mystery about the origin of the Excess Profits Levy. Everybody knows that it owes its origin to a phrase in the Conservative manifesto, giving a pledge that steps would be taken to deal with fortuitous rises in company profits because of the abnormal process of rearmament. May I say at once that I think that was a very worthy sentiment and I agree with it, and I do not think that it is any the worse for the fact that it was included in the Conservative Party's election manifesto. I do not think that the Chancellor should be criticised for having made an attempt to carry it into effect.
I think that it is laudable that an attempt should be made to carry out election promises; but what I do seriously ask the Chancellor to recognise is that he must now face a dilemma of his own. Either the Excess Profits Levy can be confined to the companies which will make fortuitous and abnormal profits, or it cannot. I feel that if the levy can be confined in that way, and if we can isolate and segregate companies which will quite obviously make huge profits in the next few years as a result of the rearmament drive, then, not only on moral grounds but on economic grounds, it would be a good thing to do. In other words, if we can cream off the huge profits made by armament companies, I would support it. I would go further. I think that in that case one should increase the rate of the Excess Profits Levy.
But I think that the Chancellor, if he can isolate it in that way, obviously ought to accept this Amendment, because he will then carry out both the moral and the economic purpose which inspired the Amendment. If the Chancellor, on further reflection, takes the view that he cannot restrict the operation of the levy to companies making these abnormal profits because of the defence programme, then he has two alternatives.
The Chancellor on Tuesday indicated that his view was that he could not restrict it to re-armament companies. If
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that is his view, he is in this dilemma: either he should drop the levy altogether, which is what I think is the right thing to do, or he must proceed with a levy which is almost universally condemned both because of the injustice it causes and equally because of the grave injury it will do to our trade and industry.
I hope that the Chancellor by this time recognises that the various objections that were put forward by Tory back benchers and outside to an Excess Profits Levy would have no relevance if the levy could he confined to re-armament companies, because, in that case, arguments about ploughing back profits into industry, encouraging enterprise and encouraging exports do not arise. These considerations are relevant only because the Chancellor has made this levy applicable to all companies, regardless of whether their activities are directly or indirectly related to re-armament.
Therefore, this Amendment, which I feel deserves the support of all Members on the benches opposite as well as the support of Members on these benches, is designed to try to extricate the Chancellor from the difficulty which he is in. I sympathise with him. I am sure that all hon. Members who read the "Financial Times" yesterday must have been impressed by the scathing indictment of the Chancellor's proposals delivered by one of the leading Conservative newspapers, the chief financial organ in this country. The "Financial Times" said—and this is the point that I am making:
"The tax has long since lost any relevance it ever had to re-armament profits."
The Chancellor himself has conceded that. It went on:
"But beyond it lie two other questions which are complex and profoundly disturbing. The amendments which the Chancellor has tabled amount to self-criticism on a totalitarian scale. How did he come to lay himself open to such a humiliating experience?"
It is not for me to attempt to answer that question, but it is worth the Committee's while to ponder it. We have here an opportunity to help the Chancellor to extricate himself from this very embarrassing situation. It is obvious that he finds himself in a terribly humiliating situation, condemned by all responsible opinion on both sides of the Committee and throughout the commercial community and the country as a whole as a

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Conservative Chancellor of the Exchequer because he has made a laudable attempt, as I believe it to be, to carry out an Election promise. I hope he will not suffer unduly for that, and I hope the country will not be made to suffer merely because the Chancellor thinks it necessary, for political reasons, to try to adhere to that policy.
I shall not repeat the details upon which the levy has been criticised throughout the country and by hon. Members opposite because of the administrative chaos it will produce and the hardship and injury it will inflict upon companies of all kinds, but I would say that the levy is unnecessary. The Chancellor could produce precisely the same results through the medium of the Profits Tax, and, in some ways, far more satisfactory results. If he could cream off the profits merely of the re-armament companies, I should support him. But he does not take that view. He says that he must extend it generally. If he does that, he must deal with the very cogent criticisms which have been uttered.
I appeal to the Chancellor in all seriousness. He must know by now that this is a thoroughly bad and thoroughly indefensible tax. He must know that he can quite well get the revenue he is hoping to get by a further modification of the Profits Tax if he wishes it. He must know that his original ambition to introduce a simple Excess Profits Levy cannot now succeed. This tax in its modified form is not only full of all the cumbersome complications of the old Excess Profits Tax, but is even more complicated.
The Chancellor must face the dilemma. Either he must perpetuate the injustice and the injury to our trade and industry, or he must do the right and courageous thing and abolish it before it is too late. He is a courageous man. We all admire his courage in taking unpalatable decisions. There are plenty of precedents for a Chancellor modifying a budget as he goes along and for scrapping a tax which, in the face of informed, intelligent criticism, is found to be unworkable. The Chancellor must either accept the Amendment and try to make it work—it is designed to be administratively possible—or, if he takes the view that he cannot do that, the only rational alternative is to scrap the Excess Profits Levy.
4.15 p.m.
Mr. Gerald Nabarro: On Clause 31 of the Finance Bill the Committee accepted the principle that there shall be an Excess Profits Levy. As we have accepted that principle, it is important that the tax should be applied in a practical form and without the kind of difficulties which would arise if the proposals of the hon. Member for Islington. East (Mr. E. Fletcher) were adopted.
I hope the Committee will reject the Amendment. There are three reasons which make it totally impracticable from an industrial and commercial point of view. The first is that the armament industry is principally concerned with engineering. The engineering industry of the United Kingdom is very largely based upon a complex system of sub-contracting. Practically all the large engineering firms which have received armament contracts rely to a very large extent upon hundreds of sub-contracting units. Thus. it is impossible to say that there is, on the one hand, an armament industry and, on the other hand, a sector of British industry that is not concerned with armaments. It is impossible in the case of hundreds of small sub-contractors in the engineering industry to say what part of the output of each one is devoted directly or indirectly to armaments and what part is devoted to normal civil purposes.
The second reason why the hon. Gentleman's proposals are unacceptable and impracticable is that the infusion of hundreds of millions of pounds' worth of armament contracts into our economy as a whole must necessarily distort the sales and production programmes of practically every industrial company in the country, whether they are directly concerned with re-armament business or not. This must have an effect upon the normal course of their business and must interfere with the raw materials supply, notably the supply of such materials as steel, non-ferrous metals and other metals and raw materials.
The third reason, which I consider the most powerful one of all, is that there are so many firms in the United Kingdom engineering industry which have a duality of production, part being devoted to armament work and part to normal civil purposes, including the export trade. Take, for example, a company concerned

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with the production of motor cycles. Part of its output is for the export trade, part of it for the home trade and part of it for Her Majesty's Services.
In those circumstances, if the hon. Gentleman's proposals were adopted, at the end of each chargeable accounting period the accountants of the company would have to analyse that part of the profits which were attributable to normal civil production, whether in the home market or for export, and that part attributable to Government contracts.
That would be nearly an impossible task, and it would merely aggravate one of the existing difficulties of the Excess Profits Levy to which the hon. Member for Sowerby (Mr. Houghton) and I drew attention on Clause 31, that of assessing the liability to the Excess Profits Levy. I am anxious that no hon. Member should aggravate that situation, and make the Chancellor's task more difficult, by piling complexity upon complexity. I hope, that, for these three simple reasons, the Committee will reject the Amendment.
Mr. Anthony Crosland: The hon. Gentleman the Member for Kidderminster (Mr. Nabarro) has made some extremely important practical points, but I can assure him that those of us who put down the Amendment were aware that this would be a difficult tax to adminster as amended like this. However, we took the view that the Amendment was so important, and that the exclusion of non-re-armament excess profits from the tax would be so beneficial, that we were prepared to accept the additional administrative and practical difficulties involved in order to achieve that result.
I would point out to the Committee that the Amendment does not place on the Inland Revenue initially the responsibility of examining the accounts of every company and of determining whether or not those extra profits are due to re-armament or some other cause. The responsibility is laid on the body corporate to satisfy the Special Commissioners that their profits are not attributable either directly or indirectly to rearmament.
I am glad that my hon. Friend the Member for Islington, East (Mr. E. Fletcher) moved this Amendment in such
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a charitable tone of voice and frame of mind. He made clear that this Amendment is designed to assist the Chancellor. There is a considerable amount of support for him on this side of the Committee in the difficulty in which he finds himself, and while I need hardly say that all our Amendments and interventions from this side are designed to be helpful to him, this Amendment is designed to be particularly helpful to him.
The genesis of this tax is a matter of common knowledge and has been the subject of comment in a good number of speeches from this side of the Committee. But it is certainly getting to a ludicrous situation when, in a Budget which was brought forward weeks before the normal time of introducing a Budget, right at the last minute these very substantial Amendments are still having to be made to what is, after all, the largest and most important section of the Bill. And the consequence of this very ill-considered proposal and the constant flow of Amendments has been that this Excess Profits Levy has been the subject of more unanimous criticism than any tax proposal in any Budget within living memory—unanimous criticism from every political complexion and every variety of interest concerned.
My hon. Friend the Member for Islington, East quoted the extremely damning and damaging leading article in yesterday's "Financial Times" which began by saying what is undoubtedly true and fair comment:
"The chronicle of the Chancellor's amendments to his own E.P.L. proposals has now reached a ludicrous length."
We think that it has reached such a ludicrous length that the best thing would be to scrap the greater part of the Amendments already tabled by the Chancellor and to adopt our own suggested Amendment which would enormously simplify and improve the whole tax.
Everybody admits that the tax is better as a result of many of the Amendments but it still nevertheless remains an extremely dangerous and damaging form of taxation. I do not personally think that the main damage will be done for the reasons which the hon. Member for Oldham, East (Mr. Horobin), and others suggested to the Committee two days ago.

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I am not so concerned with the general weight of profits taxation on companies as a whole. I am much more concerned with the general principle involved in the taxation of expanding industries and efficient firms, and so far as that is concerned, although the position is improved as a result of some of the Amendments, it is still very serious.
Take two extreme examples of how companies will fare under this tax, companies which have nothing to do with rearmament whatsoever. One example, which I ventured to quote during the Budget debate, is that of brewery companies. Broadly speaking, the profits of brewery companies have been more or less constant over the last few years. But the result of imposing this levy and the changes in the Profits Tax—and this is still true even after the modifications announced by the Chancellor two days ago—is that brewery companies, which have no particular claim to be assisted by the Exchequer at this moment, will pay less in profits taxation than before. On the other side, I think all hon. Members have plenty of examples of expanding efficient companies which should be encouraged, but which are in fact being penalised.
I would quote one case, that of long-playing records. Those who are interested in long-playing records will know we were already a considerable way behind the United States in this, and then four years ago, as will be known to many hon. Members, Decca in this country was the British firm which first developed long-playing records. During the whole of the standard period they were making no profits on this new venture whatever. As any prudent and efficient company would, they were concentrating on building up for the future and so they were making no profits on these records during those years.
After the standard period was over—this company is particularly unlucky but there are many others in the same difficult position—they began to expand their sales, both at home and in the export market. The phase of development was over, output was expanding and sales began. They are now being penalised for the profit they made in 1950 and 1951 and will make in future years as a result of their foresight and efficiency in
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developing this very important new innovation—new at any rate in this country—during the standard years. It so happens, and this is not uncommon, that about a quarter of their export sales since the standard period have gone entirely to the dollar market, to the United States and Canada.
Those are two examples of cases which show how damagingly this tax must operate. Companies which have shown no expansion since the standard period will find themselves actually paying less tax than before, while companies which have done what everybody was asking them to do are taxed on their marginal profits. That is why we have put forward this proposal to exclude companies where the additional profits are not directly or indirectly due to re-armament, to exclude profits from expansion, efficiency, innovation and the like, and on the grounds of logic, to exclude additional profits made as the result of devaluation.
As hon. Members know, the effect of devaluation, so far as many exporting companies were concerned, was greatly to increase their export profits. This was half the point of devaluation. It was desired by the then Chancellor of the Exchequer. Now they are being penalised for that fact. All manner of causes of profit, as it were, are coming into this in addition to re-armament, and we want to exclude them.
Our attitude to profits taxation is inevitably different from the attitude of hon. Members opposite. We do not take such a gloomy view as many hon. Members opposite about the total weight of taxation on industry. We do not take the same view as hon. Members opposite of the damaging results on the capacity of industry to re-equip, to modernise and the like.
We certainly have no objection to—indeed we strongly approve in principle of the idea of—a heavy weight of taxation on profits. We do not think that all savings should be in the form of private corporate saving, since we believe that this may have undesirable distributive effects. But we object as strongly as we can to the principle of taxing marginal profits, extra profits. A tax as far as possible should fall on average profits and not be heavier on additional profits than on the lower earlier levels of profits.

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That is why we are proposing this Amendment in all seriousness. It will give an opportunity for doing exactly what the Chancellor and the country want so far as fortuitous re-armament profits are concerned, and will avoid the damaging results to the rest of civil production which otherwise will follow.
Mr. J. Grimond: I agree very much with what the hon. Member for Gloucestershire, South (Mr. Crosland) has said about the inadvisability of taxing marginal profits, and also with what he said about the effect of inflation, which I do not think has been stressed enough in previous debates on this levy.
4.30 p.m.
I would add to what he said that a result of this very high rate of tax on marginal profits will be to encourage companies not to go in for risk-bearing schemes of enterprise but to encourage the type of expenditure which the Chancellor himself may well think is wasteful. A company faced with the alternative of paying for new machinery and taking all the risks of branching out into new processes or, on the other hand, spending an equivalent amount of money on redecorating its board room, may come to the conclusion that it is preferable to spend it on the latter, because so much of the profit made out of its enterprise may be taken away.
The Chancellor must feel much encouraged by the offers of help and sympathy which he is always receiving from this side of the Committee. Sometimes those offers are in acute contrast to what he hears behind him. In view of what he was stressing in his speech a few days ago—that this tax was introduced for moral reasons in order to tax excess profits made out of armaments—I have no doubt that he has great sympathy with this Amendment. In fact, I am sure, in the light of that speech, that he will be prepared to vote at least for the principle contained in it.
Before I say a few words about the principle, however, I should like to say that I am a little puzzled why this Amendment is proposed to be inserted in this particular place. I hope the mover of the Amendment will correct me if I have misunderstood his intention, but it seems
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to me that he is seeking to insert a new paragraph to subsection (4) of Clause 32. The three paragraphs which are already in subsection (4) deal with companies which are controlled and do business outside this country, and I am not sure that, if this Amendment were inserted, it would not really only apply to those companies which are either trading or controlled, or both, outside this country. I do not know whether that is the hon. Gentleman's intention.
Mr. E. Fletcher: It would apply to all companies.
Mr. Grimond: I thought that was the intention but I was surprised that it was not proposed to insert the Amendment as a new subsection (5). I must confess that I think the objections made by the hon. Member for Kidderminster (Mr. Nabarro) are extremely powerful. It would be entirely impossible to decide whether the excess profits were made on armaments, and it would put an immense extra burden on the Revenue. I am told by companies that already they are faced with having to draw up four sets of accounts, and this might involve them in a fifth set of accounts in which to record their profits earned from armaments apart from other profits.
I should like to say a word or two on this wider issue of the tax on armaments, because the Chancellor laid tremendous stress on the fact that this levy is imposed on a moral basis. I think the Committee should accept this argument with some suspicion. It seems to me that if it is wrong to make profits out of armaments. it is wrong to make any profits out of armaments at all, and I find it difficult to accept the moral argument that it is all right to make so much profit—5 per cent. or 6 per cent.—but not 10 per cent.
Mr. Nabarro: If the hon. Gentleman considers that it is immoral to make profits out of armaments, what does he suggest the armaments companies should do when they finish making armaments and want to go back to civil production?
Mr. Grimond: I have not said it is immoral to make profits out of armaments. I said that if we take that view, I do not see how we can draw the line. The logical conclusion of the argument must be to nationalise the armaments industry. I think that is impossible, but

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that would appear to be the logical conclusion of the argument. I must say that the Chancellor is on dangerous ground. His argument leads straight to nationalisation of a very large section of the industry.
Furthermore, can it be said seriously that a company which was making high profits in the standard years can continue making high profits out of armaments today without any moral imputation against it at all, but that if a company happened to be sufficiently enterprising during the standard years to retool, say, and is now able to take advantage of its enterprise, it is therefore immoral? It may be said that profiteering is immoral. But then a company ought not to be able to make large profits out of the public or Government contracts at any time, whether on re-armament work or not.
My answer to that is that the Government should examine more carefully the costing of their contracts, and in suitable cases should make stronger use of the Monopolies Commission. I must say there is a contrast between their attitude to this levy, when they talk about the moral importance of keeping profits low, and their attitude to the electric lamp manufacturers whom they are prepared to allow to continue making profits without bringing them before the Monopolies Commission.
I feel that if we are going forward with a system of private enterprise, we have got to pursue it with some degree of logic. Of course, we have got to have private enterprise. I think that companies have got to be allowed to make some profit under that system out of armaments, and if they can set aside some part of their profits to their reserves for the future, that is a very good thing and will meet the point of the hon. Member for Kidderminster that when the re-armament drive is over such companies should have something in hand.
I personally think that we shall have to continue making arms for some considerable time. I think the Chancellor is again on dangerous ground when he says that this is only a temporary tax and that in a year or two it will be taken off. We should all like to feel that rearmament will end in a year or two, but we should all be unwise to pin our economic thinking to that assumption.
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This Amendment and what the Chancellor has said face us with one of the gravest problems about this tax. We cannot justify this tax as a tax on re-armament only. Therefore, what is the justification for it? It is going to penalise all developing companies. The only justification that I can see is that it may possibly be of some temporary use as an argument for wage restraint, but I would urge upon the Financial Secretary, when we come to discuss the further innumerable Amendments on the Paper, not to use this moral argument, and to realise that in all quarters of the Committee there is grave disquiet about this tax and great anxiety to minimise its ill effect so far as we possibly can.
The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): I think it was, after all, fortunate that the hon. Member for Islington, East (Mr. E. Fletcher), despite his manifest coyness on Tuesday night, was persuaded of the immense interest of-this Amendment. As the hon. Member for Orkney and Shetland (Mr. Grimond) has pointed out, the Amendment might well have an effect of a totally different character from that which, according to its mover, is its purpose.
I am bound to say that when I first looked at the Amendment on the Order Paper, and in particular at that aspect of it to which the hon. Member for Orkney and Shetland has referred—that is to say, the proposal to insert certain words in that part of the Clause relating to overseas companies—it looked to me as if what the hon. Gentleman was trying to do was to insert one further condition which had to be satisfied if the companies in that subsection were to have the advantage which they are being given.
It was, therefore, after all, fortunate that the hon. Gentleman was able to move his Amendment and explain that what he wanted to do was to bring forward a general point relating to the exemption of any excess profits which could be said to arise neither directly nor indirectly from re-armaments. The hon. Gentleman will appreciate that I am making no reference to any point of a drafting nature. I am only too well aware of the difficulty, when in opposition and without the technical resources available to the Government, of drafting Amendments of this character, but I take it

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that it is the wish of the hon. Member and of the Committee that we should deal with this Amendment on the basis that it seeks to raise that particular issue and not on its meaning if it was strictly construed.
What the hon. Gentleman seeks to do is to give to the bodies corporate concerned the right to go to the Special Commissioners to seek to establish that their excess profits were neither directly nor indirectly attributable to re-armament and, if they succeed in that task, then to exempt them from this tax. I think I correctly interpret what the hon. Gentleman was seeking to do, and I equally take it—because he said so—that in so doing he meant to help them.
The first question which poses itself to the Committee on that basis is whether what the hon. Gentleman is seeking to do, leaving aside whether it be wise or unwise, practicable. I am sure that hon. Members will, in making up their minds about that, give some weight to the fact that exemptions of this character are not to be found in previous excess profits legislation, nor have they found their place in such legislation of other countries.
The nearest attempt to do so was, I suppose, the Munitions Levy of the 1914-18 war which, as the hon. Member will no doubt recall, did not confer any exemption on non re-armament profits; it merely proposed either an addition or an alternative tax on top of the old E.P.D. Equally the Armaments Profits Duty of 1939 never came into effect.
Mr. E. Fletcher: Was not the hon. Member aware of that at the time the manifesto was prepared, and is it not a fair assumption that some way of getting over it was found?
Mr. Boyd-Carpenter: I am sure that the hon. Member is trying to be helpful, but it would be a little more helpful if I might come to his remarks on the manifesto at the appropriate place in my argument. I am asking him to bear in mind the fact that whether his objective is sound or not, it has not been found possible to achieve it in any proposed tax of this character. Members will attach some weight to that consideration.
692
The difficulty, of course, arises in this way: How would it really be possible to establish that any particular set of profits were, in the hon. Member's own words, neither directly nor indirectly attributable to re-armament? The hon. Member himself said, on Tuesday night, when he decided to move this Amendment, that it would be a very heavy onus indeed on the applicant.
The problem is surely, as my hon. Friend the Member for Kidderminster (Mr. Nabarro) has so clearly and forcibly shown, that if there is put into our economy the large amount of purchasing power which a re-armament programme on the present massive scale puts into it, it is a matter of the utmost difficulty to mark or de-limit the final point at which the flow of that purchasing power ends.
Hon. Members may recall that on the Second Reading of the Bill I tried to deal with this issue by way of an example. I instanced a case of the setting up of a munitions factory near a small provincial town, resulting in the bringing in of a number of additional workers at high wages. That would bring immediate benefit to the retail traders, the entertainment caterers, and, in the absence of the hon. Member for Ealing, North (Mr. J. Hudson), I might add the licensed victuallers of the town in question.
None of these are people who are in the ordinary sense what one thinks of as armament makers or as being concerned with armaments. Yet all these three categories of people would benefit from the flow of purchasing power from the Exchequer to the armaments industry, and from the armaments industry to its workers, and from its workers to them. That example shows how difficult it would be in practice to de-limit or mark the limits of this re-armament expenditure.
There are all the obvious complications to which my hon. Friend the Member for Kidderminster referred. What about the company engaged partly on armaments and partly on civil work? The obvious example that springs to mind is that of the great aircraft firms which, we are all proud to reflect, are at the same time building the finest military and the finest civil aircraft in the world. It would be a matter of the utmost difficulty

693
to say not only what profits related to what type of aircraft but, in the case of an intermediate type of aircraft such as trainer aircraft, whether they were military or civil. Equally the job of arranging what figures were to be set off against what set of receipts would provide full employment for the accountancy profession almost to the end of time, but it would serve little other purpose.
What about the manufacturers of components which are useful for civil or military purposes, some of which are used for military purposes? What about their position? What about transport services or public utility services? They gain indirectly from the armament expenditure. When one reflects on such considerations, it will be appreciated that the task which it is suggested should be discharged by the bodies corporate to meet the terms of this Amendment would really be an impossible one.
4.45 p.m.
The hon. Member may say, "If that be so, what harm is there in accepting this Amendment and letting them attempt the impossible?" I do not think that this Committee ought to legislate in that way. I do not think it would be right for us to put into an Act of Parliament a principle which we did not believe to be a reality. I do not think it would be right to suggest to these people that they would have some success in arguing their case. It would be wrong to give them this inducement to argue a case which, the more one looks at it, the more impossible it appears.
The right hon. Member for Leeds. South (Mr. Gaitskell), in one of his Budget speeches, dealt at some length with the effect of a general change in the economic climate and the universality of the effect of general changes in the economic climate. Re-armament expenditure on the present scale has that effect on the economic climate. I think that the task embodied in this Amendment would be an impossible one, and I would stress that if it is impossible, if hon. Members come to the conclusion that it really cannot be done, it would be completely irresponsible and frivolous to put a provision based on a possibility that it could be done in the Finance Bill this year.
The hon. Member for Islington, East was good enough to remind me of our
694
Election manifesto. I think that some reference was made by him or by some other Member to this subject on Tuesday. Let me remind him of the actual words of the manifesto. They were:
"We shall set our face against the fortuitous rise in company profits because of the abnormal process of re-armament."
There is not a word there to suggest that a tax based on that declaration would be limited to firms concerned with rearmament. Surely what it suggests, and indeed makes perfectly clear, is that the process of re-armament on this scale will affect what the right hon. Member for Leeds, South, called the economic climate; that it will, by pouring in this enormous amount of purchasing power, affect the whole working, of our economic system.
Therefore, it is right to base the tax upon the fact that it will go right through our economic system. Accordingly, although it is always agreeable to be reminded of the impressive document from which those words came—and I express my gratitude to the hon. Member for the trouble he has taken in so doing—the words, looked at in their ordinary commonsense meaning, are perfectly clearly far more consistent with the text of the Bill as now brought forward than with the text as it would be if the hon. Gentleman succeeded in having his Amendment carried.
Of course, as my hon. Friend the Member for Kidderminster said, a proposal of this sort would have the fundamental effect of wrecking the tax. The hon. Member for Gloucestershire, South (Mr. Crosland), was perfectly frank. He does not like the tax, and he is perfectly logical in supporting the Amendment on those grounds.
Mr. Crosland: Before the hon. Member leaves the point of the Conservative manifesto, of which I am bound to say I do not think he has made a very plausible defence, might I ask him whether he does not agree that that manifesto makes it quite clear that the intention is not to tax excess profits which are not due to this injection of purchasing power as a result of re-armament, of which the hon. Member has spoken? That is the clear intention of the manifesto, whereas this proposal does tax excess profits which have nothing to do with this injection of purchasing power as a result of re-armament.
Mr. Boyd-Carpenter: The hon. Gentleman is intelligent enough to know that he is begging the whole question of whether there are such profits. If we accepted the hon. Gentleman's view, which he implied by his support, that we can cut out certain profits and say, "These have nothing to do with re-armament," there might be some force in his contention. It is not easy to say whether certain profits are the result of re-valuation or of re-armament. The only commonsense meaning of the words is that we shall take out in taxation some amount of the extra profits which, throughout the economy, result from the very large public spending which the re-armament programme produces.
Mr. E. Fletcher: Is the Financial Secretary now saying that the Conservative Party manifesto did not make it clear that the tax was to be limited to fortuitous profits?
The Chairman: I have allowed a very wide debate, but I think it is now going a little too far.
Mr. Boyd-Carpenter: I have to accept your Ruling, Sir Charles, and I do so with regret, as I should have said that it was quite clear that it was intended to introduce a tax of the same general character as its predecessor.
Mr. Fletcher: As the Amendment arises almost entirely out of a passage in the Conservative manifesto, should we, in this short debate, be completely precluded from referring to the manifesto?
The Chairman: I have allowed hon. Gentlemen to refer to it, but we cannot debate the manifesto.
Mr. Boyd-Carpenter: I can say no more. The words of the Bill are perfectly clear. The essence of the matter is that nobody's ingenuity can isolate the limits of public spending on this scale. What the hon. Gentleman puts forward, be it wise or unwise, is unworkable, and for that reason ought not to go into the Finance Bill.
Mr. Douglas Houghton: The Financial Secretary, courageously and fully, made out an overwhelming case against the Amendment. The whole time he has been criticising the lack of care used by the Conservative Party in the
696
references made to the tax in their manifesto. The words which they are writing into the Clause are only a few Conservative chickens coming home to roost.
I do not rise to give the Chancellor any assistance but to support the Amendment, and not because it will make a bad tax better, but because it will make it a great deal worse, quite unworkable. That seems to be the sole merit of the Amendment; something the Financial Secretary failed to destroy in his argument. He referred to the number of undesirable consequences of the Amendment, but they are as nothing to the number of appellants who would be lined up at the office of the Special Commissioners if the Amendment were carried. From a practical point of view, it is clear that the Amendment would make the Excess Profits Levy unworkable, and that is why I am adding my support to it.
I agree with the Financial Secretary as to the difficulty of distinguishing between profits which are fortuitous and profits which are not, between profits which fortuitously arise from re-armament and those which fortuitously arise from something else. I suppose it could be argued that the excess profits of the printers of pacifist literature or the voluminous appeals of the British Peace Committee could be considered as arising out of re-armament, and that they should be taxed, even under the Amendment. On the other hand, speculative builders who are about to make fortuitous profits, not out of rearmament but out of the fortuitous return of the Conservative Government, might think it unjust that an excess profits tax should be levied on them, outside the scope of the Bill.
We all appreciate that, in talking about an absurd tax, one can indulge in absurdity until the cows come home. The Chancellor of the Exchequer has announced concessions which will substantially reduce the yield from the tax and have compelled him to re-impose some part of the Profits Tax which he otherwise would have lifted. If he were to look again at the whole situation, he would find that he can get extra money by closer administration of the taxes we already have. That is what worries me. While the machinery and personnel of

697
the Department are mastering the complexities of this new tax, they are bound to relax their close attention to other branches of taxation which would yield substantial revenue.
I feel that in all this I have with me the hon. Member for Kidderminster (Mr. Nabarro), whose appointment as next Chairman of the Board of Inland Revenue I should warmly welcome. He and I see things very much from the same point of view. He has helped by drawing attention to the problems of administration. Despite the great ability with which the Financial Secretary demolished the Amendment, the hard core of it remains untouched. It is a wrecking Amendment, and for that reason I support it.
Mr. Douglas Jay: The Government have put us in an extraordinary position. The Financial Secretary has just argued that it is impossible to impose a tax on profits which would tax only re-armament profits. Our complaint—that is why we are pressing this Amendment as a protest—is that in that case that the Conservative Party should never have put the pledge in their manifesto.
The Financial Secretary has just put a gloss on the words in the manifesto:
"the fortuitous rise in company profits because of the abnormal process of rearmament."
The Financial Secretary now tells us that the profits referred to, and which the Government wish to tax, are those resulting over the whole economy from the rearmament programme. Is that a correct interpretation? I gather that the hon. Gentleman agrees that it is. Then it is contrary to what the Chancellor of the Exchequer said in the debate on Tuesday. He said:
"What is this tradition of the Conservative Party? It is that if we see—as we said in our Election programme—fortuitous profits made out of re-armament, we consider that they should be taxed, and that all taxation should be in the general interest of the body politic."—[OFFICIAL REPORT, 20th May, 1952; Vol. 501, c. 384.]
Therefore, it is clear that the argument of the Financial Secretary today is quite unconnected with what the Chancellor said the other night. I prefer to accept the version of the Chancellor as the true reason of the Government for this tax.
698
5.0 p.m.
In that speech the Chancellor made two quite contradictory assertions in commending the tax to the House. That contradiction has become even more glaring after the speech we heard from the hon. Gentleman this afternoon. First the right hon. Gentleman said that the whole basis of the tax was moral, and he assumed an air of tremendous ferocity and talked about "merchants of death" and so on. It is true he spoiled that a moment afterwards by using the phrase "But speaking for a moment quite seriously." He then told us that the tax for which there was this terrific moral case was impossible to impose in practice. That seemed a remarkably contradictory way of commending a tax to the Committee, and we have put down this Amendment by way of exploration.
In his attempt to carry out the Election manifesto, the Chancellor is imposing a tax which we all know to be a bad tax. Hon. Members on both sides of the Committee, tax experts, and almost the whole Press, know that this switch over from Profits Tax to E.P.L. is bad in every way. It is a tax which relieves companies who are making no increased profits, such as brewery companies, when there is no reason for doing so. It falls more heavily on the efficient and expanding company. It encourages waste, and imposes an unnecessary and indefensible burden on the Inland Revenue and accountants, who would be better occupied.
That is the stage we have reached. Simply because of that sentence in the manifesto, the Chancellor is impelled to impose this tax on the country. Therefore, we are entitled again to inquire, how did it come about that this sentence was included in the Election manifesto, because that is the source of the trouble. I do not think one has to examine the document very closely to be perfectly certain that here again the guilty man is the right hon. Gentleman the Prime Minister. We were told at the time—
The Temporary Chairman (Sir Austin Hudson): I hope the right hon. Gentleman will not go too far into the question of Election manifestos.
Mr. Jay: I shall not go too far, Sir Austin. This document was sent out to the right hon. Gentleman when he was on holiday in Italy and was signed by

699
his own hand. The right hon. Gentleman made extensive alterations in the document. One only has to read the prose style of this paragraph and the following one to have little doubt on this point. I notice that the Chancellor is not denying this allegation.
The fact of the matter is that it was the Prime Minister who committed the crime, and the Chancellor complacently agreed to take over the corpse when the Government were formed. In fact, on Tuesday, in the interests of the Prime Minister he obligingly made a false confession here; because I cannot really believe that he is any more a supporter of this tax than the rest of us. He seems to have received a reward for that, because I observed that the same day the Prime Minister, in making a speech elsewhere, said that the Chancellor, the Foreign Secretary and the Minister of Housing and Local Government were all doing very well. I thought there were some rather significant omissions. The Leader of the House was not mentioned, nor Lord Woolton nor Lord Leathers and some others, but I will not pursue that matter now.
What a piece of frivolity and irresponsibility this really is. The Chancellor is asking us this afternoon to pass a tax which we all know to be inefficient and undesirable. He is forcing through a tax we all know to be bad in the face of opinion on every side of the Committee. I suggest to the Chancellor that he has a last hope, that there is still a possible way out. The Prime Minister has enunciated a doctrine about passages in Election manifestos which the Chancellor may have overlooked, but which in this debate might come to his rescue. Some hon. Members may remember that the Prime Minister said:
"I do not admit as democratic constitutional doctrine that anything that is stuck into a party manifesto thereupon becomes a mandated right.…"—OFFICIAL REPORT, 7th February, 1951; Vol. 483, c. 1748.]
Mr. Crosland: On a point of order, Sir Austin. Is there any method by which instructions can be given to draw the blinds? As a result of sitting up all night, night after night, studying this Finance Bill, the sudden blinding sun is beginning to make me feel extremely sick.
Mr. Jay: I was trying to help the Chancellor, as we all are throughout this debate, by reminding him that the Prime Minister has enunciated the doctrine that nothing is binding just because it was "stuck" into an election manifesto—to use his own words. Indeed, he said that if that principle were accepted, why should we not "shove" more items in? Therefore, the Chancellor need not ride roughshod over the Committee and over the experts just because the Prime Minister "shoved" that unfortunate sentence into the manifesto.
What these debates have shown, and what is proved by the leading article in the "Financial Times" of yesterday, is the rightness of the policy we in the Labour Government followed in raising the straight Profits Tax, which falls as a straightforward percentage on all companies, of whatever sort, and not as an extra, heavy tax on those which are expanding and increasing their profits.
By the Amendment he is now making, and by taking a step back towards the Profits Tax, the Chancellor is admitting the rightness of the policy we followed throughout those years. I do not know whether the Chancellor remembers, but after devaluation in the autumn of 1949, instead of imposing a tax like this E.P.L., we raised the distributed rate of the Profits Tax. The right hon. Gentleman argued against that from this side of the House, and I tried to convince him with the arguments which he has now accepted in making the Amendments he introduced so hurriedly this week.
Now that we have learned that it is impossible to carry out the intentions of the manifesto—on the interpretation of the Chancellor and not on that of the Financial Secretary—and bearing in mind the escape clause of the Prime Minister of which I have reminded him, is it really too late to decide what we all know is the right thing to do, namely, to drop this absurd tax altogether and to raise the Profits Tax instead? The Chancellor could get the revenue that way. He could save a great deal of burden and trouble to all sorts of people, and we all know that it would be a far better arrangement.
I can guarantee to the right hon. Gentleman that, in spite of all the language about vacillation, clumsiness and un-skilful Government in the "Financial

701
Times" yesterday, if he were to do that we would undertake not to accuse him any further, in that matter anyway, of further vacillations, hesitations and indecision; and we would give him our support both in increasing the Profits Tax and in sweeping away the remainder of E.P.L. in the Bill.
Like the right hon. and learned Member for Montgomery (Mr. C. Davies), I happen to be one of those who took part in a modest way in the campaign against the N.D.C. in 1937. We who were then the critics suggested to the then Chancellor, Mr. Neville Chamberlain, that he should sweep away this tax, with its capital standard and all the rest, and substitute a simple corporation profits tax, as it was termed in those days, of, we suggested, 5 per cent.
In fact, Mr. Chamberlain at about this stage of the Finance Bill, attacked from this side of the House and also by the then "Financial News," changed his mind, agreed to accept that and introduced—the hon. Member for Oldham, East (Mr. Horobin) recalls this controversy—what was the National Defence Contribution throughout the war, which has become the present Profits Tax. Everybody applauded him for doing so. So I end by again asking the Chancellor whether he could not benefit by that example and still do what everybody knows he ought to do this afternoon.
Question put, "That those words be there inserted."
The Committee divided: Ayes, 212; Noes, 242.

Division No. 143.]

AYES

[5.12 p.m.

Acland, Sir Richard

Ewart, R.

Lee, Miss Jennie (Cannock)

Albu, A. H.

Fernyhough, E

Lever, Leslie (Ardwick)

Allen, Arthur (Bosworth)

Field, W. J

Lewis, Arthur

Allen, Scholefield (Crewe)

Fienburgh, W

Lindgren, G. S.

Attlee, Rt. Hon. C. R.

Finch, H. J

Lipton, Lt.-Col. M

Awbery, S. S.

Fletcher, Eric (Islington, E.)

Logan, D. G.

Ayles, W. H.

Follick, M.

MacColl, J. E.

Bacon, Miss Alice

Forman, J. C.

McGhee, H. G.

Balfour, A.

Fraser, Thomas (Hamilton)

McKay, John (Wallsend)

Bartley, P.

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

McLeavy, F.

Bellenger, Rt. Hon. F. J.

Glanville, James

MacMillan, M. K. (Western Isles)

Bence, C. R.

Gordon Walker, Rt. Hon. P. C.

MacPherson, Malcolm (Stirling)

Benson, G.

Greenwood, Anthony (Rossendale)

Mainwaring, W H.

Beswick, F.

Greenwood, Rt. Hn. Arthur (Wakefield)

Mann, Mrs. Jean

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

Grey, C. F.

Manuel, A. C.

Blackburn, F.

Griffiths, David (Rather Valley)

Marquand, Rt. Hon H. A

Blenkinsop, A.

Griffiths, Rt. Hon. James (Llanelly)

Mayhew, C. P.

Blyton, W. R.

Griffiths, William (Exchange)

Messer, F.

Boardman, H.

Hale, Leslie (Oldham, W.)

Mitchison, G. R

Bottomley, Rt. Hon. A G

Hall, Rt. Hon. Glenvil (Coin Valley)

Monslow, W

Bowden, H. W.

Hall, John (Gateshead, W.)

Moody, A. S.

Braddock, Mrs. Elizabeth

Hamilton, W. W

Morgan, Dr. H. B. W.

Brockway, A. F.

Hannan, W.

Morley, R.

Brook, Dryden (Halifax)

Hargreaves, A.

Morris, Percy (Swansea, W.)

Broughton, Dr. A. D. D.

Hayman, F. H.

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

Brown, Rt. Hon. George (Belper)

Healey, Denis (Leeds, S.E.)

Mort, D. L.

Brown, Thomas (Ince)

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

Moyle, A.

Butler, Herbert (Hackney, S.)

Herbison, Miss M.

Mulley, F. W.

Callaghan, L. J

Hobson, C. R

Murray, J. D.

Champion, A. J

Holman, P.

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

Chetwynd, G. R.

Holmes, Horace (Hemsworth)

Oldfield, W. H.

Clunie, J.

Houghton, Douglas

Oliver, G. H.

Cocks, F. S.

Hoy, J. H.

Orbach, M.

Collick, P. H.

Hubbard, T F.

Oswald, T.

Corbet, Mrs. Freda

Hudson, James (Ealing, N.)

Padley, W. E.

Cove, W. G.

Hughes, Emrys (S. Ayrshire)

Paget, R. T.

Craddock, George (Bradford, S.)

Hynd, H. (Accrington)

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

Crosland, C. A. R.

Hynd, J. B. (Attercliffe)

Pannell, Charles

Daines, P.

Irving, W. J. (Wood Green)

Paton, J.

Dalton, Rt. Hon. H.

Isaacs, Rt. Hon. G A.

Pearson, A.

Davies, A. Edward (Stoke, N.)

Janner, B.

Plummer, Sir Leslie

Davies, Ernest (Enfield, E.)

Jay, Rt. Hon. D. P T

Porter, G.

Davies, Harold (Leek)

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

Price, Joseph T. (Westhoughton)

Deer G.

Jenkins, R. H. (Stetchford)

Price, Philips (Gloucestershire, W.)

Delargy, H. J.

Johnson, James (Rugby)

Proctor, W. T.

Dodds, N. N.

Jones, David (Hartlepool)

Pryde, D. J.

Donnelly, D. L.

Jones, Jack (Rotherham)

Pursey, Cmdr. H.

Ede, Rt. Hon. J. C.

Keenan, W

Rankin, John

Edwards, John (Brighouse)

Kenyon, C.

Reeves, J.

Edwards, W. J. (Stepney)

Key, Rt. Hon. C W

Reid, Thomas (Swindon)

Evans, Albert (Islington, S.W.)

King, Dr. H. M.

Rhodes, H.

Evans, Edward (Lowestoft)

Kinley, J.

Robens, Rt. Hon. A.

Evans, Stanley (Wednesbury)

Lee, Frederick (Newton)

Roberts, Albert (Normanton)

Roberts, Goronwy (Caernarvonshire)

Swingler, S. T

West, D. G.

Rogers, George (Kensington, N.)

Sylvester, G. O.

White, Mrs. Eirene (E. Flint)

Ross, William

Taylor, John (West Lothian)

Whiteley, Rt. Hon. W

Schofield, S. (Barnsley)

Taylor, Rt. Hon Robert (Morpeth)

Wigg, George

Shackleton, E. A. A.

Thomas, David (Aberdare)

Wilkins, W. A.

Shinwell, Rt. Hon. E

Thomas, George (Cardiff)

Willey, Frederick (Sunderland, N.)

Short, E. W.

Thomas, Iorwerth (Rhondda, W.)

Williams, David (Neath)

Shurmer, P. L. E.

Thomas, Ivor Owen (Wrekin)

Williams, Ronald (Wigan)

Silverman, Julius (Erdington)

Thorneycroft, Harry (Clayton)

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

Silverman, Sydney (Nelson)

Thurtle, Ernest

Williams, W. R. (Droylsden)

Simmons, C. J. (Brierley Hill)

Timmons, J.

Williams, W. T (Hammersmith, S.)

Slater, J.

Tomney, F.

Wilson, Rt. Hon. Harold (Huyton)

Smith, Norman (Nottingham, S.)

Ungoed-Thomas, Sir Lynn

Woodburn, Rt. Hon. A

Snow, J. W.

Viant, S. P.

Wyatt, W. L.

Soskice, Rt. Hon. Sir Frank

Wallace, H. W

Yates, V. F.

Sparks, J. A.

Watkins, T. E.

Steele, T.

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

TELLERS FOR THE NOES:

Strauss, Rt. Hon. George (Vauxhall)

Weitzman, D.

Mr. Royle and

Summerskill, Rt. Hon. E

Wells, Percy (Faversham)

Mr. Kenneth Robinson.

NOES

Aitken, W. T.

Digby, S. Wingfield

Legh, P. R. (Petersfield)

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

Donaldson, Cmdr. C. E. McA.

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

Alport, C. J. M.

Donner, P. W.

Linstead, H. N.

Amory, Heathcoat (Tiverton)

Douglas-Hamilton, Lord Malcolm

Lloyd, Maj. Guy (Renfrew, E.)

Anstruther-Gray, Major W. J.

Drayson, G. B.

Lloyd, Rt. Hon. Selwyn (Wirral)

Arbuthnot, John

Drewe, C.

Lockwood, Lt.-Col. J. C.

Ashton, H. (Chelmsford)

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

Longden, Gilbert (Herts, S.W.)

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

Duncan, Capt. J. A. L.

Low, A. R. W.

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

Duthie, W. S.

Lucas, Sir Jocelyn (Portsmouth, S.)

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

Elliot, Rt. Hon. W. E

Lucas, P. B. (Brentford)

Baldock, Lt.-Cmdr. J. M.

Erroll, F. J.

Lucas-Tooth, Sir Hugh

Baldwin, A. E.

Fell, A.

McAdden, S. J.

Banks, Col. C.

Fisher, Nigel

McCorquodale, Rt. Hon. M. S.

Barber, A. P. L.

Fleetwood-Hesketh, R. F.

Macdonald, Sir Peter (I of Wight)

Barlow, Sir John

Fort, R.

Mackeson, Brig. H. R.

Baxter, A. B.

Fraser, Sir Ian (Morecambe & Lonsdale)

McKibbin, A. J.

Beach, Maj. Hicks

Galbraith, T. G. D. (Hillhead)

McKie, J. H. (Galloway)

Beamish, Maj. Tufton

Garner-Evans, E. H.

Maclean, Fitzroy

Bell, Philip (Bolton, E.)

George, Rt. Hon. Maj. G. Lloyd

MacLeod, John (Ross and Cromarty)

Bell, Ronald (Bucks, S.)

Godber, J. B.

Macmillan, Rt. Hon Harold (Bromley)

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

Gomme-Duncan, Col. A.

Macpherson, Maj. Niall (Dumfries)

Bennett, Sir Peter (Edgbaston)

Gough, C. F. H.

Maitland, Comdr. J. F. W. (Horncastle)

Bennett, Dr. Reginald (Gosport)

Gower, H. R.

Maitland, Patrick (Lanark)

Bennett, William (Woodside)

Graham, Sir Fergus

Manningham-Buller, Sir R. E

Bevins, J. R. (Toxteth)

Gridley, Sir Arnold

Markham, Major S. F.

Birch, Nigel

Grimond, J.

Marshall, Douglas (Bodmin)

Bishop, F. P.

Grimston, Hon. John (St. Albans)

Marshall, Sidney (Sutton)

Black, C. W.

Grimstan, Sir Robert (Westbury)

Maude, Agnus

Bossom, A. C.

Hare, Hon. J. H.

Maudling, R.

Bowen, E. R.

Harris, Frederic (Croydon, N.)

Maydon, Lt.-Comdr S L C

Boyd-Carpenter, J. A.

Harrison, Col. Harwood (Eye)

Medlicott, Brig. F

Boyle, Sir Edward

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

Mellor, Sir John

Braithwaite, Sir Albert (Harrow, W.)

Harvie-Watt, Sir George

Molson, A. H. E.

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

Heald, Sir Lionel

Morrison, John (Salisbury)

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

Heath, Edward

Nabarro, G. D. N.

Brooke, Henry (Hampstead)

Higgs, J. M. C.

Nicholls, Harmer

Brooman-White, R. C.

Hill, Dr. Charles (Luton)

Nicholson, Godfrey (Farnham)

Browne, Jack (Govan)

Hill, Mrs. E. (Wythenshawe)

Nicolson, Nigel (Bournemouth, E.)

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

Hinchingbrooke, Viscount

Nield, Basil (Chester)

Bullard, D. G.

Hirst, Geoffrey

Noble Cmdr. A. H. P

Bullus, Wing Commander E. E.

Holland-Martin, C. J.

Nugent, G. R. H.

Burden, F. F. A.

Hollis, M. C.

Oakshott, H. D.

Butcher, H. W.

Holmes, Sir Stanley (Harwich)

Ormsby-Gore, Hon. W D.

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

Holt, A. F.

Orr, Capt. L. P. S.

Carr, Robert (Mitcham)

Hope, Lord John

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

Channon, H.

Hopkinson, Henry

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

Clarke, Col. Ralph (East Grinstead)

Hornsby-Smith, Miss M. P.

Osborne, C.

Clarke, Brig. Terence (Portsmouth, W.)

Horobin, I. M.

Partridge, E.

Cole, Norman

Horsbrugh, Rt. Hon. Florence

Peake, Rt. Hon. O

Colegate, W. A.

Howard, Greville (St. Ives)

Perkins, W. R. D.

Cooper-Key, E. M.

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

Peyton, J. W. W.

Craddock, Beresford (Spelthorne)

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

Pickthorn, K. W. M.

Cranborne, Viscount

Hylton-Foster, H. B. H.

Pilkington, Capt. R. A

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

Jenkins, R. C. D. (Dulwich)

Pitman, I. J.

Crosthwaite-Eyre, Col. O. E.

Johnson, Eric (Blackley)

Powell, J. Enoch

Crouch, R. F.

Jones, A. (Hall Green)

Price, Henry (Lewisham, W.)

Crowder, John E. (Finchley)

Kaberry, D.

Prior-Palmer, Brig. O. L

Crowder, Petre (Ruislip-Northwood)

Keeling, Sir Edward

Raikes, H. V.

Cuthbert, W. N.

Kerr, H. W. (Cambridge)

Rayner, Brig. R

Darling, Sir William (Edinburgh, S.)

Lambert, Hon. G.

Redmayne, M.

Davidson, Viscountess

Lambton, Viscount

Remnant, Hon. P.

Davies, Rt. Hn. Clement (Montgomery)

Leather, E. H. C.

Roberts, Peter (Heeley)

Deedes, W. F.

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

Robertson, Sir David

704

705

Robson-Brown, W

Stevens, G. P.

Wakefield, Edward (Derbyshire, W.)

Rodgers, John (Sevenoaks)

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

Wakefield, Sir Wavell (Marylebone)

Roper, Sir Harold

Stewart, Henderson (Fife, W.)

Walker-Smith, D. C.

Ropner, Col. Sir Leonard

Stoddart-Scott, Col. M.

Ward, Han. George (Worcester)

Russell, R. S.

Storey, S.

Ward, Miss I. (Tynemouth)

Ryder, Capt. R. E. D.

Stuart, Rt Hon James (Moray)

Watkinson, H. A

Salter, Rt. Hon. Sir Arthur

Studholme, H. G.

Webbe, Sir H. (London & Westminster)

Sandys, Rt. Hon. D.

Summers, G. S

While, Baker (Canterbury)

Savory, Prof. Sir Doulas

Sutcliffe, H.

Williams, Rt. Hon. Charles (Torquay)

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

Taylor, Charles (Eastbourne)

Williams, Gerald (Tonbridge)

Scott, R. Donald

Teeling, W

Williams, Sir Herbert (Croydon, E.)

Scott-Miller, Cmdr. R.

Thomas, P. J. M. (Conway)

Williams, R Dudley (Exeter)

Shepherd, William

Thompson, Kenneth (Walton)

Wilson, Geoffrey (Truro)

Smithers, Peter (Winchester)

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

Wood, Hon, R.

Smithers, Sir Waldron (Orpington)

Thornton-Kemsley, Col C N

York, C.

Smyth, Brig. J. G. (Norwood)

Turner, H. F. L

Spearman, A. C. M

Turton, R. H

TELLERS FOR THE NOES:

Speir, R. M.

Vane, W. M. F

Major Conant and Mr. Vosper.

Spent, Sir Patrick (Kensington, S.)

Vaughan-Morgan, J K

Question put, and agreed to.

Sir Patrick Spens: I beg to move, in page 36, line 43, at the end, to add:
(5) Notwithstanding the provisions of subsection (3) of this section, this Part of this Act does not apply to a trade or business carried on by a body corporate ordinarily resident in the United Kingdom if and to the extent that the trade or business consists of the winning or production of raw materials.
This group of Amendments arises out of a visit which I paid to Borneo and Malaya in April, 1948. Having toured both the island of Borneo and a great deal of Malaya during that month, when I saw this Bill drafted and saw that the years 1947, 1948 and 1949 were to be taken as the basis of the standard profits, I realised, in view of the conditions of the countries as I had seen them, that those standards for companies producing raw materials from those areas which had been occupied by the Japanese forces could not possibly be fair to them, particularly in view of the way in which development had gone on and has gone on since.
In those circumstances I ventured to put down as Amendments to this Clause a series of alternatives, starting from the larger category—namely, the producers of raw materials anywhere—and going down to the smallest categories-namely, those whose business was producing minerals and oilwells in territories occupied by the enemies of his late Majesty, and where the source of production had a life of less than 30 years.
It was my hope that one of these alternatives would be selected but, whichever was selected, it was made quite clear by the last Amendment that if these companies were to be excluded from the Excess Profits Levy, they would at least have to pay the old rate of Profits Tax. There was no suggestion, either by myself
706
or by those with whom I conferred, that they should be excluded from the Excess Profits Levy and then have the benefit of reduced taxation to an extent more than any other form of trading company.
I am in this difficulty: a large number of Government Amendments have recently been placed on the Order Paper and a number of them are most pertinent and material to the suggestions which I have made. If I may be allowed to refer, very shortly, both to these Government Amendments and to some of the new Clauses, I would start by saying that I appreciate very much indeed the concessions which my right hon. Friend has clearly made to those who are producing these types of minerals from the territories formerly occupied by the Japanese.
The fact that they now have a choice of the years 1949 and 1950 makes an enormous difference, of course, when compared with an average based on 1947, 1948 and 1949. When, in addition, they are given certain other advantages by the new Clauses in connection with average output, another very serious point is overcome at least to some extent. That point is really one of principle. Was it right, as the tax was originally drafted, that a company which was in a state of developing, and bringing back into production each year more and more sources of valuable raw material, should thereby incur in each chargeable period an extra amount of tax on account of such development?
Again, to some extent that point has been met. There is, of course, difficulty in corresponding with one's friends on the subject of these Amendments, but I regret to say that I have to tell my right hon. Friend this: while they thank my right hon. Friend for what he has done, the producers of tin and rubber in Malaya

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would still much prefer to be excused the levy and to pay the old rate of profits tax. They make two points. First, better as the standard years 1949 and 1950 are than the years 1947, 1948 and 1949, the fact is, as the right hon. Member for Vauxhall (Mr. G. R. Strauss) will remember, that the price of tin was controlled up to 15th November, 1949. Therefore, in these standard years, there are 11 months of controlled prices and only 13 months of what one might call freed prices.
As far as Malaya is concerned, therefore, and also as far as the tin mines of Nigeria are concerned, they say that in principle we have a chargeable period in which they are entitled to sell their products in a free market, but the taxation is based on a controlled price, which was admittedly a great deal lower than the free price. That, itself, is a special point in connection with these companies which must merit special consideration.
They also say that the rehabilitation and bringing back into development had not nearly finished by the end of 1950 and that it is still going on today. They say that the figures themselves show that they are affected not by greater production from the sources working in 1949 and 1950, nor by better prices for a similar amount of production by comparison with the prices for these periods; but by greater overall profits coming from the amount which is still being brought back into production each year. In those circumstances, they still submit that this Excess Profits Levy cannot act with fairness on these companies.
I realise that in the Amendments later on the Paper, and in the new Clauses, a great deal has been done to meet the suggestions put forward in my Amendments, but I hope that, between now and the Report stage, my right hon. Friend will allow representations to be made to him on the two points I have mentioned. Bearing in mind the enormous importance of the utmost production of these raw materials—oil, tin, and so on—and the necessity for getting the greatest possible advantage from industry at this time, I hope that my right hon. Friend will hear those representations with a sympathetic ear even now. I feel certain that he will.
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5.30 p.m.
The Amendment contains the same suggestion as that in my right hon. Friend's new Clause; that is, it covers the companies operating mineral deposits of metals and oils which are situated in territory which was formerly occupied by enemies of this country. I do not know whether it would be right at this stage to deal with the Amendment and get rid of it, or whether, later, my right hon. Friend might give an undertaking that further representations will be considered. In the latter eventuality it would not be necessary for me to press the Amendment.
Mr. Douglas Marshall: I want to focus the attention of the Solicitor-General, who is to reply, and of the Committee, on two specific points which come within the range of these various Amendments. An Amendment in my name to Clause 31, dealing with the question of mining in this country, was not selected by the Chair, but I understand that the substance of that Amendment can now be discussed.
I want to put two special points to the Solicitor-General. In 1949 my right hon. Friend who is now Chancellor expressed sympathy with the idea of trying to help the development of mineral wealth which is hidden in our own hills. He spoke in support of an Amendment which was moved by me in an effort to get temporary relief from taxation for three or four years for any mining venture likely to operate in the United Kingdom. The suggestion I made was more or less on the lines of the taxation passed by the Dominion of Canada, and this exclusion method helped to a great degree to build up the great mining wealth of that Dominion.
It is not my purpose today to develop the argument which I then submitted, and which I may well be able to develop at a later stage. But if there was any substance in that argument then, equally, there must be great substance when we consider mines in the United Kingdom when a new venture is starting and we should consider removing them from the imposition of the levy. That is one point to which I desire the Solicitor-General to apply his mind.
My second point is also of considerable substance. I join with my hon. and learned Friend the Member for Kensington, South (Sir P. Spens) in welcoming

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many of the new Clauses and Amendments which the Chancellor has put down but which it would be out of order for me to refer to specifically at present. But there is a new Clause which gives some help for an output allowance where Her Majesty's Government feel there is a vital necessity to increase production or where previously they have given instructions to try to get production increased, and I am wondering whether, in those allowances, china clay has been included. The Solicitor-General is fully aware, as are all the Members of the Committee, that to get over our difficulties it is necessary for us to do everything in our power to secure additional effort in production to increase our exports to the hard currency countries.
Let us take the raw materials of china clay, and see what that industry in Cornwall and in Devon has done in the matter of exports to the United States of America. The figures which I propose to give to the Solicitor-General will hearten any hon. Member who is interested in the subject of increased exports to other countries. The exports of that industry to the United States have been to the value of £442,000 in 1948 and, in 1951, £590,000. I know of no other industry whose exports to the United States have risen in that way. I am sure my hon. and learned Friend would wish to do everything possible to support and encourage an industry like that, which through its basic raw materials can add to the wealth of this country and help to close the dollar gap which we have all been talking about for many years.
If china clay is not included in the particular Clause which deals with output allowances, I hope that the Solicitor-General will say that between now and the time when the new Clause is moved he will give consideration to the facts which I have put before him. I would prefer, of course, that he would say that it is now included in the new Clause. Having read it and studied it I am not too sure that it is, but I trust he will apply himself to this matter, remembering always the vital importance of bringing dollars to this country.
Mr. Roy Jenkins: Since the Finance Bill was published, some of my hon. Friends who have looked closely at this subject, have been worried about the effect which E.P.L. will
710
have on the position of certain raw materials. We welcome some of the quite substantial concessions which the Chancellor has announced, and particularly five of them which will be dealt with later. I should have thought that the Amendments which have not been called go a little too far in exempting some of these companies altogether. After all, there are no companies who can make larger profits out of the events following the outbreak of the war in Korea and re-armament than some of those which the hon. and learned Gentleman the Member for Kensington, South (Sir P. Spens) has in mind.
Sir P. Spens: But one of the Amendments made it quite clear that if they were exempt from E.P.L., they must pay at the unamended rate of Profits Tax.
Mr. Jenkins: I appreciate that the hon. and learned Gentleman is putting that forward, but that is not a point which the Chancellor could possibly accept. The Chancellor's argument is that one has to have something special over and above the Profits Tax to deal with these fortuitous profits. I should have thought that it was difficult to exclude entirely companies which have already done strikingly well as a result of world re-armament.
The whole problem that we are debating illustrates again the enormous difficulties which this levy presents. It illustrates the head-on clash that exists. Obviously, we need to increase our raw materials production, especially overseas, as much as possible. If that increase takes place, there is likely to be a big increase in profits; yet, if one is to exclude these companies, one must really depart from the whole principle.
The Chancellor, or whoever is behind him on this matter, is the real sinner. He has placed us in an impossible position. If we are to have a levy at all, I should have thought that it was not possible to exclude entirely these companies as the hon. and learned Gentleman has suggested.
Mr. F. J. Erroll: I hope that the hon. Member for Stechford (Mr. Roy Jenkins) will agree that my Amendment, which has been grouped with the others, would in fact fit into his definition. My Amendment seeks to exempt only those statutory

711
undertakings which operate abroad. There are, alas, very few statutory undertakings controlled from Britain which operate abroad, many of them having been nationalised by the Governments of those countries since the war. However, there are one or two. I suggest that the case of the statutory undertaking is exceptional.
Most, if not all, of the overseas utilities are subject to the most rigid control of profits. In most cases the taxes which they have to pay are regarded as working expenses. Therefore, if there is any increased taxation, it usually represents an increased charge to the consumer which has to be passed on in the form of increased rates or increased fares. In order to be brief, I shall quote only two examples—the Calcutta Electricity Supply Company, Limited, which is controlled by the Indian Electricity Act, 1948, and the Calcutta Tramways, Limited, which is now rigidly controlled by the Bengal Tramways Act, 1951.
Many increases in taxation which these two undertakings will have to meet as a result of E.P.L. will cause additional charges to be passed on to the consumer. I cannot see how it can be argued that a Bengali taking a tram from the How-rah Bridge to the centre of Calcutta can be classed as a person who is assisting the re-armament effort and who should, therefore, have to pay more for his ticket. But that is the effect of E.P.L. if applied to the Calcutta Tramways Company, Limited, in its present form.
We must remember that if we insist on increasing the rate of taxation on these overseas utilities, those countries which have not yet nationalised them will have an additional reason for doing so. They will see in those utilities still retained by British nationals simply a milch cow for the British Treasury. I hope that favourable consideration will be given to my small but important Amendment.
5.45 p.m.
Sir Harold Roper: I should like to express my gratitude to the Government for the concessions they have made to the metal mining industry. I feel it desirable to intervene now because I wish to express my belief that the Government's alternative new
712
Clause which has not yet been discussed does not go far enough.
I believe that the Government approach to this question pays too much regard to the narrower revenue considerations and too little regard to the benefit to the national revenue which would result from an increase in home production. The new Clause, in showing its determination to safeguard the Treasury, puts the Government in danger of so frustrating development that there will be none at all in the home-producing mining industry end, therefore, no increased revenue.
In stressing the need for home production, I wish to draw attention to the present cost of the import of essential metals. Last year imports of tin cost £24,500,000 and imports of wolfram cost £7,500,000. Those are large figures. The world supply of tin for immediate needs is reasonably assured. A good case for encouraging our mining industry can be made out on a long-term basis, and an immediate need is reflected in the £24,500,000 which is being spent on imports. There is good reason to believe that at least part of that sum could be saved by increasing home production. Of the two metals, tin is still perhaps of the higher importance, but I also wish to draw attention to the position of wolfram.
The potential production of wolfram in this country is less well known than that of tin. When our tin mining industry was at its peak in the last century, wolfram was more or less a waste product, and the potentiality of its production is therefore unknown. There is a permanent need for wolfram not merely in time of war but in peace. It is a commodity which will continue to be essential to our home industry. Though our home production at present is small, the possibilities of increasing it must certainly not be ignored. In my own constituency deposits are known to exist in four different places. How important they are cannot be foreseen until a proper examination of their potentialities is made.
Wolfram is in short supply in the world today. The main sources of cheap wolfram in China are now behind the Iron Curtain. Another important source in Burma is lost to us for an indefinite period. The International Materials Conference recently reported on the world supply of wolfram. According to their

713
report since 1950 world production of wolfram has been doubled. But it is still in short supply. The Report says:
"It is the view of the Committee that both tungsten (wolfram) and molybdenum, two metals of critical importance for the defence programme and for the maintenance of civilian standards in the modern world, are likely to be in short supply for the remainder of the current year and for a further period thereafter."
The reason that production has been doubled is a point of importance in reference to this debate. The reason is the extremely high price at the present time of wolfram, which today stands at £2,500 per ton, and which, at its peak last year, rose to over £3,000 per ton. The important point is that the doubling of the production of wolfram in the world today is solely due to that very high price. The position is that the greatly increased production has come from low-grade deposits in the United States which can only be made to pay when the selling price remains exceptionally high.
There is no prospect, therefore, that adequate world supplies will be maintained except by maintaining an extremely high selling price, and it follows that we must expect the high cost of importing wolfram to continue in this country. It is, therefore, of the utmost importance that the production of wolfram in this country should be encouraged in every way practicable, and there are on the Order Paper a number of Amendments designed to that end.
I hope the Government will pay close attention to these wider aspects of the matter. We have this highly speculative industry, demanding risks which are without parallel in any normal industial concern, and which, therefore, are without parallel in the justification for exceptional measures in dealing with them. What we want in this country is a pattern of taxation which will give more encouragement to capital investment in our mining industry, and I hope the Solicitor-General will pay close attention to that need.
The Solicitor-General (Sir Reginald Manningham-Buller): I can assure my hon. Friend the Member for Cornwall, North (Sir H. Roper), that I have given the closest attention to his extremely interesting speech on wolfram, but I am still not clear from his speech as to which of the many Amendments, with
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which I am now called upon to deal, he was supporting and which he was not.
My hon. and learned Friend the Member for Kensington, South (Sir P. Spens), has put down a large number of Amendments, all drafted with the ingenuity that one would expect. I do not know whether he is a fisherman, but if he is, he is trying to get the fish to rise to a wide variety of bait, all of differing size. I am afraid I must disappoint him, because the Government are not able to accept any of the Amendments we are now discussing, because, in our belief, those Amendments constitute the wrong approach to the problem which he so clearly outlined and which the Government recognise.
We take the view that it is difficult to draw a line to show which particular industry is making the profits in consequence of re-armament. These profits may go right down the line, and we believe that the right approach is to make this levy of general application, and to give special reliefs where those reliefs are justified.
My hon. and learned Friend made some reference to the immediate reaction which he had received from Malaya in consequence of the Amendments that have been tabled. I venture to doubt whether the full effect of the extensive reliefs now proposed by my right hon. Friend has yet been appreciated, and I feel confident that, when they are fully understood, those people in Malaya and in Borneo to whom he particularly referred will recognise that due regard has been paid to their very difficult problem.
I should like to indicate quite shortly the special reliefs that are now proposed to be given to those engaged in winning metals and oil. It would be wrong of me at present to discuss in any detail Clause 47, under which an increase of the percentage allowance for new capital and for ploughed-back profits is made of three per cent. where the estimated life of the mine or well is between 30 and 60 years, and of six per cent. where the period does not exceed 30 years. These additional increased allowances are also given in respect of foreign borrowed money after deduction of the interest paid. That particular concession reflects our view that in that type

715
of business a higher return than usual on the capital is regarded as necessary.
Then there is the proposed relief under a new Clause where the Treasury certify that increased output is essential in the national interest. In addition to that, there is the Clause proposing a 10 per cent. overriding maximum for overseas companies. These proposals will benefit not only companies engaged in Malaya and Borneo, but companies operating overseas and engaged in winning metals and oil. In addition, there is for those companies operating in enemy-occupied territory the choice of later standard years, which will make a very great deal of difference to them. I feel confident that, when the full extent and effect of these concessions, which are rather complicated, is appreciated, my hon. and learned Friend will feel satisfied that the case has been very well dealt with.
I would also say, in answer to him, that he referred to the Amendment in his name providing that if these particular concerns were exempted from E.P.L., they should revert to the old Profits Tax level. It would by no means follow that that reversion would always be to the financial advantage of the company concerned, for where their profits were just above the E.P.L. standard, by exemption from E.P.L. they would only get back a small amount of cash, whereas then they would have to pay the Profits Tax at the old rate of 50 per cent. for distribution and 10 per cent. for reserves, which would probably cost them a great deal more money.
In reply to my hon. Friend the Member for Bodmin (Mr. D. Marshall), the position of metalliferous mines is precisely the same as that of other mines, to which I have already referred, and they will get the same concession and special reliefs as are proposed in the later Clauses of this Bill in regard to mines. China clay does not at present come within the provisions of Clause 47. My hon. Friend made an argument in favour of the inclusion of this particular industry, which has played an important part in our export trade. I am not in a position to give him an answer "Yea" or "Nay" today. All I can say to him is that we shall, of course, give careful consideration to what he has said in respect of that important industry.

ROYAL ASSENT
6.0 p.m.
Whereupon, The GENTLEMAN USHER OF THE BLACK ROD being come with a Message, The CHAIRMAN left the Chair.
Mr. SPEAKER resumed the Chair.
Message to attend the Lords Commissioners.
The House went; and, having returned—
Mr. SPEAKER reported the Royal Assent to:

1. National Health Service Act, 1952.

2. Empire Settlement Act, 1952.

3. Edinburgh Merchant Company Endowments (Amendment) Order Confirmation Act, 1952.

4. Motherwell and Wishaw Burgh Order Confirmation Act, 1952.

5. National Trust for Scotland Order Confirmation Act, 1952.

6. London County Council (Holland House) Act, 1952.

7. City of London (Various Powers) Act, 1952.

8. Tyne Improvement Act, 1952.

FINANCE BILL
Again considered in Committee.
[Colonel Sir CHARLES MACANDREW in the Chair]

Clause 32.—(SCOPE OF EXCESS PROFITS LEVY.)
Amendment proposed: In page 36, line 43, at end, add:
(5) Notwithstanding the provisions of subsection (3) of this section, this Part of this Act does not apply to a trade or business carried on by a body corporate ordinarily resident in the United Kingdom if and to the extent that the trade or business consists of the winning or production of raw materials.
Question again proposed, "That those words be there added."
The Solicitor-General: We have, of course, also considered the terms of the Amendment tabled by my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) on which he spoke. We really do not think it possible to make an exception for the category to which he referred. He will appreciate, of course, that the Excess Profits Levy will only apply if the profits of the statutory company have increased. They will receive the benefits

717
of the over-riding maximum of 10 per cent. if they are overseas; though it is by no means clear from the terms of the Amendment whether or not it was to apply to a company inside the United Kingdom.
In view of that allowance and the allowance on undistributed profits of 12 per cent., my hon. Friend will appreciate that the statutory company would have to have a considerable growth in their profits before they became liable to the levy. In those circumstances, we do not consider that there is a case made out here for exceptional treatment, and I am sorry that I have to disappoint my hon. Friend.
Sir P. Spens: In view of what the Solicitor-General has said, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause ordered to stand part of the Bill.

Clause 33.—(STANDARD PROFITS FOR A FULL YEAR WHERE TRADE OR BUSINESS IN EXISTENCE AT BEGINNING OF STANDARD PERIOD.)
The Chairman: The first Amendment on this Clause is in the name of the Chancellor of the Exchequer and it is followed by 16 Amendments all linked with it. Perhaps it would be for the convenience of the Committee to have a general discussion on that first Amendment.
Mr. Boyd-Carpenter: If that is convenient to the Committee, it would be an admirable procedure to adopt.
Mr. Crosland: On a point of order. Which of these Amendments are you proposing to call, Sir Charles?
The Chairman: I am calling the Amendment in page 37, line 1, to leave out "section," and to insert "Act." That is the first of the series which will be linked with the 15 Amendments to follow.
Mr. Glenvil Hall: That takes us down to the Amendment in page 37, line 16, to leave out "ten." and to insert "twelve."
The Chairman: That is so.
6.15 p.m.
Mr. Crosland: Further to that point of order, may I take it that your Ruling, Sir Charles, that we should discuss all these together—which, if I may say so, is absolutely essential—does not preclude the calling of any particular Amendment?
The Chairman: No. All the Chancellor's Amendments will be called anyway. I was wrong in agreeing with the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall). The Amendments go as far as page 38, line 26.
Mr. Boyd-Carpenter: I beg to move, in page 37, line 1, to leave out "section." and to insert "Act."
The batch of 16 Amendments begin with this one and continue, dotted about among Amendments by other hon. Members, until we come to the Amendment in page 38, line 26, to leave out "a reference," and to insert "references."
Mr. Roy Jenkins: Are we discussing only the Amendments in the name of the Chancellor of the Exchequer?
Mr. Boyd-Carpenter: That is my understanding.
The Chairman: That is what I understood, if it is for the convenience of the Committee. I was asked what other Amendments would be called. I was going to call only the Amendment in the name of the hon. Member for Altrincham and Sale (Mr. Erroll) and his hon. Friends, in page 37, line 32, at the end, to insert:
(iii) no sum in excess of the amount by which the capital of a body corporate is reduced shall be treated as a sum paid by way of repayment of any of its share capital, and subsection (3) of section fifty-seven of this Act shall apply subject to this proviso
Mr. Crosland: The point I want to make, Sir Charles—because I had an uneasy suspicion that you might be taking this view—is in support of your calling the Amendment in the name of myself and my hon. Friends to insert a new subsection (2) at the end of line 7, on page 37. I entirely follow the argument that most of the Amendments on the Order Paper in relation to this Clause are irrelevant following upon the Chancellor's Amendment, but I think that my Amendment is concerned with an investment which is quite separate from that dealt

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with by the other Amendments. It is not strictly covered by the Chancellor's Amendments and raises a separate point.
The Chairman: I was advised that that Amendment was covered.
Mr. Crosland: I am bound to say that it is not covered, because the purpose of the new Government Amendments is apparently to exclude the very bad year of 1947 for ordinary companies by giving them the opportunity to choose 1948 and 1949. In the case of investment companies which are always one year behind, because their income is related to the payment of profits on the previous year, even if they exercise the option of 1948 and 1949 their income would be covered still by this particularly bad year of 1947. Therefore, I suggest they are not covered by the Chancellor's Amendment.
The Chairman: I beg the hon. Member's pardon. If I find I have made a mistake, I shall be quite willing to call his Amendment.
Mr. Jay: It would be well worth knowing what 16 Amendments are to be called.
Mr. Boyd-Carpenter: I will read the Amendments if the right hon. Member wishes, but they are in fact all the Amendments to this Clause in the Chancellor's name and the last one is on page 38, in line 26, as I have stated.
As hon. Members will fully appreciate, all these Amendments hang together and they all seek to put into this Clause, in respect of businesses which were in existence before the beginning of the standard period, a number of changes in the operation of the tax which were announced by my right hon. Friend the Chancellor when he introduced the Motion that Clause 31 stand part of the Bill on Tuesday night. That is their effect, and hon. Members will no doubt have noted that a set—I am glad to say a somewhat shorter one—of nine similar Amendments to the next Clause seek to do the same thing in relation to businesses which started after the beginning of the standard period. In that sense they are two comparable sets of Amendments.
Both sets seek to apply a number of the major changes to which my right hon. Friend referred, and some of them have
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already been discussed on previous Amendments. I think that the Committee would wish me to explain at this stage how they are effected. The main actual changes, as opposed to consequential and purely technical matters, are carried out first of all by the Amendments to page 37, lines 16 and 17, that is, the fourth and fifth Amendments in the name of my right hon. Friend. Taken together, those two Amendments increase from 10 per cent. to 12 per cent. the allowance in computation of the standard in respect of new capital and profits ploughed back into the business.
The other major changes are effected by the long Amendment to page 38, line 1, which is actually the thirteenth in the series of Amendments in the name of my right hon. Friend. As hon. Members will see, this leaves out subsection (4) of the present Clause and inserts a new subsection (4) and two new subsections after that-subsections (5) and (6). Paragraph (a) of the new subsection (4) makes a change in respect of one of the alternative standards. Under the Bill as it was originally drafted, a company could make use, if it so desired, of 8 per cent. of the paid-up capital in respect of two of the three standard years. Now that—under a subsequent part of this Amendment—the choice is given as to standard years, it is only necessary to give that 8 per cent. in respect of one year.
Paragraph (b) of that new subsection (4) gives the choice of 1946 or 1951 for the computation of paid-up share capital instead of, as under the original draft, taking 1949 in all cases. That is designed, among other things, to deal with cases where, for example, owing to nationalisation of certain assets of a company, there has been a big change in the scale of the company's operation during the period.
Paragraph (c) of subsection (4) is probably one of the most important of the changes. It introduces the new alternative standard which, as my right hon. Friend indicated on the Second Reading, the Government were considering. Under this new alternative standard, the alternative is given of an amount representing 8 per cent. of the assets of the company less depreciation as allowed for tax purposes. That alternative standard has been introduced, as my right hon. Friend explained, in order to deal

721
with those cases in which nominal capital might prove to be an unfair standard.
Hon. Members will see that with two important variations this alternative adopts the standard used in the old wartime Excess Profits Tax. The two differences of substance are that, whereas under the war-time Excess Profits Tax 6 per cent. was allowed, under this provision 8 per cent. is allowed. In addition, borrowed money is treated quite differently, having been previously excluded but now being dealt with under my right hon. Friend's new Clause.
To complete the picture—though I shall not seek to anticipate it—what the new Clause does about borrowed money is to allow the interest payable plus 4 per cent. The new subsection (5) gives a new choice of any two of the years 1947, 1948 and 1949 as the standard years. That means that companies can select any two of those three years. They can select 1947 and 1949, 1947 and 1948, or 1948 and 1949, as they find appropriate to their particular situation.
That is designed to deal with the criticism which was made in many quarters that 1947 was an unfair year to take. In point of fact, taken over the businesses of the country as a whole, 1947 was very little behind 1948 or 1949; but we do appreciate that there are probably a number of individual cases in which 1947 was a very bad year, and those cases are dealt with by this Amendment, because companies for which 1947 was a very bad year can select the other two.
It was necessary to retain 1947 as one of the three years because, in the case of some companies, 1947 was the most favourable year of the three, and it would have been very wrong to have denied them the right to use that year, which appeared to be given to them under the Bill as it was originally drafted.
The proviso to subsection (5) adds the special provision as to standard years in respect of enterprises carried out in territories occupied by the Japanese. That gives them 1949 and 1950 as the standard years. It covers all enterprises carried on in those territories, and it is designed to meet the point that rubber and tin in particular, in Malaya—but a good many other industrial activities also—suffered very serious damage under Japanese occupation, and it naturally took them some time to get going again after the Japanese had been evicted.
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The new subsection (6) provides for the calculation of the date from which profits ploughed back rank for an allowance. That obviously depends on the standard years chosen for each particular company, and the way it works out appears in a little table at the end of the subsection.
Those are the main Amendments as they operate in this group. The others are simply drafting, paving or consequential Amendments. I think the Committee will see that the total effect of this batch of Amendments, taken together, is to put into Clause 33—and, therefore, to apply to businesses existing prior to the beginning of the standard period—several of the very important alterations which my right hon. Friend announced on Tuesday night.
For the convenience of the Committee, I will recapitulate them. They are, the alteration in the standard year the special standard years for Japanese-occupied territories; the new allowance of 12 per cent. on new capital and moneys ploughed back, and the new alternative standard in addition to the profits standard. As I ventured to indicate to the Committee, the comparable provisions of the next Clause are being made to apply mutatis mutandis to new businesses, that is to say, businesses starting after the beginning of the standard period.
These are, of course, as was made clear during the debate on Tuesday, substantial changes. They have already been explained to hon. Members by my right hon. Friend, and reference has been made to several of them on more than one occasion. The Committee now has before it what are in a way the mechanics of their operation. The Amendments are in order to carry out those intentions and proposals which my right hon. Friend announced.
6.30 p.m.
The Chairman: When I was announcing the Amendments selected, I mentioned, apart from those in the name of the Chancellor, only the one in the name of the hon. Member for Altrincham and Sale (Mr. Erroll). I also intend to call the last one on this Clause, in the name of the hon. Member for Middleton and Prestwich (Sir J. Barlow), in page 38, line 33, at the end, to add:
(6) Where a body corporate's trade or business consist wholly or mainly of the production of raw natural rubber the preceding

723
provisions of this section shall have effect as if the references to ten per cent. were references to twenty per cent. and the reference to eight per cent. were a reference to sixteen per cent.
Mr. Austen Albu: Might I ask, Sir Charles, whether you intend to call the Amendment in my name, in page 38, line 26, at the end, to insert:
"for the purpose of this subsection a director means a director of the body corporate who throughout the whole of the chargeable accounting period worked full-time in the actual management or conduct of the trade or business of the body corporate."
The Chairman: No. I think that would he better considered in the definition Clause, the Amendments to which are printed on page 1438 of the Amendment Paper.
Mr. Clement Davies: Would you kindly repeat, Sir Charles, which Amendments you intend to call?
The Chairman: I shall call all the Amendments in the name of the Chancellor of the Exchequer; the one on page 1422, in the name of the hon. Member for Altrincham and Sale and the one on page 1426, in the name of the hon. Member for Middleton and Prestwich.
Mr. Roy Jenkins: I did not quite follow what you meant, Sir Charles, by saying that the point raised by the Amendment of my hon. Friend the Memmer for Edmonton (Mr. Albu) could be better covered on Clause 57. I do not see any Amendments there which would in any way cover the point which is dealt with in the Amendment of my hon. Friend, to which he has referred.
The Chairman: I will have another look at it. I gather that it is a definition about a director, and this is not the right place for it to come.
Mr. Jenkins: It is not an Amendment merely to clarify the point about directors. It is intended to be an Amendment changing the present meaning of the Clause.
The Chairman: If I may, I will have another look at it.
Mr. Glenvil Hall: May I point out that the wording of the Amendment in the name of my hon. Friend the Member for Edmonton specifically refers to "the purpose of this subsection." For that reason,
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if for no other, I should like to suggest that it should be taken where it actually is on the Amendment Paper. It is not a definition and, therefore, part of the interpretation Clause. It is a clarification of the Clause under consideration, to which the Amendment is directed.
Mr. Albu: The interpretation Clause would make the Amendment very much wider.
The Chairman: Yes, but when I referred to page 1438 I meant that there was in the names of hon. Members another Amendment relating to directors.
Mr. Jenkins: But not on the same subject. The Amendment which we have down to Clause 57 has the effect of slightly altering the meaning of "director" in the whole of the Bill, whereas the Amendment of my hon. Friend the Member for Edmonton to Clause 33 has the effect only of limiting the meaning of "directorin its application to Clause 33.
The Chairman: So far as Clause 33 is concerned and the matter of definition there, I was not prepared to select the Amendment for that purpose.
Mr. Frederick Mulley: We have had a very comprehensive statement from the Financial Secretary. The Committee will be relieved to know that I do not propose to follow him by commenting on the many proposals which the Chancellor has put before us so late in our proceedings this week. If my hon. Friend the Member for Gloucestershire, South (Mr. Crosland), whose midnight labours on this subject are well known, is fortunate enough to catch your eye, Sir Charles, he will be able to cover those points better than I can.
I wish to confine myself to what is the most substantial change, namely, the choice of years—two of the three original standard years. In making comments on the subject of the levy, we have criticised it, among other reasons, because it means a reduction in the total amount of taxation to be borne by certain companies. The original proposals did seem as though the levy was designed to favour brewery companies, entertainment companies and the rather spiv-like concerns which were able to make large profits in the immediate post-war period.
I thought that point had been taken by the Chancellor in this alteration in

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that it does give some better balance for those companies which are expanding companies—export companies and others which have made efforts to respond to the national need by increasing their efficiency, securing overseas orders, etc. But while I am particularly glad that that point has been met, the original criticism remains that this levy is unduly favourable to breweries, entertainment concerns and the get-rich-quick companies that sprang up after the war.
I suggest to the Chancellor that he should look again at this point, because quite clearly if he recognises the point by now making possible a choice of two or three years, there is no case for retaining 1947 as a standard year. That will surely favour only those companies which were able, in the exceptional postwar period, to make large profits. They are the only companies which will have any incentive to chose 1947 as one of their standard years.
While in the ordinary course of events it is very unusual for a Chancellor of the Exchequer to make a fundamental change in his plans at this stage of the Finance Bill, I feel that this is an exceptional year because we have already had several fundamental changes in the character of this levy. It cannot be argued, as the Financial Secretary was inclined to do, that it would be unfair to those companies if some part of the remission of total tax which will ensue is taken away from them.
It would also assist the Revenue and certainly make the tax more acceptable to Members on this side of the Committee, because we are in a difficulty in this matter. In view of the very short notice we received of the fundamental changes in the levy, and their complexity, it did mean that it was rather late to put down an Amendment to the effect I have mentioned for discussion today. I ask the Financial Secretary to see that consideration is given between now and the Report stage to removing 1947 from the standard period.
Mr. Erroll: The change has made a considerable improvement, but there are nevertheless one or two organisations which will suffer, particularly many of the firms which were concentrated during the war, and which even in 1948
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were only just emerging from that wartime concentration. They certainly had not got back into their full post-war stride. They are, of course, being helped by being able to choose 1948 and 1949, but it is not a complete help.
The case which is still the most hardly and unjustly dealt with is that of the bacon curing industry, which was concentrated for even longer than the textile firms in the north-west of England and which was only de-concentrated in October, 1949. If those firms have to take as standard years 1948 and 1949, it is a period in which they were concentrated for 21 out of the 24 months. So they really have a most inequitable basis for assessing profits under E.P.L.
They themselves would like to suggest the Chancellor's taking as their standard the first full year after deconcentration, and the Amendment which stands in my name and the names of some of my hon. Friends make that point. I know that it is very hard in general taxation of this nature to plead a particular case, but I think that there is one which is quite exceptional, because it was solely through the Government's action that these companies were not able to get going again until towards the end of the period. If something could be done to help them it would, I am sure, be in the interests of equity.
Mr. Albu: The difficulty we are in, I think, in discussing this whole series of Amendments is that we cannot really tell what the general effect is going to be. The Chancellor has told us that in a full year all the changes he is making are going to cost the revenue between £20 million and £25 million and that we have to consider that in relation to the charges that are being made in the National Health Service, the cuts being made elsewhere, and so on. We can consider the whole series of Amendments only as a form of general concession, not only to the critics, but also to those who dislike any form of taxation on company profits. Of course, on this side of the Committee we have had to distinguish rather carefully between those.
In regard to the alteration of the standard years, I think that we on this side of the Committee accept that as a reasonable change, particularly because it is a way of giving relief to those companies that were concentrated—I do not

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know about the bacon curing industry—but to the textile industry, for instance, and others. I do not know whether hon. Gentlemen opposite who have Amendments to include later years are going to press them. We shall assist the Chancellor in resisting those changes, for which there is no justification at all, if there is any justification for the levy at all, for the figures for profits are that in 1947 they amounted to £1,527 million; in 1948, to £1,537 million; in 1949, to £1,528 million—roughly similar figures—but that in 1950 they jumped to over £1,800 million.
So there would be a very considerable reduction in the yield of the levy if 1950 or a later year were taken, and though we do not like the levy at all, as we have to have it, and as there is a reduction, after all—even after the Chancellor's Amendments still there is an overall reduction—in the Profits Tax, we should certainly assist the Chancellor in resisting Amendments of that nature.
Let me come to the increase of the percentage allowed on new money and on profits ploughed back. I do not know what the justification for any particular figure—12 per cent., 10 per cent.—on new money may be, but of course one can see the advantage of increasing incentive to retain profits, which is, of course, the effect of increasing the percentage allowed on profits not distributed. As to the amount, I should have thought that the new money figure of 10 per cent. was, on the whole, not only adequate but more than adequate, but we are considering such a range of changes in the levy that it is extremely difficult to know what are the principles on which any change is made.
6.45 p.m.
From my point of view, the same doubts arise about the new subsection (4, c)—the inclusion of the asset values as one of the bases of the capital standard. I suppose this is a reasonable addition for old companies, although, of course, it has completely destroyed one of the claims the Chancellor made when he introduced the Budget—that he was greatly simplifying the previous Excess Profit Tax. This whole subsection, I imagine, will very greatly increase the difficulties that accountants and the Inland Revenue inspectors will have in
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computing the profits of standard years and the excess profits for purposes of tax. I think that this is one of the largest and most complicated subsections of a Clause of a Bill that ever could have been drafted. It seems to include so many things.
We on this side certainly welcome relief given to companies that were under Japanese occupation, included in subsection (5), and we shall certainly not oppose that. I think that this particular Clause is like the curate's egg. There are some parts of it which are certainly to be welcomed, but there are certainly others that seem to us—to me, at any rate—merely concessions to pressure, and not based on any set of principles whatsoever.
Mr. Ian Horobin: I do not propose at this stage to go over the whole of these changes, which have been summarised, from their mechanical point of view, by the Financial Secretary, except to thank the Chancellor for them. There is no doubt that, while all the fundamental objections to this tax remain, the changes do represent a genuine effort, for which those of us who are critics are very grateful.
I do want to make reference in a couple of sentences to one omission still, however, before I come to my main point. I still feel that no case has really been made out—it is too late, obviously, to argue it at length—for the omission of 1950. It is impossible for anybody reasonably to claim that trading profits made in 1950 can have had anything at all to do with re-armament. The only case for refusing to insert 1950 is that if we have got to have the tax we must get some money, and that if we do not omit 1950 we shall not. But it is a wholly cynical defence of what is being done.
The nearest approach to the argument based on defence was made in the last debate when it was said that it had something to do with the Korean war. But if we are to take the Korean war, why not the Great War? It has nothing whatever to do with the point. However, it is too late to go into that in detail. We merely note it as one more pock mark on this wretched corpse, and pass on.
The case I want to reinforce is a small but very important one, namely, that of

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the concentrated industries. We had one peculiar case, which, I confess, was new to me, referred to a moment ago. There are one or two other smaller instances where the relief by years will certainly not meet the full case—that of the egg packers, and so on. However, the primary one, of course, and the main reason for my intervening now, in the hope that it will be sympathetically considered, is the case of the textile industry, and I urge the Government, if they are going to err on this point, to err on the sympathetic side for an industry and a county which, above all others, is going through a hard time at this moment.
It is perfectly true, and I accept it at once, that the change in years will make a considerable improvement in this respect, but it is not true that it will deal with the whole case. It is well known to hon. Members who are interested in Lancashire that something of the order of 100 mills were closed by Government order. Taking the years 1948 and 1949, which were certainly better than 1947; in 1948 about 69 per cent, of the spindles in the closed mills were working, and in 1949 about 74 per cent. were working-an average of just over 70 per cent. Anybody who knows anything about business and cotton mills knows that when a factory is running at 70 per cent. profits cannot on any reasonable claim be called normal 'profits. I do not think there will be anything between us on that.
I have here figures with regard to the weaving section of the industry, of which I confess I know very little; we have none in my part of the county. They appear, on the face of them, to be even more extraordinary. In 1948 only about 38 per cent. of the looms that were installed were running, and in 1949 there were only 42 per cent. Those figures, I must admit, are not quite fair as they stand, because in any case since 1941, when the concentration took place, there would have been a falling off, so I do not base myself on a strict interpretation; but it is quite clear in spinning, and still more in weaving, that it is impossible to claim that simply by omitting 1947 we are dealing with Lancashire's case for special treatment owing to the concentration.
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Those are general figures. I do not want to weary the Committee for any length, but it is extraordinary how they work out in certain cases. Some people seem to think it surprising that the cotton industry should be worrying about excess profits, because they are going to have great difficulty in earning any profits at all this year. But so weird are the results of this concentration that one group of mills in my area made profits in the first four months of this financial year which appear to be at least comparable—it is difficult to say because of these recent changes—with what would have been their standard.
I know of another mill which was peculiarly badly hit because through its very willingness to assist industry, it became a training centre and was the last mill in the whole district to be de-concentrated and, therefore, under this proposal it will be the worst-hit mill of the lot. However, I do not wish to weary the Committee with matters of that kind.
I submit that a reasonable case is made out for a very hard-hit and vital industry to say that, owing to circumstances entirely outside its control, this tax, in spite of the improvements which have been made in it, may be still an additional burden. I very much hope that whoever is to reply will say that if the Government cannot accept the Amendments in the name of the hon. Member for Altrincham and Sale (Mr. Erroll) and myself, at least they will consider this matter again between now and the Report stage. The sum of money involved can only be very slight and, as I say, if they are going to err at all, let them err on the side of generosity.
Mr. F. Blackburn: I should like to support what has been said by the hon. Member for Oldham, East (Mr. Horobin) with regard to the textile mills that were closed from 1941 to 1946 because of the concentration of industry. The Financial Secretary said that the Amendments put down by the Chancellor all hang together, and I think the chief regret on both sides of the Committee is that we cannot hang them altogether. I know that the Chancellor has been endeavouring to meet the wishes of the Committee by putting down these 75 Amendments, but he would have

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met the wishes of the House much better if he had put down one Amendment to get rid altogether of E.P.L. and raised his finance by some other means.
If we have to have E.P.L., it is important that there should appear to be equity in the operation of the tax. The decision to alter three years to two years does, to a great extent, help those factories which were closed because of the concentration of industry, but it does not help them entirely, as has been made out quite clearly by the hon. Member for Oldham, East. Let us consider, as he did, the spinning mills. In 1947, they were still suffering from a shortage of skilled labour required to re-set and retool the machines which had been idle during the war years. As everyone will understand, a good deal of expense had to be undertaken by those mills in order to re-equip them and get them going again, and a good deal of non-productive work was involved in the initial stage.
The hon. Member for Oldham, East quoted certain figures relating to the number of spindles working in the mills which had been closed because of concentration. I think it is important that those figures should be stressed. The Chancellor and the Financial Secretary should examine those figures and see whether, even with the concession which has been made, justice is being done to those mills which were closed. The figures are: in 1947, 58 per cent. of the spindles; in 1948, 69 per cent.; and in 1949, 74 per cent. Everyone is aware of the high incidence of standing charges, and therefore, when the mills are not running to full capacity the profit is down. The profitability of the spinning mills declines sharply as the percentage of machinery running becomes smaller.
In the weaving mills the position is more or less the same. They also suffered from a shortage of labour. During the concentration, looms were often removed altogether from the mills. In other cases looms have been stacked in one part of the mill and the rest of the factory space has been used very often for storage purposes—for storage of food and other commodities—and in some cases light engineering has been carried on. Most of the mills did not obtain licences to run looms in those premises until 1946 or 1947, and then they met the following difficulties.
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The looms had to be re-spaced, as has already been mentioned. If we compare the mills of today with the mills of the 1914–18 war, we can appreciate the enormous change that has taken place in them, in the re-spacing of looms in conformity with the Factory Inspectorate recommendations. That resulted in a smaller loomage per building, and there had to be building alterations. The stacked looms had to be overhauled and re-fitted, and this was difficult because there was a shortage of skilled over-lookers—or tackers, as we used to call them—and fitters for reconditioning. There was also a shortage of weavers. These were the difficulties which had to be contended with by the mills which were closed because of concentration.
In the weaving section, as has been pointed out by the hon. Member for Oldham, East, the figures are even worse than those in the spinning section. The figures which were quoted were only for a small cross-section of the industry, but they do indicate the general position in relation to the number of looms. Taking the percentage of looms running in relation to the number installed when closure took place in 1941, the figures are: 1947, 25 per cent.: 1948, 38 per cent.; 1949, 42 per cent. As has been pointed out, we have to take into account the fact that in any case there would have been a smaller number of looms because of re-spacing.
7.0 p.m.
They are an indication of the difficulties which these concerns are facing. The Chancellor has already, I think, seen these figures. He has been fully acquainted with the position, because these figures have been submitted to him by a joint communication from the Federation of Master Cotton Spinners' Associations and the Cotton Spinners and Manufacturers' Association. Therefore, the Chancellor is aware of the position of these mills which were closed from 1941 to 1946.
Perhaps one of the reasons why he has made this alteration in the years has been to meet the difficulties of these mills. I think that if he will look carefully into the matter, he will agree that he has not yet met entirely the difficulty with which these textile concerns are faced at the present time, and, as everyone knows, the textile industry does need all the help that can be given to it.
Mr. C. P. Stevens: I share the views which have been expressed by the hon. Member for Oldham. East (Mr. Horobin) with regard to the effect or otherwise of re-armament on the profits of industry in 1950. Like him, I do not want to labour that point at length this evening.
I want to put in a special plea for those industries situated in the towns and cities of Great Britain which, during the war, were particularly the object of severe aerial attack. Their buildings and warehouses were razed to the ground and they lost their plant and machinery. When it came to rebuilding, they were faced with the usual difficulties of people trying to rebuild after the war—planning consent was difficult to obtain, building licences were hard to get, plant and machinery were difficult to obtain—and the consequence is that the task of rehabilitating these industries in the big cites of this country took a very considerable time.
It is certainly true to say that by 1947 full recovery had by no means been achieved. I doubt whether full recovery had been achieved by 1949. I think that it was probably not until 1950 that these rehabilitated industries were in full working order again. It may be that fact which accounts for the profits rising to £1,800 million in 1950, which was the figure, I think, which the hon. Member for Edmonton (Mr. Albu) gave, from £1,500 million in 1949. That increase, I feel quite certain, is in no small measure due to the fact that the rehabilitated industries did not really get going again until 1950.
It is true that the new standards will be a considerable help in these special instances of industries in the blitzed cities, but I suggest that here is a very special case, and I wonder whether, between now and the Report stage, the Chancellor will be good enough to look at these very special cases to see if he cannot make a special concession in respect of them.
Mr. Grimond: I, too, should like to urge the Chancellor to include the year 1950. As the hon. Member for Oldham, East (Mr. Horobin) has said, presumably the only reason he is against including it is that he would lose a lot of money. But, in the first place he has told us that this tax is not primarily a revenue raising tax, and in the current year the
734
revenue it will raise will be comparatively small.
Secondly, it is outside the general design of his Budget. It is not designed to bring more realism into our economy, and it is not, I think, designed to deal with the financial difficulties which face us at the moment. Therefore, I suggest that there are reasons that might allow him to modify this tax which may not be open to him on taxes that are more an integral part of his general financial policy. It cannot be argued that companies in 1950 were benefiting from a re-armament drive.
I should also like to draw the attention of the Chancellor to the year 1946. The inclusion of that year might benefit only a few companies, but in my view, as I have said before, the consequences of this tax may be so bad that any small concession the Chancellor could give he ought to give with good will. There are certain companies, for instance companies which make goods for the garage industry which were affected by petrol rationing. Some industries were very severely hit by petrol rationing during the standard years. There are also companies which had not been re-tooled. They were still working with their wartime machinery and began re-tooling in 1947, 1948 and 1949.
There is one company, which I should like to quote, with a long history of financial difficulty, but it has of recent years brought out a patent which allows it to produce the best instrument of its kind in its particular line. It is now, I think, selling 40 per cent. of its output to the Government and about 35 per cent. is going to export. Presumably that is just what the Chancellor would like. But this company is going to be seriously hit by this levy, so seriously, in point of fact, that it is going to have to slow up production. The result will be that the re-armament programme itself will suffer. I suggest that there are other companies of other types which will be in much the same position and, although the inclusion of 1946 may not benefit many companies, there are no very strong reasons against it. It cannot be said that it is a re-armament year.
The Chancellor's concessions are very valuable indeed, and no one would want to underestimate them. He has given an alternative standard based on assets. I

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wonder if he could say a word as to the computation of those assets. There are companies who did not write up the value of their assets. Can they be accommodated?—presumably they can. He has given certain concessions on debenture capital, which are welcome because there was a time when companies were disinclined to raise new capital by issues of ordinary shares.
I believe, however, that even these concessions do not get over the fundamental difficulties from which large sections of the textile industry and other industries will suffer. The crucial matter is that it is going to hit developing companies and hit them very hard. If the Chancellor can broaden the basis of the standard years and make any more concessions on those years, it will benefit the economy as a whole.
Mr. Crosland: Your predecessor ruled, Mr. Bowles, that we should discuss all the Chancellor's Amendments at once. That may be desirable from a general point of view, but it is imposing a rather considerable strain on lay Members of the Committee who are not expert accountants, because the Amendments cover a very wide variety of topics.
I should like to begin by raising one or two points which concern local authorities. I do not want to go into this in great detail, because we shall have another opportunity at a later stage of the Bill of discussing it. I want, however, to raise one or two points in connection with them, particularly concerned with the Bristol Corporation.
Corporate bodies without share capital, of which the local authorities are an obvious sub-group, are grateful to the Chancellor for introducing the new standard. A large number of them, of which Bristol was one, would have been catastrophically hit by not having any alternative standard to the base-years provided in the original text of the Bill. Bristol Corporation made large electricity losses in 1948 and had they been on the original three-year standard they would have had a very heavy E.P.L. liability which would have fallen on the other non-nationalised operations of the Corporation.
There are two points which I should like to put to the Minister who is to reply concerning local authorities. The
736
first point on which I ask for enlightenment is the case where the local authority has had its electricity undertaking nationalised. One would have thought at first sight that this case was covered by Clause 41, which discusses the transfer of a whole or a part of a corporate body's activities as a going concern, but it is not. It is specifically excluded from Clause 41 and the Tenth Schedule by the first paragraph of Clause 49.
That being so, what is the position of a local authority such as Bristol Corporation, which had its electricity undertaking nationalised at the end of 1948 and which chooses, as most of these bodies will do, the new net assets standard? If it chooses the net assets standard, it has a choice of dates—the assets as at the end of 1946 or as at the end of 1951.
I imagine that in this situation such bodies, being human, will choose the end-1946 standard. As I see it, if they do so —there may be a quite simple answer to it—they will have their electricity undertaking included in their net assets because they owned that undertaking at the end of 1946. Thus they will be allowed to make 8 per cent. on the whole of the electricity undertaking assets which they neither own nor operate at present. On the face of it, that seems a farcical result. I should be grateful for an explanation. The net assets of the large electricity undertakings were considerable sums, and 8 per cent. on them will make a great difference.
The second point on which I should like information is rather complicated and I am not competent to go into it in any great detail. This also concerns local authorities who choose, as most of them will, the net assets standard. For a definition of the net assets standard we are referred to the Ninth Schedule, and for most of the time in the Ninth Schedule we are referred to the Income Tax Act, 1945. The 1945 Act in its definition of net assets, which is largely employed for the purpose of the Ninth Schedule and the present Clause, does not include buildings and constructions more than 50 years old when the Act came into force.
I imagine this would not be a point of very great importance for a very large number of industrial firms, but it is a big one for local authorities operating public utility services, such as docks, a

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particularly important point for Bristol, a very large part of the construction of the docks being over 50 years old. On the face of it, it is very curious, and the sums involved will be considerable if the assets are not to be considered assets from the point of view of the definition of net assets in Clause 33. I should be grateful if that point could be cleared up.
I want to make a few points on the new 12 per cent. figure, not as it affects an under-distribution of profits but as it affects the issue of new share capital. The first thing to be said is that we now have a great confusion over these permitted percentages. A number of different percentages apply to various things. We have 8 per cent. on paid-up share capital in the case of a company choosing this option for one of its two standard years; 10 per cent. on paid-up share capital where the company chooses that standard as at the end of 1946 or the end of 1951; 8 per cent. on net assets; 14 per cent. for director-controlled companies; and now 12 per cent. for both under-distribution and new issues of share capital. It is not at all clear why the figures of 8, 10 and 12 per cent. have been chosen. It would be interesting to hear from the Government why these particular figures were chosen.
7.15 p.m.
What is the logic of increasing the figure allowed on new issues of share capital from 10 per cent. to 12 per cent., as has been done in the Chancellor's latest batch of Amendments? I imagine the answer will be that what we are above all concerned with is the possibility of expansion, and, therefore, the possibility of raising new capital. The answer would presumably be that we are deliberately seeking a rather higher allowance in the case of new capital and that we are not so interested in giving a generous allowance to existing paid-up share capital and that, in the jargon of the economists, bygones are bygones.
I can see that it is logical to have the same figure of 12 per cent. for both under-distribution and new issues of share capital. Clearly, undistributed profits and new issues are the two obvious sources from which new expansion can be financed. Nevertheless, it would be interesting to be told why the Government did not select a single figure for all three things, under-distribution, new issues of
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share capital and existing paid-up share capital at end-1946 or end-1951, and why the differential has been introduced.
It is not self-evident why the figure has been raised from 10 to 12 per cent. It is true that the figure of 10 per cent. allowed where new share capital was issued came in for a great deal of criticism in the financial Press, where it was held to be inadequate to attract the new capital which most industries wanted. The argument was that even if the whole of the 10 per cent., which was allowed was distributed, or if it was made clear that it would be distributed, the maximum gross dividend which the 10 per cent. would give was 7.4 per cent. once we had allowed for a full 15 per cent., as it then was, Distributed Profits Tax on 100 per cent. distribution. That figure will be altered—I have not done the calculation —now that the Distributed Profits Tax has been raised from 15 per cent. to 221 per cent.
The argument was that the maximum gross dividend which would be possible before E.P.L. came into play would be quite insufficient to attract new capital, at any rate in those industries where yields on shares are already extremely high. The argument was used very obviously in the case of textiles. Considering what textile shares are yielding now, it was argued that this was quite an insufficient yield to attract the new capital which the industry and other industries similarly placed might want.
I am rather suspicious of the argument. I am particularly suspicious of it when it comes from Conservative hon. Members or a Conservative Government. The argument that industries the shares of companies in which are now showing a very high yield, because the industries are somewhat depressed, should be put in a very favourable position for getting new capital is completely inconsistent with their general bias in favour of the price system.
I have heard eloquent speeches from the Secretary of State for the Colonies in which he has objected to all our methods of control over new investment and has said that this control should be swept away and that we should rely on the control exercised by an effective rate of interest policy. That is a perfectly consistent attitude, but if we decide that the direction of investment should be deter-

739
mined by the rate of interest or by monetary policy, it follows that industries the shares of companies in which are very depressed—if we are to adopt this sort of market attitude—ought not to have these new capital resources at all. I do not think—[Laughter.] This is not my argument and I do not believe in it.
Mr. Horobin: Turn it the other way round and it will make sense.
Mr. Crosland: The argument is perfectly clear. Industries like textiles, which are at present depressed and where profit expectations are not very favourable and as a result textile shares are depressed and showing a very high yield, should according to orthodox monetary theory not have a high claim on new capital resources. This is a perfectly familiar textbook argument which has been given to the Committee time and time again by the more orthodox, monetary experts in the party opposite, and it is inconsistent with the general criticism in the financial newspapers of the 10 per cent. standard.
The whole case of hon. Members opposite is that marginal investment should be choked off by monetary policy and not by fiscal controls or whatever term one might use for them. What I should like to know is whether there is any evidence that 10 per cent. of new issues of share capital is not a sufficiently generous figure to allow the amount of investment which the country can afford, while choking off the marginal investment, which the Chancellor has tried to discourage in his Budget.
It would be interesting to know what the reasons were for making it 10 per cent. originally and then raising it to 12 per cent. Is there any evidence that the original figure will not be sufficient to make possible the level of investment which the Chancellor wants and, at the same time, choke off the additional investment which he said firmly he did not want during this rearmament period?
My own feeling is that most of the changes which we are discussing are wholly desirable and are all moves in the right direction. I should be very grateful, however, for some explanation why this extra generosity is being given in respect of new share capital.
Mr. G. R. Mitchison: The Committee will probably agree that, from a practical point of view, this Clause and the Amendments we are now considering are fundamental to this part of the Bill and of extreme importance. I always regard economists with undiluted respect, and Chancellors of the Exchequer with both respect and sympathy. My sympathy was heightened about two hours ago when the Chancellor of the Exchequer's moral basis slipped away unwept and unsung, and another Election pledge disappeared at the same time unhonoured. I cannot go back on that matter, but two of the reasons why we were urged to accept this part of the Bill was that it was moral and simple.
I have said all I have got to say about the disappearance of that moral basis, and I am going to suggest in a moment or two that there is a distinct element of immorality in some of the Amendments we are now considering. Simple, they certainly are not.
Mr. R. A. Butler: Would the hon. and learned Gentleman ever regard immorality as being simple?
Mr. Mitchison: Sometimes it has an attractive simplicity, just as morality has an attractive simplicity. Simpler kinds of finance are prima facie more moral than the complicated ones, and that is a point I propose to develop in a minute. For the moment, I should like to turn to this question of simplicity.
It is quite true that an election pledge is broken, but in another sense, if ever there was an election Bill, this is it. There are seven elections in these Amendments and several more if we could refer to another Schedule it incorporates. Obviously I cannot discuss that now, but I have never known such a Bill for electing. I do not know what the Chancellor wants to encourage, whether he feels there is not sufficient ratiocination in City companies, or whether it is on more philosophical grounds that he is determined to prove that, even in the field of taxation, the exercise of free will has a moral value. I cannot tell, but I say, in all seriousness, that it is a distinct criticism of the tax if it is going to be so varied in form that its incidence is going to depend on elections.
The Chancellor is a most moral man, but he would share some of my moral

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objections to the roulette table. He would be the first person to recognise that in all these elections there is an element of the roulette table, which one wants to get out of, or the whole, in fiscal provisions. Such a sort of thing makes me wonder whether this is really a simple tax—if I may go back for a moment to what we were first lead to believe.
I am disposed to welcome the general effects of these Amendments. I think they are a bit better than the original Budget. They have not got very much to do with it, and this must be about the first time that a Chancellor has introduced a new tax in a Bill and then, by amending the Bill, substituted another new tax. That is what this seems to be doing.
Apart from this question of elections, I have been listening to the very interesting, eloquent and able speeches which the Committee have heard, and I hope my hon. Friends and hon. Gentlemen opposite will not think I am offensive if I point out that they have been log-rolling in a bare-faced way. They began with bacon and ended with Bristol, and in the interval they touched on cotton, or industries in the blitzed towns and on some obscure form of Kirkwall patent connected with the garage trade. That is what we get when we have complicated taxation like this, and the criticism of such taxation is that, in its exceedingly difficult and abstruse calculations, it involves every one of the trades, the corporations and so on about which we have heard and which are in some special difficulty.
I am not an economist and am never likely to be a Chancellor of the Exchequer, but I have always understood that one of the virtues of taxation was that it should be, in one respect, like the law—it should not only be fair but apparently fair. It is a pretty bad state of affairs that, in discussing the most important part of the Bill, we have to provoke members of this Committee at once to get up and log-roll. It would have been very much simpler to have left the original Profits Tax and increased it or graduated it, instead of landing us in this quagmire of special interests, special cases, percentages, elections, and general expectations of one kind or another.
I have been thinking about these percentages. The trouble about tossing up is
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that there are only two sides to a coin and there are far too many percentages to be accounted for that way. I thought of the Chancellor or the Financial Secretary drawing them out of a hat, which is one way it could have been done, but I could not explain them that way. One sees the approximate reason for some of them, but why select one of these numbers more than another? Twelve was mentioned just now. I do not think I have got them all yet, but as far as I can make out, they are 4, 8, 10, 12, 14 and 15.
7.30 p.m.
The study of numbers is very interesting, and I came to the conclusion that the Treasury had a perverse hatred of prime numbers. That seems to be the only possible explanation of this selection. It is true that they might safely have included 9, but notice that they left out 5, 7, 11 and 13—and I cannot see why they should. No doubt we shall be told by whoever replies what are the real economist's or Chancellor's reasons for these percentages, but unless he makes it quite clear I shall adhere to my previous impression that the Treasury do not like prime numbers.
Mr. Roy Jenkins: The Chancellor's new proposals have had a rather modified welcome from his hon. Friends. The hon. Member for Oldham, East (Mr. Horobin) said that they were an improvement. I am not quite sure what an improvement to a "lunatic nightmare" results in.
Mr. Horobin: They are still lunatic. but he has pulled a few straws out of his hair.
Mr. Jenkins: I hope the Chancellor is pleased with that warm tribute from his hon. Friend. On the whole, I think we are prepared to give him a slightly warmer welcome, because we approve of most of the changes which are down here. I certainly think he has gone far enough. and in one respect a little too far. He has gone far enough so far as the standard years are concerned, and I should like to say a word or two about the argument addressed to the Committee by the hon. Member for Oldham. East and the hon. Member for Orkney and Shetland (Mr. Grimond).
It would have been a great pity to have admitted 1950 as the standard year, because we must not have an Excess Profits

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Levy which is purely a piece of window-dressing; something which takes 28 Clauses, or whatever it is, of the Finance Bill, which will cast an immense burden of work on the Inland Revenue, but which really does absolutely nothing; something about which the party opposite can say, "We are carrying out our pledge in our Election manifesto, but in such a way that it will not hurt anybody."
I do not think that 1950 should be included even in the case of concentrated companies. We have put down an Amendment which is covered by the Chancellor's new proposals, and our Amendment related specifically to concentrated industries. But that only proposed that they should be allowed to take the average of 1948 and 1949; it did not include 1950. Even in that case, if 1950 is included, they would be put in a better position than if they had never been concentrated at all, and that would seem to be inadmissible.
The hon. Member for Oldham, East said the argument for putting in 1950 was that re-armament had not really started; that it could not be tied up with the Korean War; that one might just as well tie it up with the Great War, or any other war. That is not a good enough argument. What we are dealing with, if this Excess Profits Levy has any justification, is not merely the situation provoked by British re-armament, but the situation provoked by the whole change in the world situation, and by world re-armament brought on by the war in Korea. We are talking about something brought on by the Korean war situation. We had another excess profits tax to deal with the last war and the Great War, so there is a very direct connection between the two points.
There is one detailed question I wish to put to the Financial Secretary. When dealing with companies which are basing their standard on their paid up capital, why are they given the choice between 1951 and 1946? He indicated to us that it was to deal with the companies which had been affected by nationalisation. There was a point of real difficulty there which was brought out a good deal in the financial Press at the time. One can quite see in the case of a company like, say, Thomas Tilling, putting in 1951, dealing with what was a very anomalous position. But I am not quite clear why 1946
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had been put in as an alternative, and I should be grateful if whoever replies could answer that.
As my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) said, we are puzzled by these different percentages which have now been put in, and I certainly find it very difficult to see that there is any strong argument for allowing a company 12 per cent. on money which has been subscribed for shares since the beginning of the first standard year. What is the argument for giving 12 per cent. on money which happens to have been subscribed since a date in 1948 or 1949, while in the case of a company which is taking its capital standard as a whole only 10 per cent. is given on old money? That seems a very odd and anomalous position.
If there is to be a difference between 10 and 12 per cent., probably the logical way to do it would be to give 12 per cent. for all under-distribution of profits; to give a real incentive, a bigger incentive to companies to plough back and not to distribute. I certainly would support the 12 per cent. on under-distribution, but I should not have thought there was any logical case at all for having 12 per cent. on new money subscribed while having 10 per cent. for old money subscribed, particularly as it goes back three years. Not should I have thought, apart from the illogical position, that it was necessary to give this concession which will now contribute slightly to the net loss of revenue which all these changes are making.
Mr. Glenvil Hall: I have no desire to curtail this debate unduly, particularly as I notice my hon. Friend the Member for Sowerby (Mr. Houghton) desires to speak. As the Committee knows, he has an expert knowledge of Income Tax law, and it would be a pity if on this very complicated subject we failed to have the benefit of a speech from him.
We are here dealing with 42 Amendments in all, 17 of them put down by the Chancellor himself. That alone emphasise the description of the E.P.L. by the hon. Member for Oldham, East (Mr. Horobin). He is a near neighbour of mine, and when the solidarity of Oldham was broken at the last Election I, for one, was very disappointed. I did my best, with others, to try to keep him out.

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I may say, however, that my disappointment is now tempered by the knowledge that on that side of the House we have at least one hon. Member who can use words in their true meaning and who can let his own Front Bench know exactly what he and his friends think about one of the main Government proposals.
If these 17 Amendments which the Chancellor is moving are in the nature of straws, as the hon. Member said, it is a poor comment on the party opposite that they, and, indeed, we, should have to go through all this labour in order that this levy can be made workable. It shows the astonishing muddle into which the Chancellor has got himself through implementing the Prime Minister's almost casual promise, made for election purposes, that something of this kind would be done.
There is little that I can add to what my hon. Friends have said. I understand that the Financial Secretary is to reply. If I may say so, we had rather hoped to hear from the Minister of State for Economic Affairs, because there is a rumour that we may not have his presence with us for very much longer. It would be a pity if, like Gladstone, he disappeared without anyone knowing that he was going. When Gladstone went, it is said that as he left for the last time he stood at the door and took a long look at the Chamber in which he had spent so many hours of his life. No one realised at the time what a dramatic occasion it was. I hope that if and when the Minister of State for Economic Affairs is translated, he will give us due notice, and that in the meantime—and particularly on this Bill—we may have the benefit of his advice as often as possible.
I make no reflection on the Financial Secretary, of course, who has already made one speech on this series of Amendments. If the hon. Gentleman is to speak again, I want to tell him, as well as the Chancellor, that, at any rate on most of the Amendments covered by the debate, we do not intend to divide the Committee. On the other hand, our attitude to the Amendment in page 37, line 16, depends entirely on what the Financial Secretary has to say. That Amendment, which has been dealt with so ably by my hon. Friend the Member for Gloucestershire, South (Mr. Crosland), my hon.
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Friend the Member for Stechford (Mr. Roy Jenkins) and my hon. and learned Friend the Member for Kettering (Mr. Mitchison) is the one to leave out "ten," and to insert "twelve."
We cannot see why the change from 10 per cent. to 12 per cent. is being made. I listened with a fair amount of care to what the Financial Secretary said and I realise that he had a very large acreage to cover, which he did with very great ability and lucidity, but nevertheless, it is not clear to me why this change is being made from 10 per cent. to 12 per cent. I have tried to discover from my hon. Friends whether they had caught the reason, but I find that they, too, feel that he had not made it clear.
I understand that the change is to bring the percentage into line with what was done in the 1914–18 war and also into line with the Excess Profits Duty which was levied during the last war. If that is so, it is an explanation, but it is surely no real reason. I would say, therefore, that while we shall not oppose these Amendments, because we think that if we had to have this levy, these are improvements and simplify it, we do want to know why 12 per cent. is being inserted instead of 10 per cent. in subsection (2).
I hope, therefore, that the Financial Secretary will tell us quite definitely why the change has been made, because on the explanation he gives depends whether we on the Front Bench invite our hon. Friends to divide on that series of Amendments.
7.45 p.m.
Mr. Boyd-Carpenter: We have had a very agreeable debate on these Amendments, not least, I think, because the underlying note of most of the speeches has been that the more hon. Members dislike the Clause, the more they welcome the Amendments. That has certainly given us an interesting debate, which has been confined mainly to points of practical importance and of a constructive nature. I will endeavour to answer as many of them as I can.
The hon. Member for Stechford (Mr. Roy Jenkins), in his very interesting, and if he will allow me to say so without causing him undue damage in his party, very helpful speech, raised the question why we put in the alternative dates of valuation of 31st December, 1946, and

747
31st December, 1951. The reason is that which I gave, perhaps unduly briefly, in moving the Amendment—that it is to take care of the case in which, mainly owing, I think, to nationalisation, a substantial proportion of the company's assets have departed from it since 1946.
Normally speaking, if that has not happened, a company will almost certainly take the 1946 valuation for this very evident reason—that whereas, on asset values they will get 8 per cent., they will get 12 per cent. On the new money. Normally speaking. therefore, they will wish to take 1946, but we have to deal with cases where, mainly owing to nationalisation, there has been a substantial change in the size of the assets of the company. Consequently, we give them that alternative.
Mr. Roy Jenkins: The difficulty I see in allowing a choice between 1946 and 1951, rather than simply stating 1951, is that it enables most companies, to get 12 per cent. on any money subscribed between 1946 and 1951 instead of 8 per cent. to 10 per cent. I cannot see any possible justification for that.
Mr. Boyd-Carpenter: That is part of the general 12 per cent. argument, if I may put that way, to which the right hon. Member for Colne Valley (Mr. Glenvil Hall) referred, as, I think, did the hon. Member for Gloucestershire, South (Mr. Crosland). If I may, I will deal with it when I come to their speeches. The hon. Member for Sheffield, Park (Mr. Mulley) criticised the retention of 1947 among the standard years and said that in his view the only firms which did relatively well during that period were those who cashed in on the post-war boom. With respect, I think that is an excessive generalisation. If one consults the figures, it will be seen that there are a substantial number of companies which did better in 1947 than in 1948 or 1949, but to generalise from that, as he has done, is unwarranted.
It is perfectly true that there are probably some companies in that category but it is the experience of hon. Members that in all competitive and industrial and commercial life, businesses have their ups and downs. In fact, as I have said two or three times before, the general total of profits over the three years is astonishingly level and there is a very small variation among them. My right hon. Friend
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gave the figures on Tuesday night, and we think it would be unfair to deprive those companies for whom 1947 was a relatively good year of the advantage which they can get from its inclusion. It is a matter of balance, however, and the hon. Gentleman's point will be borne in mind.
Mr. Mulley: As a result of choosing 1947, a number of companies will pay less in total company taxation than they have done hitherto. That was my first point. Secondly, does not the hon. Gentleman agree that companies which are now making substantially less than in 1947, or which made less in 1948 and 1949 than in 1947, are not the kind of companies which need to be encouraged and have not made such a great contribution to our economy, either in rearmament at home or in exports abroad, by increasing their efficiency. That was the basis of my argument.
Mr. Boyd-Carpenter: I would not like to generalise, as the hon. Gentleman does. A company may be in a period of transition in a particular year. It may be laying down new assembly lines for a new model of its product, and it may do that in one of the standard years. Simply to say that 1947 was better than 1948 does not carry with it the implication which the hon. Gentleman attaches to it. He will appreciate that there are inevitable ups and downs in the industrial prosperity of individual companies, and that the particular year in which the up or down takes place does not necessarily carry the connotation which the hon. Gentleman attaches to it.
My hon. Friend the Member for Altrincham and Sale (Mr. Erroll) put in a most moving plea for the bacon industry, which he maintained was unique in his constituency. I do not think that my hon. Friend is quite right in saying that the fact that bacon was concentrated previously—incidentally, dietically that is a most disagreeable state of affairs—makes it unique. In the course of the debate we had other examples of concentrated industries. One cannot say that bacon has a special case of its own.
I agree with the hon. Member for Edmonton (Mr. Albu) that we must take the general effect of these Amendments together. They are, as my right hon. Friend explained at the outset, part of a

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set of coherent proposals for dealing with some of the difficulties which might arise under the tax. I agree with the hon. Gentleman that whether one approves of them or not they stand together.
The hon. Member for Stalybridge and Hyde (Mr. Blackburn) referred to the difficult position of certain parts of the textile industry which were re-organising after wartime concentration during some of the standard years. We appreciate their difficulty, which I think will be helped by a number of proposals in these Amendments and by subsequent Amendments, in particular by the alteration in the overriding maximum which we wish to put into effect in Clause 37. I have no doubt that the general effect of my right hon. Friend's proposals will be to make the position of these mills better than it would have been under the tax as originally presented. The same remarks apply to those hon. Members who have raised the position of the blitzed cities. We hope that the various adjustments we have made will cause the impact of the tax upon them to be less serious.
The hon. Member for Gloucestershire, South referred in particular to the case of the Bristol Corporation. His hon. Friend the Member for Bristol, South (Mr. Wilkins) was good enough to give me notice that this particular point, which is both interesting and important, would be raised. As I understood one part of the argument of the hon. Member for Gloucestershire, South, it was that the treatment of Bristol might be too favourable. That, I am bound to say, is an unique criticism, during all the criticisms that we have had on this tax. It confirms the high standard of honesty which has been maintained by the city of the merchant venturers, but I do not think that the unusual criticism is really justified.
The hon. Gentleman took the point that the city of Bristol had lost its electricity plant under nationalisation—I must comment that that was not my fault—and therefore a valuation of its assets in 1946 would include an asset which was no longer with them, even in the last part of the standard years. I believe that even under the proposals for which right hon. Gentlemen opposite were responsible compensation was made available to some extent. I believe it was the extent of the liabilities outstanding on the electricity
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enterprise. That compensation, such as it was, would no doubt be employed by the city in some other directions. They presumably added it to the assets of the city.
In any event the city would have available to them the alternatives which are given. In particular, they would be able to take advantage of one of them, that is to say, the 8 per cent. of the assets. I do not think that Bristol would suffer unduly under that head. I do not suppose that the hon. Gentleman is desirous of pressing too much the point that the city may have been unduly favourably treated.
Mr. Crosland: I fully agree with the Financial Secretary on this point. I was not pressing the case of Bristol Corporation, but I think they are being too favourably treated, if my argument is right. I do not think the hon. Gentleman's answer can be right as he put it. When these electricity undertakings were nationalised, there was, in the case of local government undertakings, no capital transaction at all. The British Electricity Authority became responsible for the interest charges on the stock concerned. There was no capital transaction, and that would have the effect of reducing the 1946 position of the city. The net assets would be the same.
Mr. Boyd-Carpenter: The exact effect in the case of any particular city would depend upon the amount of liability outstanding on its electricity account. I do not know what the figures were in the case of Bristol. It would depend on how much liability was outstanding. I think that is the point. There would undoubtedly be some compensation to the city, unless there were no liabilities outstanding at all. I do not want to go too far into this subject. I took a strong view at the time, as representing a town with a very progressive power station. But that is an old story.
Mr. Glenvil Hall: I think there was some allowance made, although not in full, for severance. That may mean some additional loss which fell upon the city of Bristol.
Mr. Boyd-Carpenter: Some additional compensation in respect of severance. in any event, that is not a grievance arising out of the tax. We are now on the suggestion that the city has been unduly

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favoured, but that was certainly not the line taken by those who have written to the hon. Member for Bristol, South. We will, of course, look into that whole aspect of the matter which has been so helpfully and courteously put forward. We wish this tax to be fair, neither unduly favourable nor unfavourable, to an ancient city like Bristol.
Mr. W. A. Wilkins: The position has been changed by the tabling of a proposed new Clause.
Mr. Boyd-Carpenter: This is a good example of the relief which these Amendments will give in these difficult cases. I think the only fear of the hon. Member for Gloucestershire, South is that they may be treated unduly favourably.
The hon. Member also asked why we had the various percentages: 8 per cent. on the net assets, 10 per cent. on the nominal capital and 12 per cent. on the new capital. Those figures were not, as was suggested by the hon. and learned Member for Kettering (Mr. Mitchison), due to some dislike within the Treasury for certain types of digit. The 8 per cent. on net assets is inserted in what hon. Gentlemen will appreciate is an alternative standard, introduced with the intention of dealing with particularly hard cases where the capital actually employed is greatly in excess of the nominal capital. We feel, therefore, that there is no need to go quite as far as the 10 per cent. on nominal capital.
This is an alternative, designed to take care of particularly hard cases where there is a big disparity. The figure of the war-time E.P.T., which is in some ways comparable with this system, was 6 per cent. There was criticism that it was unduly low and we felt, in the circumstances, that 8 per cent. was right for this alternative.
8.0 p.m.
The 10 per cent. which was in the original proposals is for the nominal capital in the standard period. It is, of course, to some extent a matter of judgment what is, on the consideration of a mass of figures, the right figure to insert. However, we thought that, on the nominal capital basis, 10 per cent. was a proper figure and nothing we have heard in our consideration of the various representations has altered that.
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Then there is the matter dealt with by this specific Amendment of the 12 per cent. of what I may call new money, because it applies to both profits ploughed back and equally to capital newly raised. Hon. Members will recall that the 10 per cent. was provided simply as an alternative in respect of a business which is not reaching the profits standard and which, therefore, ex hypothesi was not doing particularly well. It was to some extent a rescue provision.
The 12 per cent. for new money is not a rescue operation at all. It relates to moneys ploughed back or new capital raised by up-and-coming and expanding businesses. And if 10 per cent. is right as a rescue operation in the case of firms not doing particularly well, it seems reasonable to provide a higher standard of relief for expanding industries.
This tax has been criticised on the basis that it is hard on the progressive industry, and it is with a view to relieving that to some extent that we have made this 12 per cent. provision in respect of new moneys. Hon. Members may or may not take the view that those are right figures, but I hope these considerations indicate that these figures are part of a definite plan for the application in, I think, an improved form of this tax.
Those were the major issues raised in the course of this discussion. The Amendments moved some little time ago do, I think, in the general expression of opinion of hon. Members, constitute in greater or lesser degree an improvement in the provisions in the Bill. As my right hon. Friend explained on Tuesday night, they are designed to deal with difficulties which we thought might arise in the operation of the tax and they are inspired by the desire to see that this tax does not hamper the continued expansion and efficiency of British industry.
Mr. Jay: Can the Financial Secretary tell us whether the reason he has been given such an unfair amount to do is due to the fact that the Minister of State, like everybody else, is opposed to this tax?
Mr. Boyd-Carpenter: I am glad to be able to reassure the right hon. Members for Battersea, North (Mr. Jay) and Colne Valley. If, as I hope, we proceed to subsequent Amendments on this Clause, hon.

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Members will have the pleasure of hearing my right hon. Friend in the immediate future.
Mr. Crosland: If I may intervene briefly once again, I want to say something about the case of undertakings which have progressed from being a body with no share capital to being nationalised industries. I do so, not necessarily to elicit a further answer from the Financial Secretary, but to put the difficulty on the record.
The position seems to be that all the local authorities concerned will choose the net assets standard. They will also choose the end 1946 assets standard. When the electricity undertakings were nationalised at the end of 1948, no capital transaction took place between the British Electricity Authorities and those bodies in the case of the local authority undertakings. No compensation stock was handed over, but the British Electricity Authority became responsible for the interest charges on that section o1' the stock of the corporation concerned.
Mr. Boyd-Carpenter: Perhaps the hon. Gentleman will allow me to add the fact, to which his right hon. Friend referred, that there was in some cases—I am glad to say in one specific case—compensation for severance.
Mr. Crosland: Of course they took over liabilities. I am talking of the case where assets exceeded liabilities, which was not uncommon. In that case it might be that a local authority which, since the end of 1948, has not operated its electricity undertaking at all, can include in its figure for net assets at the end of 1946 a matter of £2 million, £3 million, or more, on which it is apparently allowed 8 per cent. I cannot find any provision in the Bill which would prevent this from happening because, in the cases where a nationalised industry took over going concerns, they are specifically excluded from the operation of Clause 41 by the operation of Clause 49.
I am sorry if I gave the impression that Bristol is being too generously treated. It is, however, a genuine point because, if I am right about this, Bristol would stand to lose.
Mr. Boyd-Carpenter: It is a log-roll in reverse.
Mr. Crosland: Yes, but we may be in a position where the same electricity assets are now allowed two amounts of allowance against E.P.L., one in the case of the local authority concerned and the other in respect of B.E.A.
Mr. Houghton: My few remarks call for no special reply from the Financial Secretary, so nothing will be lost in making them after his reply to the debate. However, it seems to me worth while to put on record that the history of the Excess Profits Tax is now repeating itself. When the first Excess Profits Tax was introduced, the Finance Act consisted of 11 Clauses and one Schedule but, in the Finance Act, 1940, what was later to become an administrative and legislative monstrosity, was already taking shape. We see now that the Chancellor first introduced into this Bill an Excess Profits Levy which he hoped would be simple and streamlined and would be rid of many of the bugbears of earlier legislation.
This set of Amendments shows the course that this Bill is taking. It means that for as long as we have an Excess Profits Tax we shall be discussing anomalies, the difficulties of particular interests, the hardship of the incidence of the tax on the special circumstances of individual companies, and so on. I suggest that the hon. Gentleman should take counsel of his right hon. Friend the Chancellor to see whether, in pursuing these proposals in the Finance Bill this year, they should register their determination to bring this form of taxation to an end much earlier than perhaps the Committee is expecting.
I suggest that, because there can be no end to trouble in this Committee as long as we have this Excess Profits Levy. What astonishes me is that the Chancellor should have learned so little from the experiences of his predecessors. One wonders what influenced his mind to go ahead with proposals which would so obviously come unstuck in a most serious way when they were closely examined by all those primarily interested in its effect.
I am sorry to pour cold water on the Financial Secretary's enthusiasm for the tax and the gusto with which he sails into its complexities and difficulties, but I warn him that he is saddling the whole

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of industry, the accountancy profession, the Inland Revenue Department and the whole community with a noxious tax, unfair tax, and one which will lead to further abstruse Amendments and new Clauses as time goes on.
Mr. Stevens Mr. Stevens rose—
Mr. Houghton: I have finished what I had to say, and I do not think that the hon. Member would have assisted me in my concluding remarks.
I think it is obvious to the Committee where we are all getting to, and perhaps it is worth reminding the Committee of how we started on the same course as we did on two previous occasions, although both of them were in war-time. The right hon. Gentleman and the Financial Secretary will regret that they ever wrote into the Conservative manifesto a pledge to introduce a form of taxation on such lines as these.
Mr. Stevens: By what authority does the hon. Member speak for the accountancy profession?
Mr. Houghton: I have yet to learn that any Member of the House is barred from expressing an opinion on any matter before the Committee. Does the hon. Gentleman deny that this new levy will impose fresh burdens upon the accountancy profession? Is he suggesting that we can express an opinion only if we have some direct professional representative capacity in the matter? That intervention was not only irrelevant and stupid, but was impertinent.
Amendment agreed to.
Further Amendments made: In page 37, line 3, leave out from "commenced," to end of line 7, and insert:
"on or before the first day of January, nineteen hundred and forty-seven, be half it profits for the standard years."
In line 8, leave out "standard period," and insert "first of the standard years."
In line 16, leave out "ten," and insert "twelve."
In line 17, leave out "ten," and insert "twelve."
In line 19, leave out "during the standard period," and insert:
"after the beginning of the first and before the end of the second of the standard years."
In line 21, leave out "ten," and insert "twelve."
In line 23, leave out from first "of," to "and," in line 25, and insert:
"so much of the standard years as precedes the receipt or payment bears to two years."
In line 28, leave out "ten," and insert "twelve."—[Mr. Boyd-Carpenter.]
The Deputy-Chairman: The next Amendment to be called is that in page 37, line 32, in the name of the hon. Member for Altrincham and Sale (Mr. Erroll).
Mr. Roy Jenkins: On a point of order, Mr. Hopkin Morris. When Sir Charles was in the Chair, my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) raised the question of the Amendment which appeared in his name, in page 37, line 7. We made submissions to Sir Charles, whose view was that the Amendment was covered by the Chancellor's Amendment and was not in fact valid, but his decision was that he would reconsider the matter and would call the Amendment.
The Deputy-Chairman: I am afraid we have passed that Amendment and cannot go back to it now.
Hon. Members: Oh.
8.15 p.m.
Mr. Glenvil Hall: We noticed your omission of the Amendment, Mr. Hopkin Morris, and we came to the conclusion that in order to make progress and not to muddle the Committee—and, goodness knows, we have in all conscience been muddled with this very long series of changes, which were referred to by the hon. Member for Oldham, East (Mr. Horobin) as "straws"—we would let it go by.
But, surely your predecessor in the Chair definitely agreed that the Amendment in question was one that should be called, and as it is one of the few that we have on the Order Paper—it is the second Amendment standing in the name of anyone on this side out of about 50—may I put it to you, not only as a point of substance that the Amendment should be discussed, but also as one of fairness to Members on this side who have put down very few Amendments to these Clauses, that we should, therefore, in view of your predecessor's decision, be allowed still to discuss it.
The Deputy-Chairman: I am very sorry that there is no possibility of doing that now. We have passed it.
Mr. Ralph Assheton: May I say a word to that point of order?
The Deputy-Chairman: May I say. first, that we have gone past it, and that the only method of discussing it now would be on the Motion that the Clause. as amended, stand part?
Mr. Jay: Further to that point of order. The reason why we passed the Amendment was that although we were observing the Amendments as we passed that point, we thought, Mr. Hopkin Morris, that you were taking the Chancellor's Amendments in a series first and would then return to this one. There is a misunderstanding, obviously, of some kind, but we have a clear recollection that your predecessor in the Chair agreed after some discussion to take the Amendment, on which we wanted to put forward our views.
Mr. Assheton: I do not know whether I can help to clear up the misunderstanding. The hon. Member for Gloucestershire, South (Mr. Crosland), in whose name the Amendment appears, had a word with me about it, and I understood from him that he did not want it to be called. The hon. Member is not here now, but I think that that was his view.
The Deputy-Chairman: There may have been some understanding between various hon. Members, but I am bound by the decisions we have reached and we have gone past that part of the Clause. The only possibility of discussing the Amendment now would be when we come to the question that the Clause, as amended, stand part.
Mr. Erroll: I beg to move, in page 37, line 32, at the end, to insert:
(iii) no sum in excess of the amount by which the capital of a body corporate is reduced shall be treated as a sum paid by way of repayment of any of its share capital, and subsection (3) of section fifty-seven of this Act shall apply subject to this proviso.
It sometimes happens that a company may wish to make arrangements with its shareholders for the reduction of its share capital, and in satisfaction, on securing the agreement of its shareholders, it may either make a distribution in cash or elect to make a distribution of its assets.
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For the purpose of my Amendment, the cases which most commonly arise are those where the shareholders are other companies which have an interest in the principal company. The reduction in the capital of the principal company is the result of an agreement whereby certain assets or cash may be more usefully employed by the receiving companies who may be shareholders in the principal company. This Clause takes account of the fact that capital of a company may be reduced and where it is reduced the standard is reduced accordingly by 10 per cent.
That is accepted in a later Clause where the shareholders are satisfied by means of a cash payment, but the difficulty arises where the shareholders receive assets or valuable consideration in a form other than cash. It is laid down in Clause 57 (3), that in such cases the amount so transferred will be regarded as having a certain cash value and the capital reduction standard of the principal company will be reduced by an amount equivalent to the cash value of the assets transferred and not by the actual reduction in capital agreed upon with the courts in the total capital of the principal company.
It may well arise that a firm distributing its assets to subsidiary companies in this way may have its standard lowered by a considerably greater amount than is in fact justifiable. It will he borne in mind that a company can only have its capital reduced on application to the court and with the consent of the court, so that the amount of reduction agreed upon will be a fair, true and proper amount. I submit that it would be highly improper if the value of the assets transferred in satisfaction to the shareholders were to be written up to a nominal cash value by the Commissioners and that sum used as the notional amount by which the capital had been reduced.
It is only right that what applies one way should apply the other way. That is the basis of my Amendment. The matter becomes even more important where the related companies may themselves have their shares quoted on the Stock Exchange and those shares may rise in value as a result of the transfer of the assets. They may rise in value by a greater amount than the capital of the principal company has been reduced.

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There is a danger that the Commissioners might take the rise in the Stock Exchange value of the shares of the receiving companies as the cash value of the valuable consideration so transferred.
That, of course, would be manifestly unfair because they would not have taken into account the amount by which the shares of the principal company would have fallen as a result of the reduction of capital and the transfer of the assets. This might not happen, of course, but it is the sort of thing which can easily happen. I felt that, as the sums of money involved could be very considerable in the case of some of the companies likely to be affected, it was advisable to move this Amendment in the hope that my right hon. Friend will accept it and thus safeguard the position and prevent a manifest unfairness from occurring.
The Minister of State for Economic Affairs (Sir Arthur Salter): Perhaps I ought to start by saying that I am not rising for the reasons suggested by the right hon. Member for Colne Valley (Mr. Glenvil Hall) or the right hon. Member for Battersea, North (Mr. Jay), the suggestion in each case being without foundation. I rise for the modest purpose of commenting on the Amendment before us and on the remarks of my hon. Friend the Member for Altrincham and Sale (Mr. Erroll).
I had some difficulty, on seeing the Amendment on the Paper, in understanding precisely what was the point it was desired to correct. It was only as I heard the explanation of my hon. Friend that I began to realise what he really desires to achieve. I think his Amendment is based in some respect on a misapprehension. This Clause does not do quite what he thinks, nor I think would his Amendment serve the purpose he has in mind. The Clause as it stands deals with changes in share values. Any sum paid to the shareholders in excess of the actual capital repaid is not treated as a reduction of capital; it is treated as a distribution of profits under the Ninth Schedule and, in order to meet the point my hon. Friend raised, he would have to make an Amendment to that Schedule.
That could be a reason for my suggesting that this Amendment should be rejected, but if the purpose were a good
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one, I would have suggested an Amendment on the Report stage. But the grievance is not a real one at all. We are not dealing only with changes in the capital structure, the nominal structure, of a company.
The main position is that in imposing Excess Profits Levy, everyone realises that we cannot simply take the standard profits and the excess profits without some allowance for changes which may have taken place in the meantime in the capital resources of the company in question. What matters is not just changes in the capital structure of the company, but changes in the real capital resources of the company. An amount is distributed to shareholders in the sense of the Schedule.
Supposing, for example, that investments are given to shareholders which are either without diminution of share capital or in excess of the diminution of share capital, that is a distribution of profit. It reduces the earning assets of the company. It must be assumed that the excess profits shown after that operation at x pounds would have been x plus so many pounds had that transaction not taken place.
In fact, this is the exact converse of the arrangement made in the case of new capital resources, secured, for example, by the ploughing back of profits in the period in question; in that case an appropriate allowance is made by the increase of the standard. This is the precise converse of that, the reduction of the standard because the earning assets have been reduced. I think, therefore, that apart from the fact that I do not think the Amendment serves the purpose my hon. Friend apparently had in mind and what he put as a grievance was not a real grievance, I am afraid I must ask that the Amendment should be rejected.
8.30 p.m.
Mr. Erroll: I should like to have some time in which to study the explanation given to me by my right hon. Friend. In the meantime, I beg to ask leave to withdraw the Amendment, and I shall table another Amendment on Report if the matter is not quite cleared up.
Amendment, by leave, withdrawn.
Amendments made: In page 37, line 37, leave out from second "the," to second "and," in line 38, and insert

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"relevant date (as defined in subsection (6) of this section)."
In line 41, leave out "ten," and insert "twelve."
In line 42, leave out "ten," and insert "twelve."
In page 38. line 1, leave out subsection (4), and insert—
(4) A body corporate may, if it thinks tit, elect either—

(a) that its profits for one of the two standard years (to be specified in the election) shall be taken for the purposes of subsection (1) of this section to have been an amount equal to eight per cent. of the average amount of its paid-up share capital in that year: or

(b) that an amount equal to ten per cent. of the amount of its paid-up share capital at the end of the year nineteen hundred and forty-six or the year nineteen hundred and fifty-one (as may be specified in the election) shall be taken for the purposes of this section to be the amount arrived at in its case under subsection (1) of this section; or

(c) that an amount equal to eight per cent. of the amount by which at the end of the year nineteen hundred and forty-six or of the year nineteen hundred and fifty-one (as may be specified in the election), the value of its assets, computed in accordance with the provisions of the Schedule (excess profits levy: computation of value of assets and liabilities for purposes of capital standard) to this Act exceeds the amount of its liabilities so computed, shall be taken for the purposes of this section to be the amount arrived at in its case under the said subsection (1);

and the preceding provisions of this section shall have effect accordingly:
Provided that where an election is made under paragraph (b) or paragraph (c) of this subsection, subsection (2) of this section shall not apply to sums received or paid before the end of the year specified in that election.
(5) Subject to the provisions of this Act, the standard years for the purposes of the excess profits levy shall, in the case of any body corporate be the years nineteen hundred and forty-seven and nineteen hundred and forty-eight, the years nineteen hundred and forty-seven and nineteen hundred and forty-nine or the years nineteen hundred and forty-eight and nineteen hundred and forty-nine, as the body corporate may elect:
Provided that where, at the beginning of the period of charges to the excess profits levy, the main part of the body corporate's trade or business was carried on in territory which, at any time during the years nineteen hundred and forty-two to nineteen hundred and forty-five, was under Japanese occupation, the body corporate may, if it thinks fit, elect that the standard years shall be the years nineteen hundred and forty-nine and nineteen hundred and fifty.
(6) The relevant date referred to in subsection (3) of this section is, where an election
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is made under paragraph (b) or paragraph (c) of subsection (4) of this section, the first day of January immediately following the year specified in the election, and in any other case, the date specified in the following Table opposite the years which, in the case of the body corporate, are the standard years

TABLE

Standard years

Relevant date

1947 and 1948

…

…

1st July, 1947

1947 and 1949

…

…

1st January, 1948

1948 and 1949

…

…

1st July, 1948

1949 and 1950

…

…

1st July, 1949

In line 24, after "if," insert "the references to twelve per cent. were references to fourteen per cent."
In line 26, leave out first "reference," and insert "references."
In line 26, leave out, "a reference" and insert "references."—[Sir A. Salter.]
Mr. Albu: I beg to move, in page 38, line 26, at the end, to insert:
"for the purpose of this subsection a director means a director of the body corporate who throughout the whole of the chargeable accounting period worked full-time in the actual management or conduct of the trade or business of the body corporate."
In the whole course of the proceedings on this Bill, anxiety has been expressed about the small developing companies which are likely to be affected by the levy. This has been particularly the case in areas such as Lancashire, where there is unemployment at the present time and where it is quite obvious there must he some diversification of industry. We all want to see new and vigorous companies expanding and being encouraged to go' and start up business in those areas.
I think we all welcome the assistance that has been given to these smaller companies, partly in the Bill itself in its original form and partly in the Amendments. In fact, very considerable concessions have been made if one includes all the director-controlled companies. In Clause 30, concessions are made to such companies in the Profits Tax whereby the total number of directors is increased to four and the total amount of the allowance allowed to directors is increased to £7,000.
In this Clause we have substantial reliefs for these small companies which are enabled to take as their profits standard based on assets employed, or on the capital standard for a single year, instead of the 8 per cent.—10 per cent. and whose

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standard based on their paid up share capital, either before or after the standard period, rises from 10 to 12 per cent., while that on distributed profits goes up from 12 to 14 per cent.
In addition, of course, there has been the raising of the minimum profits standard, in the Amendment which the Chancellor of the Exchequer will move on Clause 35, from £2,000 to £5,000. We are entirely in favour of giving this concession if the effect of it is to assist the type of companies we have in mind and to be a direct incentive to their efficiency and initiative. But I suggest that on this Clause the concessions really go very wide indeed, because of the use of the word "directors" in the description of the companies which are to receive this benefit.
Director-controlled companies can include a large number of persons who play no active part in the management or direction of the company. Our argument is that this is not the right way to give this batch of concessions, which are very substantial indeed when they are added to the amendment the Chancellor has made to the figures for ordinary companies. Some of my hon. Friends have already commented on the figure of 10 per cent. as the rate on new money, and of course to these companies it will be the substantially higher figure of 12 per cent.
The purpose of this Amendment is to restrict the concessions that are given to these smaller companies to companies in which the directors play a continuous and active part. This is not a new idea. There are quite respectable precedents for doing this sort of thing. For instance, in the not very lamented Excess Profits Tax introduced in the second Finance Act of 1939, a concession was given to working proprietors, who were defined as proprietors who over one-half of the accounting period were in full actual management or conduct of the trade or business. And the expression "proprietor" meant, in the case of a company, a director who owned not less than one-fifth of the shares of the company.
Under the previous Government, in the Finance Act of 1948 in the case of the Special Contribution, concessions were given to a working director who was
764
defined as a director of a private company, being a company in which the directors had a controlling interest and worked full-time in the actual management or conduct of the business of the company.
We ask that this range of concessions, giving an extra 2 per cent. on the profits standards for the purpose of the Excess Profits Levy, should be restricted in a very similar way to the restrictions made in the instances I have just quoted. I think it important to make this clear distinction. I cannot see why the profits figures that are now allowed for ordinary companies are not perfectly adequate for ordinary director-controlled companies where the directors are not themselves active working managers or actively participating.
It is very important to make this distinction, because I think that there is a good deal of confusion about the effect of profits as an incentive to increased output, increased efficiency and so on. It is obvious that the profits can provide no real incentive to directors or shareholders who play no part in the business.
I am not arguing the question whether or not they are sufficient to attract risk capital. That matter has already been referred to by my hon. Friend the Member for Gloucestershire, South (Mr. Crosland), who put forward the view that the amounts already allowed for ordinary companies were quite adequate for that purpose. If we are to go further and give a concession to smaller and expanding companies—to people who put in their own money and try to develop and build up their own companies—I think we must be careful not to carry the concession too wide. It is for that reason that I move this Amendment.
The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. R. Maudling): The companies to which this particular provision refers would, no doubt, be mainly small companies; but it is not because they are small companies that this particular additional percentage is granted. There is a specific reason, and I hope that when I have been able to explain it I shall be able to persuade the hon. Member for Edmonton (Mr. Albu) to withdraw his Amendment.
The point is that the assessment for the Excess Profits Levy is based on the Profits

765
Tax assessment, with certain Amendments contained in the Eighth Schedule. For Profits Tax purposes, all director-controlled companies are subject to very strict limitations on the amount that can be treated, for the purposes of tax assessment, as directors' remuneration. In the case of people who are not working substantially whole-time there is no allowance, and there are substantial limitations for the working directors.
It is because of this limitation for Profits Tax purposes, which applies also to the assessment for Excess Profits Levy purposes—which does not apply to companies which are not director-controlled—that this particular additional percentage has been added, and it is because the limitation applies to all companies that are controlled by their directors and all such director-controlled companies suffer the limitation that, in my submission, all such companies should receive the benefit of this additional 2 per cent.
If the hon. Member's Amendment were accepted, it would mean that a proportion of the companies would suffer the disallowance of directors' remuneration but would not get the benefit of the additional 2 per cent. I hope that the hon. Gentleman will agree that I have made that clear and that he will, therefore, withdraw his Amendment.
Sir Frank Soskice: I am sure that we feel the force of what has been said. Nevertheless, it still remains the fact that the indulgence given to director-controlled companies by Clause 33 (5) is very valuable. I quite agree that one has to take into account what the hon. Gentleman has said—the counter-balancing disadvantages which impinge on director-controlled companies under the Profits Tax provisions applicable for the purposes of assessing profits for Excess Profits Levy—but if the hon. Gentleman says that there is that counterbalancing disadvantage and one should be generous in one's provision under subsection (5), perhaps he would give some idea how the compensating advantages and disadvantages work out in terms of figures.
True, for the purpose of Profits Tax, there is a limit on the amount to be treated as a deduction when it is paid out to directors; but nevertheless, forming a
766
first-blush view opinion of it, it would seem that to increase the amount which can be taken for the purpose of computing the standard profits for director-controlled companies—as under Clause 33 (5)—an unduly valuable advantage is being conferred upon companies, if it is to be so widely conferred.
The only thing that my hon. Friend seeks to do is to confine this valuable advantage to those director-controlled companies which he has described. I quite agree that there is the disadvantage which the hon. Gentleman has mentioned but is that an answer to the argument advanced, which is to the effect that, as subsection (5) reads at present, a director-controlled company is a company the directors of which have control of it in the ordinary and unlimited sense?
8.45 p.m.
Surely there is a strong case for saying that if we are to advantage particular companies, then we will choose words in our provisions limiting the advantage to those companies which we have in mind. These are companies which, in effect, are worker by the persons who control them, as directors. They are companies which formerly, perhaps, represented partnerships—persons who had built up their business—and which have since gone over to being companies and are now worked in substance by the directors, who spend their whole time in the business.
I hope I have done justice to the hon. Gentleman's argument, but it seems to me, in spite of what he says, that there is great force in the argument of my hon. Friend the Member for Edmonton. It seems that, at the moment, the definition of a company which is to have this indulgence made in its favour is a great deal too wide, and what my hon. Friend wanted to do—to limit the category of directors who could be considered to come within the subsection for this purpose—is perfectly reasonable. What is sought by his Amendment is to use a phrase which has been used in another context and to limit the directors to those who work full-time in the actual management of the company.
Speaking for myself, and bearing in mind the object of the Amendment, as explained by my hon. Friend, I hope that the Parliamentary Secretary will give the Amendment further consideration. As

767
the subsection is worded it travels far too wide, in spite of the consideration to which the Parliamentary Secretary has called attention.
Mr. Maudling: I will certainly look with care at what the right hon. and learned Gentleman has said, but I would point out that the wording of the Amendment is considerably wider and more far-reaching than that of Clause 30, which contains the Profits Tax provision of a similar nature. For that reason, the Amendment as it is worded is not acceptable. I will look at it again, but I still maintain that the purpose of covering all companies of this type and of giving this concession to all director-controlled companies, on the principle that they all suffer limitation of profits, is correct. I think that principle stands, but I will look into the comments made by the right hon. and learned Gentleman and his hon. Friend.
Mr. Albu: I do not think the explanation which the hon. Gentleman has given is satisfactory. We are all well aware that in the calculation of profits these companies are restricted in the ways which he described, but, of course, he is giving a very valuable concession here, and our view is that it goes very wide unless there are restrictions in the way which we have suggested. For that reason, I cannot withdraw the Amendment.
Mr. John Edwards: I think the Parliamentary Secretary to the Ministry of Civil Aviation is always very clear and brief, but on this occasion I did not find him completely convincing. We are all familiar with the time-honoured device of saying. "Of course, we will look at it again." We have to have regard, however, to the spirit in which that is said, and nobody can suggest that the Parliamentary Secretary was at all encouraging. He said, of course he would look at it again, but he gave the impression that in his considered judgment, which appeared almost final, he could not yield on this point. In view of that, we must accept it that he is rejecting the Amendment.
It is the advantage of having a degree of precision in these matters which I think is important here. I need not deploy all the arguments again, but unless the Parliamentary Secretary is prepared to say, in a sympathetic and forthcoming way, that this
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matter will be reconsidered and that he will do his best to see whether he can meet us on the Report stage, I am afraid we can do nothing but divide the Committee.
Mr. Maudling: I always listen with attention to arguments adduced by the hon. Gentleman, and I shall certainly consider what he and the other hon. Gentlemen opposite have said, and I shall discuss the matter with the Chancellor, but my authority, as the hon. Member for Brighouse and Spenborough (Mr. J. Edwards) will appreciate, cannot possibly go beyond that. I must say that I am not myself yet convinced, but I will consider carefully what has been said and discuss with my right hon. Friend the arguments put forward in support of this Amendment. I do not think that the hon. Gentleman can really expect me to go any further.
Mr. J. Edwards: May I press the hon. Gentleman just a little farther? That means that, as far as it lies in his power, he will give us an opportunity to discuss the matter on the Report stage in the light of the discussion we have now had?
Mr. Maudling: I will discuss the matter with my right hon. Friend. I cannot possibly go further.
Mr. Roy Jenkins: Do we understand that the Parliamentary Secretary still stands on the principle that it would be quite wrong to define director-controlled companies differently for the purposes of this Clause than for Clause 30? Does he still stand on that? I think he made rather a point of that. If he still stands on that principle—I am not sure whether he shook his head to indicate he did not—but if he still stands on that principle it will be very difficult for him to look sympathetically on my hon. Friend's Amendment, and I do not think that we can expect very much from his promise to look at the matter again between now and Report stage.
Amendment negatived.
Sir John Barlow: I beg to move, in page 38, line 33. at the end, to add:
(6) Where a body corporate's trade or business consist wholly or mainly of the production of raw natural rubber the preceding provisions of this section shall have effect as if the references to ten per cent. were references to twenty per cent. and the reference to eight per cent. were a reference to sixteen per cent.

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The Committee will recall that a large number of companies in Malaya and elsewhere in the Far East were unable to operate in any way during the occupation by the Japanese in the period from 1942 to 1945. The Chancellor of the Exchequer has made provision, I am glad to say, to bring in the years 1949 to 1950 for them, because it is obvious that those companies that could not operate during the war took a long time to resuscitate their estates afterwards, and their products of rubber and vegetable oils, and so on, are of immense value to this country in dollars.
I am delighted with, and thank the Chancellor for, those concessions, and, on behalf of all rubber growers and people who will benefit, I thank him for remedying what was originally in the Bill a gross injustice. We hoped, of course, that he would grant this industry complete exemption, but, being practical people, we thank him for small mercies and greatly appreciate his action.
The object of the Amendment is to meet an injustice which the Chancellor has not met in the other way. I refer in particular to companies situated largely in Indonesia with registrations in this country—companies that could not gain possession, and, in some cases, have not yet gained possession, because of political troubles and upheavals in that country. Many of those estates had been only partially restored to their owners in 1948 or 1949, and the standard years of 1949 and 1950 will be of no use to them whatsoever. For that reason they will have to fall back on the alternative standard of the percentage of issued capital.
The value of these estates for a planted area is probably an average of about £50 an acre, which represents the value of the factories, the equipment, the bungalows, the housing and all the welfare of the natives. But costs have increased so much since these companies have started that now the cost of replanting the rubber alone is probably £100 an acre, and as rubber has to be replanted approximately every 30 years it is most important that the replanting should be done as it becomes due.
Under the present method of E.P.L. these companies will not have the profit to devote to that purpose. It is therefore most important that, in common justice, these companies, some of which are not
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yet back in the hands of their owners, should have a considerably higher percentage standard. That is the object of this Amendment. I agree that its wording could be substantially improved, but I hope my hon. Friend will see the point of the argument and will do something to remedy this injustice, which is a very real one to a substantial number of London companies.
Mr. Maudling: The position of the rubber industry in relation to E.P.L. is one of very great importance, and my right hon. Friend has introduced a number of Amendments designed to assist it, in company with a number of other industries similarly affected. I will certainly convey to my right hon. Friend the very friendly remarks of my hon. Friend.
The Chancellor has done two major things to help the rubber companies operating in the Far East. There is, in the first place, the opportunity given to them to have the standard years of 1949 and 1950, which will undoubtedly be of very great assistance indeed to the industry taken as a whole, though obviously some companies will benefit from this concession less than others. In addition to this concession, there is the special overriding maximum of 10 per cent. for overseas companies as opposed to 15 per cent. for borne companies. This, my right hon. Friend believes, will in practice be a very valuable concession for companies operating overseas. In these circumstances, in view of the concessions my right hon. Friend has already made, I regret to say that I must ask the Committee to reject this Amendment.
Sir J. Barlow: I am rather sorry that the Chancellor has not been able to make some concession in this respect. At the same time, as my hon. Friend has said, the industry as a whole has had considerable concessions. In spite of what has been said, I hope the Chancellor will think about this again before the Report stage, because there is no doubt that it is a very grave injustice to a certain number of companies which cannot take advantage of the present concessions. With that pious hope, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
9.0 p.m.
Mr. Horobin: I want for a moment to raise a point which I took the liberty of informing the Chancellor I wished to have cleared up. It is one of fundamental importance in the effect of this Bill on industry, and as this Clause with its standard years and alternative standards really determines the net effect of this tax, this seemed an appropriated stage on which to raise it.
It arises out of the effect of this tax on growing firms. This, as we all know, will in any case be very considerable. I have a particular case in my part of Lancashire where it is true that the new standard years will make a difference of probably £5,000 a year to their benefit in the net effect on their standard rate of profits; but they will, as nearly as we can calculate at the moment, be paying out of about £60,000 profits in the last year something like £45,000, all told, in direct taxation. That will put an enormous pressure on the moneys available for development.
This firm—and it is typical of many—is of enormous importance in that area, because it is exactly the kind of firm which we want to attract in Lancashire. It is not a cotton firm at all. The importance of it—and I commend this to right hon. and hon. Members opposite—may be indicated not only on the financial side, the figures of which I have given, but in its effect on employment. In 1946–47 it employed 20 men; it is now employing 450. The real point of the effect of this tax on growing firms is not only its financial effect but its enormous effect on the employment available to our workmen.
The point I want to have cleared up is this: There appears to be a considerable difference of opinion as to the net disincentive effect of this tax upon industry. A figure as high as 85 per cent. has been calculated. An hon. Member says that that figure is quite wrong, and I believe that it is challenged by the Chancellor of the Exchequer. It is very important that those of us who are unhappy about the tax should not over-state our case, and I am sure that the Financial Secretary or the Chancellor of the Exchequer will agree that if it can be shown that the figure is not as high as that which has been quoted in the responsible Press—for instance in "The Times"—
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it would be useful to take this opportunity of showing that they are wrong. It is not disputed that the effect is heavy, but if it is as heavy as that, I think that it will be agreed that it is criminal.
It is very possible that those who have made this calculation are in fact, incorrect. I will try, in a couple of sentences, to put to the Committee how that figure is arrived at, so that the fallacy, if there is a fallacy, can be shown. The argument, in short, is exactly the same argument as that which was put up by the Colonial Secretary in defending the Chancellor's remissions of Income Tax. The Chancellor made a great improvement by this three-decker tax by making none of these taxes affect any of the others, so we have to calculate each separately or none. If we take the normal business practice of distributing one-third of the profits and paying two-thirds tax, it is very simple to calculate what is the rate of tax which we are dealing with on the extra moneys earned in any one year.
That is the essence of the disincentive effect of the tax—not the total tax on the total income but the extra tax on the extra income. That was the argument deployed at great length, and, most of us thought, with great substance, by the Colonial Secretary, and it is the argument suggested here.
What is the extra tax on the extra income which will affect business calculation as to whether it is worth while taking extra effort, taking extra risk putting in new equipment, and so on? The suggestion is that it is calculable as follows. First, we have Income Tax, which is 45 per cent. Second we have the Profits Tax. It is an easy calculation that if one is distributing one-third that is an average of 10 per cent. That represents 55 per cent. deducted.
The E.P.L. for ordinary developing companies such as the one which I have described, which are developing but not developing so fast that they get off the maximum, nor have any of the extra reliefs because they are operating overseas, etc., will be 30 per cent. on all their extra profits. In the nature of things that must be the figure to take when they are considering the extra income coming in in any one year, otherwise it would not be excess profits over the standard, a fortiori.

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So the submission is that the extra tax on the extra income is 45 per cent., plus 10 per cent., plus 30 per cent., which makes 85 per cent. That calculation may be wrong. I understand that my hon. Friend the Member for Chelmsford (Mr. Ashton) thinks it is wrong. I cannot say categorically that it is correct, but it is highly important that it should be corrected if it is wrong.
Is the net disincentive now levied by the tax of the order of 85 per cent. on all extra earnings, or is it not? It is not disputed that it is heavy and that it must be something in the nature of two-thirds, but if the calculation that it is something in the nature of six-sevenths is correct, everybody will agree that the disincentive effect of the present taxation is terrific and very dangerous, not only to the proprietors but also to the employees. If there is a fallacy in the argument, I hope it will be pointed out to us and to the country.
Mr. Peter Roberts: Would it not be even more disincentive if the company was employed in the export trade and was trying to export?
Mr. Horobin: That may be, but I was trying to keep the calculation as simple as possible and more or less in round figures. In some cases it may be even more in others, because of special reliefs, it will be less. What I want to know is: Is there a fallacy in the argument that in the case of a normal developing company, without special reliefs and not on the maximum, the extra tax on the extra income can be 45 per cent., plus 10 per cent., plus 30 per cent.? Is that right or is it not? If it is wrong, can we be shown how it is wrong, and if it is right, can we be told how it can be defended by anybody who believes in incentives to industry?
Mr. Boyd-Carpenter: I can respond to the speech of my hon. Friend the Member for Oldham, East (Mr. Horobin), without unduly trespassing on the time of the Committee. Apart from expressing, as he has already made clear, his dislike for the statute in general, my hon. Friend really confined himself to the question of the calculation in "The Times."
I think I can best deal with the matter in this way. First, we start on the basis that, as a result of the Amendments which the Committee has put into the Clause,
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the general burden has been reduced, since the net extra yield of Profits Tax and E.P.L. taken together is an additional £75 to £80 million instead of £100 million.
Then, if one takes what is, according to the figures, the average distribution rate, a distribution of one-quarter of a company's profits, the position is that as a result of the Amendments the maximum rate of tax on the marginal profits which can be paid at all three tax points, Income Tax, Profits Tax and E.P.L., is reduced by these changes from 71¾ per cent. to, in round figures, 70 per cent. Then, if it happened to be a company operating overseas, it drops to 65 under the Amendment dealing with overseas companies.
The case on which I think the leading article concerned concentrated is somewhat unrealistic. It takes the excess profit in isolation from the remaining profits, and then proceeds to assume that the whole of that excess profit, less only the tax payable, was distributed in dividends, which I think any hon. Member will appreciate is a highly unrealistic assumption. Continuing that unrealistic assumption, the figure on that slice—and I stress "on that slice"—would be 85½ as against 84½. That is because the distributed rate of Profits Tax has been partly restored from the 17½ per cent. proposed in the Bill as it stood to 22½ per cent.
I would stress that the example, though of theoretical interest, is of no real practical significance. I do not suppose any hon. Member is aware of a case in which the whole of the excess profits, subject only to the tax falling upon it, is distributed in dividends, nor I think would any responsible person feel any undue sympathy with a company which so conducted itself.
The example is really very misleading because it ignores altogether that because of the improvements in the standards, in the percentages, etc., which I will not again inflict on the Committee, a much bigger slice of the profits will he relieved from E.P.L. altogether and the parts which will come under E.P.L. will be reduced. Take the simplest example of a company with a profit of £5,000. On the minimum standard, that is, the marginal rate of undistributed profits, there will be a reduction from 80 to 50, and after the

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distribution of profits if taxed. the maximum marginal rate comes down from 84½ to 64.
My hon. Friend will appreciate, however one considers the theoretical possibilities, that what we are concerned with is how this tax will operate on an ordinary, reasonable company and, whatever my hon. Friend may think of the tax, I think he is forced to the conclusion that we have made it much better in the last two or three hours.
Sir F. Soskice: I intervene in this debate, not with the desire of prolonging the discussion on this Clause, but because it may be of assistance to the Committee if I indicate briefly in summary form what are our views upon it. I should like to put in brief form our opinions on the changes that have been introduced. To begin with, the new standard years of two instead of three is a change, which, on the whole, we think is for the better, and the reasons given in support of the change justified it being made.
Similarly, we feel that a case has been made out for the companies that are in territory which the Japanese once occupied. That is a change also for the better, for which a case has been made out in the course of our discussions.
9.15 p.m.
We cannot share the same view with regard to the capital assets provisions. It may be that in some ways the change in that regard introduces a greater measure of equity, but we cannot help thinking that that advantage is very heavily outweighed by the very great administrative complexity which must attend upon these new provisions. They are exceedingly complex, and they will put a great and, we think, an unnecessary burden upon the authorities who have to administer them. Even if they are an improvement in some respects in making the tax more equitable, we think that the change ought not to have been introduced because it makes the administrative problem very nearly intolerable.
I have one other point to put, which we think has not been justified in the debate, and that is the increase in the capital standard. There may or there may not be a justification for it, but, if there is, we do not think any of the arguments we
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have heard from the Government Front Bench have given that justification.
Perhaps I might state in summary form the criticism which we have of the Clause in its changed form. On the general issue of this Clause, I do not think I can add anything to what has been said in expressing our opinion. We dislike this Excess Profits Levy. We think it wasteful, and we have criticised it in other ways, but we accept it as better than nothing. We would much prefer the Profits Tax to be used to achieve the purposes which the Government seek to achieve by the Excess Profits Levy.
There is only one other point I should like to make. Owing to some misunderstanding, an Amendment which was down in the name of several of my hon. Friends dealing with investment companies was not called. Possibly that might justify me in saying one word to show why we put the Amendment on the Order Paper. We had in mind the position of investment companies whose interest, derived from investments, does not find its way into their profit-and-loss accounts until, as it were, a year late. For that reason, we thought it proper to put down an Amendment which would take account of that fact and would give the investment companies the right to switch back one year.
In the changed form of the Clause that Amendment would now be inappropriate, in view of the Amendment which the Government have introduced, but I call attention to the point and express the hope that the Government will bear in mind the reasons which actuated us in putting down our proposal, which had been carefully thought out, and will give consideration to the point we raised.
Mr. Baker White: I wish to raise one point of substance which is of importance to the agricultural community. Clause 25 clearly affects the position of marketing boards. This Clause also might well apply adversely to them, although it is not intended to do so. There is anxiety in the agricultural community on that point. I do not want to press the point now, but I ask my hon. Friend the Financial Secretary to look at it before the Report stage, to see if anything can be done to alter the Clause and remove that effect.
Mr. Boyd-Carpenter: I think my hon. Friend will find that in a later Clause there is reference to the subject, but I will certainly bear in mind what he has said.
Clause, as amended, ordered to stand part of the Bill.

Clause 34.—(STANDARD PROFITS FOR A FULL YEAR WHERE TRADE OR BUSINESS COMMENCED AFTER BEGINNING OF STANDARD PERIOD.)
Mr. Boyd-Carpenter: I beg to move, in page 38, line 34, to leave out subsection (1), and to insert:

(1) Subject to the provisions of subsection (2) of this section, where the trade or business of a body corporate commenced after the first day of January, nineteen hundred and forty-seven, its standard profits for a full year shall be calculated under subsection (3) of this section.

(2) Where the trade or business of a body corporate commenced after the first day of January, nineteen hundred and forty-seven, then—

(a) if its trade or business commenced before the first day of January, nineteen hundred and forty-eight, the body -corporate may elect either that its standard profits for a full year shall be calculated under subsection (4) of this section or that they shall be calculated under subsection (5) of this section;

(b) if its trade or business commenced on or after the first day of January, nineteen hundred and forty-eight but before the first day of January, nineteen hundred and forty-nine, the body corporate may elect that its standard profits for a full year shall be calculated under subsection (5) of this section;

(c) if the condition specified in the proviso to subsection (5) of the last preceding section is fulfilled in its case and its trade or business commenced before the first day of January, nineteen hundred and fifty, the body corporate may elect that its standard profits for a full year shall be calculated under subsection (6) of this section.

This Amendment, Sir Austin, and the eight subsequent Government Amendments are part of a batch which apply to the new business—that is to say, the business started after the beginning of the standard period—the various changes which were applied to the old business by the Amendments to Clause 33.
I hope it will be for the convenience of the Committee if, just as on Clause 33 we took together the 16 Amendments concerned, we take these nine Amendments together.
The Temporary Chairman (Sir Austin Hudson): That will be convenient to the Chair.
Mr. Boyd-Carpenter: Then I need not detain the Committee very long. As I have said, the essence of these Amendments is to apply, with the necessary consequential administrative variations, the changes which my right hon. Friend the Chancellor announced when on Tuesday night he spoke on the Motion that Clause 31 stand part of the Bill.
The Committee has had a full discussion of those changes as they apply to the pre-1947 business on the series of Government Amendments to Clause 33. These Amendments have in substance the same effect. There are necessary variations, such, for example, as the variation in respect of the time by which a business must have been started in order to be allowed to go on a profits standard, but they are simply the application of the same principles as the Committee accepted in Clause 33.
Sir F. Soskice: So far as we can see, studying the complicated Amendments on the Order Paper, they effect precisely what the Financial Secretary has indicated. They reflect, in terms of Clause 34, in relation to companies which began business after the standard period, the changes which were introduced in Clause 33 in relation to companies which began their business before that period It seems to us that the Clause does no more and no less than that, and because it does so, there is no opposition we can offer to it, having accepted Amendments to the previous Clause.
Amendment agreed to.
Further Amendments made: In page 39, line 1, leave out "subsection," and insert "Act."
In line 1, leave out "ten," and insert "twelve."
In line 22, leave out from "business," to second "and," in line 23.—[Mr. Boyd-Carpenter.]
Mr. Boyd-Carpenter: I beg to move: in page 39, line 26, to leave out "ten per cent. of."
Mr. Roy Jenkins: May I ask the Financial Secretary a question? I may have misread the Amendment, but at a quick reading it seems to have the effect

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of leaving out "10 per cent." regarding undistributed profits and of not inserting "12 per cent." It appears, therefore, that the whole of the undistributed profits would go to increase the tax.
Mr. Boyd-Carpenter: The effect of the Amendment, when read with the others of the series of Amendments, is to make the variation from 10 to 12 per cent., as in the previous Clause.
Mr. Jenkins: Where is the 12 per cent. that is to be inserted?
Mr. Boyd-Carpenter: I am sorry not to be able to give the hon. Gentleman the answer immediately, but I am advised that that is the effect, as his right hon. Friend the Member for Leeds, South (Mr. Gaitskell), who in his time has had the same loyal assistance at the Box as I am able to take advantage of, no doubt knows perfectly well. I am very much obliged to the hon. Gentleman for raising this point, for I am now advised that the Amendment is designed to correct an additional drafting mistake.
Amendment agreed to.
Further Amendments made: In page 39, line 27, leave out "ten per cent. of."
In line 30, leave out subsection (3), and insert:
(4) Where a body corporate's standard profits for a full year fall to be calculated under this subsection they shall be the sum arrived at—

(a) by taking an amount equal to half its profits for the standard years; and

(b) by applying the provisions of subsections (2) and (3) of the last preceding section as if that amount were the amount arrived at under subsection (1) thereof;

and the standard years shall be the year beginning with the commencement of its trade or business and the subsequent year:
Provided that the said subsection (3) shall have effect as if the reference to the relevant date as defined in subsection (6) of that section were a reference to the relevant date as defined in subsection (7) of this section.
(5) Where a body corporate's standard profits for a full year fall to be calculated under this subsection, they shall be the sum arrived at—

(a) by ascertaining its profits for the standard years; and

(b) by reducing those profits so that they bear to the full amount thereof the same proportion as one year bears to two years
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less so much, if any, of the first of the standard years as preceded the commencement of its trade or business; and

(c) by applying the provisions of subsections (2) and (3) of the preceding section to the result as if it were the amount arrived at under subsection (1) thereof;

and the standard years shall be the years nineteen hundred and forty-eight and nineteen hundred and forty-nine:
Provided that where the body corporate's trade or business commenced after the beginning of the first standard year, subsections (2) and (3) of the said section thirty-three shall have effect as if—

(i) in the said subsection (2) the reference to the beginning of the first of the standard years were a reference to the commencement of the body corporate's trade or business and the reference to two years were a reference to two years less so much of the first of the standard years as preceded the commencement of the body corporate's trade or business and

(ii) in the said subsection (3), the reference to the relevant date as defined in subsection (6) of that section were a reference to the relevant date as defined in subsection (7) of this section.

(6) Where a body corporate's standard profits for a full year fall to be calculated under this subsection they shall be calculated as under the last preceding subsection except that the standard years shall be the years nineteen hundred and forty-nine and nineteen hundred and fifty.
(7) The relevant date referred to in subsection (3) of the last preceding section, as modified by subsections (4) to (6) of this section, is—

(a) where the body corporate's standard profits for a full year fall to be calculated under subsection (4) of this section, the date falling six months after the date of the commencement of its trade or business;

(b) where the body corporate's standard profits for a full year fall to be calculated under subsection (5) of this section, the first day of July, nineteen hundred and forty-eight or the date of the commencement of its trade or business, whichever is the later;

(c) where the body corporate's standard profits for a full year fall to be calculated under subsection (6) of this section, the first day of July, nineteen hundred and forty-nine or the date of the commencement of its trade or business, whichever is the later.

In page 40, line 9, leave out "ten," and insert "twelve."
In line 9, leave out "twelve," and insert "fourteen."—[Mr. Boyd-Carpenter.]
Clause, as amended, ordered to stand part of the Bill.

Clause 35.—(MINIMUM STANDARD PROFITS FOR A FULL YEAR.)
Mr. Boyd-Carpenter: I beg to move, in page 40, line 22, to leave out "two," and to insert "five."
The Amendment is linked with the subsequent similar Amendments in page 41, lines 4 and 21. Their combined effect is to carry out the change which my right hon. Friend announced on Tuesday night in respect of the minimum standard. The effect of the Amendments is to raise the minimum standard from £2,000 to £5,000.
The Committee might be interested in the effect, which, when taken into account with the changes regarding director-controlled companies, will relieve one-third of the companies which otherwise would have fallen under this tax. Briefly, the effect of the Amendment is to relieve the one-third group of the smallest companies. It will be of particular assistance to the small companies started by ex-Service men since the war, a considerable number of which are in this category of size. They will be relieved entirely of the tax. At the same time, the administrative burden of the tax on the Revenue, about which hon. Members have shown very proper concern, will be diminished by the very substantial reduction in the number of companies subjected to the tax.
9.30 p.m.
Mr. Grimond: I wish to say a word about this because I think it is one of the most important Amendments the Chancellor has put down. As the Financial Secretary said, it is the Amendment which more than any other will relieve the Revenue staff from at least some of the tremendous burdens which will be put on them by this Bill and it will affect one-third of the companies affected by the levy.
Can the hon. Gentleman tell us the financial effect and what the loss will be as a result of this concession? I wonder whether he could also indicate why the Government have chosen this figure. My hon. Friends and I had suggested a higher figure because we felt there was a great case for relieving the tax authorities of some of the detailed work with regard to small companies and we felt that these companies, as the hon. Gentleman indicated, are those which one would particu-
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larly wish to encourage. We should be grateful to know why five rather than 10, 20 or two was the chosen figure. It seems to us that, unless there are very substantial reasons, the Chancellor might consider raising the figure still further. If the hon. Gentleman could give more information as to the financial and the administrative effects, it would be of assistance to the Committee.
Mr. Crosland: I wish to reinforce what the hon. Member for Orkney and Shetland (Mr. Grimond) has said. I think it is probably the case that this is a good change and it will be generally welcomed on all sides of the Committee. but we ought to have a little more information why it was made. It was made only a month or so after the figure of £2,000 was put in and there must have been a reason for £2,000 and for the last-minute decision to change to £5,000. What was the logic behind the first figure and what is the logic behind the present figure?
I did not gather that the Financial Secretary was willing to commit himself at all as to the cost of this Amendment as distinct from the cost of the other new Amendments which the Government have tabled, but it would be interesting to know whether this is largely responsible or not for the total loss to the Revenue of £50 million or £60 million which the Chancellor apparently expects on the whole of these E.P.L. Amendments.
I do not think anyone is hostile in principle to raising the amount, but we ought to know what made the Government change their mind. Is it merely the fact of administrative convenience and the relieving of the Inland Revenue staff of this burden of one-third of the total of companies previously involved, or is it second thoughts which the Government had about the financial effects of the levy on these small companies?
Mr. Mitchison: Or was it because they found on the Order Paper an Amendment put down by some of their right hon. and hon. Friends suggesting £10,000 and—overcoming for once the Treasury's one well-known objection to prime numbers—that they split the difference, as they did over the Purchase Tax on boots and shoes? Is the real reason why they selected five instead of 10, or 20 simply that the machinery on the opposite side

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of the Committee is that back benchers put down an Amendment, the Government take half, and the taxpayer suffers from the result?
Mr. Hugh Gaitskell: This is an extremely important Amendment, and I make no apology for troubling the Committee further about it. After all, if one is letting out one-third of the companies involved, one really must consider whether the reasons for so doing are adequate. I should like to supplement what my hon. Friends have said about the exact effects of this. I, too, would like to know how much this costs. I should also like to know, if the Financial Secretary can tell us, just how many companies—if he can give us the breakdown—were excluded altogether under the previous arrangement, how many more are excluded under this, and how many remain subject to the Excess Profits Levy.
I think we all agree that from an administrative point of view there are, of course, great advantages in this degree of simplification, and there is, indeed, all the more reason and need for that in view of the complications that have been introduced by other Amendments, however desirable from the point of view of equity they may be. But, here again, one has to balance one thing with another.
There is, as I say, undoubtedly a great administrative advantage, but are we quite sure that the letting out of these firms is going to be fair in so far as the remainder are concerned? The Financial Secretary may have seen some comments in "The Times" this morning—or the "Manchester Guardian," I forget which—regarding the effects of this concession on the whole difficult wage issue and on the attitude which trade unionists might take up towards these widespread concessions to small businesses when, at the same time, their members employed by the same businesses were being asked to restrain their demands for higher wages.
That does not mean that we support or are in any way enthusiastic about this whole Excess Profits Levy but it does, I think, lead to the conclusion that there is all the more case for increasing the Profits Tax as such to take the place of the Excess Profits Levy. It is, as I say,
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hardly possible, without having an answer to the questions we have all put, to say just how significant the consequences of this Amendment will be.
I share the general view of hon. Members that we should assist the smaller companies if we can do so in equity and without adverse consequences, but before we allow the Amendment to go through, I hope that the Financial Secretary, now that he has received the message for which he was waiting, will be able to give us the information we want, which is no doubt contained in that message.
Mr. Boyd-Carpenter: The right hon. Gentleman did a very neat piece of timing with his speech for which I am obliged to him, and as a consequence of his courtesy I can return it by giving him the figures for which he asked. There are in all 200,000 companies, the vast majority of them very small. Under the original proposals between 35,000 and 45,000 were liable. The reduction which I propose will reduce the numbers liable to, substantially, 25,000. Those were the figures for which the right hon. Gentleman asked.
The hon. Member for Gloucestershire, South (Mr. Crosland) asked why £2,000 had been originally proposed. As the right hon. Member for Leeds, South (Mr. Gaitskell) will know, £2,000 is not only the Surtax but the Profits Tax limit, and it seemed proper in the first place to fix this tax at the same limit. After its publication and the discussions which took place, representations were made to us from many quarters to the effect that this tax might bear hardly on the type of company to which I referred in moving this Amendment—the small company, started very often by the ex-Service man after the war, making its way upwards. On consideration we thought it right to raise the figure and to exempt a good many of these by putting it at £5,000.
I am afraid I cannot give the separate figure for the cost of this concession. I think an hon. Member opposite anticipated that it might be difficult to make a break-down of the gross figure my right hon. Friend mentioned. As hon. Members will appreciate, each particular change has a reaction on each other change and, therefore, no really satisfactory figure can be given for the particular cost of each one.

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The hon. Member for Orkney and Shetland (Mr. Grimond) indicated that he thought we might have gone even further. I understand that if one goes very much beyond £5,000 one gets into a zone where there are many companies of a fair degree of substance, and to go very much beyond £5,000 would have a very serious effect on the yield of this taxation. In all the circumstances, we thought that £5,000 was about the right figure.
Sir WaveII Wakefield: I am on the executive committee of the National Union of Manufacturers, a body composed of small and medium firms. My information and my experience on that committee show that these small firms deeply appreciate what the Chancellor has done. I should like to tell hon. Members opposite that many of these small firms are having a hard time now because of the restriction of bank credits, the falling value of money and the desire to increase production. This help which the Chancellor is giving will undoubtedly assist in maintaining employment which all hon. Members opposite desire just as much as we do.
Of all the steps the Chancellor has taken in his Budget to try to undo some of the ill effects of this taxation, this action of his is probably one which will be found most beneficial to employment and to production in this country. As much of our production, and indeed of our export trade in the future, depends on a flourishing condition in these small businesses, I should like to say how much this step is appreciated by small firms and to congratulate the Chancellor on the action he has taken.
Amendment agreed to.
Further Amendments made: In page 41, line 4, leave out "two," and insert "five."
In line 21, leave out "two," and insert five."—[Mr. Boyd-Carpenter.]
Clause, as amended, ordered to stand part of the Bill.

Clause 36.—(RELIEF IN RESPECT OF DEFICIENCIES OF PROFITS.)
Mr. Mitchison: I beg to move, in page 43, line 11, to leave out "one, two or three," and to insert "up to seven."
Clause 36 provides for relief in respect of deficiencies of profits. The part of it
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with which I am particularly concerned at the moment is subsection (5), which deals with the circumstances under which there is deemed to be a break in continuity for the purposes of that relief. The circumstances are set out in five paragraphs, of which the first deals with the case where
"(a) a body corporate comes under the control of another body corporate or of one, two or three individuals, and thereafter there is a substantial change in the nature of the trade or business carried on by it;…"
I understand what is meant by coming under the control of another body corporate, and I should understand what is meant by coming under the control of a small number of people. What puzzles me is why one, two or three individuals have been chosen as the right size of the group with whom alone this has been deemed to happen. It is for that purpose that my hon. and learned Friend and I have put down the Amendment suggesting the inclusion of up to seven people. After all, if what the Government have in mind is family control, there are provisions in the Income Tax Acts and elsewhere which deal with that kind of provision, and I know of no case—although I am subject to correction on this matter—where the number is restricted in this way to one, two or three individuals.
9.45 p.m.
Statistically, I believe that the average family, even on the basis of parents and children, is rather larger than three individuals; but surely the mischief that is aimed at here—or the circumstance that is to be considere—is control by a small group of people. There would be no difference in principle—and no substantial difference of any sort—if some rather larger figure were taken.
I have already had to call the attention of the Committee to the numerical wanderings of the Government and the Treasury throughout this Bill; but this particular one is really very odd indeed. I can only leave it at that and ask the Government to let us know what is the reason for this curious selection. Surely, if the thing is to be done at all it should be done properly, and a larger number should be taken with a view to getting the maximum of what one reasonably can call a close group of people. One, two or three is hardly sufficient for that purpose.

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While I am on this point, I hope I shall be in order in pointing out that the whole character of this subsection is curious. Perhaps it would be more in order if I took the opportunity to do that later, when we come to the question of the Clause standing part. In moving this Amendment I should like to know the reason for this curious numerical selection by the Government.
The Solicitor-General: I have listened with the greatest attention to the speech of the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison), and I must say that I was a little puzzled to know what particular attraction the figure 7 had for him. The difficulty with regard to this Clause is to know where to draw the line. The hon. and learned Gentleman appears to draw it above the number 7. At the present moment, in the Clause as drawn, it is a maximum of three.
Having listened to what the hon. and learned Gentleman has said, I do not think there is anything between us as to what this particular provision of subsection (5, a) is intended to achieve and, though it may surprise him—and it may perhaps shock him —we are prepared on this occasion to accept the Amendment.
Amendment agreed to.
The Solicitor-General: I beg to move, in page 43, to leave out lines 26 to 30.
After that victory for the hon. and learned Member for Kettering (Mr. Mitchison), may I suggest that it would be convenient if we discussed together the remaining Amendments on this Clause, the last two of which are consequential? The Amendment which I move corrects something which we think might do hardship in certain cases. Under paragraph (e), as it now stands, the effect of a liquidator carrying on the business would be to make a break in the carrying forward of the deficiency, and that might do hardship to the creditors of the company.
This Amendment was originally down in the name of my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) and other of my hon. Friends, and we have very great pleasure in accepting their suggestion and in moving this Amendment.
Sir F. Soskice: The purpose of paragraphs (a) to (d) of subsection (5) are obvious, but what has rather puzzled me is why the Government introduced this argument about a break of continuity, in paragraph (e), dealing with the acquisition of a body corporate's trade by a liquidator, receiver, etc., and then, when they gave the matter further thought, decided to leave it out. What was the point of ever putting it in?
Speaking for myself, I suggest that paragraph (e) is entirely different in its scope from the previous paragraphs, and one cannot help thinking that there was some want of thought in the construction of the subsection, leading to the inclusion of liquidators, receivers, managers, trustees and so on, in the same category as the previous categories dealt with in the earlier paragraphs. I do not want to occupy time on this, but, as a matter of curiosity, I should like to know why the paragraph was included in the first instance.
The Solicitor-General: The curiosity of the right hon. and learned Gentleman is insatiable. We have been asked how the Conservative manifesto came to be written and now we are asked why this subsection came to be written. Soon we shall be asked who was the author. I am not sure whether the right hon. and learned Gentleman is in favour of its deletion or whether he wants it retained.
Sir F. Soskice: I am in favour of its deletion. I wondered why it was ever included.
The Solicitor-General: I am afraid I must leave the right hon. and learned Gentleman to wonder still further, as I cannot assist him with his historical researches.
Mr. Frederic Harris: I wanted to raise this point, too, and I am rather surprised that the Solicitor-General cannot answer it. In its drafting, the paragraph clashes with Clause 52, which makes one think that there must have been some great carelessness when the Clause was drafted.
Mr. Gaitskell: I had no intention of intervening in this legal debate, but if the Solicitor-General wishes to prolong the proceedings, then he is going just the right way about it. He was asked a perfectly reasonable question by my ever

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courteous right hon. and learned Friend, who at one time was his predecessor, and, after being rather offensive to us about our curiosity, all he can, say is that he simply does not know. We cannot have that. We know that there are a lot of admirable advisers not very far away, and surely the right hon. and learned Gentleman could have found out the answer.
Even now, I am prepared to go on talking until the information comes. It is a most extraordinary thing if the Solicitor-General cannot answer the question. I have no doubt that the message is waiting for him, and I must say that if the right hon. and learned Gentleman had sent for it straight away we should have saved ourselves two or three minutes. Now that I see that the message is beside him, I will resume my seat, and perhaps he will at least give himself the trouble of reading it out to us.
The Solicitor-General: I shall certainly not read it out to the right hon. Gentleman, for the simple reason that I cannot add more than I said before. On reflection, we thought it better out. That is what we have done—we have taken it out. We are not considering—although it is very easy to take prolonged time on historical researches—how it originally came in. What we have to consider now is whether it should stay in or go out, and on that, I understand, we are all agreed. I am not in a position to satisfy the right hon. Gentleman's curiosity.
Mr. Gaitskell: The hon. and learned Gentleman has the answer written down.
The Solicitor-General: I have not got it written down. I will read out exactly what I have received. The right hon. Gentleman will see that it is exactly what I said in the first place. [HON. MEMBERS: "Read it out."] Of course I will: "On reflection we think this would be wrong."
Sir F. Soskice: I can assure the hon. and learned Gentleman that I do not want to take time over this, but really I think he wants to be discourteous. We quite naturally thought, and we still like to think, that consideration was given to this Clause before it was put in that form in the Bill. If that is not the case, it is very deplorable. Surely the hon. and learned Gentleman must have been consulted about this, and there must have been a good and solid reason for putting
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this particular category of person into the subsection.
All I was asking—and I really do not think I deserved the scorn I got from the hon. and learned Gentleman—all I was asking was what was the motive behind it. No doubt there was a good motive. I simply asked the hon. and learned Gentleman to acquaint himself with it—to ask, if he does not carry the answer in his mind. I know one cannot carry all these points in one's mind, but if he is not carrying it in his mind, surely one of his advisers could tell him why it was originally introduced. That is all I want to know. It seems to me a perfectly reasonable request. We hope he will do us the courtesy of trying to get the information.
The Solicitor-General: I am sorry if I was in the least bit, discourteous to the right hon. and learned Gentleman. It was not my intention to be so. If I were able to tell him, I should, of course, tell him. I have no doubt that it is the case that this Clause was considered in its original drafting, but now it is considered that it is well to make this change. On reflection, it is thought this will be for the better, and I gather that the right hon. and learned Gentleman agrees that the Bill will be better if this is out. If I could tell him the actual motives that led to its inclusion in the Clause, of course I should tell him, but I am not in a position to tell him. All I can tell him is that, on reflection, we are satisfied—and I gather he agrees with us—that it is better that this should come out of the Bill.
Mr. Roy Jenkins: If the Solicitor-General is not able to add anything to the most unhelpful reply he gave us before, perhaps some more consistently courteous and better informed member of the Government would tell us and redeem the promise that the Financial Secretary gave us earlier that the Minister of State for Economic Affairs would ex plain. Many of us are very worried about the position of the Minister of State for Economic Affairs.
We have noted not only the fact that he has not joined in our discussions, but the expression of doubt and distaste on his face when his hon. and learned Friend has been replying to the arguments from this side of the Committee, and we do

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feel very worried that he must be on the point of resignation. We know well his views on the general subjects. We are now getting on to the more detailed aspects of the Excess Profits Levy, to detailed matters of machinery, and I hope very much that we can hear from him on these matters, because otherwise many of us on this side of the Committee, who have great sympathy for him, will feel that he is in the impossibly difficult position of not being able to support his hon. and learned Friend.
Mr. Erroll: I think I should mention that the hon. Member for Stechford (Mr. Roy Jenkins) was not in the Chamber when the Minister of State for Economic Affairs gave a very full and complete reply to the case for the Amendment I moved.
10.0 p.m.
Mr. Glenvil Hall: It must be quite obvious from the number of my hon. Friends who wish to speak that we are not satisfied with the explanation and, perhaps I might say, apology offered to the Committee by the Solicitor-General. We have had a very amicable discussion on a very large number of Amendments, both today and earlier this week. As has been said, there have been many dozens of Amendments put down, and all except one or two have been moved by hon. Gentlemen opposite. I, for one, think it quite unfair, when we do put what, after all, is a reasonable question to the Treasury Bench, that we should be treated as we have been this evening by the Solicitor-General. In the end, when he gave the explanation he only half gave it.
The explanation of the hon. and learned Gentleman was that on reflection it was considered that this paragraph should come out. He has not told us who did the reflecting, and what we and the rest of the Committee want and are entitled to know is who it was on the Government Front Bench, if it was someone on that Front Bench, who reflected on this matter and in the end came to the conclusion that these words were better deleted.
We have said on more than one occasion during the passage of this Bill when, time after time, we have had to take out words, sentences and even whole Clauses, that it is a pity the Government
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did not think a little more before they introduced the Bill. This is a time for us to pause and help the Government Front Bench to reflect that it would be much better if they did their thinking before they brought a Bill to the House rather than during its Committee stage.
I, for one, protest, both at the conduct of the Solicitor-General, who for once in a way has not been his usual courteous self to the Committee tonight, and also for the fact that he has not yet answered the question put to him, which before we pass on my hon. Friends will try their best to find out from some Government spokesman. We hope it will be the Minister of State, who obviously is used to reflecting and has done a great deal of reflecting in the course of a long and very studious life. If the Solicitor-General feels himself unable to speak again, perhaps the Minister of State will indicate to us who it was who, at almost the 12th hour, came along and did some reflecting, as a result of which this Amendment was put on the Order Paper.
Mr. Jay: In order to give the Solicitor-General more time for reflection, may I just add this to what my right hon. Friend has said? We are being asked to delete this paragraph, and the Solicitor-General said that the only question before us was whether we should delete it, and that therefore it was quite irrelevant how it ever came to be put in the Bill at all. But unless we know why the Government put it in the Bill we cannot be sure that we are right to delete it. For all we know, it may be that there was some substance, some validity, in the Government's original reason for putting it in the Bill. Therefore, if the Solicitor-General will just take the opportunity of the time we are giving him for reflection and investigation, it will enable us to decide whether or not to delete this paragraph.
Perhaps the Committee might like to know exactly what this paragraph is that we are talking about. It reads as follows: If
"a body corporate's trade or business comes to be carried on by a liquidator, receiver, manager, trustee or judicial factor "—
no doubt the Solicitor-General could explain what that is—
"or by any person acting in any capacity similar to the capacities aforesaid."
That is what we are being asked to delete.

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We have been told—and this is all the information we have had from the learned Solicitor-General—that the Government decided on reflection that it would be better to delete this paragraph. Are we to infer from that that the process of reflection within the Government only began after the Bill had been drafted? Was there no reflection at all when somebody decided to insert this paragraph in the Bill? That is what we should like to know. I hope that the Solicitor-General will now relent and give us the answer we are clearly entitled to have.
Viscount Hinchingbrooke: Does the Chancellor of the Exchequer not now feel compelled to say on behalf of the Leader of the House that it has been decided to resume the Sitting of the House on Monday, 9th June, as a result of the filibustering that is going on opposite?
Mr. Harold Wilson: I think that the remarks of the noble Lord come very badly from that side of the Committee. If the Solicitor-General is willing to pursue historical researches throughout the Finance Bills, I do not think he will find an Opposition which has been more constructive and cooperative in dealing with a difficult and technical Bill than we have been during the last few weeks. The noble Lord was probably not with us when we were discussing Purchase Tax, but I will not go into that.
Viscount Hinchingbrooke: It is pure delaying and obstructive tactics.
Mr. Albu: Is it in order, Sir Charles, for the noble Lord to make these remarks in view of the fact that he has not been at our proceedings during the whole of the Committee?
The Chairman: I had called on the right hon. Member for—
Mr. Jay: On a point of order, Sir Charles. We were not referring to my right hon. Friend whom you called, but to the noble Lord.
The Chairman: I thought that reference was being made to the speech which the right hon. Gentleman was making.
Mr. Wilson: I should like to support the plea made by my hon. Friend the Member for Stechford (Mr. Roy Jenkins)
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and supported by my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall), that we might have an intervention from the Minister of State for Economic Affairs on this very important deletion. There is obviously a matter of confusion about his attitude, not only to this Clause but to other parts of the Bill. The hon. Member for Altrincham and Sale (Mr. Erroll) does not even know what is the right hon. Gentleman's title. He keeps calling him the Economic Secretary. And although he made a powerful contribution on this point only a moment ago, he has since left the Chamber and has not had a chance of getting a reply from the Minister of State.
I think that the views of that Minister of State should be known to the Committee. There has been an important article by the hon. Member for Southgate (Mr. Baxter) today. He says that the views of the Minister of State for Economic Affairs are always too obstruse, ponderous, high up in the clouds and metaphysical for him to understand. I should like to correct the hon. Member for Stechford, who was anticipating the right hon. Gentleman's resignation, because we have had it on the authority of the hon. Member for Southgate that he is about to be promoted to a higher place.
I hope that the Minister of State for Economic Affairs is going to intervene, because there is a very important point in the original Clause. We have not been told why it was put in and, even more important, we have not been told why it is proposed to leave it out. The references in the Clause to receivers and liquidators, not to mention "judicial factor," do raise fundamental points. I am not very clear what is a judicial factor, and I think the Solicitor-General ought to tell us. References to liquidators and receivers, and the fact that the Chancellor of the Exchequer thought it necessary to make these references to them in the first place, when he drafted the Bill, is in keeping with the general financial policy of the Government, which seems to be to promote the greatest number of bankruptcies in the shortest possible time.
I am afraid that before this year is out we are going to see a very large

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number of them, far more than in the whole of the last five or six years since the war.
Viscount Hinchingbrooke: As a result of what the Labour Government have been doing in the last five years.
Mr. Wilson: The noble Lord may laugh, but I assure him that these figures have been very low and many firms are now facing the danger of imminent bankruptcy as a result of the right hon. Gentleman's policy. If that is not the position in South Dorset it is certainly the position in Lancashire and Yorkshire at the present time.
I do not intend to bandy words with the noble Lord about the textile industry, about which he knows even less than he knows about most other things. The Chancellor of the Exchequer has now decided to delete this Clause. Does he think that it is not relevant to the Bill? I hope the Minister of State for Economic Affairs or the Chancellor of the Exchequer will tell us exactly why this Clause was put in relating to bankruptcy, receivers and so on, and why it has now been taken out. The Solicitor-General's answer to my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) was thoroughly unsatisfactory.
The Chancellor of the Exchequer (Mr. R. A. Butler): Perhaps it will be useful if I intervene for a moment. The original object of the subsection was to prevent a liquidator or receiver from reclaiming Excess Profits Levy which a company has paid on its past profits, by reason of deficiencies incurred while the company was in liquidation. The reason why we decided to delete this was—strange to relate to hon. Members opposite—that this matter is fully understood by the Chancellor of the Exchequer. I really do try to follow all the details of a Bill. I do not intervene all the time because I have so many trusty lieutenants.
We were not absolutely sure on reflection that the Clause was fair to creditors. I do not believe that this provision was fair to creditors, and that is the reason why I gave my own authority for its deletion. I am perfectly ready to tell the Committee that if I am wrong, as a result of the discussion today, we will certainly look at it again before the next stage. I
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think my judgment will prove to be right, but if it is not right I give an undertaking that we will look at the matter before the next stage. Perhaps, on that undertaking, we might make a little more progress.
There is no question but that hon. Members have tackled the Bill throughout this sitting in a purely businesslike manner, which I do not think it is a bad thing for the House of Commons or this Committee to do. I have absolutely nothing but gratitude for the way in which hon. Members on all sides have tackled their work.
As for my dear friend the Minister of State for Economic Affairs, he has taken part in the debate today. He takes part rather more than I have done. The Minister of State's duties are not confined to taking part on Amendments here, but they are also to advise me on many of these subjects in a way that his lifelong experience makes quite vital to me.
I will give the Committee an example connected with a recent visit to the O.E.E.C. I not only found that my right hon. Friend knew a great deal more about the subject than I did, but he knew more than almost all of the European statesmen present. The senior statesman of Belgium did not rush to welcome me. He rushed to welcome the Minister of State. With the Minister of State he had restored the Austrian finances after the war of 1914 –18, and he said that that was how he had learned to understand these problems.
That is why the Minister of State is so vital to us. He takes part not only in these debates but in helping me in every way. The apocryphal stories about him, although they may give pleasure to the right hon. Member for Colne Valley (Mr. Glenvil Hall), do not mean the immediate translation of my right hon. Friend anywhere else. I hope that he will always remain by our side.
Mr. Gaitskell: I am sure that the Committee would wish me to thank the Chancellor for his courtesy and lucidity, for putting the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) very firmly in his place, for giving a model answer which I am sure will be of great value to the Solicitor-General when he comes next to reply, and for his loyal and staunch defence of

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the Minister of State. We are all delighted to hear that the Minister of State is to remain with us. We only hope that he will take part in the further proceedings on the Finance Bill, if European affairs permit it.
Amendment agreed to.
Further Amendments made: In page 43, line 33, after "cessation," insert "or."
Leave out lines 34 and 35.—[Mr. R. A. Butler.]
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
10.15 p.m.
Mr. Mitchison: I have every personal reason for being deeply grateful to the Solicitor-General for the concession which he recently announced, and I hope he will not take it amiss if I make some rather critical remarks about the remaining paragraphs of subsection (5). I am told that there is some precedent for these figures. None the less, I find this paragraph remarkably difficult to follow, rather difficult to reconcile, and—what does matter a little—rather difficult for the ordinary person to understand. Paragraph (b) provides one clear case of where
"a body corporate wholly ceases to carry on the trade or business theretofore carried on by it."
Then there is a break in continuity. That is one instance, and then in paragraph (a) we have something else
"a substantial change in the nature of the trade or business."
Does that mean a complete cessation to carry on the trade or business, does it mean a partial cessation or does it involve a curious philosophical concept by which some trade or business is carried on but with a substantial change in it? What is the real distinction?
When we come to paragraph (c) we come to a particular case. Here is a case where a particular trade or business consists
"wholly or mainly in the holding of investments or other property."
and then it
"ceases to consist, or to consist mainly, in the holding of investments or other property."
Apparently we do not there get the whole cessation of the trade, even a partial ces-
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sation of the trade or a substantial change in its character, because this is a particular case which has to be provided for separately. What is the difference between what happened in the special case paragraph (c) and in the cases of paragraphs (a) and (b)?
That is not the end of the matter because we come next to a case which is described in most remarkable language. This is a case where
"a body coporate, either in one step or by a series of cessations, whether connected or not, ceases to carry on a part or parts of its trade or business with the result that the trade or business which it continues to carry on is less important than the part or parts thereof discontinued as a result of the cessation or cessations,"
First of all, the first method, as it were, is a step and the second a step plus something which becomes a series of cessations. They are very remarkable cessations because a single cessation, which, by the way, does not appear to be 'capable of existing under these paragraphs, does not mean that anything ceases. That is the one case which is not contemplated.
So we come to this: first of all a step, then a cessation by which we do not cease, and then a cessation by which we do cease. This makes people completely uncertain about what this sort of drafting really means. There may be some precedent for it, but there is no excuse. This is a gross misuse of the English language. No ordinary person, if I may claim for this purpose to be an ordinary person, can understand what it is all about.
But there is worse than that. Let us take another look at paragraph (b). Let us omit the one step by which it ceases to carry on a part and so on. That is the simplest case. Let us come to the series of cessations, whether connected or not. What does it mean? What kind of connection is contemplated? Is it that each of them should be a cessation? But that is provided for by a series of cessations. What kind of connection have the Government in mind? Do we have two alternative processes, the first one consisting of a cessation and then an unconnected cessation, and then perhaps a cessation connected with the second cessation but not with the first cessation, at the end of which we cease to carry on something or other?

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It seems to me much more "Alice in Wonderland" than the rest of the Finance Bill. I can imagine the sort of discussion that Alice and the March Hare might have about this business over the teapot. The end of the tea party was when the Dormouse went in. In this case somebody else goes in, but whether it is the taxpayer or whether it is the Revenue I am left wondering. In many ways "Alice in Wonderland" is a very logical book, but we cannot safely use it as a complete guide even to this subsection of the Finance Bill.
I do not know that I need develop this very much further, but I should be extremely grateful to the Solicitor-General or one of his Scottish colleagues, who are very good at this sort of thing, if they could explain to us in clear simple language not about subsection (b) but what the difference is between (a) and (c) and whether (d) really does mean anything and, if so, exactly what it does mean.
The Solicitor-General: I hope that the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) will not accuse me of discourtesy. I shall try to answer his questions as shortly as I can and I hope to make the answer clear. He and the Committee will appreciate that the object of the subsection is to try to stop something like a market in standards growing up.
Once we try to stop evasion, it becomes a complicated matter to try to block every possible way in which the operation of the Clause can be evaded. That is why this is a difficult subsection, but I think it is effective in preventing dealing in deficiencies, the acquisition by one company of the deficiency of a moribund company. It cannot be carried forward; there must be a break.
Subsection (a) merely deals with the transfer from one company to another, or from a body of individuals to another, where there is also a change in the character of the trade or business carried on. Paragraph (b) is quite clear, as the hon. and learned Gentleman said. Paragraph (c) is concerned with the change of an investment company into that of a trading company. That has to be dealt with, and it is a complicated matter.
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Paragraph (d) is an extremely difficult one, I quite agree. It deals with the case of a company which does not wholly cease to carry on its business but sets down some part of it. It is a difficult case with which to deal. It is largely a question of fact. I can assure the Committee that the most careful consideration has been given to the wording of the subsection to see that we have secured the best language in order to prevent evasion and dealing in deficiencies.
Clause as amended, ordered to stand part of the Bill.

Clause 37.—(OVERRIDING LIMIT ON THE AMOUNT PAYABLE BY WAY OF THE EXCESS PROFITS LEVY.)
Mr. Boyd-Carpenter: I beg to move, in page 43, line 37, at the beginning, to insert:
"Subject to the provisions of this section."
This is a paving Amendment for the one in the name of my right hon. Friend to page 44, line 13, at the top of page 1431, which inserts a new subsection (2).
Amendment agreed to.
Mr. Boyd-Carpenter: I beg to move, in page 43, line 41, to leave out "eighteen," and to insert "fifteen."
Perhaps the Committee will be prepared to take with this Amendment the next three Amendments in the name of my right hon. Friend. Each has a rather remarkable mixture of names attached to it, which is a clear indication that great minds think alike. The Amendments are all designed to decrease the overriding maximum provision from 18 to 15 per cent. As the Committee will be aware, that provision prevents the tax working hardship in extreme cases. The type of case with which it is designed to deal is that of the company which has made a really remarkable expansion over the last few years.
For obvious reasons, I do not want to mention specific companies, but there are some which will be in the minds of many hon. Members that have made great expansion in the last few years. In their case, to leave the companies with just the 30 per cent. rate might result in remarkable hardship since the tax would be very heavy. Therefore, the over-riding maximum provision was inserted in the first place at 18 per cent.,

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but consideration of certain figures, and of the position of one or two companies, has made us feel that it would be wiser to reduce this to 15 per cent. in order to make quite sure that progressive and successful companies should not be penalised. This is one of the changes to which my right hon. Friend referred when he spoke on Tuesday night, and it is part of the general body of Amendments which we have been discussing during the last few hours.
Mr. Blackburn: Will that additional help be given to those industries closed during the war because of the concentration of industry?
Mr. Boyd-Carpenter: This was one suggestion as to how they might be assisted, together with two or three others to which I referred earlier, when I think the hon. Gentleman spoke.
Mr. E. Fletcher: Can the hon. Gentleman tell the Committee what would be the cost to the Revenue of this Amendment?
Mr. Boyd-Carpenter: As I indicated on an earlier Amendment, it is not possible to break down the gross figure which my right hon. Friend gave on Tuesday night. As the hon. Gentleman will appreciate, one variation itself varies the effect of another. I explained earlier that I could not break down the gross figures separately.
10.30 p.m.
Mr. Roy Jenkins: The Financial Secretary said something about the general concept of an over-riding limit. I should like to follow that up. It is an odd provision in an Excess Profits Levy that one should have an over-riding limit of 18 per cent., as it was, and 15 per cent. as it will be if this Amendment is accepted. It is another example of the impossible position which arises when a tax is put on excess profits.
An over-riding limit makes the tax less severe on those people who make more excess profits. If one is against excess profits and thinks that there must be some penalty upon them, it is very curious to find that the bigger the excess profits the less the rate of tax will be. The Chancellor, when we were debating Clause 31, became most eloquent about merchants of death, but the extraordinary position with an over-riding
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limit is that if one is a fairly successful merchant of death one has 30 per cent. of the profits taken away, but if one is a highly successful merchant of death one has less taken away.
I can well understand that in a rapidly expanding business there are great difficulties about taking 30 per cent. of the excess profits, and that some provision such as this has to be included to prevent hardship. But the whole matter brings out the contradiction between what the Chancellor is trying to do by the concept of an Excess Profits Levy and the concessions which he is now giving to try to make it a little bit more workable.
There is a further difficulty inherent in the nature of the Levy. Companies generally are given an incentive to plough back profits by having their standard increased by 12 per cent. of any money so ploughed back. But a company which has expanded rapidly so that its taxation, when it is liable to tax, is determined not in relation to its chargeable profits and its standard profits but in relation to the 15 per cent. over-riding maximum, loses the incentive to plough back profits which is given to companies which are not expanding so quickly. One would have thought that it was the rapidly expanding companies who one most wanted to encourage to plough back profits.
It is a contradictory situation. I am not against the provision of this overriding limit, but the fact that we have to have it brings out all sorts of contradictions which are inherent in this nonsensical Levy.
Mr. Grimond: I was one of the original ingredients of the rather curious shandygaff which is now supporting this Amendment, and I may, therefore, be allowed to welcome the large and amiable cuckoo who has joined us and to say how glad we are to see him among us. We felt that the original maximum of 18 per cent. would bear very hardly on certain expanding companies and that it ought to be reduced.
I do not know whether the figure 15 will satisfy the rather fastidious mind of the hon. and learned Member for Kettering (Mr. Mitchison). At any rate, it is an acceptable figure to us. We certainly think it a very great improvement on 18. As has been mentioned, there are very strange results which can be seen in

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some of the figures which companies have prepared as a forecast of the effects of this levy. I have little doubt that this is an Amendment which is acceptable to most companies, and especially to expanding companies about which the Committee must be concerned.
Mr. Nabarro: This Amendment disposes very satisfactorily, by providing an alternative standard, of one of the gravest anomalies that existed in the war years with the Excess Profits Tax. A company engaged in important work, generally in connection with armaments, could expand its turnover many times in the course of the war years, while retaining only a small capital in the business. That company would find at the end of the war that something above 90 per cent. of all the profits earned had been paid to the Treasury and that there were no reserves of any description available for post-war business.
That was the position in a large number of companies. This alternative standard, for which the hon. Member for Stechford (Mr. Roy Jenkins) could not understand the reason, disposes of that grave anomaly which was recognised on all sides in the operation of the Excess Profits Tax during the war years.
Mr. Jenkins: I certainly understand the reason for this alternative standard. I was merely pointing out that the fact that we have this alternative standard does indicate the great number of contradictory factors in relation to this tax.
Mr. Nabarro: I am sure I did not misunderstand the hon. Gentleman at the beginning of his speech, when he criticised the alternative standard in itself. I think that the two Amendments which the Chancellor has made in the later stages of this Finance Bill are of great importance to the medium and small manufacturer. The first was the raising of the minimum standard, which we discussed in an earlier Clause, and this one is of even greater importance, because there are undoubtedly thousands of medium and small companies in the United Kingdom which have been steadily building up during the course of the last few years and which have, not fortuitously but by efficient and sound trading—particularly in export markets—succeeded in expanding their profits very
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substantially. They are the very companies which will benefit by this alternative standard, and they will be encouraged to go on expanding, which is precisely what this alternative standard seeks to achieve.
Mr. Crosland: I am sorry to say that my hon. Friend the Member for Stechford (Mr. Roy Jenkins) has fallen into rather serious error on this Clause. After a consistent record in the Committee stage debate, it is sad that at this late stage he should have sunk below his usual level and failed to see the logic of this overriding limit. Like the hon. Member for Kidderminster (Mr. Nabarro), I think that this is one of the most important concessions which the Chancellor has made, because it does go some way to weaken the main objection to this tax, which has been raised so strongly on both sides of the Committee.
If one considers this matter a little more seriously than the hon. Member for Stechford has done, one realises that we cannot have an excess profits tax of any kind without an over-riding limit. To take the case—which is not so uncommon—where chargeable profits exceed standard profits by some very large amount, without an over-riding limit, the weight of excess profits tax would be unbearable. Therefore, it is logical, if one is to have an excess profits levy, that the tax should be levied at this point at 30 per cent. and beyond it at 15 per cent.
So far from being illogical, it seems to me to be sensible and essential that excess profits should be taxed at a lower rate the higher they are. The reason why that is sensible and logical and wholly desirable is the reason which has been advanced from these and the benches opposite, throughout this Finance Bill. What we disliked about this tax was the way it fell so heavily on additional profits over a standard period. If one accepts that criticism, it is clearly essential to have some system whereby the higher the profits over a certain standard period the less heavily they are taxed.
I welcome this concession, and I agree with the hon. Member for Kidderminster that it is one of the most important concessions the Chancellor has made. It is quite a substantial improvement in the Bill.
Mr. Roy Jenkins: I am extremely sorry that my hon. Friend—who has told the Committee on a number of occasions how early he has been getting up and how long he has been staying up to study this Bill in great detail—should have got befogged by all this detail and missed a rather obvious general point, which is that if one is in favour of taxing excess profits, the bigger the excess the more one should be in favour of taxing it. I think this levy is such nonsense that the Chancellor is bound to bring in some provision of this sort to prevent doing immense harm. On the Chancellor's own showing—as somebody who believes in a levy of this sort—it is nonsense to say that small excess profits should be taxed at 30 per cent. and that big excess profits should be taxed at less than 30 per cent.
Mr. Gaitskell: In view of this apparent disagreement on our side of the Committee, I should explain, in case there is any misunderstanding, that there is no split in the Labour Party, and that both my hon. Friends are right. It all depends on the way one looks at it. If one is looking at it from the point of view of the "merchants of death," it is quite clear that, according to the ceiling arrangements, the larger the profit the lower is the rate of Excess Profits Tax. That certainly seems paradoxical. That, I understood, was the point of my hon. Friend the Member for Stechford (Mr. Roy Jenkins).
But, if one looks at it from the point of view of my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) and is as concerned as he is with the devastating effect of this tax on incentives, it is a relief to have anything which puts an end to the disincentive effect of that tax. Both are primarily right, and it only goes to show what a terrible thing the Excess Profits Levy is.
Sir E. Boyle: In view of the fact that the two hon. Gentlemen opposite are right, would it not save the time of the Committee if they made their speeches simultaneously?
Amendment agreed to.
Further amendments made: In page 43, line 45, leave out "eighteen," and insert "fifteen."
In page 44, line 4, leave out "eighteen," and insert "fifteen."
In line 11, leave out "eighteen," and insert "fifteen."—[Mr. Boyd-Carpenter.]
Mr. Boyd-Carpenter: I beg to move, in page 44, line 13, at the end, to insert:
(2) In relation to a body corporate ordinarily resident in the United Kingdom which, throughout all its chargeable accounting periods, carries on the whole, or substantially the whole, of its trade or business through a permanent establishment situated in territory outside the United Kingdom the preceding subsection shall have effect as if the references to fifteen per cent. were references to ten per cent.
This is a further Amendment which provides that the over-riding maximum in the case of foreign companies operating mainly overseas shall be 10 per cent. It is confined to those companies which are, to all intents and purposes, operating completely overseas, and which must have a permanent establishment abroad to qualify for the lower figure. The reasons for the change were outlined by my right hon. Friend the Chancellor during his speech on Tuesday night. It is designed to deal with the special difficulties of companies operating abroad, and my right hon. Friend made clear the reasons he thought they were entitled to the lower figure, and the considerations he put forward then were fairly clear and generally appreciated by the Committee.
Mr. Gordon Walker: It seems to me that this Amendment goes a little wide. It is a considerable concession in itself, and it seems that some of these companies may come within the framework and terms of that ill-starred sentence written into the Conservative manifesto about companies making fortuitous profits directly out of armaments. We would wholly support this in so far as it includes companies operating in the Commonwealth, including the Colonies, because it is vital to build up our capital and resources there.
Would the Chancellor consider limiting this. Amendment to companies in the Commonwealth and Colonies and, within that, to limit it to those concerned with the production of primary products? That would be a proper discriminatory use of taxation, and it would fit in with the great objectives we have to build up resources, particularly dollar earners, in the Commonwealth. It would fit in with the communiqu é issued by the Finance Ministers of the Commonwealth when they met, and it might be good use of what we think is a bad tax. Could the

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Chancellor consider limiting it to companies operating within the Commonwealth and to those concerned with primary goods and products.
10.45 p.m.
Mr. E. Fletcher: I hope that the Financial Secretary will be good enough to explain to us what is the significance of the words "a permanent establishment." As far as I know, these words are an innovation in the language of the Finance Acts, and I think that it would help the Committee if the Financial Secretary would tell us what he thinks is meant by these words. Are they meant to indicate a branch or an office? Can he tell us whether they are intended to add anything to the meaning of the Clause? I should have thought myself that the Clause would have been equally valid and equally effective if the words "through a permanent establishment" had been omitted. Are they intended to be of a limiting nature? If so, how? Can the hon. Gentleman give us any indication?
Mr. Boyd-Carpenter: Yes, the words "a permanent establishment" derive from double taxation practice. They are designed to ensure that the advantage of this concession is not obtained by a company whose headquarters are in this country simply because it exports goods abroad. It must have an office, a branch, or a productive unit—some definite physical establishment—abroad in order to qualify. They are, of course, as the hon. Gentleman appreciates, limiting words; otherwise it would be very difficult to get a satisfactory definition, and it would be quite likely that companies whose main activities are really in this country but conduct substantial export business would get the benefit of the concession. A permanent establishment is some fairly easily identifiable object, and it does make it possible to have a fairly clear line of demarcation.
In response to the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker), I would say that, of course, the points he brought forward were very carefully considered. He will appreciate that to discriminate between overseas territories may well, particularly in certain countries, involve considerable international difficulties, and we think it wiser to make it a general overseas provision.
Sir Ian Fraser: Can my hon. Friend tell me whether a company in London owning a subsidiary company, which has permanent premises abroad that acts for it and thereby gives it a standing in the country in which its trade is done, would qualify as a company having a permanent office abroad?
Mr. Boyd-Carpenter: As my hon. Friend is aware, I am sure, there are separate provisions in the Bill dealing with overseas subsidiaries.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.
Clause 38 ordered to stand part of the Bill.

Clause 39.—(COMPUTATION OF PROFITS AND LOSSES FOR EXCESS PROFITS LEVY PURPOSES.)
Mr. Maudling: I beg to move, in page 45, line 19, to leave out subsection (4), and to insert:
(4) Where an accounting period of a body corporate begins before but ends within the first of the standard years, and another accounting period of that body begins within but ends after the other standard year, the fact that sufficient accounts are available as to the part of one of those accounting periods which falls within a standard year shall not be treated under subsection (3) of this section as a special circumstance affecting any apportionment of profits or a loss for that accounting period unless the accounts were drawn up before the end of the year nineteen hundred and fifty-one and sufficient accounts so drawn up are also available as to the part of the other accounting period which falls within a standard year:
Provided that where the standard years are not consecutive years this subsection shall apply to each standard year separately as if all the references to a standard year referred to it.
The purpose of this Amendment is quite a simple one. It is really consequential on the fact that instead of a single period for the standard period, the periods of 1947, 1948 and 1949, companies are being given the opportunity of choosing 1947 and 1949. The main purpose of Clause 39 is to cover the position where an accounting period of a company overlaps the calendar year on which the standard period is based. What happens when the accounting year runs from, for example, June, 1946, to June, 1947. and again from June, 1948, to June, 1949?

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There is an overlap at either end of the single period.
Now when a company can choose as a standard, in a single consecutive period of three years, any two years with an interval in between, namely 1947 to 1949, there are overlaps which will be treated in exactly the same way by the Amendment, as overlaps at the beginning and end of the consecutive three-year period were treated in the original Clause. In fact, this Amendment is consequential upon the alteration of the standard of years.
Amendment agreed to.
Mr. H. Wilson: I beg to move, in page 45, line 30, at the end, to add:
(5) Notwithstanding anything previously in this section contained, a body corporate an accounting period of which begins before but ends after the first day of January, nineteen hundred and fifty-two, and which establishes to the satisfaction of the Commissioners that, owing to trading conditions peculiar to the industry in which the body corporate is engaged, its profits in respect of that part of its said accounting period which began on the first day of January, nineteen hundred and fifty-two (herein referred to as the nineteen hundred and fifty-two period), as computed in accordance with subsection (1) of this section would be less by not less than thirty per cent. than its actual profits in respect of the corresponding period in the year nineteen hundred and fifty-one, shall be entitled to elect that in respect of the nineteen hundred and fifty-two period its liability if any to the excess profits levy shall be charged in respect of its actual profits computed as aforesaid in the nineteen hundred and fifty-two period:
Provided that this subsection shall be of no effect in any case in which the result of its application would or might be that the liability to the excess profits levy or to any other tax of that body corporate or of any other person would be greater than if this subsection had not been enacted.
I and my hon. Friends are concerned, not with the determination of the standard period, but with the position in the current accounting period. I hope to be able to put the point briefly to the hon. Gentleman. He will be aware that the accounting period of many firms does not coincide with the calendar year. I will take for illustration firms whose accounting period ends on 31st March, though the argument applies equally to firms whose period ends on 30th April, or on any other date in 1952.
In the Bill as it now stands the calculation of the firm's profits for the calendar year 1952 is made partly by reference to a proportion of the accounting period
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ending in 1952. It may be in the period ending on 31st March. As I understand the Bill, it will be necessary in estimating that part of the profits to take the quarter of the year ending on 31st March. The hon. Gentleman will be aware, and this has been the subject of debate on earlier parts of the Bill, that there are many firms, especially in the textile and clothing industries, and the whole range of consumer goods industries, whose profit rate for the year ended 31st March, 1952, or at a later period, has been extremely varied.
In the earlier part of the year they were perhaps making profits which were in excess of the standard based on the three years, or two years, selected from 1947, 1948 and 1949. But in the fourth quarter of their financial year they may be making smaller profits, or even, in the textile industries, in many cases a loss. It seems to me and to my hon. Friends wrong that a Bill which provides for a levy on excess profits should be based on the calculated excess profits for the calendar year 1951, and not on the real figures. What we have in mind is an attempt to provide some sort of option for a firm which can say that in the first quarter of 1952 it is doing badly for reasons outside its control.
One can see the practical difficulties and objections immediately. The hon. Gentleman may say that few firms will have an account covering the actual period of the first quarter of 1952, or the first half of 1952 for firms whose accounting period ends on 30th of June. But I can assure him that many firms took the Chancellor of the Exchequer seriously when he made his original announcement about the Excess Profits Levy on 6th November. He announced that this Levy would operate from 1st January, and many firms thought that that might mean that he would base his Levy on the actual earnings from 1st January and not on some calculated figure.
I do not know if it is the majority. But very many firms did actually close their books in order to take a quick record of the position on 31st December, 1951. Many had a stock valuation, which was of course essential to establish the trading position of the firms, and I would say, that many, especially those whose profitability varies, are in a position to

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show their accounts for the first quarter of 1952.
It may be that the right hon. Gentleman will recognise this as a valid point. I think some concession would have to be made to satisfy all that the Chancellor has said about charging excess profits in 1951, profits due to re-armament and so on. It may be that he will say that the Amendment is not in the right form. We would prefer a simple option and to be able to say that a firm may select, instead of one quarter of the actual profits over their accounting period, the actual profits for the first calendar quarter, or whatever period is involved.
The reason why we did not put that in the Amendment is because of the seasonal problem. There are many firms whose profits vary over the year between one period and another—perhaps ice-cream firms, unless they have a lucrative sideline, which have lower profits in the winter than in the summer. It may be argued that firms which had a stock valuation on 31st December, 1951, did not do so on 31st December, 1950. That is a valid argument, but I am sure that most firms would be in a position to make a statement to the Commissioners which would be sufficient and satisfactory to take advantage of the Amendment.
It may be that the right hon. Gentleman is prepared to accept the principle —I hope he is—but may want to look at the drafting: I am sure that my right hon. and hon. Friends would understand that. But I do suggest to the Committee and to the Chancellor that there is an important point of principle here and that many firms which have been caught by the slump in the consumer goods industries will be treated badly if, in fact, they have to take a quarter of their actual earnings over their accounting period instead of the actual earnings in the first quarter of the year.
Mr. Maudling: The right hon. Gentleman is on a good point here, and the reason why we do not accept his Amendment is because, as I hope to show, it is unnecessary. The problem he expounded is that if one has an accounting period overlapping the beginning of the excess profits period at the beginning of January one might find a substantial fall in the first three months of 1952, and if one has to take the average and
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the first quarter as being the profits in the first calendar months of the year one might be charged on more than the profits earned.
I am assured that firms which have accounts available as at 31st December, 1951, with proper stock figures and so on, will be able to treat that actual profit for the first three months of 1952 as the basis for the Excess Profits Levy assessment, If they can produce the actual figures, that will be the "special circumstances," in the words of subsection (3), and the averaging position, which as the right hon. Gentleman rightly says would in some cases be quite unfair, would not apply.
The right hon. Gentleman referred to the question of seasonal trades, and there is a point there. People who have a low trade at one period of the year and a higher trade at the other period may want to take their actual profits for the first quarter and the average in the last quarters of the chargeable period.
11.0 p.m.
It may be that it will be necessary at the end of the E.P.L. period to see that people who have chosen to be taxed on their actual profits and not made subject to a calculation for a broken period at the beginning of the E.P.L. period will also have to be charged on the actual profits and not on the average period. That will get out of the difficulty of seasonal trade. We do not think that this Amendment is necessary, because I can assure the right hon. Gentleman that where a proper account, made up as to the 31st December, 1951, can be produced, and where definite figures can be given for trade during the first quarter of this year, then the averaging provision will not apply. I hope the right hon. Gentleman's points have been fully covered.
Mr. Wilson: I am very much obliged to the hon. Gentleman for his reply. Am I right in saying that a firm which is in a position to produce satisfactory balance-sheet results for the first quarter, taking a particular time for any calculated chargeable figure for the calendar year 1952, can take the actual figure for the first quarter and three-quarters of the next 12 months for the remaining part of 1952?
Mr. Maudling Mr. Maudling indicated assent.
Mr. Wilson: The purpose of our Amendment was to give the firms I have described the option of using the actual results instead of the calculated results for the first quarter. I am not sure if the Clause to which the hon. Gentleman referred does, in fact, give firms that option, or whether it is entirely at the discretion of the Commissioners. I think it is an important distinction and, if it is to be at the discretion of the Commissioners, we should know in what circumstances the discretion would be exercised. The hon. Gentleman said that if a firm can produce actual figures instead of calculated figures, it can use those figures instead of the calculated figures. The way he put it suggested, I think, that there was an option at the disposition of the firm, but from the way the Bill is drafted it would appear that it is entirely at the discretion of the Commissioners. That is a point which should be cleared up.
Mr. Nabarro: We have had this point in principle on several occasions before. The Profits Tax was introduced on the first day of the calendar year and the whole question of split chargeable accounting periods arises on that occasion. Can the hon. Gentleman say whether there are any difficulties in splitting the chargeable accounting period for assessments of Profits Tax for previous years? If there is not any difficulty about the figures, why need there be any difficulty on the assessment to E.P.L. from the January 1st?
Mr. Maudling: The governing factor in this matter is the decision in the case of Jenkins Productions, Ltd. v. the Inland Revenue Commissioners (1944) (I. ALL. E.R. 610; 29 T.C. 142), where it was held that if the taxpayer was able to produce an account for a broken period, even though he did not normally make up his accounts on that basis, the existence of the special account of itself must be regarded as a "special circumstance."
In other words, the taxpayer should be able to claim for that period and base his accounts on actual profits. It must be shown that the actual account was produced at the end of 1951, not accounts produced now or estimates made now. In these circumstances, the taxpayer should be able to claim that he should be treated in that way.
Sir F. Soskice: The answer is not quite satisfactory, because the hon. Gentleman started by accepting the case on its merits. He said that my right hon. Friend was on a good thing. In other words, he conceded that the case on merit is made out, and that therefore if any provision is necessary to answer it, that provision should be made in the Bill. Then he goes on to say that no provision is necessary.
He must have in mind Clause 39 (3), which undoubtedly is a discretionary Clause. It gives the Commissioners a discretionary right. He calls attention to a case decided in 1944, before this Bill was even introduced. The whole point of my right hon. Friend's Amendment—to which I have also appended my name—is that it is designed to give the company in question, which can satisfy the requirements as to proof, a positive right to elect.
There is a big difference between giving a company a right to elect and giving it simply a hope that the Commissioners will, in their discretion, decide in its favour. They are not bound to decide in its favour. It may be they are bound to consider circumstances of a particular kind, special circumstances within the meaning of subsection (3). Even if there is a special circumstance the Commissioners still have discretion to exercise, and they must still exercise that discretion; and if there is a special circumstance under the plain provision of subsection (3), they are still not hound to give the company the remedy it seeks.
It seems an illogical position, if the hon. Gentleman says that the case is proved on its merits, that he should then hesitate to provide, by accepting the Amendment, that the company should be given the right that corresponds to these merits, and try to say that the company is sufficiently met if it has merely a hope that the Commissioners will agree with the view it puts forward. There is a fundamental difference between the Amendment and subsection (3). I press the Parliamentary Secretary to reconsider this point.
Mr. Maudling: I assure the right hon. and learned Gentleman that, where these accounts can be produced, most assuredly the taxpayer will be given the opportunity of basing his tax liability on the actual

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profits in that period. I will see if that is not covered by the actual wording in the Clause. But the Amendment itself is by no means satisfactory as it stands, because it only gives the taxpayer this right when profits have fallen by so much as 30 per cent., whereas, as I understand it, the taxpayer will get this if profits have fallen by less than that. So it may be said that the position is more satisfactory as it is than it would be under the proposals contained in the Amendment.
Sir F. Soskice: Does not the hon. Gentleman appreciate that if the profits have fallen by less than 30 per cent., with the Amendment in its present form, the taxpayer could still apply to the Commissioners to exercise their discretionary powers? It is not as if the Amendment takes any right away from the taxpayer. He can still ask for relief under subsection (3). The Amendment says that if there is a fall as big as 30 per cent. the company has a right which cannot be withheld from it.
The hon. Gentleman must surely know that he cannot control the Commissioners in the exercise of their discretion. If the Commissioners are given a discretion to exercise, it is their duty to exercise it, whatever the hon. Gentleman may say with the best will in the world, and he cannot control them.
Mr. Gaitskell: Can we have an answer from the Parliamentary Secretary on that? My right hon. and learned Friend has made the position quite clear. There is all the difference in the world between the discretion which the Commissioners have under the Bill as it stands, and the right which, under my right hon. and learned Friend's Amendment, the firm would have itself to choose between the alternative methods of calculating its liability. It may well be that there are drafting faults and deficiencies in the Amendment. That is very often the case. but if the hon. Gentleman would give an undertaking that between now and Report he will consider this point, and meet us fully so that the firm has the right, and it is not merely left in the hands of the Commissioners, then my hon. Friends may be prepared to withdraw the Amendment.
Mr. Maudling: I think we have the same object in mind. I did believe it
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was covered by the Clause, but certainly, in the light of the weighty opinions expressed, I will look at the drafting and see if it can be improved.
Mr. Mitchison: I should like to hear from the Solicitor-General on this. It appears to be a matter of law from Jenkin's Ear onwards. It appears to be a matter well within the cognisance of the Government beforehand. Cannot we have an authoritative exposition from the Solicitor-General?
Mr. H. Wilson: I should like to ask the Parliamentary Secretary another question, apart from the assurance which we think he has given. I may not have heard him accurately, but I think he did refer to the necessity, if this Clause is to be invoked, of actual returns being available already for the period ending 31st December which will enable, by a simple process of subtraction, the firms to give the figures for the first quarter of 1952. But I was not quite clear when he introduced that qualifying clause in his remarks.
For instance, take the case of a typical textile firm which might have at the end of December valued stocks—and certainly they would be valued downwards—and which takes out all the necessary figure for the preparation of accounts which they do not actually publish or produce a completely audited set of accounts for the period up to 31st December. Many firms did this last December. The accounts would not be audited as at 31st December, but they would have the figures vouched for. I take it if these figures were accurate at that time they could be assembled, audited and submitted. If that is the position, then in view of the assurance given by the hon. Gentleman that he does accept the principle of the Amendment and is prepared to look again at the question of the discretion of Commissioners, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
Mr. Grimond: May I ask the Parliamentary Secretary whether it will be possible to give any assistance under this Clause to firms which are making profits by new processes? I think he will

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probably agree that if it could be done it would be desirable. They are, of course, the typical expanding firms we are all anxious to help. It might be done by a deduction in the computation of their profits of a percentage of any profit made by the sale of goods manufactured by a new process or under a new patent. It might be possible at least to make such a deduction in cases where the patent has been sealed. I think there are objections to that particular suggestion, because there will be some processes for which patents have not been taken out and which will be difficult to identify.
I know that the Parliamentary Secretary has given some thought to this matter, and he may be able to suggest some other way in which these firms could be assisted. They are the typical firms which need a proportion of their profits to build up their businesses, and which are perhaps seriously affected by the levy, even with the concessions granted by the Chancellor.
Mr. Maudling: My right hon. Friend gave careful consideration to the suggestion in the Amendment standing in the name of the hon. Gentleman, but after all the concessions he has made, designed to assist developing companies, it would not be possible to adopt the suggestion of the hon. Gentleman for one outstanding reason. That is, that if a concession were to be given in the case of a patent, there would be many other equally good claims.
Mr. Percy Wells: It is one of the consolatory features of debates on the Finance Bill that from time to time attention should be drawn to the masterpieces of erudite and recondite drafting which distinguish this Measure each year. If one looks at Clause 39 (1) it will be seen what an achievement has been reached this year. The Clause says:
"Subject to the provisions of this Act and, in particular, to the provisions of the Eighth Schedule to this Act, the profits or loss of a body corporate "—
Mr. R. A. Butler: On a point of order, Sir Charles, are we discussing the Eighth Schedule now?
The Chairman: No, we are discussing Clause 39, as amended, standing part.
Mr. Wells: In my submission, Sir Charles, one cannot look at this Clause without referrring to the Eighth Schedule to see the meaning attached in this Clause
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to the purposes given to it. Therefore it is necessary, by way of definition, to look at the Schedule. If one looks at that, hoping that here at last one will find something easy and simple for the taxpayer to follow, one finds in paragraph 1:
"The profits or losses shall be computed without abatement and including franked investment income, that is to say, as if subsections (1) to (3) of section thirty- three of the Finance Act, 1947 (which provide for an abatement of profits for"—
Chairman: Order, order. This speech would be more in order when we come to the Eighth Schedule.
Clause, as amended, ordered to stand part of the Bill.
Mr. Gaitskell: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
We have made considerable progress this afternoon and evening, and we have covered in all eight Clauses, including the greater part of the major Amendments proposed by the Chancellor. Apart from a brief, regrettable interlude, which was happily brought to a conclusion by the intervention of the Chancellor, we have had harmonious and constructive debates. In the circumstances, I hope the Chancellor may feel that we might adjourn for the evening.
Mr. R. A. Butler: I should like to have an interchange with the right hon. Gentleman on this matter. I think it would be reasonable to go on to our usual hour of 11.30, which might enable us to get another Clause at least. However, without wishing to inconvenience the Committee, I should like to ask him whether we could, by arrangement on either side of the Committee, retain the hon. Members who are interested in these subjects and finish the business Amendments; without wishing, of course, to go any further with the Schedules. We have Monday and Tuesday before us and all the new Clauses in which hon. Members take a great interest, as well as the new Clauses on the Excess Profits Levy, and these very difficult Schedules.
As we have to get the Bill before Whit-sun if we are to give time for the Report stage and fulfil the terms of the Act under which financial business is carried on, we are working to a time-table. I do not want to be unreasonable. If the right

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hon. Gentleman thinks that that arrangement would not work, I sugest that we should continue until our usual hour. If he thinks that the arrangement would work, and as these are purely business matters, we could sit for another hour or so and finish the Amendments and let those who are not experts in these business matters go. I think that that would be a reasonable arrangement. If that will not work, then the right hon. Gentleman must say so, and we must go on until our usual hour.
Mr. Gaitskell: The right hon. Gentleman is, as usual, most courteous. There is a considerable difficulty about his proposal. He describes these as business Amendments, meaning, I suppose, that they are not controversial in any way and that we can merely talk them over and come to some agreement on them. Sometimes that is the case but, unfortunately, it is not always so. There are some Amendments here which we could not treat as purely business Amendments. They are of considerable concern to a number of hon. Members and they cannot be left, even if it were right that they should be, to a small group of experts. If we do not get satisfaction on them we might wish to divide the Committee.
In the circumstances, therefore, I suggest that we proceed until 11.30. I do not think my hon. and right hon. Friends would object to that. We think that the proposition that we should go on as a small group, letting everybody else go home, is not feasible in the circumstances. I am sorry. In the circumstances I beg to ask leave to withdraw the Motion.
Motion, by leave, withdrawn.

Clause 40.—(ASCERTAINMENT OF UNDISTRIBUTED PROFITS AND OVER-DISTRIBUTIONS OF PROFITS FOR EXCESS PROFITS LEVY PURPOSES.)
The Solicitor-General: I beg to move. in page 46, line 5, at the end, to insert:
Provided that where a body corporate's trade or business commenced after the first day of January, nineteen hundred and forty-seven, then, for the purpose of ascertaining its undistributed profits or over-distribution of profits for any period beginning at the relevant date (as defined in the provisions of this Act applicable to the body corporate) and ending at any time after the end of the year nineteen hundred and fifty-one, its losses for the period beginning at the said relevant date and ending at the end of the year nineteen hundred and fifty-one shall be Left out of account to the
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extent, if any, that they exceed its profits for the last-mentioned period.
This Amendment proposes that in the case of a new business—that is to say, one set up after 1st January, 1947—any aggregate loss incurred during the development period up to the end of 1951, is to be left out of account in computing the adjustment to its standard in respect of a percentage of its undistributed profits.
The point has been made that it is unfair to diminish the standard of a new company where its resources at the beginning of the period of charge are less than the capital it started with a few years earlier solely because it has incurred losses in the development period.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 41.—(EFFECT OF TRANSFERS OF GOING CONCERNS ON STANDARD PROFITS AND COMPUTATION OF PROFITS AND LOSSES.)
The Solicitor-General: I beg to move, in page 46, line 19, to leave out "July, nineteen hundred and forty-eight" and to insert "January, nineteen hundred and forty-nine."
This Clause is concerned with the transfer of businesses. This Amendment, with others which are consequential, secures that the purchaser of a business gets a standard on the basis of the Chancellor's new proposal relating to the choice of any two of the three years 1947, 1948 and 1949.
Amendment agreed to.
Further Amendment made: In page 46, line 20, leave out "beginning of the standard period" and insert:
"first day of January, nineteen hundred and forty-seven."—[The Solicitor-General.]
Mr. Roy Jenkins: I beg to move, in page 46, line 23, after "shall," to insert:
"in relation to any chargeable accounting period during which the trader or business continues to be carried on without any substantial alteration in the character thereof."
This Clause relates to businesses which are transferred, and whether or not the standard profits can be carried on in the event. It says that they can only do that if the business passes
"… as a going concern and without substantial alteration in the character thereof …"

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This phrase appears to us to be rather ambiguous, because it might mean that, providing the business passes without subtantial alteration—provided there is no alteration on the day of transfer—the condition is fulfilled, and whatever happens subsequently it would not be taken that there had been a change in the nature of the business such as would exclude the company to which it had been transferred from carrying forward the standard profits.
We propose to tighten up things and say that these standard profits may only be carried on so long as there is found to be no change in the nature of the business. I think it was the Solicitor-General or the Financial Secretary who, earlier, said that the Government wished to prevent the buying and selling of profit standards and it seems to us that this Amendment would clear up an ambiguity and—if my reading of the Bill as it stands is correct—would help towards eliminating this undesirable practice of buying and selling profit standards.
The Solicitor-General: I hope I have understood the Amendment which has been moved with commendable brevity. I should like to correct one thing on which I part company with the hon. Member. I do not think we said that we were against the transfer of a standard from one company to another. We were against the transfer or buying-up of a deficiency. There is a difference between this Clause and the earlier Clause to which he referred. This Clause deals with the purchase of a business, as distinct from the acquisition of control over a business, and it does mean that it is difficult, when the businesses are merged, to separate or distinguish the profits as between the two.
We have looked into this very carefully. There is a real difficulty, on which I think the hon. Gentleman has put his finger; but we believe that the Clause in its present form is the most effective way to overcome that difficulty. After all, it really would not be fair, if one company legitimately buys a new business, that that new company should be deprived of the standard of the old business. If the new company were to infuse life into that old business and earn greater profits I think it ought at least to retain that standard. That is a legitimate trans-
822
action, as opposed to the transaction where there is a dealing to secure a deficiency. I hope I have made the position clear to the hon. Gentleman; but if I have not I should be only too glad to discuss it with him later.
Sir F. Soskice: I follow what the hon. and learned Gentleman says, but I still have not the remotest idea what he means by the words. If he wants to say that if company A buys from company B it is to enjoy the standard of the previous company, well and good; but when I include the words:
"without substantial alteration in the character thereof"
they become completely otiose.
If the intention is that there should be a period after the transfer, during which the business is carried on without change, let him say that. I could perfectly understand the view being taken that all one has to show is that company A has bought company B's business; but if that is all one wishes to indicate what is the point of putting in words which seem to mean nothing? One cannot help buying a business without substantial change, because all that is done is to transfer it from one set of hands to another, and that does not change its nature.
The point is, what happens when it has been transferred? I would impress upon the hon. and learned Gentleman that the words used by the Government in this subsection are really quite inappropriate. Let it be one thing or the other. If the hon. and learned Gentleman desires to enact that it should be sufficient to prove a transfer, let him say so and give his reasons; but if he thinks it necessary, for the purpose of obtaining the standard of the former company, that there should be some degree of continuity of the business in its previous state, then let him choose some words such as those which my hon. Friend has put on the Order Paper, to enact, in terms, that after the transfer the business is to remain unchanged. One thing or the other, either is completely indefensible. The words are wholly ambiguous. I hope that the Solicitor-General will reconsider the words used. I do impress on him that they either mean nothing or something of dubious intent.
11.30 p.m.
Mr. Jenkins: While we cannot complain about the hon. and learned Gentleman's courtesy we can complain about the substance of his answer. I really do not think he made an attempt to answer the point. I could not understand his first point, which was that it was wrong to try to pick up a remark by his hon. Friend the Financial Secretary and say the Government was not anxious to prevent the buying and selling of businesses which were attractive from an E.P.L. point of view because it related to a deficiency and that was a different matter from what is dealt with in the Clause.
That is true, but the whole of the Clause, and that is why it is in the Bill is that the Government do not want to have pre-buying. There is no point in having the Clause and the words of which we complain. What we are anxious about is how long a period it covers, and the hon. and learned Solicitor-General has not told us that at all. Before I consider withdrawing my Amendment I should like to know from him whether it covers the day of transfer or whether it extends indefinitely.
The Solicitor-General: I agree with the right hon. and learned Gentleman that the wording is complicated, but this is a complicated matter. I think it has to be a complicated provision to try to stop something that I do not think anyone wants. But in view of what has been said we are prepared to look at the drafting again. It is a drafting matter, and I do not think there is any substance of difference between what we want to achieve.
Sir F. Soskice: I do not want to take time and I am grateful to the Solicitor-General. I do not think it is a drafting matter. It is a matter of substance. Either he wants a company which acquires a business to buy the former company's standard if it continues in the same way, or the Government would have taken a different view. They propose to enact that it is enough to obtain the former standard if a former company's business is bought. There is an alternative position, which is different entirely in result and the Government should choose one or the other and not say it is a drafting matter because it is
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not. The words are simple although they are not unambiguous.
The Solicitor-General: Whether the right hon. Gentleman agrees that it is a drafting matter when I say we will look at it again, it covers what has been said from both sides of the Committee.
Mr. Jenkins: I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Amendments made: In page 46, line 32, leave out "July, nineteen hundred and forty-eight," and insert:
"January, nineteen hundred and forty-nine."
In line 33, leave out "beginning of the standard period," and insert:
"first day of January, nineteen hundred and forty-seven."—[The Solicitor-General.]
Mr. Stevens: I beg to move, in page 47, line 3, to leave out "individuals" and insert "persons."
In line 3 of this Clause the word "individual" appears, but I am told that it cannot include a body corporate. Yet the possibility of a body corporate being in partnership with an individual is clearly contemplated in other places in the Bill, particularly, for example, in Clause 51. If that is so, I feel that the word "persons" should be used instead of the word "individuals," so that the possibility of an individual's being in partnership with a body corporate may be contemplated.
In the case of the next pair of Amendments, beginning with that in page 47, line 6, I would point out that subsection (1) of the Clause provides that when a business of a limited company is transferred as a going concern to another limited company the purchasing limited company succeeds to the profit standards of the vendor limited company. As at present drafted Clause 4 (3, a, b, c, d) provides that if a partnership sells to another partnership the successor will only take over the standard of the vendor provided that there is a certain relationship between the one and the other.
That relationship is defined in the Bill. I nearly said "clearly defined," but those of us who have read it will agree that it is not so very clearly defined. We believe that the same principle should apply where the goodwill of a partner-

825
ship is sold as a going concern to another partnership or a partnership consisting of a limited company and an individual.
So far as the last of the five Amendments is concerned, to page 47, line 14, it would extend the relationship not only to legitimate and adopted children but also to trustees—trustees, for example, of younger members of the family. I think that that is perfectly justifiable. It would certainly be in line with practice so far as Income Tax is concerned. Section 163 of the Income Tax Act, 1951, makes just such a provision, and I do suggest that that provision should be made here. If the Amendment to line 6 is accepted, of course, that to line 14 would not be necessary. I suggest that these five Amendments are logical and simple justice, and I hope the Chancellor will accept them.
The Solicitor-General: I can deal with the Amendments in the same order as that in which my hon. Friend has dealt with them. With regard to the first two, the omission of the word "individuals" and the insertion of the word "persons," I understand that the reason he wants that done is simply because the word "persons" will include a body corporate. I would say to him that if he will be good enough to withdraw that Amendment we shall put down an Amendment on Report to cover the situation he has in mind with regard to that.
With regard to the next two Amendments, I am afraid we cannot meet him, for this reason. He will appreciate that where a company acquires a business from individuals there is no excess profits standard of business belonging to the individual. That does mean that to try to arrive at some standard we should have to go a good deal—or might have to—into the private affairs of individuals, and we do not believe that that would be justified. Provision is made in the Bill for the acquisition of a standard on the purchase of a business from individuals, in the circumstances set out in subsection (3), that is to say, where the business is in the nature of a family one.
With regard to the last Amendment, we feel that that really is a drafting matter. We are doubtful whether the
826
clause, as worded, covers a case where a committee in lunacy, for instance, transfers a business to a new limited company. If the hon. Member withdraws the Amendment we will look at that point also, and if we are satisfied that the Amendment is really necessary, one will be introduced on the Report stage.
Mr. Stevens: With regard to the second pair of Amendments, surely it is true that the Excess Profits Levy standard of a limited company is to be ascertained on the basis which is used for Income Tax purposes. In a trading partnership, the profits are assessed for Income Tax purposes on a basis similar to that used for a limited company. Surely there is not all the difference which the Solicitor-General has indicated. I hope he will look closely at this again. If he does, I think he will find that the difference is not quite as he suggests. On the basis of his assurance, I beg leave to withdraw the Amendment.
Amendment by leave withdrawn.
Amendment made: In page 47, line 3, leave out "beginning of the standard period," and insert:
"first day of January, nineteen hundred and forty-seven."—[Mr. R. A. Butler.]
Motion made and Question proposed, "That the Clause, as amended, stand part of the Bill."
Mr. James Callaghan: I want to ask the Solicitor-General how the nationalised industries are concerned when transfers take place to, or from, them. This is an important matter, as the Patronage Secretary obviously recognises. One reason why my right hon. Friends could not assent to an earlier suggestion that discussion of this particular point of the Bill should be confined to a small group of business experts from both sides of the Committee who would agree, in amity, about signing away the country's rights on these matters. The layman, who does not understand the Excess Profits Levy, may have important questions to raise.
Clause 49 provides what shall happen in the case of property which is transferred—a part of a trade or business, which is transferred to the National Coal Board, the British Transport Commission, the British Electricity Authority,

827
and various other bodies. I want to ask, regarding Clause 41, whether it is intended to cover transfers of a trade or business, or part of a trade or business, from a nationalised industry to another body corporate. If so, I would like to ask why, in the case of a nationalised industry to which a trade or industry is transferred, Clause 41 should not apply, whereas in the case of a trade or industry transferred from a nationalised industry to a nationalised body, or body corporate, the Clause should apply? I am sure that the Solicitor-General will be able to give me an immediate answer.
The Solicitor-General The Solicitor-General indicated assent.
Mr. Callaghan: He indicates that he can, and I can leave that point.
The next point is that we understand that the Government, for reasons which I do not intend to go into, means to sell a number of properties of the nationalised industries at knock-out prices. How is that to affect the standard of the nationalised industries? Will that leave them worse off? Is this another blow by the Government at the nationalised industries through adjusting their standards of profit by selling them at knock-out prices, so that these industries will be compelled to pay more Excess Profits Levy than would otherwise be the case?
These are all important questions—very important questions—and, although some hon. Members behind the Solicitor-General are quite confident that they know the answers, we on this side of the Committee would be grateful if he would tell us whether the shabby and sordid processes through which the Government intend to drag road haulage are to appear in this Bill.
11.45 p.m.
The Solicitor-General: The hon. Member began by asking whether Clause 41 referred to transfers of businesses of nationalised undertakings. If he will turn to Clause 49 (1) he will see that it is said:
"Section forty-one of this Act and the Tenth Schedule to this Act shall not apply to any transfer of the whole or any part of a trade or business to the National Coal Board, the British Transport Commission, the British Electricity Authority, any Area Electricity Board, the Gas Council or any Area Gas Board."
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I think, therefore, that the further questions he wishes to raise, in so far as they arise, will be more conveniently discussed, not on the Question that Clause 41 stand part of the Bill, but on the Question that Clause 49 stand part.
Mr. Callaghan: I should like to follow this up, because I do not want to get to Clause 49 and then be told that I cannot discuss the transfer of business of the Transport Commission. What I and many people are concerned about is the transfer of businesses from the Transport Commission. I submit to the Solicitor-General—and I think I put it fairly clearly in the first place—that it seems to me, as a layman who has not the advantage of the legal training of the Solicitor-General, that Clause 41, subsection (1) or (2), is the position we are discussing in relation to the Transport Commission today. The Clause says, in subsection 1:
"Where the whole, or substantially the whole, of the trade or business of a body corporate which commenced before the first day of July, nineteen hundred and forty-eight."
That is exactly the position of the Road Haulage Executive. The Government propose to mangle the corpse and distribute it among the carrion crows. We would like to ask whether, in fact, in that case the profit standard of the British Transport Commission will be effected.
Secondly, we ask whether the profit standard of the Commission will be affected, why it should be affected when Clause 49 deals with the reverse position in entirely another way or whether the operation of subsection (2) of Clause 41, namely, the transfer of
"… a part, not amounting to substantially the whole, of the trade or business …"
is intended to apply to these trades or businesses taken over from the Transport Commission? That is a fairly simple question, I hope, and capable, I am sure, of the usual succinct courteous and distinctive reply which we always expect from the Solicitor-General.
Mr. R. A. Butler: The position is as far as I can ascertain following the arguments of the hon. Gentleman, that there is no reference in this Bill as drafted to the problem he raises. It is not intended, as far as I can ascertain, to arise under under Clause 41. I have quickly scanned Clause 49 and cannot see any reference to

829
it there. I think that far the best thing is for me to give this consideration. It will not be prejudiced by the passing of Clause 41 and if it were we should raise it at the next stage. I will give that undertaking, but I do not consider it will be prejudiced by passing Clause 41. I think the hon. Member had better let me look into it and see how such a matter is likely to be dealt with in the contingency to which he referred.
Mr. Callaghan: I am much obliged to the right hon. Gentleman and I am sure the Solicitor-General realises that I was on a real point and that here is another example of the incomplete and muddled legislation placed in front of us by this Government in relation to the most important legislative proposal in the King's Speech—the proposal to denationalise road haulage—which they did not consider it worth while putting into their first Finance Bill.
It is left to the Opposition to dig it out of them in order to make sure that the finances of the country are properly safeguarded. This is another example of the inefficient way in which we have come to expect hon. Members opposite to conduct their legislative business. We shall expect to see something better next time.
Mr. Butler: I do not think it would be possible for Parliamentary counsel to draft a Bill in relation to matters not yet before us and only in course of preparation. That would be an impossible situation. It would be much better to rely on the commonsense answer I gave than to make bad blood against the Government at this time of the night on these matters.
In order to fulfil the undertaking I gave earlier, I beg to move, "That the Chairman do report Progress and ask leave to sit again."
Committee report Progress; to sit again tomorrow.

ARMY AND AIR FORCE ACTS
Select Committee appointed to consider the Army Act and the Air Force Act, and to make recommendations for the amendment thereof; and to consider and report on the advisability of enacting the said Acts or parts thereof permanently:
Mr. Bing, Mr. Bowen, Wing Commander Bullus, Colonel Gomme-Duncan,
830
Air Commodore Harvey, Mr. Ian Harvey, Mr. Arthur Henderson, Mr. James Hutchison, Mr. Basil Nield, Mr. Paget, Brigadier Prior-Palmer, Sir Patrick Spens, Mr. Michael Stewart, Mr. George Wigg and Mr. Wyatt.
Power to communicate from time to time with the Departmental Drafting Committee to be appointed to assist them by the Secretary of State for War and the Secretary of State for Air:
Power to send for persons, papers and records:
Five be the Quorum.—[Mr. Butcher.]

CARAVAN SITES, MIDDLESEX
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Butcher.]
11.53 p.m.
Mr. Frank Beswick: I want to deal with a problem involving about 250,000 people. That is the estimated number of our fellow-citizens who are today living permanently or semi-permanently in caravans. That number is in addition to the holiday-maker or recreational caravan occupant. I understand that about 15,000 additional caravans are being made and sold annually.
Within the boundaries of this problem we have an element of exploitation and downright racketeering. We have some individual site tenants taking as much as £2,000, £3,000 or even £4,000 a year for the provision of a few acres of parking space and primitive facilities. On the other hand, we have thousands upon thousands of decent, law-abiding citizens who only want, and are entitled to ask for, a site on which they can live, either until a conventional house is available or, in some cases, because they prefer the open-air, healthy life which some enjoy in a modern caravan.
I must also say that there are, within this whole picture, reputable firms making and distributing good caravans, and who are only too anxious that the industry generally should be rid of the unsatisfactory features and allowed to play a useful part in our economic and social life.
The County of Middlesex is especially concerned in this matter, partly because there are so many caravans sited within

831
the area and partly because it already has an excess of population over the number suggested in the County Development Plan. Yiewsley and West Drayton Urban District, for example, expect to have by 1954 a surplus of 1,250 families and fear that, as things are, they will be moving out residents of long standing at a time when new families in caravans will be arriving. Nevertheless, it is not feasible to deal with this problem in one county alone, at least not without squeezing it into neighbouring counties.
There are two initial propositions to which I invite the Parliamentary Secretary to agree. First, that here is a national problem with which the Government must necessarily deal. We have somehow to fit this new development into our social picture. Secondly, although the Government and the local authorities need to be armed with adequate powers, present experience suggests that these powers are not now available.
Two illustrations support this second proposition. There is within the Uxbridge urban district about 20 acres of open land reserved for residential development. An individual secured the tenancy of this site in November, 1949. He put two caravans upon it and charged 10s. 6d. a week for site rent. When the caravans increased to about a dozen, the local authority found out about it. They wrote to the site tenant and the individual occupiers pointing out that they had not obtained planning permission. There was no reply and caravans continued to arrive.
There was some difficulty in making absolutely certain who the actual tenant was, and to make sure they were dealing with the right person the Council served the man whom they believed to be the tenant and the individual occupiers of the caravans with a notice requiring them to state their interest in the land. The individual occupiers disclosed the name of the tenant and the tenant himself did not reply.
All this time more caravans had been arriving. A summons was taken out against the tenant for failing to answer the notice and to give information about ownership. He feigned ignorance but eventually supplied the necessary information. Meanwhile, more caravans had arrived. However, with the necessary evidence about ownership the Council
832
then served an enforcement notice. On the last day before it became operative the tenant put in a planning application. By this time there were 100 caravans on the site. The Urban District Council refused planning permission and on the last day before that refusal became effective the tenant entered an appeal to the Ministry. There were further delays. A hearing day was fixed, and adjourned. Meanwhile, more caravans arrived. Eventually, the Ministry's decision was given, and it advanced temporary planning permission of 18 months. That permission ends with September.
I can appreciate why this temporary permission was given because to withhold it would not only have entailed considerable hardship upon caravan occupiers, but also presented an insuperable problem for the urban and county authorities of providing alternative accommodation for so large a number of homeless families. But this problem will still exist at the end of 18 months. Can the Parliamentary Secretary say what action he expects the Urban District Council to take on 1st October when the permission expires and about 100 families are supposed to leave this site?
Another case, at the other end of my constituency and within another urban district, also illustrates how the present law can be flouted. Application was made in March, 1951, for planning permission for a site of seven acres. There were no caravans on the site when permission was requested but, while the appeals machinery has been slowly ticking over, there are 56 caravans and 56 innocent families drawn up there now. In the words of the Clerk of the Uxbridge Urban District Council. who perhaps has as much experience of this problem as any man, it is as difficult for the local authority to operate the provisions of the 1947 Act as it is easy for the developer to evade it.
There is, of course, the Middlesex County Council Act of 1944 which also contains some provision about moveable dwellings. This might be thought to provide some solution, but the provisions contain some snags with which the Parliamentary Secretary is probably familiar. The principal weakness of this Act is that it lays down that a caravan must not be used as a sole means of habitation for a period of more than

833
three months in any one year. This means there must be a delay of at least three months before any action can be taken. Then there are appeal procedures which mean that the unscrupulous person can use the time for accumulating a large number of unfortunate families, and then present the courts with a problem which, if dealt with rigorously, means hardship and suffering to the innocent occupiers.
This is the kind of problem with which we have to deal. What are we to do about it? I have said all along in previous correspondence with the Parliamentary Secretary's Department that I do not think it is possible to deal with the unsatisfactory features of this business unless we make some provision for the orderly development of proper caravan sites in suitable and approved places. I know that the Minister cannot direct local authorities to provide sites, but, of course, he has considerable powers of persuasion
I believe that the Minister should positively encourage the provision of a number of properly equipped, properly organised, and fairly rented sites either directly by the local authority or under licence from the local authority. The use of caravans as sub-standard housing accommodation is likely to persist for at least another decade. In any case, one thing that has impressed me is the number of caravan occupiers who have told me how much they enjoy and have come to prefer that manner of living.
I can well see that on the outskirts of London and other cities, even after the housing situation has eased, decently equipped sites on which visitors or holiday makers can park a caravan for two or three weeks, while they went into the city on pleasure or business, would be an asset to the local authority, and an offence to no one.
The majority on the two local councils in my division do not necessarily agree with the proposal I now put forward. I know they certainly would not consider the provision of sites unless they were certain of powers to control the unscrupulous type of site developer with whom they are already afflicted, and the question is whether these powers can be granted. I do ask the Parliamentary Secretary to look into that. I also suggest that one of the unsavoury features of the present situation is the way in which the unscrupulous caravan distributor—and
834
there are only a small minority in an industry which wants to put its house in order—sells his caravans by misleading the purchaser to believe that authorised sites are available.
Would it not be posible to compel a caravan vendor to give, with each caravan sold, a statement of the law as it relates to the parking of caravans? This would at least prevent the shady dealer exacerbating this human problem by misleading a home-hungry family and selling another caravan which cannot be parked without committing an offence.
I know that the Parliamentary Secretary's officers have given much thought to this matter. But I ask him to look at it again as an important and urgent social problem. I hope he will make this dual approach: first, on the matter of properly equipped and controlled sites; and, second, the prevention of unsuitable development. Finally, I hope that it will be possible to satisfy the good principles of town planning without causing any further unnecessary hardship to those citizens who now regard their caravan as a home.
12.4 a.m.
The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples): The House will be grateful to the hon. Member for raising this matter, because it cannot be disputed that in the Uxbridge area in particular, and in Middlesex and the Home Counties, there is undoubtedly a grave problem caused by caravans. In the case of Uxbridge, it has been rather unfortunate that one particular individual has exploited the situation—and I grant the hon. Gentleman that point—but the reasons for that individual being able to exploit it are that there has been a shortage of sites, and the local authority has been reluctant to provide them, and, of course, the grave housing shortage which is accentuated in this particular area because places such as Slough and the London Airport want workers, and they have no accommodation for them.
I think the hon. Gentleman has slightly overstated the case because, from the inquiries I have made, I fancy that the matter is now under control. The authorities have been very lenient with caravan dwellers who were in possession with their caravans before March, 1951.

835
After that date, they got rather rough and tough with any caravan dwellers who went into their area.
But when we move the caravan dwellers we are faced with the question of where they are to go. It is not easy to go to a person living in a caravan and say, "You must move somewhere else," unless we tell them where they can go. One of the difficulties which have arisen in Middlesex is that they evicted a lot of their caravan dwellers to neighbouring counties, which were a little disturbed at the number exported from Middlesex.
The scale of the problem in Middlesex is not, however, as great as the hon. Gentleman makes out. In Middlesex there is a population of 2 million, and only between 800 and 900 caravan dwellers. He asked certain specific questions. The first was, would we in the Ministry treat this as a national problem? I gathered that he wanted the Minister to lay down standard lines and prescribe those lines of treatment from Whitehall so that there should be uniform treatment over the country. But that would be wholly inappropriate, because the problem is not spread evenly over the country. It is worse in the Home Counties, Midlands and Lancashire and those big centres where there exists a dense population, such as Slough and Coventry and where the population is great in relation to the number of homes available.
It varies according to the progress of the local housing programme and the employment situation. The hon. Gentleman started by saying that he thought it affected 250,000 people. It is difficult to say how many caravans are used as permanent homes. The National Caravan Council estimates the number at 50,000, but the Ministry officials who have been dealing with this problem for years are not able to accept that figure. The figure they have in mind is nearer 25,000 caravans, but it is difficult to get an accurate figure, although the 25,000, which the Ministry accept as being nearer the correct figure, is compiled from returns made by the local authorities.
Mr. Beswick: But the hon. Gentleman will admit that one of the difficulties here is that while we have no proper sites a lot of people are parking illegally?
Mr. Marples: I will go on to the provision of sites as my next point. The real point in these cases is what we are to do with the families. It is a choice of evils. It is a question of which is the greater hardship—to shift a family from the caravan where they are living, or to let them stay. It is like the county court judge who is faced with some appalling problems when he has to decide which family will suffer the greatest hardship when they are both seeking to get possession of the same house.
The hon. Gentleman asked if we in the Ministry would give more positive encouragement for the provision of sites for the orderly development of these caravan dwellings as permanent homes. There is nothing to prevent local authorities either allowing camp sites to be developed or owning their own sites. They have all the powers they need, and some counties have already organised their own sites or allowed commercial firms to have properly organised sites. Hertfordshire, Berkshire, Essex, Warwickshire, and so on have their own sites. We in the Ministry will help in every possible way any county which wants to organise its sites properly.
The initiative must come from the local authority. It will not come from Whitehall. My right hon. Friend will follow the lines set down by his predecessor in this matter. He will not actively encourage the provision of residential caravan sites. The hon. Gentleman will probably want to know why. The caravan is sub-standard accommodation. If we encourage the provision of organised sites, we will in effect encourage the provision of sub-standard accommodation on a far greater scale than at present. People will tend to buy caravans knowing that there are organised sites.
The hon. Gentleman said that caravan dwellers like their accommodation and like living in them. I grant him that. He must remember that the Opposition, in wilder and less generous moments, have often attacked this Government by saying that the people's house is sub-standard accommodation. This house was started by the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) in early 1951, and there was absolute silence from the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan). When, after the General Election, he was transferred to the Opposition, the right hon. Gentleman

837
the Member for Ebbw Vale launched a tirade against my right hon. Friend. We had torrents of emotional words accompanied by much jabbing of a forefinger at my right hon. Friend for building a house which, in the opinion of the right hon. Gentleman the Member for Ebbw Vale, was sub-standard.
What would the hon. Gentleman's right hon. Friend say now if the Government encouraged caravans as a permanent form of home? He would inject a certain amount of venom into his remarks. It would not be agreeable, though it might be amusing, to listen to him. Once we start on sub-standard houses it is my right hon. Friend's opinion that we cannot stop. Even if we say that it is to be temporary, in effect they become permanent houses. We had the temporary prefabricated bungalows which are dotted all over the countryside. They were expensive to erect. They are expensive to service, and more expensive than a permanent traditional house. They are now expensive to keep in repair.
Mr. Beswick: I propose that these sites should be provided for the caravans that are now causing the problem. Once the municipalities have the sites, they can control the numbers that come on to them. I do not suggest that there should be extra sites for additional sub-standard accommodation.
Mr. Marples: If a local authority wishes to get a properly organised site it has all the necessary powers to compulsorily acquire land, to organise the sites, and to take over the caravans which are now spread about in disorderly fashion in their county. My right hon. Friend will help in every possible way, but the initiative must come from the local authority. It will not come from Whitehall.
Even if we dictated from Whitehall, most local authorities would not agree. They dislike intensely this form of development. I do not think that it would help very much. Some are even reluctant to provide sites where the existing ones are very badly kept. The hon. Gentleman wanted to know whether our powers were adequate. I realise that in an Adjournment debate one cannot discuss legislation. It is up to the hon. Gentleman to show that they are inadequate, and in what respect he wants additional powers. He is skilful enough,
838
because he held office in the previous Government, to skate very carefully on thin ice. I am sure that he is dialectically skilful enough to have got away with introducing here and there whatever his suggestion may have been.
The existing powers are in the Town and Country Planning Act, 1947, the Health Act and the Middlesex Act. The Middlesex Act requires permission from the first day, whereas under the Town and Country Planning Act the period is 28 days and under the Health Act it is 42 days. The complaint of the hon. Gentleman was that the procedure was too slow. In certain cases a person who takes advantage of the housing shortage can delay proceedings by appealing to the Minister before the last day of his enforcement notice, and so on; but he can only do that once.
I should like to make one suggestion in answer to the hon. Gentleman and that is, that if the Uxbridge local authority would care to consult with the Minister, or send a deputation, we should be glad to meet them and help them on this particular problem to which he has referred, where I think planning permission was given with regard to the site in question in September last. We should like to meet them as early as possible to discuss what can be done with the 70 caravans which are there now. I hope the hon. Gentleman would let the local authority know that we would like to meet them if they would like to meet the Ministry, and we should be glad to help them in every possible way.
But the enforcement of these existing powers does mean hardship, even though in some cases it is delayed. It is not easy. We have to face up to the problem that if the existing powers could be applied even more severely than they can now it would still mean finding a way of dealing with the families, and the shorter the notice that one gives a person when ejecting him from a house or caravan, the greater the hardship caused.
I must not make reference to proceedings upstairs in Committee, but I remember, on the Second Reading debate of the Housing Bill, which my right hon. Friend is now introducing, that there was great agitation because certain agricultural workers had been given short notice to quit their tied cottages—3, 4, 5

839
or 6 months. Great indignation was expressed by some hon. Members that this notice was not long enough. If we are to give local authorities more powers so that they can act more speedily there will be greater hardship. I think that on the whole it is better to be slower; and I think that if one is slower one acts more justly, because when one is dealing with homes one is also dealing with human beings—and even if the homes are substandard they are, to the people living in them, their homes, and it is difficult to move them at short notice.
I think we have to accept the fact that the caravans that are with us are an evil. The real answer is not to give more powers but to build more houses, and my right hon. Friend is setting about that task very vigorously, and we hope that that will be an answer to the hon. Gentleman's problem of caravans in his own constituency.
I should just like to refer to the question of houses in the industrial areas, where we have re-armament problems. This is a very grave question, and my right hon. Friend would much rather see an increase in non-traditional houses than the introduction of these substandard
840
caravans. A non-traditional house takes possibly 50 per cent. of the man hours which are taken with the traditional house, and it can be erected very speedily.
In the case of those factories which have recently been started to assist rearmament the real answer is to build those non-traditional houses and have a block licence so that the builder can start at one end of a site and go right the way through, build a large number of houses and get the rhythm necessary to bring down the cost. I hope that if any local authority has that particular problem it will consider my right hon. Friend's suggestion that non-traditional houses should be erected in these areas.
I conclude by saying that the local authority at Uxbridge ought to be very grateful to the hon. Gentleman for raising this matter and if he will be kind enough to extend an invitation to them to come and see the Minister and his officials we shall do what we can to help them with that particular site.
Adjourned accordingly, at Nineteen Minutes past Twelve o' Clock a.m.

AGRICULTURE
  Ellbridge Horticultural Station
  Ellbridge Horticultural Station
  Farm Workers (Wages)
  Farm Workers (Wages)
  Foot-and-Mouth Disease, Mull
  Foot-and-Mouth Disease, Mull
  POLICE (DUTIES)
  POLICE (DUTIES)
  ROYAL COMMISSION ON GAMBLING (REPORT)
  ROYAL COMMISSION ON GAMBLING (REPORT)
  SCHOOL CROSSING PATROLS. HASTINGS
  SCHOOL CROSSING PATROLS. HASTINGS
  PRISONS AND ASYLUMS (ESCAPES)
  PRISONS AND ASYLUMS (ESCAPES)
  RESIDENTIAL NURSERIES (COSTS)
  RESIDENTIAL NURSERIES (COSTS)
EMPLOYMENT
  Burton, Uttoxeter and Tutbury
  Burton, Uttoxeter and Tutbury
  Technical and Scientific Register
  Technical and Scientific Register
  Newcastle
  Newcastle
  Foreign Hypnotists (Permits)
  Foreign Hypnotists (Permits)
  Relaxation of Customs Agreement (Dilutees)
  Relaxation of Customs Agreement (Dilutees)
  Foreign Workers
  Foreign Workers
  Institute of Houseworkers, Swansea
  Institute of Houseworkers, Swansea
  Paper Mill, Eynsford (Closing)
  Paper Mill, Eynsford (Closing)
  General Transfer Scheme
  General Transfer Scheme
  Actors and Actresses
  Actors and Actresses
NATIONAL HEALTH SERVICE
  Nursing Posts (B.T.A. Certificate)
  Nursing Posts (B.T.A. Certificate)
  Foreign Countries (Reciprocal Arrangements)
  Foreign Countries (Reciprocal Arrangements)
  Coronary Thrombosis (Research)
  Coronary Thrombosis (Research)
  Broadmoor Inquiry
  Broadmoor Inquiry
  Dentists
  Dentists
HOSPITALS
  Public Meetings
  Public Meetings
  Patient Costs
  Patient Costs
  Dietary (Apple Juice)
  Dietary (Apple Juice)
EDUCATION
  Teachers
  Teachers
  Ramsay Primary School (Conditions)
  Ramsay Primary School (Conditions)
  Gravesend Grammar School (Repairs)
  Gravesend Grammar School (Repairs)
  Holidays (Agricultural Areas)
  Holidays (Agricultural Areas)
  Registered Pupils, Cornwall
  Registered Pupils, Cornwall
  School Meals
  School Meals
  New Schools
  New Schools
  Educational Foundation Schemes
  Educational Foundation Schemes
  Durham County Council (Teachers' Complaint)
  Durham County Council (Teachers' Complaint)
  Dentists
  Dentists
  EMIGRANTS TO AUSTRALIA (PASSPORTS)
  EMIGRANTS TO AUSTRALIA (PASSPORTS)
TRADE AND COMMERCE
  N.E. Development Area (Factory Projects)
  N.E. Development Area (Factory Projects)
  Decorated Pottery (Sale)
  Decorated Pottery (Sale)
  Cotton Textiles (Imports)
  Cotton Textiles (Imports)
  Royal Pavilion, Brighton
  Royal Pavilion, Brighton
  Non-ferrous Metals (Losses)
  Non-ferrous Metals (Losses)
  Magnesium Imports
  Magnesium Imports
  Magnesium Electron Factory, Lowerhouse
  Magnesium Electron Factory, Lowerhouse
  MUSEUMS AND ART GALLERIES
  MUSEUMS AND ART GALLERIES
  HUNGARIAN ASSETS (CLAIMS)
  HUNGARIAN ASSETS (CLAIMS)
GOVERNMENT DEPARTMENTS
  Exchequer and Audit Department (Temporary Staff)
  Exchequer and Audit Department (Temporary Staff)
  Civil Servants (Telephone Facilities)
  Civil Servants (Telephone Facilities)
  NATIONAL ASSISTANCE (PROSECUTION)
  NATIONAL ASSISTANCE (PROSECUTION)
MINISTRY OF FOOD
  Fish Transport (Charges)
  Fish Transport (Charges)
  Anglo-Soviet Contract (Tinplate)
  Anglo-Soviet Contract (Tinplate)
  BUILDING WORKERS, SCOTLAND
  BUILDING WORKERS, SCOTLAND
  Foodstuffs (Home Production)
  Foodstuffs (Home Production)
  AIR MAIL SERVICES, ORKNEY AND SHETLAND
  AIR MAIL SERVICES, ORKNEY AND SHETLAND
  MR. DE BERNALES (PROCEEDINGS)
  MR. DE BERNALES (PROCEEDINGS)
  TERRORISTS, MALAYA (INFORMATION REWARDS)
  TERRORISTS, MALAYA (INFORMATION REWARDS)
COAL AND COKE
  Industrial Supplies
  Industrial Supplies
  Power Stations
  Power Stations
  Pit-mound (Utilisation)
  Pit-mound (Utilisation)
  HIGHWAYS HOSTEL, EUXTON
  HIGHWAYS HOSTEL, EUXTON
  FUEL AND POWER (SALES PROMOTION)
  FUEL AND POWER (SALES PROMOTION)
  ARMY DRILL HALLS, WALES (LIQUOR)
  ARMY DRILL HALLS, WALES (LIQUOR)

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Lord Carew—Took the Oath.
The Lord Simon of Wythenshawe—Took the Oath.

MAIL VAN ROBBERY
2.36 p.m
THE EARL OF LISTOWEL: My Lords, I rise to ask Her Majesty's Government the Question of which I have given private notice—namely, whether Her Majesty's Government have any statement to make about the mail van robbery which occurred yesterday morning in Oxford Street?
THE POSTMASTER GENERAL (EARL DE LA WARR): My Lords, I am grateful to the noble Earl for giving me an opportunity to make a short statement on the robbery with violence of a Post Office van containing packages of high value yesterday morning in Central London. Her Majesty's Government felt that in view of the serious nature of this outrage, and the fact that it followed closely on a similar crime on British Railways only last week, the House was entitled to an early statement.
The facts, so far as they are at present known, are these. Yesterday morning a Post Office van left Paddington Station for the City. Owing to road repairs in Oxford Street there was a diversion of traffic, and when the van was in East Castle Street, at about 4.20 a.m. it was attacked in the following way. A private car emerged slowly from a side street, causing the Post Office driver to pull up without arousing his suspicions in any way, and almost simultaneously a second car which had been following the Post Office van drew up quickly alongside it. Seven men, all masked, immediately got out of the two cars, attacked the driver and the two Post Office officials who were seated beside him and left two of them lying unconscious on the pavement. I am glad to inform the House that, happily,
1288
they are making a good recovery. The Post Office van was then driven away and was later discovered by the police in a yard near Regent's Park. The police were summoned in a short time by a member of the public whose attention had been attracted by the noise.
I had better explain to your Lordships that the removal of very high value packages from Paddington and other stations has been a regular part of the service provided by the Post Office for many years past. Two men are sent on these vans in addition to the driver and the vans are fitted with an alarm siren which can be operated by the driver and which, when once pressed, cannot be stopped until either the battery runs down or is disconnected by an expert. It has since been discovered that this alarm bell has been tampered with. I am satisfied that all the normal precautions laid down in the case of these very high value packages had been observed.
In the case of this particular van the contents were Treasury notes sent by banks in the West Country for delivery to their Head Offices in London; there were no jewels of any sort. The precise value of the money stolen is not yet accurately known, but it is of the order of £200,000. In view of the statements in the Press that this loss falls upon the Post Office, I should, perhaps, make it clear that the liability of the Post Office is £5 for each of the ninety-odd packages that are missing; but this fact must only increase the Post Office sense of responsibility. I take an extremely grave view of this robbery, coming as it does so soon after similar robberies in other parts of the country, and I am convinced that the procedure which has proved satisfactory for so long in the past is not adequate in present circumstances. Certain additional precautions of a temporary and short-term nature have already been put into operation, and consultations are going on with the Commissioner of the Metropolitan Police as to what extent extra permanent safeguards may be required.
LORD MORRISON: My Lords, may I refer to the noble Earl's statement that there was interference with the alarm bell, and ask whether, on the occasion of the theft which happened last month, the same thing had happened?
EARL DE LA WARR: My Lords, speaking offhand I do not think it had, but I will certainly look into that matter and inform the noble Lord. I should, perhaps, say that there is no blame attaching to anyone for the fact that the siren had been interfered with and that this fact was not ascertained by the chauffeur. He would not lie in a position to test the alarm beforehand, since when it was once started he would not be able to stop it.
THE EARL OF LISTOWEL: My Lords, I am sure that the House and the public will be reassured on hearing of the further precautions which the noble Earl proposes to take. I hope the noble Earl will convey the sympathy of your Lordships' House to the unfortunate victims of this cowardly crime.

BROADCASTING POLICY
2.42 p.m.
LORD REITH LORD REITH rose to call attention to the Government White Paper on Broadcasting Policy (Cmd. 5550); and to move for Papers. The noble Lord said: My Lords, I begin with an admission of personal interest and a note made just on thirty years ago:
"I had thought the Chairman. Lord Gain-ford, or Sir William Noble would be around a good deal; and when Noble came to see me before the firs; board meeting on January 4, 1923, I asked him about this. 'Oh, no,' he replied. 'We are leaving it all to you; you will be reporting at our monthly meetings and we'll see how you are getting on.' Leaving it all to me.…I thought of what was involved. Noble misunderstood my silence—'That's all right, isn't it?' Yes: quite all right'."
That is the end of the note, and it was more or less "left to me." Anyhow, I was chief executive of the B.B.C. for the first sixteen years; and that is my personal interest—or the start of it.
I am slow of speech, reluctant to waste your Lordships' time or my own, and it seemed that when, after mountainous, six months' travail, a White Paper was produced, the Government were probably minded to force it through, no matter what was thought or said of it. So was there any use in talking? Could any conceivable, slightest good come of the raising of this Motion? Probably not: and so I win; inclined to withdraw the Motion—anyhow, disinclined to proceed: as to myself, whatever any others might
1290
do, letting the issue go by default. By default.—what so often happens in these days: the product of laziness, indifference, laissez faire—what does it matter anyhow? Or selfish self-interest—"Don't offend the boss"; and of evasion, timidity, defeatism—why kick against the pricks? I did not want to be accused in years to come of any of those amiable faults and characteristic. Even if as to nothing else, in the wide range of public activity and concern I should wish my conscience to be clear as to broadcasting; that with the unique experience of those first sixteen years I had not, on this subject of all subjects, defaulted on your Lordships.
That personal, mental process is relevant to the Motion. Is there, for instance, any element of default it this document? Look at it; let us congratulate the writers, for it is clever—oh! yes, it is clever. Stand off to starboard and you will see it is green; to port you will see is it red. Very clever—on a superficial viewing. One can imagine the stresses and strains, the pullings and pushings behind the scenes, arguments and counter-arguments, drafts and redrafts. And one must remember what the Lord President of the Council said in your Lordships' House on July 25 last year. Let us get the issues dear. The first point is that past and present managements of the B.B.C. are in no way. individually or collectively, impugned. Their performance, despite the Lord President's unfavourable comparison of the Sursum Corda here with a sponsored Catholic service in New York, is abundantly approved. B.B.C. staff cart feel proud of themselves and their work.
The next point is one to which I first drew attention in 1927—that there was more to the B.B.C. than just broadcasting. It was the first corporation of the kind, a heavy responsibility on that account alone. We should see whether this White Paper suggests anything inconsistent with the status and procedures, the relative independence of a constitutionally established public corporation. Thirdly, there is broadcasting itself, its interests and influences, its serious and tremendous potentialities. Is there anything in the White Paper to prejudice the development of the service pro bono publico?—and that surely should be the determining criterion. As to the B.B.C. itself, because of my long, though long ago, association

1291
with it, I suppose some of your Lordships might think me incapable of unbiased consideration of the issues here involved; that I should be either unduly critical or unduly partial; that anything I say should be discounted.
All right—let me make this clear. I have had little contact with the B.B.C. since I left it nearly fourteen years ago, and none at all for the first nine. The present Director-General treats me with great courtesy when we meet, but he knows that I do not by any means agree with everything that happens now. But I say that the country is fortunate, and more fortunate than it can know, in having Sir William Haley as Director-General in that great office. So I hope that what I say will not be discounted, either on the one score or on the other.
Let us look first at some of the White Paper proposals which come into the public corporation category. I regret the suppression of the Whitley document, but it had gotten out of proportion. It was not devised to strengthen the Director-General's position at the expense of the Governors, but to avoid trouble of a sort that had seriously threatened—a Governor or two wanting to break individually into the executive field. It is a relief to find that the Government think that executive responsibility for day-to-day management should rest with the Director-General, and that his office should still be mentioned in the Charter. But the possibility of two Directors-General is to be taken care of. I cannot see the point of this except in terms of something sinister and silly. Do the Government want there to be two—one for sound and one for sight, may be—and, if there are two Directors-General, then the Chairman becomes executive, does he not? Was that thought of? One paragraph says that Regional Controllers were already almost completely autonomous in the Home Service, and that now the Governors have "devolved authority" on the various Service directors. Whatever that means, it is even more authority than the Regional Controllers have, because the paragraph concludes by saying that Regional Controllers are soon to be put in a similar position. What does it mean? What is all this in aid of? Is it one suggestion after another to reduce the responsibility and the authority of the Director-
1292
General?—because if so, let this be clear: no matter how much authority any Director-General could ever have, or could ever have had, it is all de facto. I should have thought, from all points of view, the more the better, but however much, it cannot affect the de jure omnipotence of the Board of Governors.
Now the National Councils. Let us embark on the turbid waters of paragraph 21, with the snag of a meaningless "however" in the middle of the channel to make navigation more difficult. Detailed definition of powers is left to the Corporation; and subject to reservations to secure co-ordination and smooth administration, forsooth, the Councils' primary function is to control policy and content of Home Service programmes. There is another subjection—namely, that the Councils' control is subject to arrangements made, presumably at headquarters, for Party political broadcasts. Another primary function is that the Councils are to appoint the staff "wholly employed" in Home Service programmes.
As to the membership of these unenviable bodies, the Corporation Board is to be raised to nine to accommodate three National Council chairmen "in close touch with opinion"—whatever that may mean, and however achieved. There are to be eight members, and we must read paragraph 22 carefully or we shall get lost in a fog of panels, local authorities, religious, cultural and other bodies, National Councils, the General Advisory Council; and even the Corporation itself may be cruising about with no lights showing. The eight members are to be appointed by the Corporation, but they are to be selected for appointment by a panel of the General Advisory Council. How that panel is to be appointed is not specified, but some form of musical chairs or elimination dance may (by permission of the Postmaster General, and with the concurrence of the Treasury) be adopted.
From this panel of the General Advisory Council there is to be a spawn of other panels in Scotland, Wales and Northern Ireland—if indeed Northern Ireland is coming into the game at all. These panels are, somehow or other (again the means are not specified), to be representative of the local authorities—the local authorities, mark you—and from them there is to be drawn, presumably out of a hat provided by the Office

1293
of Works, three of the eight members of the National Councils. The other five, we read, are to be appointed after consultation with cultural, religious and other bodies. That will surely mean more panels and more drawings; and a considerable "hoo-hah'" from many bodies that are not consulted and think they should have been. And after all the agonies of conception, gestation, incubation, and delivery in plain vans, these poor fellows are not to get any pay. The chairmen are paid—but by the time their Councils are formed they probably will not be fit to draw it.
Now look beyond the tangled electoral process, at a Council in operation—or trying to operate; appointing staff, controlling programmes. There was a reference to "smooth administration"—again, "forsooth". I can see confusions, conflicts, divisions of authority and responsibility. And if ever the Councils do get going they will be subject to constant pressure to extend their powers and spheres of influence and control. They would probably he willingly so subject: but every strengthening there would mean a weakening of the Corporation; of broadcasting as now known; progressive growth would be progressive loss. The solitary items the National Councils have to accept are Party political broadcasts. Why only that; why this in such unique perspective? Not one other item or class of item that has to have national coverage—no great ceremony; no statesman on a pregnant occasion; not even a talk by the Sovereign. The three Regional Controllers—still appointed by headquarters presumably—could no longer look with -unembarrassed undivided loyalty to Director-General and Board. A local chairman and a local board intervene in absolute control of some part of what had hitherto been the Regional Controllers' staff and the Regional Controllers' work. And, as to the "wholly employed" criterion, let them try to find it.
My Lords, with great respect, these proposals are foolish and pernicious—and note that second adjective; I am not the first to use it in this connection, as you will see in a minute—the administrative structure undermined: professional responsibility at a discount. As a Scot I understand what is desired; and I say that anything and everything desirable can be done by enhancing the
position
1294
of the existing National Councils, without trying to make them executive and by appointing national Governors. Why not try out something on those lines? Even if the scheme were justifiable and workable, why the ghastly burden, complication, embarrassment now, when there is enough on hand with the changing pattern of the Service, increasing emphasis on television? Why this crippling handicap as the Corporation faces the possibility of competition? And if Northern Ireland does agree, what is to happen between Belfast and Manchester as they now share a wavelength?
Let me remind your Lordships of the Lord President's opinion of July 25 (OFFICIAL REPORT, Vol. 172, Col. 1216):
"The second reason why I raise this matter is because of the Government's suggestion that there should be broadcasting councils, drawn from public authorities, for the provincial areas. I hope that, whatever else we do today, we shall kill this idea stone dead. It is the most pernicious idea which has come out in all the discussions we have had."—
That is where I got the word "pernicious."—
"If these Councils, as indicated in the White Paper, are to have almost absolute control over the policy and the programmes, I think we shall get into a state of chaos."—
I ought to have used that word.—
"I cannot imagine why they have been suggested. The B.B.C. would, I presume, be able to have nation-wide broadcasts only by permission of these local councils. But what about the staff? They would have dual and maybe conflicting loyalties. Your Lordships know what would happen in the end. We should have more committees, hindering operations, delaying actions and incurring travelling expenses."
That was the Lord President of the Council, Lord Woolton, on July 25.
Now as to finance, the White Paper deprives the B.B.C. of 15 per cent. of the net revenue it was entitled to expect. I should have thought this wrong at any time; but now, with possible competition, it is particularly shabby to prevent the Corporation from putting anything by as reserve. Two evils at once—competition and borrowing. I need say no more on this point: I will only read what the Lord President said:
"I do not think the Government are right in takir4i the 15 per cent I am sure they are wrong to take the 15 per cent. and then tell the B.B.C. that, if this ax prevents their putting money aside for their future need they will be able to borrow it. That is the sort of 'cock-eyed' finance that is causing so much of our present troubles. The B B.C. must continue

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to put aside out of their income very considerable amounts of money for the future financing of their activities; and they ought to go to the country to borrow for only quite exceptional and major developments. If the Government want to put a tax of 15 per cent on broadcasting, there is a case for that; but, let them do it in the Budget. I do not like this 'taxation round the corner,' because that is what it comes to if people have to pay for a licence and then find that, without any Budget proposal, a portion of this money is being taken for taxation."
On the subject of relay exchanges we are told that a fifteen-year licence is to be given, but nothing about its terms. Perhaps the noble Earl will tell us whether it is to be tramway terms? Is the obligation to take B.B.C. output to be maintained: and the embargo on origination?
My Lords, I have left till last the most serious point of all; one that is not concerned with administration or with the Corporation as such, but with broadcasting itself—its worth and consequence, the flower and essence. The White Paper says:
"the effective monopoly has done much to establish the excellent and reputable broadcasting service for which this country is renowned."
But a few lines lower down, the Government conclude:
"that in the expanding field of television provision should be made to permit some element of competition."
Now either that is a complete non sequitur, or else the Government do not appreciate the significance of television. There is nothing hypothetical about television. Its effect, even under responsible control, presents, I suppose, one of the gravest, most critical and most baffling social problems of the day. Both by the nature of television and the nature of the audience, nothing could be more certain than that Gresham's Law will apply and dominate, far more in television than in sound broadcasting. There is no mention of sponsoring in the whole Paper; but the income guarantee to the B.B.C. means that any competitor will have to finance himself. And is that likely to any extent or for any time, otherwise than by sponsoring? Have the Government any other means in mind? If not, why is sponsoring not mentioned? The Government clearly foresee trouble over sponsored television.
"It would be necessary,"
we read,
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"to introduce safeguards against possible abuses; a controlling body would be required."
Safeguards here are utterly worthless. Do the Government know about the American Federal Communications Commission? Would a British one be any more effective?
And could there not be less ambiguity about timing? One reading suggests—and it is intended to suggest—that there will be no sponsored television till the B.B.C. has finished its television coverage and has also introduced V.H.F. So, with money and labour and materials as they are in this country, sponsored television is many years away. But the White Paper does not say that; it only gives the B.B.C. a first claim: that is all. Is it beyond possibility that the Government, urged by some malcontents, might somehow find the finance to enable another claim to be made simultaneously? Why do they say:
"the radio industry must be given as soon as possible the technical information necessary to enable them to design and produce adaptors."
And what did the Parliamentary Private Secretary to the President of the Board of Trade mean by telling the Institution of Electrical Engineers last Saturday:
"Next year television sets which can be switched to different channels will be on sale to the public. One channel will receive the B.B.C., the second the future alternative programmes. Owners of existing monopoly sets will be able to buy adaptors for about £5. In the last three years the B.B.C. has been allowed £5,500,000 for capital construction. One-tenth of this might be permitted to competitors in the next three. I cannot subscribe to the theory that the B.B.C. can go on developing its system while all others are banned."
I have given the noble Earl who is to speak for the Government notice of these matters, so he knows about them. Actually, I gather that this Member of another place never made the speech at all: that is what he would have said if he had had the opportunity to make the speech. I ask the Government: Has he advance information of the Government's intentions? A last question on this point: If sponsoring is to come, what arguments could there be for confining it to television?
Now I close. I have never spoken on broadcasting in this House before. I may have done this great cause no good: maybe even harm, because I well realise that, during the years of my association

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with the B.B.C., I built up for myself an immense unpopularity and dislike which surrounds me still. And yet what was done was approved. For that I claim no credit. I tried to do as I had been taught in the Manse of the College Church in Glasgow. I believe that I was peculiarly helped in plan and execution, and through every sort of opposition, vehement and powerful and determined though it often were. To-day, thanks to Sir William Haley, and Governors, and a devoted staff, British broadcasting commands the respect and admiration of the whole world; an institution of which England—yes, and Scotland and Wales and Northern Ireland—can be proud; one which we should be jealous and quick to safeguard and defend.
What grounds are there for jeopardising this heritage and tradition? Not a single one is even suggested in the White Paper. Why sell it down the river? Do we find leadership and decision in this White Paper; or compromise and expediency—a facing-both-ways? A principle absolutely fundamental and cherished is scheduled to be scuttled. It is the principle that matters, and it is neither here nor there that the scuttling may not take place for years. The Government are here on record to scuttle—a betrayal and a surrender; that is what is so shocking and serious; so unnecessary and wrong. Somebody introduced dog-racing into England; we know who, for he is proud of it, and proclaims it urbi et orbi in the columns of Who's Who. And somebody introduced Christianity and printing and the uses of electricity. And somebody introduced smallpox, bubonic plague and the Black Death. Somebody is minded now to introduce sponsored broadcasting into this country.
"Two things"
said Immanuel Kant,
"fill the mind with wonder and awe, the more often and the more intently the mind of thought is drawn to them—the starry heavens above me, the moral law within me."
The stars are somewhat depreciated, and man is losing his sense of wonder in these egalitarian days. But what about the moral law? Need we be ashamed of moral values, or of intellectual and ethical objectives? It is these that are here and now at stake. My powers of persuasion may be feeble, my influence
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very slight, but with all the earnest and urgent conviction of which a man is capable. I ask the Government—especially the noble Marquess whom the whole House admire and trust—to think again. I appeal to them to do so. And leave this thought with them,
"because right is right, to follow right were wisdom in the scorn of consequence."
I beg to move for Papers.
3.11 p.m.
VISCOUNT SAMUEL: My Lords, no doubt there will be many in your Lordships' House who will not agree with the noble Lord in some of his main propositions, but all will be glad that he did not act on his first thoughts and withdraw this Motion from the Order Paper. He persisted in it, and has given the House not merely an opportunity for a full debate on a matter of immense national importance bin also of hearing a speech, eloquent, deeply sincere and passionate, which must carry weight, coming as it does from a man who, more than any other in this country, has been responsible for the initiation and development of the British Broadcasting Corporation. As the White Paper says, the B.B.C. has brought renown to this country. His is a great share in that renown. And if in future history pays tribute to the achievements of this Corporation, that tribute will be directed also to him.
For myself, I find that I am in general agreement with the argument of the noble Lord, Lord Reith We had a debate in your Lordship' House last July on the Beveridge Report soon after it first appeared, and or that occasion I had an opportunity of addressing your Lordships. I do not propose to repeat to-day any of the arguments which I addressed to your Lordships then. I would say only that I reaffirm the view that C then expressed supporting the maintenance of the monopoly of the B.B.C. and my firm apposition to all forms of sponsored programmes, whether relating to sound broadcasting or to television. My speech to-day will be limited to brief dimensions on account of the number of your Lordships who wish to speak. I shall not attempt to give again the arguments for the position that I took up, but I will consider in what way the situation as it was when your Lordships considered broadcasting last July

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has been changed by the publication of the White Paper which is the subject of this debate.
As the noble Lord, Lord Reith, said, that White Paper is obscure. It does not say frankly and plainly what it means. It does not declare anywhere in any of its paragraphs that it supports the provision of funds for broadcasting from the proceeds of advertisements. It declares, in paragraph 5:
"The Government would willing to see any change in the B.B.C. themselves towards accepting advertisements,…"
Observe, "of the B.B.C. themselves." The White Paper goes on to graph 7:
"The present Government have come to the conclusion that in the expanding field of television provision should be made to permit some element of competition…"
"Some element of competition." It then continues, in the following paragraph:
"Parliament should have…opportunity of considering, before the licensing of the first station, the terms and conditions under which competitive television would operate."
And that is all. But I think we are entitled to know definitely from the Government to-day, in short and simple terms, whether they are in favour of sponsored television or not. It is here implied. It is taken to be a fact by the Press and by public opinion. But it is not asserted, and I invite from the Government to-day a clear declaration. The answer, I think, must be that they are in favour of it, but do not wish to say so, for they feel some coyness, some diffidence, some shyness, in appearing before the nation at large and saying that in future to some extent. large or small, the nation will get its broadcasting, so far as sight is concerned, paid for on its behalf by commercial interests, who will choose the programmes and give the nation what they think it is expedient for it to have in order that they shall get value for their money. I can hardly think they can take any other line from the reticence of the actual terms of the White Paper.
The failure to state that honestly and frankly seems to be due to some struggle that has gone on behind the scenes between various sections of their own supporters. Indeed, it has been publicly stated—it is not a matter merely of politi-
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cal gossip—that there has been a vehement division of opinion in the Party supporting the Government, particularly in another place, as to whether there should be what are called sponsored programmes or not, and that that pressure has been dealt with by the ambiguous terms in which the White Paper is now couched. I can well imagine the conversations that have gone on behind the scenes when those representing these various views got together. I can suppose (I have no inside information but anyone with experience of the working of Governments can easily guess) that at some stage or another the Chairman, whoever he might have been, will have said to those pressing him, "Why should we quarrel about this now? There is nothing to be done at the present moment. There is no capital and no labour to put up these new stations. This is a matter for the future. Let us jump that fence when we reach it. For the time being we are neither endorsing nor opposing the principle of broadcasting paid for by the proceeds of advertisements."
The Government will remember that there is a personage in the Bible who walked delicately. They will also remember that at the end he was hewn in pieces. And it may well he that soon the Government will be denounced both by those who are opposed to sponsored broadcasting—for the Government apparently have admitted the principle that there should be such a thing—and by those who are in favour of the advertisers saying that they have been deceived, and in the long run nothing will be done along the lines advocated. The principle of sponsored broadcasting is clearly admitted in the White Paper, and it is that which has brought the denunciation that we have just heard from the noble Lord, Lord Reith. If that principle is to be opposed, the moment to do it is now. We cannot lot this White Paper pass sub silentio, otherwise, when the matter becomes actual, in two or three years, or whenever it may be, it may be said: "Well, this was before both Houses of Parliament in 1952 and nobody seemed to object very much. Therefore, the matter is decided, and sponsored broadcasting will become the rule for television."
The safeguards which are supposed to reassure those who oppose this proposition are unreal. It is said: "Why should we trouble to consider this at all at the

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moment? It will be years before the rearmament programme can be carried through and capital and labour are available." I submit that that is not so. The expenses involved in this matter are not so very large. There would be no difficulty, the moment the urgent pressure of rearmament was over, in inviting commercial undertakings to put down the sums needed for one or two stations; and it could b: done in quite a short space of time.
Nor is it true to say that this is the only way of promoting television with adequate speed; that it would be very costly to provide private sets, and also that considerable capital is needed for the erection of stations; that it is essential to find some new source of revenue, and that advertising is the only place where it can be found. The B.B.C. have already accumulated a reserve of £4,500,000, mostly earmarked for the development of television. The new revenue of the B.B.C. from television licences themselves already amounts to about £2,000,000 a year. If the expansion continued with the speed that it would if there were adequate coverage for the whole country, and the manufacture and sale of Jets were unrestricted, the new revenue from the £2 licence on every set would soon bring in an abundant revenue. Furthermore, the Government are now taking away 15 per cent. of the amount, which will soon reach £2,000,000 annually, of the ordinary revenue of the B.B.C. If it is necessary that the B.B.C. should have more money, as the noble Lord, Lord Woolton, said when he was in Opposition how can this annual withdrawal of this great sum from the ordinary revenue derived from listeners' licence fees possibly be justified? We therefore have no sufficient justification for this change.
The White Paper, as has already been quoted by the noble Lord, Lord Reith, speaks of the British Broadcasting Company as being
"an excellent and reputable broadcasting service for which this country is renowned."
Why, therefore, should we make way, in any degree, for a commercialised corporation, or commercialised stations which are less excellent and are by no means likely to add fresh renown to this country? I ask this particularly because we have the warning before our eyes, the
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object lesson of the United States of America. I am also informed, though I have little first-hand knowledge of it, that in Australia, where there is a public broadcasting system paid for by licence duties, and a commercialised system paid for by advertisements, the latter is in all respects inferior to the public service.
Earlier this year, I was in the United States for a month and I made it my business to ask many of the Americans whom I met what was their opinion of their own service. I should not venture to quote my own view—it is absurd for someone who in recent years has been there for only a month to form an opinion on this matter—but if one asks Americans to give their opinions, no doubt they are valid. And it is an extraordinary thing that all those whom I asked during the month I was there, just putting the point: "Do you listen to the radio? What do you think of it?", all answered in almost exactly the same words: "I practically never listen to the radio. I do listen in sometimes to the political commentators. I listen if the President or one of the political leaders has a statement to make. I listen the musk on certain programmes, and now and then there may be a good entertainment on the air." Some added that they were interested to see on television sporting pictures, and particularly boxing. They all repeated that; and. I am sure that noble Lords who have been in American who have put the same questions have received the same answers. Those Americans who are familiar with life here, when they are asked to compare the two systems, always say that unquestionably the B.B.C. service is much superior to the American.
My own experience was limited. In the hotel where I was staying there was a television set in the room, and for two dollars you could have the use of it for a day. One day I paid my two dollars and listened at intervals during the day, with the most depressing results. It was quite a simple set to manipulate, with five different programmes: each time you pressed a knob you changed from one programme to another, running down the five programmes and coming back again to No. 1. The only satisfaction I had from listening was the ease with which one could turn a programme off. But the hope that one might get something better from the, next programme was almost never fulfilled. Most of the programmes

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were crooning, or background music, as it is called; with occasional entertainment consisting of wisecracks fired at you with the speed of a machine gun. There was one programme which I was fortunate enough to come across—a good little play by a Negro company. On one occasion I turned on the programme and heard the last question and answer of an interview with someone who had come from Britain to America on behalf of the Travel Association. The last question was very hurriedly given. It was: "Sir Alexander, what do you think of Anglo-American relations?" The reply was: "I think it very important that the two countries should be on good terms," to which the interviewer said: "And so do I; and I hope when you travel about in America you will remember to recommend to your friends our brand of cigarettes." Then on the screen one saw held up a packet of cigarettes, which grew larger and larger until it filled the whole screen.
Not on television, I wished to listen to a concert one evening. I turned on just before it was due and found that it was the six o'clock news. At the end of the six o'clock news there was an advertisement extolling the virtues of a brand of a bottled beer, as refreshing, stimulating and generally very desirable to those who drink beer. That was followed by the same announcer giving the news from Korea for about three or four minutes, followed again by a repetition of the beer advertisement impressing upon the hearer that it was the best and most famous beer produced in New York. Then came news of the progress of the candidates in the Presidential Election, which similarly was by courtesy of this particular brand of beer. Finally, at 6.15, the same announcer who had been advertising these commodities and giving the news said: "We now take you to the Carnegie Hall where, by courtesy of such-and-such beer, you will have the privilege of listening to Beethoven's Fifth Symphony conducted by Arturo Toscanini who has recently celebrated his eighty-fifth birthday." After hearing the concert, one has to be very quick to turn off the radio before the last notes die away, or one again would be plunged into the merits of this particular beer. I think the British people are right to wish to pay their licence fees in a decent
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way in order to get their radio programmes provided for them by a responsible authority, and not to get them provided free, at the choice of advertisers, as a kind of by-product of a highly industrialised and commercialised system of society.
I wish to detain your Lordships only a very few moments more to deal very quickly with some other specific points. One of them is the question of the National Councils for Scotland, Wales and Northern Ireland, against which the noble Lord, Lord Reith, has brought many severe criticisms. For my own part, I think the purpose in view is desirable and, as I said in the previous debate, I do not think that the national sentiments and aspirations of those countries are sufficiently recognised in the present constitution and management of die B.B.C. But, to my mind, the way in which it is proposed to carry out this idea is—and here I agree with the noble Lord, Lord Reith—reprehensible and, indeed, is likely to prove unworkable. The White Paper says on the one hand that:
"…the Government will leave to the Corporation the detailed definition of the powers to be delegated to the national bodies."
That is excellent, but it goes on to say:
"The Councils will be responsible for the appointment of staff wholly employed in connection with the Home Service programmes."
I doubt very much whether it would be possible, in the first place, to divide the staff up into those who are concerned with Home Service programmes and those who deal with other matters. Secondly, if they are divided up, there must come the divided loyalties and possibilities of friction to which the noble Lord, Lord Reith, referred. I therefore hope that that provision will be reconsidered.
With regard to the representation of local authorities, it is proposed that a panel should be provided from which should be drawn representatives of the local authorities of Scotland. Wales or Northern Ireland, as the case may be. What is meant by "a panel" in that connection is difficult to understand. Are the local authorities to draw up a list of forty or fifty and someone to choose three or four out of that list? What is meant by "a panel"? How is this choice to be made? Perhaps the spokesman for the Government in replying may give us further information on that point. The Beveridge Committee recommended that

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there should be established within the B.B.C. a public representation service which should guide and control the B.B.C. in its programme-making, in the light of what is ascertained to be public needs. I ventured to take exception to that when I spoke on this subject last July, and am glad to End that that proposal does not now appear and that it is to be left to the B.B.C. itself to provide in whatever way it thinks best for the ascertainment of public opinion. I am convinced that to have a special kind of censorship staff inside the B.B.C., with their censor sitting at the elbow of the programme-maker while he is engaged upon his daily work, would prove to be utterly unworkable.
For the rest, I welcome the provision in the White Paper that Governors are not in future to be appointed by the Government of the day but are to be appointed by a small body of very august personages presided over by the Speaker of the House of Commons. I welcome also that the General Advisory Council (of which I have had the honour to be a member for some five years) is to be raised in status; and the provision that the new Charter is to be for ten years seems to me also a very sound proposal. Therefore, in general, I support and am grateful for this White Paper with one or two minor exceptions and with an exception on one matter of very great importance. I earnestly hope that your Lordships' House will express itself in no qualified terms and say that we are against compromise of any sort on this question of advertisers' programmes. We object that our time—and it is the listeners' time which is involved in this question—should be bought and sold behind our backs by commercial interests, so that if we hear about Anglo-American relations it is by courtesy of such-and-such a brand of cigarettes, and if we are to be indebted for Beethoven, it is to a bottled beer.
3.37 p.m.
THE EARL OF LISTOWEL: My Lords, I am sure that I shall have the sympathy of the House in following the father of broadcasting on one side and the father of broadcasters on the other. Whether we agreed or disagreed with the views of the noble Lord, Lord Reith, I am certain we all agree that we listened to an extraordinarily impressive and thought-
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provoking speech, and that we hope that his maiden speech on broadcasting will not be his last. For my part, I hope that the Government will give very favourable consideration to his advice. I am sure they could not have received advice from a more authoritative source.
Your Lordships will remember that it was less than a year ago that we debated the White Paper on broadcasting issued by the late Government. In that White Paper we put forward some provisional views about the proposals in the Beveridge Report, and those were views which we were asking Parliament to comment upon before we made up our own minds. The subsequent General Election saved us the trouble of making up our minds by transferring this; responsibility, with many others, to noble Lords opposite and their colleagues. The present Government have not unreasonably prolonged the existing Charter to give them time to think over this important problem. Now we have their conclusions, and the noble Lord, Lord Reith, has kindly given us the opportunity of commenting upon them.
I think your Lordships will agree that when we compare these two documents—the White Paper of last year and the new White Paper—the striking thing is the large measure of agreement which is shown about the future of the B.B.C.— perhaps I should say "the immediate future," in order not to be taken up later on for an inaccuracy. We said in our White Paper that we wanted the B.B.C. to carry on, under the new Charter, with no substantial change in its present structure. The present Government states that the B.B.C.
"is to continue broadly on the existing basis"—
I quote the words used in their White Paper. This broad measure of agreement between the two major Parties shows, I think, that the great majority of people, whether they are on the Left or the Right in politics, are satisfied with the performance of the B.B.C. and, indeed, regard it as one of those national institutions which everyone respects and few would substantially change. From the standpoint of the Corporation I am sure it is a good thing that their admirable staff—and I should like to join the noble Lord, Lord Reith, in paying a tribute to their work—should have this

1307
compliment from the political Parties, and should be able to go their way with absolute confidence that the outcome of General Elections will not revolutionise their own future. It is something of a relief to many people that the Government have listened to the wise counsel of the noble Earl, Lord Halifax, and the noble Lord, Lord Brand, and many other of their less doctrinaire supporters, who strongly urged them in past months not to introduce forthwith commercial broadcasting. If they had obliged the B.B.C. to increase their revenues by sponsoring broadcasts or had allowed other stations to be licensed for sound broadcasting to commercial users, the essential features of our present system of broadcasting would have been completely lost. But no drastic change in favour of private enterprise is proposed for the moment, and for the time being, at any rate, there will be no challenge to the B.B.C.
As we look into the future, the prospect appears more uncertain. It is reassuring to note that the Government intend that sound broadcasting shall remain uncommercialised. It is a great pity that we cannot feel equally confident about the future of television. Although technical considerations and lack of equipment fortunately rule out commercial television in the near future, the Government regard the broadcasting of television programmes by private companies as a desirable longterm objective of their policy. We on this side of the House dissociate ourselves entirely from this policy, and in that we are in complete accord with the noble Viscount, Lord Samuel, and his colleagues on the Liberal Benches. But let me make it clear that we do not object to this policy because it would break the monopoly of the B.B.C. That would be a misunderstanding. There is no reason why the B.B.C. should have a permanent monopoly of broadcasting. When technical progress permits, there might well be a number of broadcasting stations under different control, scattered about the country. The main reason why we object to this policy of commercial television is that it would soon reduce the standards to the lowest common denominator of taste. The noble Lord, Lord Reith, spoke of the operation of Gresham's Law. That is his reason for objecting, and it is ours.
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Television has not become a rich man's hobby, as many people expected it would on account of its cost. On the contrary, hire purchase has made it possible for television sets to be acquired by families in every income group, and I am informed that more sets are used in the homes of people in the lower income group than in the homes of the people who are better off. That is an extremely interesting sociological problem. If the present popularity of television continues—and there is no reason to suppose that it will not—there is surely a grave responsibility on Parliament to prevent the television service which at the moment has such a high standard of performance from becoming a byword for crude and trivial entertainment. It is true that paragraph 9 of the White Paper suggests that a public body should supervise the television programmes broadcast by these private stations. This body would also exercise some measure of programme control. I hope the noble Lord will tell me if I am not correct. But it would surely not be among the duties of this supervising authority to interfere with the normal commercial practice that has debased the currency of broadcasting wherever it has been left to private enterprise.
Another reason why we object to commercial television is that it would be unfair, in our view, to the B.B.C. The Corporation would have to compete for popularity with people whose main concern would be to sell their programmes to the largest possible number of viewers. It is hard to believe that the B.B.C. would find it possible to maintain the high standard and quality of their own service in face of this pressure. We have no doctrinaire objection to competition in the quality and variety of broadcast programmes, or in a proper desire to serve the true interests of those who watch or listen in. We should like them to have a wider choice of programmes as soon as this is technically possible. We are following with the keenest interest technical developments such as frequency modulation, because we think they will make possible in future a much more varied diet when a number of new stations have been set up.
If large urban authorities or universities wanted to run their own broadcasting stations we should consider their wishes with a completely open mind.

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But these are public bodies which, unlike the private companies whom the Government want to see in the field of television, would do their own broadcasting, not for profit but as one of the nonprofit-making services they render to the public. Having a high sense of responsibility they could be trusted to recognise their duty to maintain the quality of their programmes. Now this matter of very high frequency broadcasts is alluded to in the White Paper in only one sentence, at the end of paragraph 6. I would ask the noble Earl, or someone who will be replying for the Government, to give us more information about the Government's intentions in relation to the future of sound broadcasting from high frequency stations.
I should like to comment briefly upon three other differences, not so important as the one about television, between the Labour Government's White Paper and the new one. The first is the proposal to extend the Charter for ten instead of fifteen years. I must confess that I still prefer the longer to the shorter period. Spring-cleanings at frequent intervals are bound to impair the efficiency of the B.B.C. It is sometimes forgotten that a revision of the Charter occupies the minds of senior officials for about three years in advance and that the many adjustments required by a new Charter, which cannot be made overnight, occupy a good deal of time as well. The efficiency of the Corporation suffers inevitably while the minds of its key men are taken off their real jobs. A rather longer Charter, with an ad hoc review of policy and administration about half-way through, seems preferable to pulling up the roots of the B.B.C. every ten years. But I am at least thankful that the Government have not adopted the seven-year extension suggested by the noble Lord, Lord Woolton, last year. I have no doubt that the present proposal is a compromise, which might have been less satisfactory, between opposing views in the Conservative Party.
Another difference is the discretion which the new White Paper would give to the Governors to decide whether to disclose that a particular broadcast has been vetoed by the Government. A prohibition of this kind, even though it has never been used and is not likely ever to be used, gives the Government a power of
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censorship which might in theory be abused. The possibility of public disclosure lessens the risk of abuse and safeguards the immunity of the Corporation from possible political interference. The independence of the B.B.C. is also strengthened by the proposed restriction of the Government's cower to order the broadcasting of matter, other than announcements, to periods of emergency. I do not feel that these alterations in the powers of the Government have much practical importance. I am inclined to think that they are a more accurate description of the existing relationship between the Government and the Corporation.
But probably the most important of the lesser differences between this White Paper and the other one is the proposed change to which the noble Viscount, Lord Samuel, referred—I wish we could have had the views, of the noble Lord, Lord Reith, on this matter—in the method of appointing the Board of Governors of the Corporation. I remember that in the 1945 Government, when I occupied the post now held by the noble Earl opposite, one of my first and most alarming duties was to choose a new Chairman and Board of Governors for the B.B.C. There was no staggering of these appointments in those days, and the entire Board of managers had to be replaced simultaneously. I was exceptionally young, both in years and in political experience, and very conscious of the fact, and I cannot imagine anything more cruel or unwise than for my senior colleagues to have left me to take the decision. To my immense relief, I found that, apart from a polite request for my views, the decision was taken entirely out of my hands. It was communicated to me by the Prime Minister, after he had consulted his right-hand man, the then Lord President of the Council, and I merely formally advised the Crown about the terms of the Order-in-Council.
I have described my own experience because I believe it is a typical example of the way in which every Government, whatever Party is in power, has made these appointments hitherto. That is the way in which it has been done. The Postmaster General advises the Crown, but what advice he gives is decided by the Prime Minister. I do not know

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whether things have changed under the present Government. I shall be very interested to hear from the noble Earl opposite if they have. The first thing that strikes me about this way of doing it is that the system has worked most satisfactorily. The Beveridge Committee gave it careful consideration and were so satisfied with it that they recommended no change in the present arrangement. It has not been suggested by either side in politics that the other has been influenced by political bias in making these appointments—I am glad to observe that the noble Earl concurs in that observation, which I had hoped would receive general consent. I am not aware, indeed, that there has ever been any complaint about Party prejudice in this particular matter. We tend in this country to judge our institutions, not according to theory—although perhaps theory has been more prominent lately than it usually is—but according to the way they work in practice. I hope that some noble Lords opposite, at any rate, will sympathise if we are more conservative than the Government about a system that has proved its value, and are less in favour of something entirely new and untried.
It is to guard against the risk of political interference that the Government propose that this new committee, which will include two judges and the Speaker of the House of Commons, should appoint the members of the board. Judging from past experience, the risk, as I have already said, looks extremely slight. Indeed, it is hardly conceivable that any of the major political Parties at the present time would abuse their authority in this way. Of course, if the Communist Party were to win a majority in another place, or a Party with similar doctrines were to spring up, the danger would then be real and pressing, and we should have to deal with it immediately. But can any of your Lordships imagine that this will happen within the next ten years, before the Charter comes up again for review? In our view, this new safeguard for the independence of the B.B.C. is quite unnecessary. Moreover, it would bring in its train a number of serious disadvantages which do not attach to the present system.
The main disadvantage is that it would diminish the ultimate control of Parliament over the Corporation. So long as
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the power of appointing and dismissing members of the Board belongs to a Minister, and is exercised by a Minister on behalf of the Government as one of the things for which he is responsible to Parliament, its use will continue to be subject to Parliamentary approval. But if the Government deprive themselves of this power by transferring their responsibility to a committee, no Minister can be called to book if things go wrong in the B.B.C. as a result of a bad appointment. There will, of course, be one Minister sitting on the committee, the Prime Minister, but the decisions of the committee will not be his decisions. They will be majority decisions and, on occasions, he may find himself in disagreement with his colleagues. He will be neither morally nor technically responsible, for he cannot be accountable to Parliament, in the constitutional sense, for the decisions of a committee appointed by the Crown, not on the advice of a Minister but according to the terms of the Charter.
This is a committee which will derive its authority from the Charter and not from the Government. It will not be responsible to the Government and will, in fact, be responsible to no one but itself. Parliament will not only lose its final say in the composition of the Board, but will also find it a good deal harder to criticise the conduct and policy of the Board. It is the business of the Opposition to direct attention to reasonable grounds of complaint, but if the Leader of the Opposition has already given his blessing to the whole of the Board, it is less easy for his followers to point out shortcomings resulting from his choice. There is one other disadvantage in this new method of appointments. One of the principal considerations in the choice of Governors has always been that they should be able to voice the main currents in public opinion. It is just as much the business of Ministers to study public opinion as it is the business of stockbrokers to study the stock markets. But judges, however eminent, are no more concerned than any one else about the state of public opinion. The inclusion of two judges, though adding to the impartiality of the committee, would lessen its expertise and, to that extent, would increase the risk of appointing the wrong person.

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There might be something to be said for experimenting with a new method of appointment if both the major political Parties wanted to make the experiment. But for the reasons I have explained, to which we attach a great deal of importance, this proposal is not accepted by
the Party for which I am speaking this afternoon. No one wishes the B.B.C. to become involved in Party controversies. Commercial television is a long way off, and in the meantime the broad structure of the B.B.C. is accepted by both Parties. It would surely be a mistake for the Government to do something now which would make the B.B.C. a target for Party criticism. I hope that the Government will have second thoughts about this selection committee and that they will take into account the views expressed in the debates in both Houses of Parliament before the, decide to adhere to their present proposal.
Our main theme is this. We are asking the Government, as the noble Lord, Lord Reith, and the noble Viscount, Lord Samuel, have both done, to maintain the present intellectual, cultural and ethical tradition of British broadcasting. That is not a Party matter. That is a matter that appeals to the national pride of people in every Party and in every walk of life. We believe that the policy proposed in relation to television will encroach upon that tradition. We therefore hope that tae Government will give their most earnest consideration to this particular policy proposal before they decide to adhere to the proposed change in the White Paper.
4.0 p.m.
THE EARL OF HALIFAX: My Lords, I owe to the courtesy of your Lordships who intend to take part in this debate the fact that I am allowed, on the grounds of personal convenience, to intervene thus early. I am extremely grateful to my noble friends and I can promise that I shall not abuse their kindness by detaining the House very long. The noble Earl who has just spoken, and the noble Viscount, Lord Samuel, made one observation with which, at the outset, I wholeheartedly wish to associate myself—namely, that the noble Lord, Lord Reith, who has introduced this debate this afternoon, has, by so doing, added greatly to the debt in which we all stand to him for his past work in this field, which has
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been so completely distinctive and creative in kind. My title to speak is a much humbler one, and consists of the fact that during the last three or four years I have happened to be Chairman of the General Advisory Council of the B.B.C., and though I have no authority to speak on their behalf I have no doubt that in what I propose to say I shall be carrying the overwhelmingly preponderant opinion of those who sit with me on that body.
One point with which the noble Earl who has just sat down dealt is not one with which I had intended to deal but I merely record my own opinion in passing. I refer to his point in regard to the change proposed in the White Paper in the method of appointing the Governors. I do not propose to argue the matter. I think a great deal can be said on the other side, and there is clearly a great deal that can be said on the side that the noble Earl developed. In the light of what he said—if that represents the considered view of noble Lords opposite and those with whom they are associated—I myself should feel that it was certainly not worth making a change in a matter of this sort in present circumstances.
The point to which I wish to address myself is that which claimed the bulk of the attention of both Lord Reith and Lord Samuel—namely, the question of principle involved in opening the door to sponsored television. The difficulty of the Government in this matter is one with which I can have considerable sympathy because it is one which anybody who has ever been associated with the Government is necessarily familiar. I imagine that in this case it was extremely difficult for the Government to maintain the simple direct line of their predecessors, which was to have no compromise in the matter at all. That, I appreciate, was probably politically difficult, in view of the fact, as the noble Lord, Viscount Samuel said, that it was common knowledge that many of their supporters in another place had found their consciences tender on this subject of the so-called monopoly of the B.B.C.—a tenderness, curiously enough, that has never been evident as at all tormenting the consciences of the noble Lords opposite. I am glad they have never been so tormented because, with them, I take

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the view that the attribution of the general evils of the term "monopoly" to the position of the B.B.C. is a complete misnomer and irrelevant to the real facts of the case.
On the other hand, the Government—and all praise to them—found it difficult completely to satisfy those who wish for free competition on commercial lines. No doubt, their own consciences would not permit them to do that. Therefore they were driven, as I conceive it, to the drafting and acceptance of a White Paper which might be regarded as an innocuous compromise which would do no particular harm to any one and which might appear to mean different things to different people, according to the taste of the consumer. The Government can say to the advocates of competition: "Look at Clause 7. Once you get your foot in the door, have a little patience. All these things will be added unto you, and there will be no limit to what may be your achievements in time to come." On the other hand, they can say to opponents of competition, like myself, "Look at Clause 5 and see how generously we pay our tribute to the past work of the B.B.C. Look at Clause 7, and see how alive we are to the limitations of possible development imposed upon us by the circumstances of other obligations, and the rest. Lastly, if you are not yet satisfied, look at Clause 11, and see how we safeguard the B.B.C. in the completion of its television coverage. Add all that up, and you will see that at the end, for the sake of greater security, the position is carefully controlled by the Government, by regulating bodies and the like." Surely, they would add, the conclusion in the mind of any reasonable person is that nothing can happen for a long time, and when it does happen there is nothing very much to be frightened of.
My Lords, that, I suppose, is the way the Government have arrived at this White Paper, and I do not think it is at all an ungenerous or strange interpretation of the movement of ministerial thought. But as those who preceded me in this debate have said—and nobody more strongly than Lord Reith—no gloss can conceal the fact that a fundamental issue has been raised and a vital principle is being touched by this proposed concession to the claims of commercial and
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sponsored television. Whatever may be said, the concession constitutes a landmark in the history of British broadcasting. It may be right—some people think it is. I think it is profoundly wrong. But whether we think it right or wrong, do not make any mistake, the Government are doing a big thing in the whole history of British broadcasting; and I am profoundly sorry that it should be the Party with whom I have been associated who have made themselves responsible for it.
Two questions are involved—I will not dwell on either of them, because I think the point is clear enough. The first is: When will all this happen? I do not think I have anything more to say than has already been said by those who preceded me, except that, as Lord Samuel has already pointed out, the time is not necessarily as far away as most people think. I am advised that the actual capital equipment and money required to bring all this into operation would not be very great, once other capital possibilities were within sight. The important question is the second—namely, what effect is this going to have on the practice of television over the years and. consequently, upon the minds, thoughts and lives of our fellow citizens over those years? That, whether it comes soon or late, is what matters. I myself am not greatly interested whether it is a matter of one year or two years, or even five years. The thing itself is what matters.
We can argue, I have no doubt, "until the cows come home" about what the effect will be. It may well be that the effect here would never be likely to be so bad as it has been in America. I do not feel too confident about that, but I hope it is true. We are not, fortunately, accustomed to doing things on quite the scale, or always in the pattern, which they adopt in the United States. Therefore I hope it may be true. But when all these arguments are stated, the fact remains that among those who know what the B.B.C. has done and who have watched what has happened abroad when this other principle is introduced, the overwhelming majority deplore the change; they are satisfied that it must mean a lowering of standards. I do not think it is possible, except at our peril to ignore that mass of experience.
The other thing that impresses my thought is that the principal source of

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approval of the proposed change is, so far as I can discover, to be found among people who have had no direct experience of what the alternative method means. The reason, I think, is clear enough, because once the commercial element is introduced the service has to be made to pay. The people concerned are not going to be in the business for the good of their health. Therefore another principle is introduced besides that of trying to give the public the best service, which is the principle on which the B.B.C., thanks to those who started it, has hitherto been built. We may be told that the proposed change will be applied only to television. I do not know why, if there is no harm in it for television, it should not be applied also to sound broadcasting. It is certain, I suppose, that over the years television is going to be much more important than sound broadcasting and therefore I find very little comfort in the fact that, at present, commercial programmes are contemplated only for television. To me, the conclusive fact is that if the values of broadcasting are to be preserved, that cannot be done without preserving the values of television.
My Lords, that is all I have to say. I understand that my noble friend Lord Reith is not proposing to ask your Lordships to divide at the end of this debate. But if he did, and if I had to make my choice, I should feel obliged to vote with him. I think he will be wise if he does not ask your Lordships to divide. I entirely appreciate that this debate may have little effect on Her Majesty's Government. I wish I could feel that it was going to have effect. I should like to feel that Her Majesty's Government would take this White Paper back and have another look at it, in the light of what I hope will be the preponderant feeling expressed by your Lordships in this debate. As the noble Viscount, Lord Samuel, has said, it is essential for those of us who feel as many of us do to state the objections that we hold to this proposal. There should be no opportunity, if this question comes to life and before Parliament again later, for anyone to say then—as Lord Samuel has reminded us—that "No one four years ago seemed to mind very much; therefore, do what you like." Let us do everything in our power to avoid that happening,
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and let us make clear that a great many of us do most greatly deplore the decision at which Heir Majesty's Government have arrived.
4.15 p.m.
THE LORD BISHOP OF SHEFFIELD: My Lords, I find myself in such agreement with what has already been said by those who speak with more knowledge and weight than I do myself that I do not propose to waste time by merely trying to say it all over again, but I wish to say just a few wools in connection with the proposal to make a radical departure in the principle underlying broadcasting in this country which appears to me to be set out rather casually in this White Paper. One finds among those with whom on, discusses this subject that the word "monopoly" is very often used to obscure the issue. Monopolies, as we all know, are of several kinds. In the case of broadcasting, monopoly lies in the very nature of the thing and not exclusively in any particular Charter of the Broadcasting Corporation. All radio broadcasting is akin to a monopoly. While anyone can publish a book or produce a newspaper if he has the necessary means, he cannot in the same way broadcast. Air channels are limited, and ordinary competition is not possible in an air channel. But the so-called monopoly of the B.B.C. within this field, where you cannot have completely free enterprise, is surely quite different in its moral character from what we normally mean by monopoly in terms of commerce. For, after all, broadcasting is not an industry; it is a public service, and for the public so served to say, "I am going to keep this service in my own hands and not allow my ears and eyes to be exploited by the vendors of soap or what not" is to establish a monopoly which is in no sense a vested interest.
I believe it is true to say that the B.B.C. has exercised its monopoly with great sensitiveness to the demands of the public. It is of the very nature of its operation that the reactions of the public to its services are very quick and very easily gauged. Introduce competitive salesmanship into broadcasting, and, as a writer in the Tablet said recently,
"The whole nature of the work is changed. The question then is not what is worth broadcasting but what will fetch the best box office return."

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Evidence has already been given from the other side of the Atlantic, and I believe that that evidence is conclusive, especially when one recognises that the problem of coverage in this country is not the same as it is on the American Continent, especially in Canada. The Chancellor of the University of Chicago has expressed his opinion in these words:
"American radio is not made in the image of the American people. It is made in the image that advertising men would like to create. The radio industry disclaims any obligation to improve the people's tastes. Actually, they know well that they are degrading it."
Last July, a Canadian Royal Commission on Arts, Letters and Science, of which the present Governor-General was Chairman, published a most comprehensive Report, a large part of which was devoted to radio and television. The survey they give is extensive and thorough. They find little complimentary to say about private broadcasting. I should like to quote the following sentence from the Report:
"After a careful consideration of the evidence available, we are convinced that only very rarely can limited revenue be advanced as an extenuating circumstance for this inexpensive and unimaginative programming."
Artistes in this country, especially those who think that private broadcasting would bring larger fees, may be interested to know that in 1947 in Winnipeg musicians received from the Canadian Broadcasting Corporation roughly 94,000 dollars, and front private stations 1,900 dollars: and in Toronto, they received from the Canadian Broadcasting Corporation 382,000 dollars as against a mere 30,000 dollars from private stations. Bearing in mind that production costs of television are considerably higher than those of sound broadcasting, I think we can fairly assume that commercial television would be driven to concentrate on advertising and on "tickling the ears" of the largest number of people, with little regard to cultural or moral standards.
It is often said by people who argue about this matter that people should be allowed to choose what they wish to hear—"Everyone to his taste." But, in fact, people cannot choose what they wish to see or hear on the radio. The noble Viscount, Lord Samuel, in New York had five knobs which he could turn for his two dollars, but I do not think he found the choice at all to his satisfaction
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Surely the difference is this: that what is laid on by a corporation of the standing of the B.B.C. has as its motive the desire to please and educate the public, but what is laid on by sponsored programmes, speaking broad and large, is motivated by the desire to sell goods. Moreover, it is not part of our democratic tradition to say that what the public want should be the sole criterion of our public service and life. To apply that standard to sound broadcasting, in view of its immense social and moral influence, would be foolish; and to apply it to television, which is likely to be far more persuasive and penetrating in its influence, would be an even more foolish thing to do.
As your Lordships are aware, this subject has greatly exercised the minds of those who have some claim to think and speak for the Christian communions of this country. So far as I know, they are well satisfied with the services of the B.B.C. and unanimous in their opposition to sponsored broadcasting. It is to be greatly regretted that neither of our two Archbishops is able to be in the House this afternoon. To-day happens to be one of the major festivals of the Church—Ascension Day—and they are otherwise occupied. But I think I can say for them that if they were here they would speak very strongly against the proposal to have sponsored broadcasting introduced into this country.
I think it is fairly true to say that these words, which come from the report issued by the British Council of Churches and submitted to the Beveridge Committee, reflect the opinion of the Christian Churches in this country. The report says:
"The commercial system necessarily abdicates before the complexity of the problems. It is content to leave things to the decision of the market. This is to pass authority into the hands of those who can pay for it…We believe that the present system of monopoly broadcasting, under public corporation, or some modification of it, is better designed to secure the good of the community than any other we have been able to investigate."
In this attitude we of the Churches are not thinking narrowly of what may help or hinder religious broadcasting as such, but of what may help or hinder a fine quality of life in our people as a whole. If we believe that what is best in our life stems from Biblical and Christian traditions, we must also recognise that

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these beliefs and values are being severely threatened in our time by powerful influences inherent in our industrial society. Therefore, how we use a medium like radio is a concern for the most wise statesmanship. In the corporate decision that has to be made I would suggest that the voices of whose who exercise influence down or up the channels of the Board of Trade are not the most important voices be heard. I would join with those noble Lords who have already spoken in asking the Government to think again before they commit this country to sponsored broadcasting. We are proud, and rightly proud—and in this we have a debt to acknowledge to the noble Lord, Lord Reith—of the public service given by our Broadcasting Corporation which, quite beyond the imagining of the people of old, makes possible to a high degree In the whole life of a community,
"a peaceful sharing of the things we cherish."
4.28 p.m.
LORD MANCROFT: My Lords, the list of twenty-seven speakers who desire to address your Lordships on this subject is almost as impressive in quantity as the debate has hitherto been in quality. Many speakers who are to speak have intimate connection with the B.B.C. in interests that are well known. They have given vent, or will give vent, to views which are already known to your Lordships. My only qualification for intervening in this debate at all is, it seems to me, a rather unusual one. I happen to possess a wireless and I am fond of listening to it. I should like to offer one or two views to your Lordships with no expert knowledge at all, but solely from the point of view of the average listener. And it is the average listener who has been neglected in the discussion that has taken place so far and I think it is the average listener who might well be neglected in the rest of the debate.
The right reverend Prelate the Bishop of Sheffield said that what the public wishes should not always dictate public policy, and I agree with him. The Economist, however, has pointed to the fact that in the Gallup Poll taken on this subject—the vexed subject of sponsored radio which has been the main topic this afternoon—nearly 65 per cent, express a preference for some form of competitive broadcasting. Here I would say at once that there appears to be some confusion
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in the public mind. Surely, nobody is suggesting that sponsored broadcasting should take the place of the B.B.C. The suggestion is that it should be complementary. I cannot believe that some of the strictures placed upon sponsored broadcasting, both in your Lordships' House and elsewhere, are very flattering to the standard of our taste. We should not judge our taste, plainly, by what the Americans like. The American taste in neckties is not the same as ours; the American taste in many things is not the same as ours. I believe that we are a sufficiently mature and sophisticated people to decide roughly what we want in the way of sponsored broadcasting when the time comes.
My noble friend Lord Halifax lamented the fact that it was the Party to which he has belonged for a long time that is now proposing sponsored television. I hope that he will forgive me and acquit me of any disrespect if I say, in my turn, that, having been all my life a staunch Tory, I am very proud indeed that it is my Party which has first attempted to break this monopoly: I am delighted, for two reasons, that it has been done. The first is—and I should have liked to see the Government go much further—because it, at least, gives many of us our first chance in due course to see what it is like. Half the difficulty about sponsored broadcasting in this country, as many speakers have so far pointed out, has been that very few of us have had much experience of it. I repeat, I should have liked to see the Government go further and introduce sponsored radio as well. I do not think I stand alone in holding that view in the country, or in your Lordships' House, and certainly not in the other place. We are not going that far, and more is the pity.
The other reason is this. I do not want to make a political point, but if I did this is what it would be. I have all my life been strongly opposed to monopoly, and strongly opposed to dictatorship. I dislike monopoly, be it in beer, in steel, in cement, in meat supplies or in broadcasting—because I think that monopoly of opinion is the most dangerous of all monopolies: what we have seen of the history of Europe in the past ten years should surely have shown us that. Therefore, I welcome the Government's proposal, and I accord a warm welcome to their White Paper. I think they have

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carried out a difficult task very well. Of course, the White Paper is full of compromise. How could any subject as wide and all-embracing as this, covering so many different subjects and so many facets, be free from compromise? But I still wish that it could have gone further.
On this subject of monopoly, may I remind your Lordships of the remarks of Sir Frederick Ogilvie, who was Director-General of the B.B.C. from the autumn of 1938 to the beginning of 1942? This is what he said in a letter to The Times on June 26, 1946:
"The B.B.C. itself, good as it is, would gain vastly by the abolition of monopoly and the introduction of competition. So would all the millions of listeners, who would still have the B.B.C. to listen to, but would have other programmes to enjoy as well. So would all would-be broadcasters gain. If rejected by the B.B.C. they would have other corporations to turn to. The only possible losers would be the various Governments of the day, Labour, Tory, Coalition, or what not."
I apologise to the noble Viscount, Lord Samuel, and his followers for the words "or what not." The letter goes on:
"Governments are thoroughly suited by the Charter as it stands. What better could any Government wish for than to have at the end of the street a powerful, efficient instrument which has all the appearance of independence but which by the existing provisions of the Charter licence it can control at will?"
Those are powerful words, coming from an ex-Director-General of the B.B.C.
I should like to consider one or two of the aspects which Sir Frederick Ogilvie brings forth. He says that the B.B.C. itself would gain. Of course, it would. The employees, the artistes, the technicians, the staff, who now have only one means of employment, would surely gain if they knew that upon dismissal they would have somewhere else to go. Those in whose power it is to dismiss a man for incompetence would surely do so with a freer conscience, knowing that he had some other place where he could look for employment. The B.B.C. itself would gain, because even the most efficient racehorse and the most efficient athlete always gains by having some pacemaker to extend him to the full. Sir Frederick says that the listeners would gain. Many listeners like sponsored broadcasting; otherwise, they would not listen in to Radio Luxembourg, which often gives inferior stuff. They listen in their millions—but apparently it is wrong for them so
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to do. Then he says that broadcasters themselves would gain. Sir Frederick Ogilvie speaks strong words when he says:
"So would the broadcasters gain. If rejected by the B.B.C.".—
that is, if they make speeches in public places which do not meet with the B.B.C.'s approval—
"they would have other corporations to turn to."
That also brings in paragraph 39 of the White Paper. We have had in the past one or two examples of favouritism, and a certain amount of unsavoury linen has been washed in public. If rumour has it correctly, there is still ground for improvement, particularly in the Variety department. Paragraph 39 says:
"The Government understand that the Governors have reviewed the existing arrangements in the light of this recommendation and that they are satisfied that no additional machinery is called for."
That means merely that if an artiste or some performer does not meet with, possibly, one man's approval in the B.B.C., he or she at present stands no chance of employment on the radio, even if that be his or her only livelihood.
Elsewhere, the television proposals advanced in this White Paper are, so far as they go, good. I would only say that the fears which several noble Lords, including the noble Viscount, Lord Samuel, have advanced concerning the time factor are my fears too, but for a quite different reason. The noble Viscount, Lord Samuel, thinks that the period can be accelerated by the Government in order to get television sponsored more quickly than is envisaged by the White Paper. My fear is that the proviso may be used by the B.B.C. as a means to delay the arrival of sponsored television. I therefore hope that the Government will do all they can to see that this proposal is not delayed by those who could use procrastination to spin out the arrival of sponsored television. I agree with the noble Viscount, Lord Samuel, that the question of capital expenditure is not as serious as it seems. I am no economist, and I can never understand this business about capital expenditure. The London Passenger Transport Board, which since 1938 has apparently put 1,230 buses on the streets at a cost of £4,500 each, has not been subjected thereby to great public

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criticism. But £4,500 is more than a single V.H.F. station costs. So if the Government went into that matter again more carefully, the comparison might prove interesting. I do not believe that the expenditure which would be required for this project is anything like as great as the B.B.C. have suggested, and I do not believe it is as great as the Post Office suggests. I feel that that is something which should be looked into carefully.
VISCOUNT SAMUEL: Before the noble Lord continues may I explain that I did not say, and I certainly do not think, that the B.B.C. will be induced to press on more rapidly with television itself for fear of others coming along afterwards. I think the B.B.C. wish to press on with television as fast as they possibly can, that being their public duty.
LORD MANCROFT: I quite understand that the B.B.C. want to press on with their own television as fast as they possibly can. I am anxious only that sponsored television should also be pressed on with at as great a speed as possible.
Reverting to the question of capital expenditure, I would point out that a great deal of money has been spent upon the B.B.C. Third Programme. I would not say a word against the Third Programme—I even understand it now and again. And I admire it for one thing alone: it is one of the few uncompromising features of our life to-day. It always strives to pull up the standard of the listener, and that is highly praiseworthy. But only one per cent. of the population listen to the Third Programme, and twenty-two transmitters have been provided for it in the last two years or so. So it would seem that there is capital available in the B.B.C. where they want it. I suggest that they should bend their minds to increasing and speeding up certain capital expenditures, because the provision of sponsored television depends entirely on the speed with which the other tasks set to the B.B.C. by the Paper are completed.
Again, I congratulate the Government on what they have achieved. I hope that nothing I have said will be taken as unduly critical of the B.B.C., of which I have just as profound an admiration as have other noble Lords who have spoken. Particularly should we admire its politi-
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cal independence. Proof of that is surely forthcoming by the number of Conservatives who announced loudly that the whole of the B.B.C. is in the hands of the Socialists, and the number of Socialists who so frequently complain about the Tory reaction of the B.B.C.'s policy. I am happy to think that we are making great attempts to take the ultimate control of the B.B.C. outside of politics. The time may come when we have a Postmaster General not quite so fair and broadminded as the noble Earl, Lord De La Warr. I therefore say nothing critical of the B.B.C. beyond what I have already suggested. I congratulate them warmly on what they have achieved. All I can say in conclusion concerning this White Paper is that we are given now the chance of having an even better service than we have had. That is high praise, as we certainly have the best in the world.
4.42 p.m.
EARL JOWITT: My Lords, I am sure that the whole House feels itself under a debt of gratitude to the noble Lord, Lord Reith, for raising this question. There is no man more qualified in this country to raise it than the noble Lord, and with the great bulk of his speech I find myself in complete agreement. I have little qualification for speaking on this matter, arid I shall be very brief. In the first place, I want to say that I found myself entirely in sympathy with what the noble Viscount, Lord Samuel, said about the obscurity with which this White Paper is drafted. As he said, the noble Earl, Lord De La Warr, like Agag, has been walking very delicately. If my recollection of the Bible is correct, Agag was hewn to pieces by Samuel himself, and I confess that today I thought the same thing happened again. It is no use using a large number of phrases about this. If the Government contemplate having sponsored television it would be better that they should "come clean" about it. As it is, the reader of this White Paper is left to infer that there is going to be sponsored television from the statement that the whole of the licence money is to go to the E.B.C. Applying his knowledge and common sense he will realise that people will not put on television programmes for the sake of their health (as the noble Viscount, Lord Samuel, said), and obviously, therefore, it is some advertising project. Why not say

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so? But the Government do not say so. They are obviously shy and coy about it. It is the fact that what is proposed is sponsored television.
I am glad that the noble Lord, Lord Reith, is not going to divide the House. I think it would be a pity if this debate at this stage got on to Party lines. I hope that the noble Lord, Lord Woolton, and the noble Earl, Lord De La Warr, realise that there is a very great body of opinion which is fundamentally opposed to this proposal for sponsored television. It is not a mere question of experience. Those of us who have been to the United States of America and to Australia have seen how the thing works. I believe that all those who will speak with me—I do not want to put it on Party lines—are opposed to this idea root and branch, because fundamentally it is wrong. Whether I object on moral or aesthetic grounds I am not quite sure, but I sincerely hope that, just because the House is not to be divided, the noble Earl will be under no illusion that this matter is not very seriously felt—because it is. At the present moment, I am in a difficulty. I am chairman of one of our great public picture galleries, and for the lack of some £3,000 only this morning I have had to cancel an exhibition of twentieth century masterpieces which is now being shown in Paris and which could have come to this country. We have not the money to do it, and it is a lamentable thing.
THE LORD PRESIDENT OF THE COUNCIL (LORD WOOLTON): It is foreign exchange.
EARL JOWITT: It is a question of insurance. We have to pay for the insurance on all these pictures, and we cannot do it. Would anybody in his senses suggest that we should do it in this way: that I should have these pictures exhibited at the Tate Gallery, and that once every ten minutes the lights should go out and that there should be shown an advertisement for somebody's beer or somebody's pills, or something of that sort? Everybody would revolt at the idea. It seems to me that it is just the same thing that the Government propose to do on radio and television. Therefore I beg the Government to think again about this. I do not want to bring this matter on to Party lines at all—I would rather keep it off Party lines. But please realise that there
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is a great body of opinion to be found in all Parties in this country which rightly or wrongly, reasonably or unreasonably, feels very strongly about this subject and is determined to do all it possibly can to prevent the introduction of this sponsored television. And, for my part, I feel satisfied that once this evil thing—as I believe it to be—is introduced, we shall never get rid of it.
The second point I wish to make is a point upon which my noble friend Lord Listowel touched, and that is this kind of electoral college. I believe that to be a thoroughly bad idea. It is one of the features of English life—and thank-God for it!—that although Ministers are engaged in politics, yet we have the characteristic (perhaps we are unique in this) that we can from time to time cut off our politics, as it were, and apply ourselves fairly to appoint the right sort of people. Over the last seven years I had the experience of appointing judges of the High Court, judges of the county court, magistrates, and so on. The noble and learned Lord, the present Lord Chancellor, does that now. I have supreme confidence in what he is doing, just as I have supreme confidence in what my predecessor did. It is a characteristic of this country that people who have achieved great positions in this country can stop being political when they are considering whom they should appoint. To my mind one of the great benefits of our Constitution is that all Ministers have to be Members of one House or the other. If anything goes wrong, and if there is a ground for criticism, the man is there to face criticism. Somebody once said to me: "You can wring the neck of a Minister, but you cannot wring the neck of a committee." For that reason, I regard it as a profound mistake to leave these appointments to a committee. Incidentally, if I were going to have a committee at all, I should be most careful to avoid including judges, because it seems to me that it is completely the wrong place for judges. It is surely undesirable to bring the judges into the sort of controversy which might conceivably arise about these appointments. I sincerely hope that the Government will think again about that part of their proposal.
One other matter, and then I have finished. It is dealt with in paragraph 30 of the White Paper. I am far from

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saying that there is not great room for improvement in our programmes, both sound broadcasting and television. I think we might help considerably if we were to try to get a system, and get it fairly soon, whereby great sporting events could be televised and broadcast. There were millions of people in this country who wanted to have the Grand National either televised or broadcast. Owing to some—I will not say selfish interests, but private interests, the services of the ordinary broadcasters were not available, and what a miserable thing that broadcast was!—as those of your Lordships who listened to it will know. It just shows that broadcasting is something which has to be done by expert people. I should like to establish the principle that all these great sporting events—the Derby, the Grand National, the Boat Race, the Test Matches, the tennis at Wimbledon and all such events—should be made available. They should be broadcast and they should "be televised if the technical difficulties—about which I know nothing—can be surmounted.
I believe that the difficulty is largely one of copyright. I am well aware that that matter is being referred to a Copyright Committee, and I believe that that Committee have not yet reported, although they are about to do so. I should like to see not a copyright in the actual performance itself, which I think would be very inconvenient and wrong, but a copyright in the televised image of a sporting spectacle. That would make it an easy matter to prevent "pirates." then, by all means, let the three parties concerned—the B.B.C., who would have the copyright, the cinema interests and the sporting people who organise the events—get together and see how they will parcel out the money arising from this copyright. There would have to be legislation.
I ask the noble Earl to realise that this is a matter in which the public of this country are greatly interested. I feel very definitely and strongly that sectional interests must give way to the general interest. I should, of course, be entirely in favour of treating all the interests fairly. If they were not able to arrange among themselves what the terms or payments should be, perhaps there might be some sort of arbitration tribunal. But the time has come when we should say quite
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plainly that these spectacles must be made available to viewers and listeners, and it is for the Government to consider ways and means of doing it. I am quite satisfied that this is a matter of urgency: a vast number of people are waiting for something to be done
I believe that television of football matches and cricket matches and such things would do the sport promoters no harm at all. It would in fact, induce a new circle of people to become interested in these things; and, so far from doing the promoters any harm, it would do them a great deal of good. I humbly suggest to the noble Earl that this is a case for prompt action and a case in which the general good must prevail over sectional interests. With these few observations, I would close by saying that I think the House is fortunate in having had a debate of this quality and tone.
4.54 p.m.
EARL DE LA WARR: My Lords, may I first of all join with other noble Lords who have spoken in thanking the noble Lord, Lord Reith, for having put this Motion on the Order Paper? He told us that at one time he wondered whether he would do so—whether the Government would give sufficient consideration to a debate in your Lordships' House to make It worth while. I can only say that if he or some other noble Lord had not put this Motion down, it would have been the duty of the Government to submit this White Paper to this House for discussion—and, of course, the Government would have done that. We all recognise that there is nobody in this country who has a greater right to speak on this subject than Lord Reith, in view of his years of pioneering service and the devotion he has given to British broadcasting. I admit that I could wish, if only for that reason that he had felt more able to give his blessing to our proposals a little more warmly than he did.
But, whatever the noble Lord's views on the White Paper, the fact remains that the whole country is deeply indebted to him for what he has done in building up our British system of broadcasting. And let there be no doubt about it: it is a great system. And despite all that has been said to-day, I am perfectly convinced that it will continue to be a great system. I do not accept the

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assumption, which has been made by noble Lords who have spoken already, that the B.B.C. is utterly incapable of facing any competition; and I resent most strongly the unproven assertion made to-day by speaker after speaker that the White Paper represents, to use the words of Lord Reith, a scuttling of the B.B.C. I assert that no proof whatsoever has been put before us for that suggestion. The B.B.C. is a human institution, and it is easy to find fault with it and to criticise it. But I am speaking on behalf of Her Majesty's Government, who are responsible for placing this White Paper before Parliament and I would challenge anyone to point to any country that is better served.
The B.B.C. was set up only twenty-six years ago, and it has given the United Kingdom a broadcasting system that is the envy of many other countries. If we conducted this discussion on any other basis than that, we should be not only churlish but extremely foolish. We have here a system and an organisation that has justified itself in practice; and the first condition of our new policy must be not only that that organisation remains intact but that it should be able to grow and expand as a living organism. That is a test that I am prepared to accept for the discussion of this White Paper. Before I go on to that, however, I should like to add one word. I am glad to see that the noble Lord, Lord Simon of Wythenshawe, is in his place. I can, therefore, on behalf of Her Majesty's Government, give a message to him personally and to his colleagues and staff—and I believe that the whole House will feel the same—that we owe them a great debt for what is being done by the British Broadcasting Corporation.
It should not be necessary, after what has been said already, and after correspondence that has appeared in the Press during the last few weeks, and even months, to emphasise that this is an extremely difficult subject, and that very strong and divided views are held upon it. I may be told that it is a platitude to stress that, or to say that our national future, in terms of our thoughts, feelings and standards of values, is at stake; but, even if it is a platitude, it is true, and therefore I believe it is worth saying. For that reason alone I make no apology—after all, we have taken nearly six
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months to decide on a policy—for the fact that it is easy to describe these proposals, as the noble Earl, Lord Halifax, did, in terms of being in the nature of a compromise. So far from apologising for proposals that attempt to meet the very strong opposing views which are felt, I would assert strongly that a Government which did not treat with respect views that are felt so deeply, and with such sincerity on both sides, would be acting very wrongly.
To carry on that point, what emerges particularly, not only from the discussion to-day but from the discussion that has been taking place outside this House, is that neither side—what I will call, on the one hand, those in favour of sponsoring and (in deference to what the noble Earl, Lord Halifax, and the right reverend Prelate, the Lord Bishop of Sheffield, said about the word" monopoly") those in favour of monopolies on the other—is alone in the sincerity or strength of its moral conviction on this question. The noble Earl, Lord Halifax, said that it was quite unfair to speak of the present position of the B.B.C. as a monopoly. On a definition of the word "monopoly," I simply cannot see how it is possible to speak of the present position of the B.B.C. as being anything but a monopoly—it may be possible, as the right reverend Prelate said, to say that there are good reasons why there had to be a monopoly. It would be so much more difficult to start rival stations than to start rival newspapers—but that is not the sense in which we are discussing the continuance or otherwise of a monopoly.
Speaking on behalf of myself, I say that it is very much in terms a conflict of negatives—certainly it is for a great number of people. By that, I mean that it is really a case of deciding whether our dislike of monopoly is stronger or weaker than our dislike of sponsored or commercial broadcasting. The noble and learned Earl, Lord Jowitt, will see that I am neither shy nor coy about the use of those words. The reason why "commercial" was left out was very different from what the noble and learned Earl has suggested. It is clear that under our proposals commercial television is possible, but it is equally true that there are other possible ways of providing competition. There has been a strong argument, with which I will deal in another portion

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of my speech, for a rival State-financed broadcasting commission. There is a proposal contained in the Report of the Beveridge Committee—and, shall I say, it was at any rate looked at in a friendly way in the last White Paper—for permitting broadcasting by approved public bodies such as universities and local authorities. I am afraid that I am diverting from my argument, but the noble Lord asked me what we felt about that matter Frankly, we have not made a reference to it in the White Paper because it seemed to us such a long way away, and we felt that for the moment it was not necessary to come to a decision, any more than the last Government did. But if the matter comes up, it can certainly be discussed on its merits.
EARL JOWITT: This is a very important point. When the noble Earl refers to the necessity for providing some element of competition, is he not referring solely to commercial broadcasting? Does he contemplate some other form of competition?
EARL DE LA WARR: I felt that commercial television was a very likely interpretation of the words in the White Paper, but they certainly do not exclude some other method of bringing about that competition. It was for that reason that the word "commercial" was quite deliberately left out, and not because we were either shy or coy about its use.
VISCOUNT SAMUEL: Can the noble Earl say where such a competitive body would get its revenue?
EARL DE LA WARR: I think that is a legitimate point. It was suggested that there should be three separate State commissions financed from the State.
EARL JOWITT: But you do not accept that.
VISCOUNT SAMUEL: Financed from the State by the taxes?
EARL DE LA WARR: It is not a proposal for which we are responsible, but is one which has been put forward. Although we are not laying the proposal before your Lordships, that is, nevertheless, open for consideration at a later time when this matter can be considered on a rational basis. But I am assuming, for the purposes of my argument, that the most likely form of competition will
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be the form your Lordships are assuming it is likely to be—that is, commercial broadcasting.
I want to say, as strongly and as clearly as I can, that the proposals before your Lordships have a very much stronger basis than that of mere compromise. I should fed that it was wrong to base our proposals merely on compromise in dealing with a living and growing force such as broadcasting, and especially television. We have tried therefore—and I believe that we have succeeded—to put forward an answer which takes account of both opposing views of this problem. This we have done by offering an alternative to the principle of monopoly whilst at the same time preserving the B.B.C. in its full integrity, and thus making sure that the people of this country are not left—as is the situation in America—without any alternative to sponsored television. The fact remains that if our full proposals are eventually carried through, nobody who does not want to, need look at a sponsored television programme, but he will be able to tune in to the B.B.C. as he does to-day. And if the noble Viscount, Lord Samuel, does not like beer with his Toscanini he need not have it. A parallel with the United States of America is quite unfair. The right reverend Prelate the Lord Bishop of Sheffield, as an argument against competition, said (I did not quite understand his argument) that people cannot choose in broadcasting. That is true to-day, but if the Government's proposals are put through it will no longer be true. They will be able to choose
THE LORD BISHOP OF SHEFFIELD: A very limited choice.
EARL DE LA WARR: In fact, it is a 100 per cent. choice, which is very considerable.
My Lords, how do we propose to achieve our two objectives? If your Lordships will turn to the White Paper, you will see from paragraphs 5 and 12 that we propose to renew the Charter of the B.B.C. for ten years. As one noble Lord has already said, the B.B.C. will not be allowed to put out sponsored programmes or to accept advertisements without my consent. That is exactly the position to-day. The B.B.C. will be the only broadcasting organisation having any claim on revenue derived

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from broadcasting licences. It will continue to be the only source of sound broadcasting in this country, and will continue to provide its own television service, though in this case the field will be open to competition. The noble Earl, Lord Halifax, asked what was the logic of allowing competition in television and not in sound. I freely admit that the answer may not be based on pure logic, but it seems to me simple and obvious common sense. The public already have a fully developed service of sound broadcasting. There are the three separate national programmes and a good many local variations. On the other hand, television provides only one programme and under present conditions that is likely to continue to be the case for some time. Therefore, if some new development is to be made—in some ways one might almost be justified in calling that development an experiment—television is the obvious field.
So far so good, on that point. But it has been argued by many noble Lords in this House, first in the speech delivered to-day by the noble Lord, Lord Reith—and the point which has been fully developed by the noble Lord, Lord Brand, in The Times and elsewhere—that there is really no room for competition here, because in entertainment, as in coinage, the bad must always drive out the good. That is pure assertion. We have been given no reason whatsoever why that must be so. I can understand that it would be a danger, but we have not had demonstrated to us that that danger is one that cannot be met. I believe that there are circumstances and conditions provided in the White Paper which can eliminate that danger.
Let us just look at what the position is going to be. If and when the B.B.C. has to face competition, it will start with the advantage of an assured annual revenue of approximately £11,500,000, a revenue which, with the steady growth of licences, is likely to increase every year. As a matter of fact, during the last four months alone the revenue due to the B.B.C. from licences has increased by no less than £325,000—that is in four months. Then, my Lords, even if the fears of certain noble Lords are right (it may well be that they are), that competition would deprive the B.B.C. of some of its audience, this would not affect
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its income, because wireless licences are paid for in order to use a receiving set and not for the privilege of listening to the BBC.
However, not only would the B.B.C. embark upon its competitive life with an assured revenue, but we can go a step further, because in paragraph 11 we provide that competition against the B.B.C. will not start until that organisation is at least well on the way to supplying the whole country with—to use the words of the White Paper—"adequate national broadcasting services," including both television and broadcasting on very high frequencies. This means building five new low-powered television stations which, with the existing stations, would give service to something in the neighbourhood of 90 per cent. of the population. It means also at least making a good start on developing the use of very high frequencies. In such circumstances, I can see no good reason why it should be so universally assumed by speakers in your Lordships' House that the B.B.C. would be driven to debase its coinage, even if sponsored television were in fact as low as some noble Lords think it might be.
I am going (to say something that I should not have said but for the remarks made by some noble Lords who have spoken. To hear noble Lords speak with horror at the type of programme which they are afraid that commercial television might produce is to make me wonder how much they listen to our present Light Programme. For all we say about the B.B.C, we cannot always be tremendously proud of the Light Programme. Occasionally I look at television, as I feel it is my duty to keep an eye on what is happening. Again, I must say that there are some programmes of the light variety type which are hardly calculated to give pleasure to all who watch. I am glad that the noble Lord, Lord Mancroft, made this point—namely, need we assume that the British people would enjoy the same vulgarities and horrors, and even tiresomeness, to which the noble Viscount, Lord Samuel, referred, which are apparently so popular elsewhere? I have enough faith in the people of this country to believe that the sort of programmes some of your Lordships are fearing just would not be a success in this country. Incidentally, I cannot help

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expressing a certain mild surprise that speakers from the opposite side of the House, who claim to be the spokesmen for the common people of this country, should, when it comes to a test case like this, take such a low view of their taste in this regard.
My Lords, I am afraid that I have dwelt at some length on this point, but it is so much the essence of the problem. I must repeat that the more I look at the case the more I find myself questioning this assumption that the bad must drive out the good; that indeed, the B.B.C. is utterly incapable, in spite of all the advantages it possesses, of meeting competition from any source. The whole force of every argument that has been put against our proposal so far has; been based on those two assumptions. Indeed, I think it would not be going too far to say that some of the speeches which have been made seemed almost to be based on the assumption that the B.B.C. was not going to be left to operate at all.
On one point which arose at the beginning of the debate I should like to give my personal view. There is a proposal which has already been mentioned for the setting up of separate State broadcasting commissions. That is the proposal, and it is open to consideration. I have never myself been at all impressed by the idea, although it was argued strongly before the Beveridge Committee. There would be no challenge to a monopoly, because the source of finance and power would be exactly the same for each corporation. But, having said that, I would add that the Government do go some way in the direction of securing the advantages, without the disadvantages, of such a proposal, by providing, in paragraphs to which references have already been made, for greater decentralisation, not only in Scotland, Wales and, possibly Northern Ireland, if they want it, but also in each of the English Regions. I know that; the noble Lord, Lord Reith, does not approve of this greater decentralisation. He regrets the giving to Scotland, Wales and Northern Ireland of such greater power and influence as is visualised by the setting up of these separate councils. He regrets that any encouragement should be given to increase devolution to the regional controllers. I must frankly say that we disagree with the noble Lord about that matter.
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I am quite prepared to admit that in paragraph 21, which deals with the setting up of Broadcasting councils, although what is there stated us almost word for word what was stated in the last Government White Paper—and it is none the worse and none the better for that—there is a certain amount of room for what I call administrative untidiness. I admit that. But it seemed to me that we were faced with a choice between that, on the one hand, and not paying sufficient and adequate respect to the natural desire in regions—certainly in Scotland and Wales, and possibly in Northern Ireland—to have greater control over their programmes. Nevertheless, in spite of possible administrative untidiness, I say that this is a scheme that can be made to work. It was carefully drafted and I believe that its advantages are much greater than its disadvantages. I know that the noble Lord, Lord Reith, cannot agree. As we are aware, he is a great administrator, and I think he has always been one who likes his own way. There is no doubt that in this case there would have to be a certain handing over or devolution of power.
Now I come to a point which was dealt with by the noble Earl, Lord Listowel, and the noble and learned Earl, Lord Jowitt: I refer to the new methods put forward for the appointment of Governors. I must confess that I am disappointed at the reactions of the noble Lords to this proposal, because whatever we may feel about the position of the B.B.C. and on the question whether the B.B.C. has a monopoly or not, I think we realise that the Governors and the organisation are in a position of immense power. We felt, therefore, that it should be made clear beyond any shadow of doubt that their choice must never be on partisan or sectional grounds. I am prepared to say that we may or may not have chosen the right form of panel. If we are agreed on the objective—
THE EARL OF LISTOWEL: I do not think we are agreed on the objective in the sense of giving the power of appointment to a committee. We think the Government should continue to appoint the Board
EARL DE LA WARR: I am greatly disappointed to hear that. I am not sure whether the noble Earl is speaking officially and formally for his Party.
THE EARL OF LISTOWEL: May I intervene again to say that—as I tried to make clear in my speech—I am speaking on behalf of the noble Lords and the Party on these Benches on this issue.
EARL DE LA WARR: Then I can only express regret. In doing so I want to make it clear that there was no suggestion whatever that in the past there has been ground for complaint that complete impartiality has not been shown. All Governments have always shown the most complete impartiality and a deep sense of responsibility about the matter. But we feel that there is much to be said for applying the principle laid down for Cæsar's wife, and of not accepting too easily the phrase: "It can never happen here." That phrase can be one of the most dangerous in our national life. There is only one way in which we can prevent unpleasant things happening here and that is by agreeing together to take steps to ensure that they cannot happen. There is no doubt in my mind that a committee of appointment of the type that we propose will at least help towards these ends. Noble Lords opposite say that they cannot co-operate. That is a matter for deep regret, but I must leave it there, for I confess it takes me by complete surprise.
One last point which the noble and learned Earl, Lord Jowitt, raised related to the question of sporting events. I agree with him about the importance of this matter. If I were not in office, I could hardly think of a word he has said which I should not wish to say. But would your Lordships be good enough to allow me to leave it at that? The subject is an extremely difficult one. It is tied up with the law of copyright and with some intensely difficult principles. It is clear that the really satisfactory solution would be that the parties most closely concerned should get together. I do not think it is desirable at the moment to attempt to answer the noble and learned Earl at greater length. I do not think it is desirable that a settlement in this matter should have to be imposed by the Government. Therefore, if your Lordships would be good enough to take that from me as being as much as I wish to say at the moment on the subject, I should be grateful.
I am only too conscious that I have not dealt with all the points that have been raised, but I undertake that the points I
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have not dealt with will be carefully considered. I had intended to say that broadcasting is not a Party issue and I am glad to think it has been said from the other side of the House first. Though speeches that have been made from the other side have not been over friendly to the proposals put forward by the Government, they have borne out the fact that noble Lords have certainly not criticised them in any partisan manner. The day the B.B.C. becomes a matter of Party division will be a bad day, not only for the B.B.C., but for the country as a whole. I trust that the contribution I have been able to make to this debate has contributed to that feeling. We may not be able to obtain unanimity on a most difficult subject, but underlying unity of purpose is, I believe, possible, and I am firmly convinced that this debate, as it has started to-day and as it continues, will help the nation towards this end.
LORD CLYDESMUIR: My Lords, may I ask the noble Earl a question to clarify a point about administration? I understand that, by convention, as a Governor of the B.B.C. I am not entitled to speak, but if I may ask this question I shall be much obliged. In dealing with the administration of the Regions, could the noble Earl say whether it is the intention that the Corporation should still appoint Controllers of regions?
EARL DE LA WARR: My Lords, the answer is certainly, yes. I apologise for omitting to make that point. That is definite.
LORD CLYDESMUIR: I thank the noble Earl.
5.32 p.m.
LORD ELTON: My Lords, I think I am the only surviving member of your Lordships' House who was a member of the Ullswater Committee which in 1934 gave the B.B.C. its first official "onceover." I well remember then the appearance which the noble Lord, Lord Reith, made in the witness stand, and what a formidable and ingratiating witness he made. I should like to say what has been implied in various fashions by every previous speaker: one of the chief reasons why the B.B.C. has so conspicuously been the most satisfactory of our corporations; and why, despite the fierce light which beats upon its throne, it has always contrived to retain

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the good will and respect of the public; and why, after more than twenty years of monopoly, even now its monopoly of sound is not being seriously challenged, has been the fact that the noble Lord (Sir John Reith, as he then was) was its first Director-General. He bequeathed to it a tradition, derived, as he himself remarked this afternoon, from the Scottish manse, a faintly astringent tradition of idealism and integrity which has been worthily maintained since.
The noble Lord, Lord Mancroft, who I am sorry to see is not here at the moment, made some passing and not very explicit reference to "unsavoury episodes" at the B.B.C., but I much wonder whether there is any other public corporation which could have faced the almost continuous running commentary which is accorded the B.B.C. in the daily and weekly Press without the revelation of some pretty substantial skeleton in any one of its many cupboards. I remember that, when the personnel of the Ullswater Committee had been announced in the Press, a popular journalist of the day sought me cut and assured me that there was abundant evidence that Broadcasting House had sold its soul to Moscow. I replied, "Send in the evidence." For I was young enough then to anticipate a scandal with a faint sense of pleasurable excitement. Needless to say, not a line of evidence ever came.
I should like to go on record—though I am not going to develop this point, because everyone else has dealt with it to the exclusion of most others—as quite convinced that the introduction of commercialised sponsored broadcasting would be a disaster, one against which, if it came to a vote, I should certainly vote. I want to speak this afternoon for a few minutes, not as one of the former inquisitors of the B.B.C. away back in 1934, but rather as one who has had a considerable personal experience of broadcasting over the last twenty years or more. As I have listened to this debate from the angle of a broadcaster, I have felt that there was a certain danger that in our anxiety to avoid what I agree are the pitfalls of American sponsored broadcasting, we should overlook the fact that nevertheless there is a good deal to be learned from certain American methods, provided we avoid their main mistake of adopting commercial sponsor-
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ing; lessons which would strengthen our own monopolistic B.B.C. It is true that the worst features of American programmes are worse than the worst of our own, and that is saying a good deal. No doubt it is also true that no broadcaster in this country is ever invited to mutilate his script in deference to some powerful commercial or political prejudice as I am told happens sometimes on the other side of the Atlantic, although it certainly never happened to me on the two occasions when I broadcast in America. In my own fairly long experience of Broadcasting House, the only alterations ever suggested in my scripts have been attempts, usually successful, to improve their artistic quality.
But it is to the best and not to the worst of American broadcasting that we should look if we wish to learn something from it, and practically nothing has been said this afternoon about the best side of the American competitive system. The services of the successful broadcaster in America are competed for by a number of rival broadcasting chains—with two immediate consequences. First, the successful broadcaster is soon earning an income of upwards of £50,000 a year; and secondly, which is considerably more important, there are a number of men and women who devote practically the whole of their working time to broadcasting. Of these two consequences, the first—the fact that the successful broadcaster earns an astronomical salary and becomes what, apart from sports commentators, is virtually unknown in this country, a professional purveyor of the spoken word over the air—is not, of course, anything like so important as the second.
I believe that the paying of astronomical salaries by Hollywood and American broadcasting chains has done these institutions nothing but harm. But, in passing, I feel I am bound to say that the temptation to pay astronomical salaries is one which so far the B.B.C. have been remarkably successful in resisting. The Corporation pays a standard fee for a talk broadcast, the same whether the performer is delivering his first, his fifth or his; 500th broadcast, and it is roughly equivalent to what a provincial newspaper would pay a reasonably distinguished contributor for an article involving about a quarter of the

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work represented by a broadcast. This is not a very important consideration, though judging from some words which fell from the noble Lord, Lord Mancroft, it is a factor which may be stressed by those who are pressing for competition in broadcasting. But I feel called upon to mention it, in passing, because I clearly remember how on the Ullswater Committee we were very conscious of how omnipotent the monopoly would necessarily be in relation to those whom, at its discretion, and on such occasions as it pleased, it might invite to broadcast; and how we did express the hope that it would treat its performers generously.
But the important lesson which I believe we could learn from American broadcasting is the fact that it does keep a number of highly talented men and women broadcasting fairly continuously. I am convinced that broadcasting is an art, just as playing the violin is an art, and that, like playing the violin, it is an art which cannot be acquired or sustained without constant practice. The radio musician can obtain his practice by appearing in the concert hall; but the purveyor of the spoken word can obtain practice only by appearing in front of a live microphone, with all the terrifying consciousness that there are many millions of his fellow citizens on the other side of it. It is not desirable, of course, to have whole-time broadcasters in this country. But anyone who has had the experience of fairly frequent broadcasting, say, once or twice a week for several months on end, will, I am sure, agree that his whole technique has benefited immensely from the experience; and conversely, no one who broadcasts for the first time, or at very long intervals, can possibly do himself full justice.
Of that I think sufficient evidence is frequently provided by the broadcasts at General Election time by the Party political leaders. Quite a number of prominent politicians, all too conscious that for once they are addressing 15,000,000 instead of 500, seem to conclude that all they have to do is to distend their normal platform manner to rather more than life size. The results are usually disastrous. Mr. Churchill's broadcasts have, of course, been immensely, indeed, uniquely, effective: indeed, his war-time broadcasts are
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already part of our history. But Mr. Churchill is a great man, speaking on great subjects, and his inimitable personal aura overshadows and transmutes anything he does. Nevertheless, I should venture to say that, technically speaking, he is not a good broadcaster, and that, if he were, his peace-time broadcasts would be even more effective than they are now.
At present the Corporation can rarely permit a broadcaster the practice which he needs if he is to develop his full capacity to entertain the public. Here I ought perhaps to say that I do not think I need declare an interest, because to me the B.B.C. have been consistently-generous: if they have been guilty of any error, it has been in inflicting me too frequently on a long-suffering public. In fact, it is my experience in that respect which leads me now to suggest that that sort of experiment should be more widely extended to others. From time to time there has been a series of talks by highly-skilled performers—your Lordships may remember the names of Mr. Harold Nicolson and Mr. J. B. Priestley. But, almost invariably, at the moment of their highest success they suddenly and silently disappear, to return only fitfully and at prolonged intervals. No doubt there are good reasons for the sudden disappearances, as through a pantomime trapdoor, and certainly it would be undesirable to allow any individual to build up the immense popularity which he might acquire by constant appearances over a number of years.
However, I would plead with the B.B.C. to recognise that in the interests of good public entertainment it is desirable that there should be a certain number of people who obtain more practice than anyone obtains at present. It is natural enough to introduce the expert on his own subject, but if he is only an expert and not a broadcaster, all he will do will be to read a literary essay into the microphone. That may be most interesting, but it is not broadcasting.
As if to emphasise the inducement to purely literary broadcasting, the B.B.C. invariably include in every contract a clause which reminds the signer that they retain for a certain period the right to reprint verbatim in the Listener anything he may say on the air. Naturally, in face of this warning, anyone with a

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literary conscience, experiences a great temptation to produce the sort of material which is suitable for print, rather than attempt to develop a true broadcasting technique. The professor of entomology is brought along to the Home Service once every five years to talk about how water beetles defend their young. He comes nervously to the microphone and reads the sort of essay which he might have contributed as a special article to The Times. Then perhaps five years later he is brought on again, possibly this time in Children's Hour, on "How mummy and daddy water beetle protect their families," or it may be to the Third Programme—of which we have heard some well chosen words of praise—to speak about "recent researches into the defensive tactics of the nototectidae." But wherever he speaks, so long as he speaks in merely literary form, he will not hold his listeners. He may be a good professor, and even a good lecturer, but a substantial proportion of his audience will switch him off if he does not hold their attention as a broadcaster.
There are plenty of analogies outside the B.B.C. for the point which I am trying to make. Not long ago the directors of a company in which I am interested decided that they wished to organise a series of talks—not broadcasts—in one of their factories, with a view to enlightening the operatives as to the history, nature and function of their industry. They soon came to the conclusion that, although there were plenty of directors and plenty of executives who were experts on the subject, if they wanted to get the theme across to 1,000 working men they had better retain the services of somebody who might not know anything about the subject until he had been briefed but who had had long and successful experience of putting ideas across to working-class audiences. We never had cause to regret or revise that decision. I am not suggesting that there should be whole-time professional broadcasters at the B.B.C. What
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I am suggesting is that rather more attention should be paid to creating, and then making use of, the practised broadcaster.
There is only one more point that I desire to make, and it is part of the same theme: that while we are frightening ourselves by the admitted terrors of the American example, we should not overlook some of its successes. Do not let us forget that it is not only whisky and toothpaste that can buy time on the air—anyone can buy it. Although that sometimes leads to highly unedifying results, it is not always so. Only the other day I was reading in a religious journal an account of a nation-wide revivalist campaign in the States conducted by a man whose name I think (I may have it wrong) was Billy Graham. This man held enormous open-air meetings. There were 50,000 people at a meeting in Washington. It would have ended with the actual audience, but for the fact that his backers were able to buy time on the air, both in sound and in television, with the result that he reached many tens of millions of fellow citizens besides I am not, of course, suggesting that we need sponsoring, but I do suggest that here again is an example of something which can be done over there which is not wholly bad, and which is a reminder to us that we might try to do it too—by being slightly more adventurous in some of our programmes, and particularly, perhaps, in the department of religious broadcasts.
I do not wish to take up any more of your Lordships' time, and I will end by repeating that on the major issue I am with those who have opposed the introduction of sponsored broadcasting, and that I hope that the B.B.C. will enjoy as much success in its next ten years of life as it has in the past.
EARL FORTESCUE: My Lords, there is to be a Royal Commission at 6 o'clock, and therefore I suggest that we adjourn during pleasure.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION
6.0 p.m.
The following Bills received the Royal Assent:

National Health Service,

Empire Settlement,

Edinburgh Merchant Company Endowments (Amendment) Order Confirmation,

Motherwell and Wishaw Burgh Order Confirmation,

National Trust for Scotland Order Confirmation,

London County Council (Holland House),

City of London (Various Powers),

Tyne Improvement.

House adjourned during pleasure.
House resumed.

BROADCASTING POLICY
6.12 p.m.
Debate resumed.
VISCOUNT HAILSHAM: My Lords, the noble Lord who spoke before the Commission was read said that he was a broadcaster. I, too, claim to have had some dealings with the British Broadcasting Corporation in the past few years, although I certainly would not claim his skill and experience. Nevertheless I thought it right to mention the fact lest it should be thought—I hope it will not be thought—that I am in any way influenced in the opinions which I am about to express by any dealings I may have had or might hope to have with the Corporation. Indeed, after the noble Lord's speech, I could readily say that my interests lie in favour of a rapid extension of sponsored broadcasting. But I myself find my opinions directly in the opposite camp to that of sponsored broadcasting. I know that the subject is a difficult one. I know that in a short speech one is bound, to some extent, to seem dogmatic, but since I feel no doubt about the opinions I hold, I think it right to put them forward before your Lordships in the hope that I shall not be regarded as being unduly dogmatic.
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I am at least fortified by this reflection. The opinions which I am about to express make no pretence at being original. They have not, until recently, been thought unusual in the Party of which I am a member. They were the opinions of successive Conservative Governments before the war. They represent a policy consistently pursued for twenty-five years by Conservative Governments, of which my own father was a member, and, in the main, subject to a minor criticism which is contained in the Beveridge Report, they represent the successive opinions of Royal Commissions. If, therefore, I seem to be controversial or dogmatic in putting them forward, I hope to be forgiven. But after hearing the Postmaster General's speech, I must say that I was diverted in one respect from my intention. I had intended to deliver a diatribe against the White Paper on certain points, but I realise that what I had attributed to vice must be ascribed to a pardonable ignorance.
I know that it will be difficult to persuade the Government and the Postmaster General to agree with me, or to agree with those who do not like the proposals in the White Paper, but at least I shall attempt to make them understand our case, because at present they manifestly do not. They have not understood the case which they have attempted to demolish. The White Paper has been put forward as a compromise. It is a mistake to confuse inconsistency with compromise. The White Paper is to be condemned not because it is a compromise but because it is inconsistent. The inconsistency can be expressed in two sentences: either the encomium of the B.B.C. contained at the beginning of the White Paper was justified, or it was not. If it was justified, the distinctive features of policy which follow it in the White Paper are both irresponsible and absurd. If, on the other hand, the policy which is contained in the White Paper is not irresponsible and not absurd, the encomium of the B.B.C. with which the paper begins is obviously unjustified and probably insincere. To my mind there is no way out of this dilemma.
The case against the use of sponsored broadcasting has nothing whatever to do with the general controversy regarding the merits of private enterprise and public monopoly. The B.B.C. is not a monopoly

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in any accepted sense of the word, because it sells nothing. Sponsored broadcasting is not, in the ordinary sense, private enterprise, depending for its revenue upon direct consumers' choice, because the public buys nothing when it gets the broadcast; it buys nothing directly. The peculiar feature of broadcasting is that it must be financed in one of two ways, both of them, to my mind, fundamentally unattractive. Either it must be financed out of taxes, which may be raised by licences or otherwise, or it must be financed out of advertisement revenue. No third method has so far been discovered.
If it is financed out of taxes, clearly of course there is a danger of inefficiency and unattractiveness in the programme. But if it is financed out of advertisements, what is otherwise a danger becomes a certainty. The thing which is destroyed by sponsored or commercial broadcasting, financed out of advertisement revenue, is the integrity of the editorial function. The noble Lord, Lord Mancroft, and indeed the Postmaster-General, said: "Cannot we trust the good taste of our population?" Up to a point we can, of course, but the population is not getting what it wants with commercial broadcasting or sponsored broadcasting of television; it is getting what the advertisers consider a good advertisement medium, and that is not necessarily good broadcasting or what the listener wants.
Take a simple example illustrated by an admirable cartoon in the Daily Express two days ago. Suppose that an advertiser wants to sell toothpaste. He asks himself: "Shall I put on variety or shall I put on a religious service?" Obviously, the more religious he is, and the better his taste, the more he wants variety, because there can be no less suitable advertising medium than a religious service. The public, therefore, must get a kind of broadcasting which is distorted by reason of the fundamental purpose for which the vehicle is used—not broadcasting for its own sake but its use as a medium in which advertisements can live. It is this, and not the defects or demerits of private enterprise, which renders commercial broadcasting fundamentally pernicious.
In the White Paper, curiously, the Government have recognised this. But they have recognised it in a perverse and odd way. They have excluded from their
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proposed new experiment religious and political broadcasting. They recognise that such broadcasts would be inappropriate to be placed in private hands. But what is the result of that? It is that the alternative programme is intrinsically unbalanced as a programme. Religious and political broadcasting is an essential part of any well-balanced broadcasting programme, and the Government are proposing to give the public an alternative programme which is bad because it is unbalanced, and bad because it is animated by advertising methods rather than the methods of the independent editor, together with the B.B.C. programme, which will be a balanced programme.
The noble Earl the Postmaster General says that this will give the public a wider choice. In a sense, it will. But the public would get an equally wide choice, but of two balanced programmes, if the B.B.C. were given back 15 per cent. of its revenue and allowed to run two alternative balanced programmes. The advantages of giving the public a wider choice have absolutely nothing whatever to do with the advantages or the disadvantages of sponsored broadcasting. They are irrelevant to the issue. A wider choice is to be achieved by increasing the number of channels made available to the public. It does not depend upon the method of finance selected for supporting these various channels. When the Postmaster General solemnly tells us that he will get a 100 per cent. increase in consumer choice because he develops a commercial system of television, side by side with the system of television proposed by the B.B.C., my answer is that be will continue to give the public one good programme, but that he will give the public a new programme which is relatively bad. By returning to the B.B.C. its revenue, by maintaining its monopoly, by giving it enough money and the means to develop two alternative channels, he could equally well give the public two good programmes of different kinds between which they could choose. Therefore, it is wholly false to suggest that the policy of the White Paper offers the smallest additional advantage to the public in the way of consumers' choice. The variety of consumers' choice depends upon the numbers of channels available, and not upon the method of finance.

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Secondly, it is sometimes said that the B.B.C. would benefit by competition. But under the new proposals the B.B.C. will not suffer any competition; it cannot suffer any competition. A public monopoly, financed out of public revenue, cannot in the strict economic sense of the Manchester school be competed with. There can be competition between rival commercial broadcasting systems, but there can be no competition, in the strict sense, between a public system, financed out of public revenue or revenue from licences, and a private system financed out of advertisements. As one noble Lord pointed out—I think it was the Postmaster General himself—although more listeners may tune in to the private rather than to the public system, it will not decrease the revenue of the B.B.C.; and certainly the B.B.C., under this system of so-called competition, could continue to operate with its full revenue without having a single listener. This is not competition in the sense in which it is generally understood.
The idea of various public corporations competing with one another as if they were private enterprises when they are not, is a perfect chimera. I am not in the least wedded to the principle of public monopoly, but it has at least the advantage of singleness of control. To provide and operate three alternative systems with separate control, each of them financed by public money and each having different staffs and separate systems of central administration, is to combine all the disadvantages of private enterprise with all those of public control. You have no competition thereby. Both corporations would get their revenues from the public purse. Yet in their very essence they would destroy the one advantage which public monopoly can always give—namely, a unified control. Therefore, I think the Government were right in rejecting the suggestion which was put before the Beveridge Commission, as I think the Beveridge Committee rejected it too. But to bring it in now as a sort of "King Charles' Head," to make us swallow sponsored television a little more easily, by saying that in about three years' time the Government may erect three alternative corporations, is, I think, rather a strain on our intelligence.
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If in fact what I have said is true, as I think it is, of sound broadcasting, I must insist that there is absolutely no reason at all why it should not also be true of television. So far as I have heard—and I have heard all the speeches in the debate, including that for the Government—there is no argument whatever why television should be treated on principles different from those which apply to sound broadcasting. On the contrary, I should have thought that if there were to be any distinction at all, the advantage might well be in favour of effecting a change in the older system, which might well be expected to survive it, rather than the newer system, which is now in its infancy and taking on its distinctive features.
If the encomium at the beginning of the White Paper was correct, the B.B.C. secured that position from which it established the tradition and characteristics which have caused it to be praised by the possession of those particular advantages of which television is to be deprived in its infancy. The members of the B.B.C. staff, who must know that television has only reached the beginning of its development, will necessarily be discouraged in the knowledge that the growing weapon has been taken out of their hands, whereas the obsolescent one has been left with them. The running of new sponsored broadcasting systems in the television programme, when it is denied to sound radio, is therefore in my belief nothing more than an attempt, possibly deliberate and possibly misguided, to kill the B.B.C. in the end, to impose upon it sentence of death but to allow a stay of execution. At least in my belief, the idea of those who have succeeded in achieving this programme, and certainly its effect, is to wreck the life's work of the noble Lord who opened this debate. That I think is what he felt and to some extent it explains the heat with which the noble Lord spoke. The idea is to wreck the life's work of the noble Lord by gradual means. It is hoped that the B.B.C. will continue as a monopoly with sound broadcasting but that, as television develops, with its new sponsored broadcasting and competitive techniques, it will come to take the place of the monopoly more and more.

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Of course I am aware that the introduction of very-high-frequency broadcasting may change the whole technical picture under which broadcasting is conducted. I should have thought that was an argument for the status quo and not against it. It may well be that one at least of the arguments for monopoly which have existed hitherto—namely the limitation on the number of channels effectively available to the public in one country—may be removed when very-high-frequency broadcasting becomes the rule. That, to my mind, is an argument for prolonging the present situation until it has become a real and immediate prospect. But even here I must say that I agree with the noble Earl opposite when he says that the mere fact that monopoly may ultimately come to be modified or broken down is not in itself a reason why one should switch over from public financed broadcasting to broadcasting financed by advertising.
By way of conclusion there are two short points that I desire to make. The first is that if the Government are going to experiment with commercial broadcasting and television it would be wiser to do so under the power which they possess under the existing Charter, of permitting or even directing the Corporation to allow sponsoring on limited terms and for limited periods, say in regard to variety, where it will do relatively little harm, than to erect new stations consecrated to a principle which is so gravely in doubt.
The second point is this. For the reasons which have been given by numerous noble Lords who have spoken, I hope that we have heard the last of the suggestion that the Lord Chief Justice and the President of the Court of Session will be allowed to take part in executive actions which may bring upon themselves public criticism. I wonder whether those two judges were consulted before this proposal was put abroad. We know that the noble Viscount, Lord Swinton, in a speech last week said that it is now not the habit of the Government to consult interested parties before announcing policy. That was one of several novel constitutional doctrines for which this Parliament will become famous. I should have thought on this occasion that, before using the positions of the Lord Chief Justice and the President of the Court
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of Session in such a way, they would have had the wisdom first to consult members of the Judiciary. I doubt very much whether, if either of the judges mentioned had been consulted first, he would have said he would conceivably accept such a post. I very much hope that they would not.
Suppose that by some misfortune or inexperience they should select for the British Broadcasting Corporation a hidden Communist. I am not saying that it would be a bad thing or a good thing that a hidden Communist should be a Governor of the B.B.C. but I know that they would then incur criticism. They are then in politics. You cannot confuse executive and judicial functions in this country without undermining the essential principles of our Constitution. I have no doubt that whoever may claim credit for this ingenious but ridiculous scheme had in mind the analogy of The Times. But The Times is not a public monopoly, and the B.B.C. is. If they had in mind the analogy of The Times, I wonder why they omitted the name of the Warden of All Souls College, Oxford. I trust that the last has been heard of this ridiculous proposal, and I sincerely hope that on the major matter of policy the Government may have second thoughts before they pursue the matter to its logical conclusion.
I am gravely disturbed by various signs of the policy which the Government are pursuing. It seems to me that they are running the risk of antagonising those very sections of opinion. they ought to be wooing at the present time, the opinions of responsible people without strong political convictions on either side, who might make all the difference in the next few years between the present Government remaining in office—or getting elected for a second term—and complete defeat. These may not be numerous in point of number, but the state of political opinion in this country I am sure, precariously poised at the present time, and I view with great alarm, even from the purely Party point of view, the numerous signs I have seen which seem to indicate that the Government are almost going out of their way to antagonise moderate opinion outside the Conservative Party merely to gratify the somewhat confused political pressures from within.
6.35 p.m.
LORD FOLEY: My Lords, there are one or two issues that I should like to raise. I have a deep interest in all branches of the entertainment business, particularly sound broadcasting and television. First let me say that I should be extremely grateful to the noble and learned Lord who is to reply to the debate on behalf of the Government if he would let me have the average listening figures for the Third Programme. I feel that many people would be very surprised if those figures were made known, as I do not believe that sufficient people are listening to the Third Programme to justify the expense of running it. I wish to say right away that I am in no way personally opposed to the Third Programme; indeed I well remember that when I last spoke in this House some two years ago in the debate on television which was initiated by the noble Lord, Lord Brabazon of Tara, one or two members of your Lordships' House were indignantly opposed to any attempt to abolish the Third Programme.
Of course, from a prestige point of view the Third Programme is undoubtedly a success, although, of necessity, it appeals to only a minority on account of its high intellectual level. But does it really justify its existence as a separate entity? Could it not very well be merged with the Home Service? The Home Service could cater for the more serious-minded, including those who listen to the Third Programme at the moment, leaving the Light Programme for light entertainment and the Third Programme wavelength free for a commercial programme. There are several reasons why, contrary to the opinion expressed by most noble Lords to-day, I am very much in favour of commercial broadcasting. After all, the success of a play or a film can easily be judged by noting the number of people in the theatre. If the theatre is full, you know immediately that the play is a success: if the house is empty you know it is not.
I should like now to quote a few facts and figures about the success of commercial broadcasting in this country at the moment. Radio Luxembourg, a foreign firm with a British branch, to-day has an average listening figure of over 6,000,000 people. This. I think your Lordships will agree, is a staggering figure and it constitutes a substantial supplement and a real
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contribution to the B.B.C. system. Also one must consider that reception of Radio Luxembourg, particularly in the Southern area, is often far from good, and that Radio Luxembourg is never advertised, boosted or in any way mentioned by the national Press, who, on account of advertising, are not in favour of commercial stations. I think this proves fairly conclusively that the great mass of the British listening public is in favour of commercial broadcasting and would very much welcome a British commercial programme which, with perfect reception, would, I feel sure, have an enormous listening public, probably far greater than any one programme broadcast at the moment by the B.B.C.
I wish to pause for one moment to say that I am sorry but I completely disagree with the statement of the noble Lord who has just spoken, that sponsors are people who are buying your time to advertise their goods and that they think only about selling their goods and not about the programmes. I think that is evidence of terribly muddled thinking. I know several sponsors and I can assure your Lordships that they try their hardest to get the best possible programmes.
VISCOUNT HAILSHAM: Would the noble Lord forgive me for intervening? If I may say so, I never said anything of the kind that he has atttributed to me. What I said was that no doubt these people want to put out as good a programme of its kind as they can, because their purpose is to get persons to listen to it, but they think of programmes as mediums for advertisement and that is essentially and intrinsically bad for broadcasting.
LORD FOLEY: Let us pass that over for the moment, if we may. I believe that those of your Lordships who have listened to programmes on Radio Luxembourg will know that there is a certain friendliness and lack of formality in the atmosphere which provides a pleasant contrast to the often rather cold-blooded approach of the B.B.C. Against this, there are, of course, people who, having been to America and listened to the many hundreds of commercial radio stations which they have there, profess an active dislike of all radio advertising. The speech made by the noble Earl, Lord Halifax, is a typical example of that. He has lived for some time in America and

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he feels very strongly against radio advertising as it takes place in America. But surely what goes on there would not necessarily go on here, because we should put in an advertising programme only as an alternatve programme. I am sure we should all agree that advertising of the kind of which the noble Earl has had experience in America is absolutely unsuitable for this country.
But is not advertising in all forms a necessary evil? Surely nothing could be more unpleasant than some of the ugly, disfiguring posters, so distracting to motorists, which one sees on buses and in the countryside. Moreover, advertising on commercial radio, judged by the percentage of time devoted to it, is a small matter in relation to other forms of advertising such as in newspapers, et cetera. About 6 per cent. of programme time on Radio Luxembourg is devoted to advertising and a very high percentage indeed of the remaining time is devoted to musical items. On the other hand, I took the trouble to study a copy of the Radio Times and I discovered that roughly 60 per cent. of B.B.C. programme time on the Home Service is devoted to speech and only 40 per cent. to music. This, I feel, is another reason for the great popularity of commercial programmes.
There is another point: why should a foreign company amass wealth in this country—money paid to them by British companies for advertising their goods—even if that money is not allowed to be taken out of the country owing to the exchange laws? Why should not British firms pay money to a British company or companies running commercial broadcasting? I do not see why foreign companies should invade the ether and take our money as well. I feel sure that artistes like working on commercial radio and for these reasons: first, they are, of course, able to obtain more money; and secondly, as a large percentage of commercial programmes are recorded, they know that only their best work will be heard. The B.B.C. are very conscious of the danger of losing their artistes to commercial broadcasting, and even if an artiste asks if he may appear on a commercial programme, the answer is: "We would rather you did not." If the artiste persists in so doing, the chance of getting a B.B.C. booking for a considerable time to come is very slight indeed. I find
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this an intolerable situation. I should like a statement from the noble and learned Lord on behalf of the Government that the B.B.C. do not intend to victimise artistes who wish to appear on commercial programmes.
In my opinion, monopolies without competition can lead only to decadence. Monopolies are bad things and stifle initiative. I find it surprising that the Government appear to have set their minds firmly against commercial radio while at the same time they accept the possibility of commercial television. Surely to-day the capital expenditure necessary for the construction of an alternative radio system is considerably less than that of the competitive television system. I believe I am right in saying that it is possible to have commercial radio on very high frequency at once. I am told the equipment is available and a transmitter could be put up to cover London at the negligible cost of £10,000. Also, B.B.C. television does not operate between six and eight in the evenings. These two hours could be allocated to sponsored television without the building of new transmitter stations or equipment.
Finally, as I feel I have perhaps spoken for too long and I do not wish to bore you, I would say just this. In olden days the kings and courts of Europe were the great patrons of art, and artists of all kinds well knew that their cause would be furthered. At the present time the greatest patrons of the arts are the industrialists of the United States of America, who spend hundreds of millions of dollars in order to provide entertainment for their clients, and thereby return to their purchasers directly in kind and in pleasure some of the money they spend in acquiring their goods. I believe that sponsored programmes will play a great part in the future of both television and radio. I am not suggesting they should be the only programmes—and, after all, those who do not like them are not forced to view or listen. I believe they are part of progress, and all progress is to a certain extent unpopular. I cannot believe that propellor manufacturers were highly delighted with the advent of the jet engine. I sincerely hope that the noble Lords present who do not feel the same way about these matters as I do will bear with me for having expressed my views.
6.42 p.m.
THE EARL OF BUCKINGHAMSHIRE: My Lords, I do not want to detain your Lordships long as the hour is getting late. Before I make my few remarks I should like to offer an apology to the noble and learned Lord on the Woolsack, who is to reply on Monday, because I shall be unable to be present when he makes his reply. I have read many letters in The Times on this vexed question of commercial and sponsored broadcasting. There seems to me to be an erroneous impression expressed in some of these letters, that if sponsored broadcasting came in it would do away with the B.B.C. programmes. Surely that is entirely wrong. We do not wish to do away with the B.B.C. Although there is room for improvement, we all agree that the B.B.C. is doing very good work. What we want is a little more variety.
Paragraph 4 of the White Paper says in its first sentence:
"The successive Licences granted to the B.B.C. have not of themselves established the Corporation as the sole authority for all broadcasting in the United Kingdom."
Further on, the White Paper says that the Government would be most unwilling to see any change in the policy of the B.B.C. towards the existing restriction on commercial broadcasting without the consent of the Postmaster General. I am certain that that is right. Whatever happens, all broadcasting of any sort should be under the control of the Postmaster General. The White Paper talks of using television for sponsored broadcasting or advertising. To my mind this is good. I do not possess a television set and I do not intend to possess one for some considerable time, but I have seen one or two programmes and, except for the broadcasting of sporting events, I must say that I have been highly disappointed. I know of several people who were enthusiastic watchers every night for a time after they had obtained their television sets, but lately have stopped using them. Surely that indicates that the programmes need a large improvement. If sponsored television comes into existence, I think it will have an effect on the television programmes of the B.B.C. and should encourage the B.B.C. to improve them.
But if we are going to have sponsored television, why should we not have sponsored sound broadcasting? The noble
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Earl, Lord De La Warr, answered that point, rather uncertainly, by saying that this was a matter of common sense. I was rather surprised at that answer. If we are to have sponsored television, surely it would also be common sense to have sponsored broadcasting. We have the experience in other countries to go by—in Australia, for example. I am not suggesting that the systems in these countries are perfect. We may be able to improve on them, or we may not. If we look at the Beveridge Report we see in paragraph 368 the result of public opinion polls on the question of commercial radio. In 1946, 43 per cent. of the people were in favour of it, and in 1949 the proportion was reduced to 33 per cent. But like the noble Lord, Lord Foley, I suggest that 33 per cent. is a large proportion.
The noble Lord, Lord Foley, said that 6,000,000 people listen to Radio Luxembourg. Does that figure not speak for itself? It is certainly a minority of the population, but time and again we talk about the preservation of minority rights. Should we not at times give the service that certain members of the minority want? We already do so in one sense in the Third Programme. Can we not do so by sponsored broadcasting? I suggest to your Lordships that here is a great chance to give a service to that minority. I agree that it is no use rushing into this wholesale. The whole question has still to be looked into. I suggest that one or two experimental stations might be started for sponsored broadcasting, as well as for television. I appreciate that this cannot be done at once, as the White Paper indicates, but I submit that there is a strong case for sponsored broadcasting as well as for sponsored television.
6.49 p.m.
LORD MONTAGU OF BEAULIEU: My Lords, we have had a long debate—ten speakers long—and it is interesting to notice that the last two speakers, both of whom are members of the younger generation, support the line of sponsored radio. Earlier this afternoon we had a series of speakers who were born when the B.B.C. was established; but it is the men of my generation who have been brought up with the B.B.C. who are not satisfied. We are the new generation of radio listeners, and we are the people for whom this legislation is ultimately

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intended. I think the Government have done more than some people think to find out what public opinion is on this question. Some time ago the Daily Mirror had an article on commercial radio, which criticised and attacked the idea. The paper asked for its readers' views, and they were surprised to find that seven out of ten readers were in favour of commercial radio. Another point is that the British Forces in Germany are listening more and more to the American Forces Network, to which they grew accustomed during the war and which they now prefer to the B.B.C.
We call ourselves a democratic country and this House is often accused of being reactionary. I think we have provided evidence this afternoon of that, and I am glad that some people have taken the other line. Gresham's Law has been mentioned. Gresham's Law was a law about money, not about entertainment. We still have good films; we still have good theatres, and we still have Good music. The bad music does not drive out the good music, and the bad films do not drive out the good films. The advertising man of this country seems to have become the scapegoat of this operation. The advertising man is really quite a meek man: he is not an evil man. With their great experience of what the public want, I feel that they are just as good judges as the Governors of the B.B.C.—in fact, I would say that they are better. There is no reason why the Director-General should have complete control of what the British public want to listen to.
Casting our minds back a little, we find that the reason why the broadcasting systems of America and Britain started differently was mainly a geographical one. America is a very large country; it was impossible to get any national network going, and a large number of stations grew up under private enterprise. This country was small enough to be able to grow up under one system. The B.B.C. has now grown up. It has been in existence for twenty-six years, and it has now come to a stage where the whole essence of sound radio is giving way to television. I believe that it has been said that if we are to obtain the highest quality of television in this country licences will have to cost about £10 each, which is obviously much more than any man can afford, even to get the
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best quality entertainment. There is only one other way to do it, and that is to call in the many people who will willingly spend in order to have something competing with that service.
I am sorry that the noble and learned Earl, Lord Jowitt, is not here, because I wish to take up two points which he made. The first point was about the Grand National, which I think was a very unfair point. The whole question there was one of negotiation between the: B.B.C. and the Grand National people about money. What was hinted at was that commercial television sponsors would not get the highest quality people. That is absolutely untrue; they would get the best people. I would refer to the case of Stewart Macpherson. He was trained in commercial radio in Canada; he came to the B.B.C., but did not get what he wanted, and has now gone back to the Canadian commercial radio. Another point raised by the noble and learned Earl was about the Tate Gallery. The Tate Gallery was founded by a great sugar manufacturer. I cannot conceive of any place more suitable for a well-known sponsor. We have the Courtauld Collection, and many great industries in this country have built up works and collections of art. I think the objection is wrong particularly as the Tate Gallery put advertisements in their own catalogues. It really comes down to this. Many speakers seem to be terrified of competition. Why are they terrified of competition? If they consider the B.B.C. the best in the world, they have no need to be frightened of competition. If it is not the best in the world, and there is room for improvement—as I think there is—then it is up to the Government to try and provide better entertainment for the people for whom the B.B.C. exists. I therefore strongly support the White Paper and the introduction of competition into broadcasting.
VISCOUNT SAMUEL: My Lords, before the adjournment, may I have the leave of the House to add a supplementary observation to what I said in the debate? I referred to the new proposal for the appointment of the Governors to be in the hands of a committee presided over by the Speaker. In regard to that matter I ought to have said that I was speaking on my own behalf, and not for my colleagues in the House of Commons

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or here, because, after having made that observation, which was not a very carefully considered one or at all emphasised, I was much impressed by what was said from the Front Opposition Bench, and by the remarks of the noble Earl, Lord Halifax. I should like to make it clear that I do not wish to be considered as committing others in that particular matter.
VISCOUNT SWINTON: The noble Viscount does not want to withdraw the rest of his speech?
VISCOUNT SAMUEL: Not at all.
LORD MACDONALD OF
GWAENYSGOR: My Lords, I beg to move that the debate be now adjourned.
Moved, That the debate be now adjourned.—(Lord Macdonald of Gwaenysgor.)
On Question, Motion agreed to, and debate adjourned accordingly.

CORNEAL GRAFTING BILL
Brought from the Commons; read 1a, and to be printed.

FAREHAM URBAN DISTRICT COUNCIL BILL
Brought from the Commons; read la, and referred to the Examiners.
House adjourned at four minutes before seven o'clock.