Sitting of 7 July 1953

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  BRITISH ARMY

    Union Jacks
    Mr. Remnantasked the Secretary of State for War to what extent Army units at home and overseas are entitled to fly the Union Jack between sunrise and sunset; and whether this national flag is an Ordnance issue.
    The Secretary of State for War (Mr. Antony Head): The Union Jack may be flown by any unit. It is provided at public expense for authorised flag stations.

    Rifle Hall, Wick
    Sir D. Robertsonasked the Secretary of State for War if he is aware of the agreement reached at a meeting in Wick in January, when the Under-Secretary of State and the General Officer Commanding in Scotland met representatives of the Territorial Forces Association, the Provost and Town Clerk of Wick and the hon. Member for Caithness and Sutherland, for the partial use, by the people of Wick, of the Rifle Hall which they built and paid for; why it has not been carried out; and what steps he intends to take to honour the agreement.
    Mr. Head: Yes, Sir. I was informed by my hon. Friend the Under-Secretary of State that there had been difficulties and he went personally to Wick to try to settle them. This he hoped had been achieved, but since the meeting I understand that the local Territorial and Auxiliary Forces Association state that there was some misapprehension. I am trying to sort it out.
    Sir D. Robertson: Will my right hon. Friend expedite this, because it is six months since this meeting took place and it is not right that the people who bought
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    and paid for this hall for joint use by themselves and the military should be totally excluded from it. That did not happen in two world wars. Why should it happen in peace?
    Mr. Head: I can assure my hon. Friend that I am trying to sort it out, but it is difficult to get things sorted out quickly when there is something of a deadlock locally.
    Mr. Ede: Are we to understand that peace has not yet broken out in Wick?

    Requisitioned Land, Brighton
    Mr. H. Johnsonasked the Secretary of State for War if he will fix an early date when his Department will derequisition land at The Level, Brighton, and will remove therefrom the seven huts used by the Royal Engineers Records Office.
    Mr. Head: I regret that I can hold out no hope of an early start on the new building which is needed before this site can be given up.
    Mr. Johnson: Is the Minister aware that this land is reserved by Act of Parliament as a public open space, is in the centre of a very populous area and is badly needed by Brighton Corporation for its proper use as a children's playground?
    Mr. Head: Yes, Sir, I am aware of those facts, but I cannot give up the buildings until we have somewhere to put these R.E. Records. I want to build a great many things, but the problem with building is to get the labour, materials and money.
    Mr. Johnson: Is my right hon. Friend aware that local estate agents have offered him many highly desirable properties in which to house these officers of the records office who are now in Nissen huts? Could he not consider purchasing some of the very highly desirable properties in the county borough of Brighton?
    Mr. Head: My information is that although they may be highly desirable the price is also very high.
    Mr. Colegate: Are there no historic houses which could be used for the purpose?
    Mr. Head: I cannot answer that without notice.

    Overseas Deceased Soldiers (U.K. Interment)
    Mr. Haleasked the Secretary of State for War (1) whether he is aware that Mr. and Mrs. Winterbottom, Salem, Oldham, recently informed that their son, 22592235 Trooper Jack Winterbottom, had been killed on manoeuvres in Germany, have been told that to bring back his body for burial in Oldham will cost them £100, and that his Department can give no help by gift, grant or loan; and why this is the practice of his Department;
    (2) why he has refused to bring back to England for burial the body of Trooper Jack Winterbottom, 3rd King's Own Hussars, recently killed while on manoeuvres in Germany.
    Mr. Head: With permission, I will answer Questions No. 6 and No. 7 together.
    Mr. Hale: On a point of order. I am not prepared to give permission in this case. These are two separate Questions. One raises the amount of the payment and the other raises an important general principle of interest to hon. Members on both sides. It is not a matter to be treated cavalierly, and I am not prepared to give permission.
    Mr. Head: It is not a matter of treating it cavalierly.
    Mr. Speaker: If the hon. Member hears the answer he may ask a supplementary question.
    Mr. Head: As far as Question No. 6 is concerned, the cost of bringing back the body from Germany is considerably less than it would be were it a civilian. That is to say, we have cut rates for this purpose.
    As far as Question No. 7 is concerned, those who are killed or die abroad are buried where they have died. However, in this case, or any other in overseas theatres except Korea, the body may be brought home if the relatives so wish. While my Department gives every help in this matter, it cannot undertake to bear the cost.
    Mr. Hale: So far as Question No. 6 is concerned, why does the right hon. Gentleman say that the cost is cut when people are being charged much more than the air fare if an adult person goes
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    to Germany and back? So far as Question No. 7 is concerned, is the right hon. Gentleman aware that last week in Oldham two young lads had military funerals who had been killed on manœuvres, and that in both cases parents were charged money for bringing back the bodies of their sons, whereas in the case of a high-ranking officer or an American pilot, the body would be brought back here without charge? In those circumstances, will the right hon. Gentleman reconsider the practice and meet what, I am sure, is the wish of this House?
    Mr. Head: As regards the first part of the question, it is true it is more expensive to bring back a body than the normal fare. To bring one back by air from the Middle East costs something like £600. It is the same in the case of Germany: it is more expensive. As regards the question of bringing back bodies, it has been the policy in all the Services for a very long time indeed, before the last war, that all those who died or were killed overseas were buried there, but we leave this option open, and I do not think that there is any question of changing this policy at the moment.
    Sir H. Sutcliffe: Can my right hon. Friend say if there is any possibility of reducing the high charge still further, because it does prevent many people from bringing their sons or other relatives home? Will he confirm again that there is no difference being made between those killed in war and those who meet their deaths accidentally during peace time? One of those young men to whom the hon. Member for Oldham, West (Mr. Hale) referred, came from my constituency.
    Mr. Head: I can give the assurance that no difference is made in that way. As regards the cost, I have been into that, and the right hon. Gentleman the Member for Easington (Mr. Shinwell), when the was in my position, also made a careful inquiry into this question of costs, and we have cut the rates to a very considerable degree.
    Mrs. Mann: Would the right hon. Gentleman consider the case before him of one of my constituents, whose son was run down in an accident four days before he was due to leave Egypt? The mother scrambled together with great hardship

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    £120 to get her boy home, but actually required £180, and could not get the £60 more and had to abandon the project. Does the right hon. Gentleman not think in those circumstances, and as there was an accident, that that extra £60 might have been advanced to help that poor mother?
    Mr. Head: I assure the hon. Lady that I do appreciate that these are very distressing cases, and I know how strongly some people feel on this subject, but were we, all three Services, to embark on bringing home all those who died overseas, we should get into a very large commitment indeed.

    Pay and Allowances
    Mr. Swinglerasked the Secretary of State for War by how much the cost of living has risen since the present rates of Army pay and allowances were fixed; and what action he is taking to review these rates.
    Mr. Head: The Interim Index of Retail Prices for September, 1950, when the present rates of pay were introduced, was 114; the corresponding figure for May, 1953, was 140. I keep a very close watch on Army pay and allowances.
    Mr. Swingler: Is the right hon. Gentleman aware that, as these men and their wives have no trade union, he ought to put in for a wage increase for them from the Treasury? Has he done so, or considered doing it, in view of the very substantial increase in the cost of living that has taken place?
    Mr. Head: I can assure the hon. Gentleman that the thoughts passing through his head are not absent from mine.

    Nesscliffe Camp, Oswestry
    Mr. Emrys Hughesasked the Secretary of State for War if his attention has been drawn to the remarks of Mr. Justice Finnemore at the Assizes at Stafford on 2nd July, in which he called attention to the collection of weapons in the possession of soldiers stationed at Nesscliffe Camp, Oswestry; and what action he proposes to take in the matter.
    Mr. Head: Yes, Sir An immediate and drastic inquiry was made at Nesscliffe Camp. A special search was
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    carried out, but no offensive weapons were found. Apart from the two weapons used in this particular case, two coshes were found last November on waste land near the camp. Their ownership is unknown. It is an offence in the Army, as in civil life, to carry such weapons. It was, however, disclosed that a small number of ill-intentioned National Service men in the camp had formed a gang. Two of these men have already completed their service, four are awaiting trial and the remainder have been posted elsewhere. The military police in Oswestry have been reinforced and all soldiers at Nesscliffe Camp are forbidden to visit Oswestry in plain clothes.
    Mr. Hughes: Had these ex-Service men any previous records of convictions? Is the right hon. Gentleman aware that the judge referred to the appalling collection of weapons in this camp? Is he aware that a search was conducted? What weapons are left in the camp?
    Mr. Head: A thorough search was made and no weapons were found. The hon. Gentleman will be aware that the Army, and, indeed, all the Services, take boys who have had records of Borstal or previous sentences, and sometimes these boys do gang up together. It is a problem with which the Army has to cope. Oswestry has always been a rather difficult area, and there is no doubt at all there was a gang formed up. It has now been dispersed, and I hope the measures I have taken will prevent a recurrence.

  WAR GRAVES (HEADSTONE ENGRAVINGS)
  Colonel Crosthwaite-Eyreasked the Secretary of State for War what sums the Imperial War Graves Commission have asked to be paid by the next-of-kin of those buried in cemeteries under their control, as a contribution towards the cost of engraving the headstones to be erected.
  Mr. Head: The Imperial War Graves Commission have not at any time asked the next-of-kin to contribute to the cost of engraving, or erecting, headstones on war graves. The next-of-kin have the right to choose a personal inscription, in

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  addition to the name and service particulars, to be engraved on the headstone. In order to meet the desire of many relatives to have a personal share in the Commission's work of commemoration, an opportunity has been given to them to contribute up to £1 towards the cost of engraving this personal inscription. As the Commission's letter to all next-of-kin explains, this is entirely voluntary, and if relatives do not wish to pay, the cost is borne by the Commission.
  Colonel Crosthwaite-Eyre: Is my right hon. Friend aware that, while that is so, grave misunderstandings have occurred because of the terms of the recent letter sent out by the Imperial War Graves Commission? Can he say whether a new version is now being sent out and, if so, whether it will be sent to all those who received the previous letter and who may be under a misapprehension concerning the facts he has stated?
  Mr. Head: Yes, Sir. A new letter has gone out and it now makes it abundantly clear that this contribution is entirely voluntary.

  TRADE AND COMMERCE

    Dehydrated Vegetables
    Sir L. Ropnerasked the President of the Board of Trade whether he will control the import of dehydrated vegetables.
    The Secretary for Overseas Trade (Mr. H. R. Mackeson): Dehydrated vegetables imported from the sterling area, from Western Europe and certain other foreign countries are covered by an open general licence, and it is not proposed to restrict the quantities which may be imported from those countries. The producers of dehydrated vegetables have been advised that if they wish to make an application for an increase in the present rate of duty the Board of Trade will examine it.
    Sir L. Ropner: Can my hon. Friend say whether there has been a considerable recent increase in the amount of imported dehydrated vegetables?
    Mr. Mackeson: I have some figures here, but I should like to see that question in writing.
    Mr. Bottomley: Can the hon. Gentleman say whether a record is being kept of the number of times he is pressed by his hon. Friends to re-introduce controls in one form or another?

    Bananas (Import Licences)
    Miss Burtonasked the President of the Board of Trade whether he is aware of the dissatisfaction felt by the London Fruit and Vegetables Trades Federation Limited over the basis of the allocation of banana import licences; and if, in view of this dissatisfaction and the representations made to his Department by the Federation, he will give further consideration to the matter.
    Mr. Mackeson: As I promised the hon. Lady on 5th May, sympathetic consideration has been given to cases of substantial hardship which may have arisen from the method of allocating import licences for bananas. The London Fruit and Vegetable Trades Federation have been informed of the action taken in the cases which they put forward, and they have now expressed themselves satisfied.
    Miss Burton: Is the hon. Gentleman aware that there will be considerable satisfaction over this? Is he aware that the Federation thought the basis of allocation did prohibit genuine imports into this country?
    Mr. Mackeson: I am grateful to the hon. Lady.

    Wool Cloths (Fibre Content)
    Miss Burtonasked the President of the Board of Trade whether he is now in a position to make a statement concerning those standards agreed by the British Standards Institution for standard description of fibre content of wool cloths.
    The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss): I understand that a large measure of agreement has now been reached and that the British Standards Institution expects soon to make an announcement.
    Miss Burton: Does the hon. and learned Gentleman hope it may be possible to make an announcement on this matter before the House rises for the Summer Recess?
    Mr. Strauss: I am afraid I cannot give the date.

    Anglo-Spanish Trade
    Mr. G. Jegerasked the President of the Board of Trade whether he will now make a further statement on the trade discussions with the Spanish delegation.
    Mr. Bottomleyasked the President of the Board of Trade if he will make a statement on the Anglo-Spanish trade negotiations.
    Mr. Anthony Greenwoodasked the President of the Board of Trade whether he will make a statement on the outcome of the recent Anglo-Spanish trade conversations.
    Mr. Mackeson: Both delegations are at present reporting to their Governments, and I regret that I am not in a position at this stage to make a statement.
    Mr. Jeger: In view of the widespread interest in the negotiations taking place on the question of discrimination against British goods entering Spain, does the hon. Gentleman not think that it may be advisable to issue a White Paper as soon as the negotiations have been concluded?
    Mr. Mackeson: I will consider that. I can give the hon. Gentleman this assurance, that the Spanish delegation are well aware of the dissatisfaction on this point of Her Majesty's Government.
    Mr. Bottomley: In view of the very unfair discrimination against British goods by the Spanish authorities, would the hon. Gentleman not consider banning imports of oranges from Spain and consider recommending to the Chancellor of the Exchequer that he should reduce the tourist allowance for visitors to that country? [HON. MEMBERS: "Oh."]
    Mr. Mackeson: As the right hon. Gentleman knows, we have of course sanctions, but we also have considerable imports from Spain, and I should not like at this stage to use any words that might further exacerbate the position.

    Scotland (Minister's Visit)
    Mr. Hamiltonasked the President of the Board of Trade whether he will include in his visit to Scotland in August the developing mining area of Fife to discuss with local representatives the need for industrial diversification within the county.
    Major Anstruther-Grayasked the President of the Board of Trade whether his visit to Scotland in August will include meetings with trade and industry on both sides of the Firth of Forth.
    Mr. H. Strauss: My right hon. Friend will spend a day in Angus and Fife and a day in Edinburgh at the end of his visit to Scotland, and will meet the Dundee Chamber of Commerce and the Edinburgh Chamber of Commerce and Manufactures. He will also, earlier in his visit, meet members of the Executive Committee of the Scottish Council and of the Scottish Board for Industry for discussions on the general question of Scottish industrial development.
    Mr. Hamilton: While thanking the hon. and learned Gentleman for that reply, may I ask him if he is aware that the Government have rejected the proposition put forward in the Cairncross Report on the grounds that their present policy of developing this area is attractive enough to deal with the developing mining area, and will he give an assurance that the President of the Board of Trade is not simply going to this area to please the local inhabitants without doing anything positive after he has met the local inhabitants?
    Mr. Strauss: I do not want to travel outside the general subject of these two Questions, but all questions of interest to my right hon. Friend's Department will no doubt be raised during his visit.
    Major Anstruther-Gray: Will the President of the Board of Trade specifically discuss the need for a road bridge over the Forth during his visit, and will he take the opportunity of travelling on the Queensberry Ferry so that he can experience the inconvenience and delay caused by those who have to use it?
    Miss Herbison: Will the hon. and learned Gentleman convey to his Minister the need to include the National Coal Board, Scottish Division, in the visit he proposes to make, particularly in view of the great need to do something for Lanarkshire in the future?
    Mr. Strauss: I feel sure that it is the universal desire of all Members that this visit should be as useful as possible. I think that neither the questions to be discussed nor the exact places to be visited can conveniently be dealt with by

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    Question and answer, but all the views expressed will be noted by my right hon. Friend.
    Mr. Brooman-White: Is it not a fact that in a recent reply about the Cairncross Report it was intimated that the Government did not envisage any immediate change in the distribution of industry policy, and can we take it that during the present discussions he will consider the longer-term implications?
    Mr. Strauss: The Cairncross Report really does not arise on either of these two Questions, and in fairness to other hon. Members who have Questions on the Order Paper, I think I should confine myself to the subject.
    Mr. Hoy: Will the President of the Board of Trade, when he is in Edinburgh, give consideration to the question of trade at Leith Docks, which at present is being considered by his Department?
    Mr. Strauss: I am sure that all relevant questions will be brought to the notice of my right hon. Friend and that he will have noted what has been said by the hon. Member.

    Foreign Competition (Export Subsidies)
    Mr. Russellasked the President of the Board of Trade to what extent he has information that United Kingdom exports, especially to South America, are being handicapped by subsidised exports from foreign countries.
    Mr. Mackeson: Certain foreign Governments have special incentives for their exporters which, in our view, act as export subsidies. These schemes are one of several factors contributing to the increased competition which our exporters are meeting in South American as in other markets, but their effect cannot be measured in isolation.
    Mr. Russell: Can my hon. Friend say what steps he is taking to bring this up to the Committee which is responsible for running G.A.T.T.?
    Mr. Mackeson: Yes, Sir. We are talking to individual Governments, raising the matter with the appropriate international institutions and, in particular, with the International Monetary Fund and with O.E.E.C.
    Mr. Bottomley: Is the House to be informed of any success following the visit of the Joint Under-Secretary of State for Foreign Affairs? The Secretary for Overseas Trade will remember that I said that it was the job of the Joint Under-Secretary to report to us as well, if he had any information of any kind.
    Mr. Mackeson: Perhaps the right hon. Gentleman will put down that question to the Foreign Secretary.
    Mr. K. Thompson: Is the Minister aware that one of the most important subsidies for exports to other countries is extended credit, and that efforts on the part of British exporters to offer extended credit have been hampered to some extent by the increase in the rates charge by the E.C.G.D. covering these exports, and will he look into it?
    Mr. Mackeson: I will gladly look into it, but I should like to see that supplementary question in writing.

    Radio and Television Sets (Hire Purchase)
    Mr. Rankinasked the President of the Board of Trade whether, in view of the falling-off in the demand for television and radio sets, he will now consider excluding these items from the Hire Purchase and Credit Sales Agreements (Control) Order, 1952, or, alternatively, repeal the Order entirely.
    Mr. H. Strauss: No, Sir.
    Mr. Rankin: Does the Minister not realise that so far as these two particular items are concerned, the Credit Sales Agreement just does not mean a thing, and in view of that why should he deceive himself and the trade that it is having any effect whatsoever?
    Mr. Strauss: If it does not mean a thing, I do not know why the hon. Member is so anxious for its repeal. The fact is that this Order must be considered as part of the Government's general economic and financial policy and not in isolation. The hon. Member and the House will remember that this industry has benefited by the recent reduction by 25 per cent. in the rate of Purchase Tax.
    Mr. Rankin: Surely the Minister knows that the Order is being completely side-tracked by the system of rentals agreement which is in existence.
    Mr. Strauss: I have explained to the hon. Member on many occasions the difference between a rental agreement and a hire purchase agreement, and I thought that he understood it.

    Tobacco Pipes
    Mr. Russellasked the President of the Board of Trade the total quantity of tobacco pipes imported into the United Kingdom in the first five months of 1953; and what quantity came from Malta and other Commonwealth countries, respectively.
    Mr. Mackeson: Imports of tobacco pipes during January to May, 1953, amounted to 8,440 gross of which 661 gross were sent from Malta and 83 gross from other Commonwealth countries.
    Mr. Russell: Is my hon. Friend satisfied with these figures so far as Malta and the other Commonwealth countries are concerned?
    Mr. Mackeson: That is really a question for the Maltese producers and the Commonwealth producers. They have a 20 per cent. preference.
    Captain Ryder: Will the Minister bear in mind the special need to encourage industries of this kind in Malta, and can he say whether these imports are increasing or decreasing?
    Mr. Mackeson: I cannot answer the latter part of the supplementary question, but it is very largely a matter for the producers. These countries naturally want to export here, but they have a preference and it is a generous one.

    Merchandise Marks
    Mr. Swinglerasked the President of the Board of Trade to what extent he has consulted with Commonwealth and foreign Governments on the subject of merchandise marks since he took office; and whether he will now initiate such discussions for the purpose of preventing the circulation of counterfeit goods.
    Mr. H. Strauss: Two international agreements governing this matter are already in force and the need has been not for general discussion but for taking up individual cases of complaint. Since 1952 the Board of Trade have taken up about 330 such cases in 50 different countries.
    Mr. Swingler: Has the Parliamentary Secretary read the recent report of our commercial attaché in Japan that Japanese commercial conditions are to some extent reviving the counterfeiting of British goods in Japan, with the assistance of foreign capital, and can he say what protest has been made about these cases by the President of the Board of Trade, and what action can be taken to put a stop to this malpractice?
    Mr. Strauss: I should not like to answer that detailed Question without notice, but I would inform the hon. Member that of the 330 cases not more than 20 were from Japan, and that in the cases which we have brought to their notice the Japanese Government have not been unreasonable.

    Nylon Stockings
    Mrs. Mannasked the President of the Board of Trade the reason for the reduction in our exports of fully-fashioned nylon stockings from £2,757,557 for the first five months of 1951 to £1,760,688 during a similar period this year.
    Mr. H. Strauss: The chief reasons are the change from a sellers' market to a highly competitive buyers' market and import restrictions imposed in the countries of some of our best customers. The figures quoted by the hon. Member exclude goods sent by parcel post. The total figures for the first five months of this year, though lower than the corresponding figures for 1951, are 35 per cent. higher than last year.
    Mrs. Mann: Is the hon. and learned Gentleman aware that I have here some figures from the Trade and Navigation Accounts, and I think that they are perfectly correct. Is he further aware that a greatly increased export trade could be had by British manufacturers if they manufactured the fish-net, non-ladder stocking which is much more durable wearing nylon stocking, and can he explain why they are not entering into that trade?
    Mr. Strauss: I hope that the hon. Lady does not think that I am complaining about her figures. I was merely pointing out that she was not giving the total figures to which I referred in my answer. The manufacturers concerned are very eager to get as great

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    an export trade as possible, and I think that they must be assumed to know their own business and what goods will sell best.
    Sir T. Moore: Do not those figures mean that more nylons are being made available and are being worn by the hon. Lady and her friends in the country?
    Mr. Stokes: Has the hon. Gentleman any information to show how many pairs of these stockings go all the way to Gibraltar and come back again before they are sold?
    Mr. Strauss: I certainly have not those figures now, but I will look into the point which the right hon. Gentleman has raised.
    Mr. Assheton: Is it not the case that, although the quality of our yarn is just as good as that in America, we have not been allowed the dollars with which to buy suitable machinery? Are not many of our stocking manufacturers suffering as a result of that?

    General Agreement on Tariffs and Trade
    Mr. Beresford Craddockasked the President of the Board of Trade whether, in view of the fact that the United States of America attaches to any trading concession given under the General Agreement on Tariffs and Trade a condition that such concessions may be withdrawn if damage to home industry is likely to be caused, Her Majesty's Government will assume power to take similar action in connection with existing or future preference margins within the Empire and Commonwealth.
    Mr. Mackeson: The General Agreement on Tariffs and Trade already provides that all contracting parties—ourselves as well as the United States—may, subject to certain conditions, withdraw or modify negotiated tariff concessions in the event of serious injury to domestic producers.
    Mr. Beswick: Is the Minister aware that special concessions in trade are now granted as between one State of the American Union and another? Why, then, should the United States Administration complain because similar concessions are granted as between one unit of the British Commonwealth and another?

  NATIONAL FINANCE

    Planning Duties (Reorganisation)
    Mr. Nabarroasked the Chancellor of the Exchequer to give an assurance that no successor is to be appointed to the office shortly to be relinquished by Sir Edwin Plowden.
    Mr. Gaitskellasked the Chancellor of the Exchequer who will carry out the duties of the Chief Planning Officer after Sir Edwin Plowden's retirement.
    The Chancellor of the Exchequer (Mr. R. A. Butler): I would invite the hon. and right hon. Gentlemen's attention to the official statement published on 30th June, of which I am sending them a copy. This explains the reorganisation in the Treasury which will take place at the time of Sir Edwin Plowden's retirement.
    Mr. Nabarro: Can my right hon. Friend clarify that statement by saying whether the senior civil servant who will now assume the responsibilities formerly held by Sir Edwin Plowden represents a new appointment, or a replacement appointment, or whether there will be a reduction of £6,500, the amount of Sir Edwin's former salary, in the charge against the public purse?
    Mr. Butler: I cannot give an exact answer to the latter part of the supplementary question. The fact is that the post of Chief Planning Officer will be lapsing. That does not mean that the new plan will be any less effective than the old one. The House will note that, by the introduction of the Chief Economic Adviser to the Government into the Treasury and by the assumption of duties by the Deputy-Secretary of the Treasury, the duties will be very well carried out. I should like to pay a tribute to the work done by Sir Edwin Plowden over these years. His efficiency and service to more than one Government have been beyond praise.
    Mr. Gaitskell: Is the right hon. Gentleman aware that hon. Members on this side of the House would wish to associate themselves with the tribute which he has paid to Sir Edwin Plowden, who served his country faithfully under different Governments over a number of years? Might I, however, also ask him whether the official statement, which I have already

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    read, indicates that Sir Bernard Gilbert, as Deputy-Chief of the Treasury, will perform the duties hitherto performed by Sir Edwin Plowden and that the change is only a change in name?
    Mr. Butler: The duties of Sir Bernard Gilbert will be somewhat wider because he will be the Deputy-Secretary to the Permanent Secretary to the Treasury, but he will subsume the duties performed by Sir Edwin Plowden and will be aided by a Third Secretary in charge of that section of the Treasury, which will remain to perform the duties which it has performed.
    Mr. Gaitskell: May we take it that the planning section of the Treasury comes under Sir Bernard Gilbert but that he is also responsible for co-ordinating the whole of the financial and economic policy?
    Mr. Butler: That is right.
    Mr. Ellis Smith: Did the Chancellor see the glowing tribute paid to Sir Edwin Plowden by the "Financial Times," and is he aware that in the opinion of many of us Sir Edwin Plowden was largely responsible for preventing real planning during the term of the Labour Government?
    Mr. Stokes: For the enlightenment of those of us who understand only plain English, what does "subsume" mean?
    Mr. Butler: It can be replaced by two English words, "take over."

    Letters (Customs Examination)
    Mr. M. Lindsayasked the Chancellor of the Exchequer in what circumstances a letter to a visitor in the United Kingdom from his daughter in Canada, the envelope of which has been sent to him, was opened by Her Majesty's Customs.
    Mr. R. A. Butler: Letters in the incoming mails are liable to examination as a check that the contents do not include sterling banknotes or other prohibited imports.
    Mr. Lindsay: Is my right hon. Friend aware that the man to whom this letter was addressed has for many years been one of the biggest purchasers of Lancashire's textiles and that to have one's private letters opened in times of peace is
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    extremely offensive and gives the impression of secret police? Will he reconsider whether it is really necessary that letters should be opened unless they are addressed to an individual who there is good reason to think may be engaged in illegal activities?
    Mr. Butler: Power has been given by the House under the Foreign Postal Packets (Customs) Warrant Act, 1948, to open letters. The difficulty, which has been experienced before by hon. Members, is that it is impossible to differentiate between one letter and another. Experience has shown, unfortunately, that the power is needed because on occasion things are found which should not be found in letters, and, therefore, I regret to say that I cannot go behind the powers which have been given by Parliament.

    Post-War Credits
    Mr. Gowerasked the Chancellor of the Exchequer what he estimates would be the cost to the Treasury of ensuring that the repayment of post-war credits shall not be postponed solely by the death of the holder prior to the age when he might obtain payment.
    Mr. R. A. Butler: The cost would be about £17 million in the first year and £2 million a year thereafter.
    Mr. Gower: In view of a widespread feeling of injustice about this aspect of the problem, will the Minister re-examine the possibility of doing something along the lines suggested in the Question.
    Mr. Butler: There is clearly a grievance here, to which my hon. Friend has drawn the attention of the House on previous occasions.
    Mrs. Braddock: Will the Chancellor say what are the administrative difficulties which prevent the Treasury paying postwar credits to next-of-kin on the date on which the person who owned them would have claimed them had he lived?
    Mr. Butler: It is not so much an administrative difficulty as a policy decision not yet to make any such concession.
    Mr. Awbery: As the right hon. Gentleman has already made arrangements to pay post-war credits to men at 65 and women at 60, surely it would cost him no

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    more to pay them to the next-of-kin at the date at which the deceased would have drawn them had he lived?
    Mr. Butler: That is precisely something which would impose an extra charge. However, I am fully aware of the difficulty, which is the most striking of the several anomalies connected with postwar credits.

    £ Sterling (Purchasing Power)
    Sir W. Smithersasked the Chancellor of the Exchequer the purchasing power of the £ at the latest available date taking June, 1948, 1949, 1950, 1951 and 1952 as 20s., respectively.
    Mr. R. A. Butler: On the basis of the figure for May, 1953, in the Ministry of Labour Interim Index of Retail Prices, which is the only official price index available monthly, the answers are respectively 15s. 7d., 15s. 10d., 16s. 2d., 17s. 9d. and 19s. 7d.
    Sir W. Smithers: Will the Chancellor warn the country and himself before it is too late that increases in taxes, rates and wages can result only in a vicious spiral and a further depreciation of the paper £, and that in a country which cannot be self-supporting they must increase our cost of production and impede or destroy our ability to export at world competitive prices, which we must do or starve?
    Mr. Butler: I accept the personal warning from my hon. Friend. With regard to the national impact, I hope attention will be paid to my hon. Friend's words.
    Mr. Bottomley: Would the right hon. Gentleman agree that a £ worth 20s. in October, 1951, is today worth only 18s. 7d.?
    Mr. Butler: I do not think things are quite as simple as that. If the right hon. Gentleman will study this Question and then put down a further Question to me, we may get it straight.

    Overseas Travel Allowance (Excess British Currency)
    Mr. Goughasked the Chancellor of the Exchequer if he will consider amending the existing currency regulation under which a traveller who, at the
    1042
    outset of his journey, innocently declares himself to be in possession of currency notes to the value of more than £5 suffers the confiscation of such moneys, and if he will reconsider the limits allowable in respect of currency notes where a traveller is going direct to another country within the sterling area.
    Mr. R. A. Butler: In answer to the first part of the Question, the law provides for the seizure of excess notes, but the traveller can apply subsequently for their restoration and this will depend upon the circumstances of the individual case. In answer to the second part, I do not think that any change is called for, particularly since there are very few direct routes which do not call at outside ports on the way.
    Mr. Gough: Is my right hon. Friend aware that the first part of the answer will give general satisfaction because it is generally accepted that there is no redress against such seizures? Would he consider innocent cases—and there are many innocent cases—and extend to them the more simple procedure of the person concerned sending the excess notes to some person by registered post?
    Mr. Butler: I am informed that there are agencies, banks and other offices on the way to the port of exit which can be used by the passenger to deposit extra notes which should not be taken abroad. I recommend that course in the first case. I have examined the circumstances very carefully, and certainly in the case of extra money being taken to the Sterling Area every effort is being made to restore the notes seized.
    Sir R. Boothby: Does my right hon. Friend not think—and there have been cases in this connection—that if a £ is voluntarily handed to the Customs by a traveller, presumably for safe keeping, and it is subsequently confiscated by the Customs authorities, it really amounts to a form of thieving by the Customs?
    Mr. Butler: I have examined the practice, and it is really wiser for travellers to read the directions given to them before they travel, or at least to deposit their notes with one of the agencies or banks available. Even if they do not do that, the Customs' officers try to interpret their duties in as human a manner as possible.
    Mr. R. Bell: Does my right hon. Friend realise that in every case where currency is voluntarily declared the operation must be innocent, and that nearly every country in Europe does operate a deposit and return system?
    Mr. Butler: I have studied some of the foreign practices. I do not think there are many Customs and Excise systems better than ours, but I am always ready to listen to any point of view put by an hon. Member.

    European Financial Discussions
    Mr. Gaitskellasked the Chancellor of the Exchequer whether he will make a statement on the purpose and outcome of the financial discussions which have recently taken place in London with Germany, Holland, Switzerland and other European countries.
    Mr. R. A. Butler: The main purpose of these discussions was to exchange views on the questions of freer trade and currencies raised in the statements made by my right hon. Friend the Foreign Secretary and myself at the Council of O.E.E.C. on 23rd March. The discussions were purely exploratory and without commitment. Further studies will now take place in O.E.E.C. in accordance with the Council decision to which I referred in my reply to the right hon. Gentleman on 1st April.
    Mr. Gaitskell: Did the discussions cover the question of particular countries which are surplus in the European Payments Union coming into balance again and the deficit countries equally achieving a balance?
    Mr. Butler: That particular question, of course, was discussed at our meeting at O.E.E.C., where it was more relevant. But as far as I can remember almost every aspect of this type of question was raised at the recent discussions and I do not doubt that the question raised by the right hon. Gentleman came up for consideration.

    Members' Salaries and Expenses
    Mr. Lewisasked the Chancellor of the Exchequer (1) if he has considered a letter from the hon. Member for West Ham, North; and whether he will make a statement in connection with the points contained in this
    1044
    letter regarding the salaries and expenses of Members of Parliament;
    (2) if he is aware of the concern felt by Members of Parliament at the way in which their Parliamentary allowance has been reduced by virtue of the continuing rise in the cost of living, the rise in the cost of articles and services that they have, of necessity, to provide out of this allowance; and whether he will agree to meet a deputation of Members to discuss these matters;
    (3) if he is aware that Members of Parliament are the only section of the population that have not had any increase in their salaries since 1946; that no other section of the State servants have to meet the cost of their expenses of postage, travel, stationery, living away from home, from their salaries; and what is the reason for this discrepancy in treatment as between Members of Parliament and other civil servants.
    Mr. R. A. Butler: I am aware of the concern felt by the hon. Member and others about the present salaries of hon. Members, but I regret that I am not at present in a position to make a statement.
    Mr. Lewis: May I thank the right hon. Gentleman for what I know to be a sympathetic understanding of the position, and can I ask him sympathetically to consider this matter on the merits of the case and not from what some people outside may say about anything affecting the situation?
    Mr. Butler: Thanks to much of the material sent to me by the hon. Member himself and the representations which I have had from the other side of the House, as has my right hon. Friend the Prime Minister and my right hon. Friend the Leader of the House, there is little danger that this subject will be considered without fully realising the merits of the case, including the situation in other legislatures.
    Mr. Marlowe: Is my right hon. Friend aware that the hon. Gentleman who proposed this Question is asking for an increase in a rate which was fixed in 1946 and is strongly opposing any increase in salaries for High Court Judges which were fixed in 1831?
    Mr. Shinwell: Will the right hon. Gentleman not allow himself to be deterred from doing what is reasonable

    1045
    because of any risk of unpopularity and, if there is any to be incurred, surely we should be prepared to take that risk in order to do what is reasonable?
    Mr. Butler: I think the right hon. Gentleman may be well satisfied that that is the general spirit animating the approach of Her Majesty's Government to this and every subject.
    Mr. Gower: Is my right hon. Friend aware that if the salaries of Members of this House are increased commensurate with the American salaries no one will be available for high positions in industry?
    Mr. Lewis: Is the Chancellor aware that judges do not have to meet the cost of their postage, stationery, living away from home, travelling expenses and other expenses which a Member of Parliament does have to meet?
    Mr. Butler: The strange part is that most people who approach me have the same thought, that their own cases are worse than anybody else's.

  LOCAL GOVERNMENT

    Greenhouses, Barry
    Mr. Gowerasked the Minister of Housing and Local Government if he will now authorise the Barry Borough Council to proceed with the erection of new greenhouses and ancillary buildings for reasons stated in correspondence from the hon. Member for Barry.
    The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples): My right hon. Friend is prepared to authorise work to the value of £8,000.
    Mr. Gower: Is the Minister aware that the Barry Council will be very pleased that the Minister has found it possible and proper to review his earlier decision?

    Derating
    Mr. Hargreavesasked the Minister of Housing and Local Government if he is aware that the city of Carlisle is losing £42,000 in rate income, representing a rate of 1s. 6d. in the £, through the partial derating of industrial hereditaments; and what reply has been given to the
    1046
    views expressed to him by the Association of Municipal Corporations supporting the setting up of a committee of inquiry to consider and report upon the full implications of Section 68 of the Local Government Act, 1929.
    Mr. Marples: Derating naturally caused a loss of rate income to local authorities; but equalisation grant assists in so far as the local resources are, for this or any other reason, below the average; and Carlisle benefits under these arrangements. The views of the Association of Municipal Corporations have been noted.
    Mr. Hargreaves: Will the hon. Gentleman inform the House what are the views of the Minister upon the proposal that has been made for an investigation into the effects of the Derating Act?
    Mr. Marples: My right hon. Friend has appointed a Committee, which has just reported on the equalisation grants, and they have recommended what is in their opinion a fairer distribution of the Exchequer money than has formerly been the case. Derating did not come within their terms of reference, but I understand that the party opposite have come out categorically against derating for both industrial and agricultural purposes. I am not sure whether that is the unanimous view of the party opposite.
    Mr. Lewis: Is the Minister aware that, even taking into account the advantages of the Equalisation Grant, many of the poorer boroughs, particularly those that were blitzed such as West Ham, find that they are far worse off with the Derating Act in operation, and will he not try to do something if only to help those poorer boroughs?
    Mr. Marples: The West Ham Corporation, amongst others, received a block grant, to which the hon. Gentleman did not refer in his supplementary question.

    Exchequer Equalisation Grants
    Mr. Blenkinsopasked the Minister of Housing and Local Government whether he will make a statement on the report of the Inter-Departmental Committee on the operation of the Exchequer Equalisation Grants.
    Mr. Marples: The report of the Committee has been published so as to enable all concerned to give the fullest consideration to the proposed changes. In due course my right hon. Friend will consult the associations of local authorities and lay a White Paper reporting the results of this investigation of the operation of the grants.
    Mr. Blenkinsop: Is the hon. Gentleman aware that in their Report this Committee do nothing to help the serious situation of an authority like Newcastle-upon-Tyne, which receives no grant and is in a serious condition because of the derating position, and will he receive representations from that city?
    Mr. Marples: But the House will forgive my right hon. Friend if he did not give full weight to the considered and expressed views of the Association of Local Authorities, which will not be available until late September or early October.
    Mr. Paget: Is the Minister aware that the Association of Local Authorities consists of a majority of authorities who receive the grant and is not really representative of the authorities who do not receive the grant?
    Mr. Marples: But the authorities who do not receive the grant are represented in the Association of Local Authorities as well as those who receive the grant.

  SYNTHETIC DETERGENTS (COMMITTEE OF INVESTIGATION)
  Mr. Gowerasked the Minister of Housing and Local Government what steps he will take to deal with problems arising from the chemical reactions and other effects of detergents upon sewers and rivers and upon freshwater fish.
  Mr. Marples: I would refer my hon. Friend to my right hon. Friend's announcement on 18th May last of the appointment of a Committee to examine this whole question.
  Mr. Gower: Is my hon. Friend aware that in some parts of the country this is really an urgent matter, and will he see that the inquiry is speeded up?
  Mr. Marples: Yes, Sir. The inquiry is being carried out by experts and it is a
  1048
  complex matter, but a conclusion will be reached as quickly as possible.
  Mr. Awbery: Is the Minister aware that during the last fortnight medical officers of health have reported the effect on rivers, which has prevented children from swimming and, because of that, will he hurry up this inquiry?
  Mr. Marples: It is going forward as quickly as possible.

  ATMOSPHERIC POLLUTION
  Mr. Nabarroasked the Minister of Housing and Local Government whether he is yet in a position to announce the names of the Committee to be established by his Department for investigating problems arising from smoke pollution of the atmosphere; and what special representation is being arranged for Scotland.
  Mr. Marples: No, but my right hon. Friend hopes to do so shortly. He is in close touch with his right hon. Friend the Secretary of State for Scotland.
  Mr. Noel-Baker: Will the terms of reference of this Committee include a request for a report on all measures necessary to ensure that local authorities and all householders will install efficient solid-fuel appliances which consume all the fuel and prevent smoke?
  Mr. Marples: I should like notice of that.
  Mr. Hastings: Will the Minister consider pollution not only by smoke but by noxious gases, the result of a combination of coal and other fuels?
  Mr. Marples: I shall convey that to my right hon. Friend.

  HOUSING ACT (IMPROVEMENT GRANTS)
  Mr. Skeffingtonasked the Minister of Housing and Local Government whether, in view of the Government's proposals in connection with leasehold property, he will consider taking steps to amend Section 20 (3) C of the Housing Act, 1949, in respect of improvement grants.
  Mr. Marples: My right hon. Friend is making a general review of the operation

  1049
  of these grants under the Housing Act, 1949, and he would be happy to consider any suggestion which the hon. Member thinks would increase their usefulness.

  EVEREST EXPEDITION (AWARDS)
  Sir I. Fraserasked the Prime Minister if he will consider recommending the striking of an Everest Expedition Medal similar to the Polar Medal.
  Mr. R. A. Butler: No, Sir. There is no such present intention. The House will be aware of the awards made by Her Majesty The Queen to members of the recent Everest Expedition.
  Sir I. Fraser: Will my hon. Friend realise the usefulness of this suggestion as a means of rewarding all ranks who have taken part in this magnificent expedition, and is he aware that by an extraordinary coincidence, of which I have only just learned, the two hon. Members sitting one on each side of me—the hon. Member for Solihull (Mr. M. Lindsay) and the hon. and gallant Member for Merton and Morden (Captain Ryder) happen to have the Polar Medal?
  Mr. Butler: I am gratified to hear that the two hon. Members concerned have the Polar Medal. I trust that they will stick to their Parliamentary duties and not become involved in further travel at present in those regions. Coming to the serious point made by the hon. Member, Her Majesty's Government fully realise the importance of this Question. The difficulty is that no medal is given for exploration in other areas, and no medal is given for particularly difficult mountaineering. There are really, therefore, serious difficulties in the face of deciding upon a medal for this particular and gallant expedition.
  Sir I. Fraser: But is there really any distinction between gallantry and service to exploration in going to the Pole or going to Everest?
  Sir J. Lucas: Is not Everest just as cold as the North Pole?
  Mr. Butler: It is true that there have been for some time medals for most of the members of successful exploring teams within certain well-defined limits of the Polar regions, but there have not been
  1050
  medals for other mountaineering expeditions besides Everest, nor have there been medals for exploration in, for example. Africa. Therefore it raises very wide questions.
  Mr. Noel-Baker: Will the Chancellor consider that Everest is unique, and that the proposal of the hon. Gentleman would have widespread support I believe in many parts of this country?

  RESERVOIR, CHINGFORD (BLACK FLIES)
  Mr. Finlayasked the Minister of Housing and Local Government if he is aware of a nuisance caused by black flies breeding in the area of the Metropolitan Water Board's William Girling Reservoir, to the local inhabitants at Waltham Way, Chingford; and whether he will make a statement.
  Mr. Marples: I understand that the Water Board are trying to find a way of getting rid of those flies. They have cut the grass and sprayed insecticide around the reservoir site but these are not complete remedies and investigation is continuing. I am advised that this particular species of fly does not constitute a danger to health.
  Mr. Finlay: Is my hon. Friend aware that this species of fly, whatever he thinks about it, constitutes a considerable nuisance to the unfortunate inhabitants concerned? Is he also aware that the unfortunate inhabitants of Staines have been suffering under similar incursions for some years, and will he do everything he can to develop research to stamp out these kinds of unpleasant pests?
  Mr. Marples: I am aware that they are annoying because I have been to Staines and have been subjected to the indignity of having these flies around my head, but the official and technical advice which I have received is that they do not bite or sting, nor do they feed or alight on food or refuse; they just hatch in the water, mate, and then they die.

  MINISTRY OF WORKS

    School Building (Materials)
    Mr. Shortasked the Minister of Works what steps he proposes to take to make more material and labour available for school building.
    The Minister of Works (Sir David Eccles): My responsibility is to keep the Government informed of the probable supplies of building materials and to do what I can to encourage further expansion of output. At the present time materials are adequate for the school building programme, and the general supply of all materials is expanding.
    Mr. Short: Does not the recent Report of the Select Committee reveal that the supply devoted to school building is inadequate, and does the Minister not agree that, if we are to remove these blots from our educational system, a considerably bigger share of our resources of manpower and materials will have to be devoted to this purpose?
    Sir D. Eccles: I am only concerned with the programme as it is, and I have had no complaints that there are shortages of materials for the programme.

    Palace of Westminster (Cafeteria Ventilation)
    Mr. Fenner Brockwayasked the Minister of Works what steps can be taken to improve ventilation on hot days in the cafeteria adjoining the Terrace of the House of Commons.
    Mr. Beswickasked the Minister of Works if he is aware that the inadequate ventilation of the Terrace Level cafeteria presents an inconvenience to visitors using it and a hardship for the staff working in it; and if he will have the ventilation improved.
    The Parliamentary Secretary to the Ministry of Works (Mr. Hugh Molson): Substantial improvement in the ventilation of the cafeteria was made early this year by installing four Ventaxia fans which both induce and expel air. The Chairman of the Kitchen Committee, at whose request the work was done, has expressed his appreciation of the improvement. It will not, however, be possible to make the ventilation entirely satisfactory until a completely new system can be installed, and money cannot at present be provided for this.
    Mr. Brockway: Is the hon Gentleman aware that both visitors to this Assembly who use that cafeteria and the staff who work in a very limited space behind the heating apparatus would greatly appreciate some improvement of the ventilation there, and will he look at this matter again?
    Mr. Molson: A general system of extract ventilation, both for the cafeteria and also for the Strangers' Bar, will be installed as soon as it is possible to find the necessary money.
    Mr. Beswick: But could not the Parliamentary Secretary do something in the meantime? Since the improvement was made, certain other heating arrangements have been put in at the back there and the position is really below the standard which ought to obtain in this Palace?
    Mr. Molson: I will see if it is possible to do anything more in the way of fitting additional fans.
    Mr. Shinwell: Ask the Chancellor of the Exchequer.

    Coronation Ceremony (Films)
    Mr. G. R. Straussasked the Minister of Works what financial arrangements were made with the two companies that were given concessions to film the Coronation ceremony.
    Sir D. Eccles: The Earl Marshal granted facilities to three companies to make colour films of the Coronation ceremony. He also granted facilities for a black and white film record which was pooled by the five main newsreel companies. My Department will recover from the film companies the cost of all work carried out on their behalf. This will include the cost of building camera boxes in Westminster Abbey and the cost of providing the extra lighting required for colour filming.
    Mr. Strauss: But might I ask the Minister of Works this question: As in those films no payment was made by the companies for actors, sets or script writers, and they were bound to be exceedingly profitable, and as I understand one company has sent out a thousand copies, surely it would be reasonable to ask that the companies should pay, either to the Government or to the Westminster Abbey Restoration Fund, some considerable part of the profits they make?
    Sir D. Eccles: Our chief concern was to see that the film was the best possible film, and to my knowledge those companies invested large sums in the preparations for the film. If there is a profit

    1053
    made, my right hon. Friend the Chancellor of the Exchequer will get a good slice of it.
    Mr. Gaitskell: While recognising the excellent quality of the films made of the Coronation, may I ask the right hon. Gentleman whether the Treasury were consulted before this arrangement was made?
    Sir D. Eccles: I am not sure of the answer to that, but I know that it was difficult to select only a small number of the companies who asked to make the film, since the space in the Abbey was not sufficient to give a camera box to everybody. It would have been difficult to put this sort of thing out to tender.
    Mr. Strauss: Surely the capital invested was tiny compared to the investment involved in the making of any ordinary film. In view of the fact that it was almost inevitable that there should be substantial profits from this film, it would have been reasonable to ask the companies, who were selected, to agree to some profit-sharing basis with the Government, or particularly, as I suggest, to pay some part of their profits to Westminster Abbey to help its restoration fund.
    Sir D. Eccles: I think that the Earl Marshal was right in what he did. He had to make these arrangements very early, and so far as I know it is not the custom of the Government to ask for cash payments down for the film rights of religious ceremonies.
    Mr. Gaitskell: Would the right hon. Gentleman consider approaching the film companies concerned and asking them whether they would not care to adopt the suggestion by my right hon. Friend that at least a proportion of these profits should go to the Westminster Abbey Fund?
    Sir D. Eccles: I will take note of the right hon. Gentleman's suggestion and look into it.
    Mr. J. Hudson: Most unbusinesslike.

SCOTLAND (EXCHEQUER EQUALISATION GRANT)
The Secretary of State for Scotland (Mr. James Stuart): With your permission, Mr. Speaker, and that of the House, I should like to make a statement about
1054
the investigation into the working of the Exchequer Equalisation Grant in Scotland which has recently been going on.
A Committee consisting of representatives of the three associations of local authorities and of my own Department have been examining the whole matter. They submitted an interim report in January which demonstrated that the addition of 25 per cent. which is at present made to the English standard rateable value for the purpose of calculating the grant to Scottish local authorities, is unfair to Scotland. The Committee concluded that as for the time being no precise arithmetical measure can be found of the difference between the levels of the rateable value in the two countries, the total grant to Scottish local authorities should, as an interim measure, amount to the Goschen equivalent of 11/ 80ths of the grant payable in any particular year to local authorities in England and Wales. On the basis of the 1951–52 figures, this would increase the total grant payable to Scottish local authorities by about £1·7 million a year.
The Government intend to propose early legislation providing as an interim measure for an alteration in the basis of the grant on these lines. I understand that the investigating committee will submit a final report on other aspects of their inquiry almost immediately.
Mr. Woodburn: Is the right hon. Gentleman aware that local authorities in Scotland will welcome this step as an interim settlement of this difficulty? Is he also aware, however, that very considerable anomalies are outstanding as between town and town, not only in Scotland but in Scotland and England together? Will the Committee in their further report be dealing with this problem? Is the Secretary of State aware that much of this difficulty has arisen because of the non-completion of the revaluation in England, but that this step will go some way to repair the disadvantages suffered by Scotland in that regard?
Mr. Stuart: I am very glad the right hon. Gentleman agrees that it will go some way to repair the disadvantages. As to the distribution of the sum, I am at present only in possession of an interim report of the Committee. Their further report will reach me, I believe,

1055
shortly, and the method of distribution is a matter which will have to be settled thereafter.
Mr. Woodburn: Is the right hon. Gentleman aware, however, that apart altogether from the distribution of this amount, considerable unjustifiable anomalies have appeared both in England and Scotland and are relevant to each other? Will the right hon. Gentleman be looking into these anomalies?
Mr. Stuart: I agree that this is an interim settlement pending a final one. I must just say how grateful I am to my right hon. Friend the Chancellor of the Exchequer for his assistance in this matter.
Lieut.-Colonel Elliot: Is my right hon. Friend aware that the result of this successful expedition into the land of Goschen and the remedying of a manifest injustice will give lively satisfaction throughout Scotland? Furthermore, when my right hon. Friend is considering the allocation of this sum, would it be possible to use it, not simply in small packets, but towards some important objective, such as the remedying of the housing of Scotland, which is certainly one of the greatest defects in our whole economy?
Mr. Stuart: It will probably be agreed, Mr. Speaker, that I should not at this stage go into a debate on these important and complicated matters. I merely assure my right hon. Friend that I will bear these points in mind. I am grateful to him that he agrees that this action is a help to us.
Mr. McNeil: Would the Secretary of State not agree that as according to his statement and the Report of the Committee the sum of £1·7 million—I think it should be nearer £1·8 million—is to be applied to reduce the anomalies, it would be improper and contrary to the recommendations if any further strings were tied to it as the right hon. and gallant Member for Kelvingrove (Lieut.-Colonel Elliot) suggests?
Mr. Stuart: As I said, this is an interim arrangement and it will go some way to help us at the present time.
Lady Tweedsmuir: Can my right hon. Friend say how much this increase amounts to per head of the population?
Mr. Stuart: I am credibly informed that it amounts to approximately 6s. 7d. per head.
Mr. Pryde: Is the right hon. Gentleman aware that the situation in Scotland is deteriorating rapidly and that there is considerable dissatisfaction that the consideration of derating was not taken into account long ago?
Mr. Stuart: I am not responsible in every respect for the past, but I maintain that the £1·7 million is something to help us in the future.
Mr. Emrys Hughes: Is the Minister aware that the £1·7 million is really not enough, because the local authorities have had to pay an increased rate of interest and their interest burdens since the Government took office are far more than the £1·7 million?
Mr. Stuart: I think that the Goschen formula is the best that we can work on at present. It has stood the test of time for some years and I base myself on that.
Sir W. Darling: Will my right hon. Friend make it clear that this is not a piece of legislation which has been initiated by this Government but is a piece of legislation to remedy a serious blunder by the previous Government?
Mr. Rankin: Is the Secretary of State aware that the loss to Glasgow due to derating represents exactly the total amount of money which he proposes to distribute over all the rating areas?
Mr. Stuart: I was dealing not with derating, but with the question of the equalisation grant and this arrangement to better the position.
Mr. Paget: Is the right hon. Gentleman aware that this plundering across the border will cause grave indignation amongst English people who do not get any equalisation grant at all?
Mr. Stuart: I do not say that I object to plundering, but this is not plundering. It has been proved by the Committee that for once Scotland is being treated unfairly.

SCOTLAND (EXCHEQUER EQUALISATION GRANT)

  BUSINESS OF THE HOUSE
  Ordered,
  That the Finance Bill, as amended, may be considered immediately after the re-committal of the Bill and report thereof, notwithstanding the practice of the House as to the interval between the various stages of such a Bill.—[Mr. R. A. Butler.]

ORDERS OF THE DAY

  FINANCE BILL
  Order for consideration, as amended, read.
  3.40 p.m.
  The Chancellor of the Exchequer (Mr. R. A. Butler): I beg to move,
  That the Bill be recommitted to a Committee of the whole House in respect of the Amendments to Clause 19, page 18, lines 15, 21, 26, 28, 34 and 39; and page 19, line 16, standing on the Notice Paper in the name of the Chancellor of the Exchequer.
  The reason I have moved this Motion is to fulfil an undertaking given by the Economic Secretary to the Treasury that certain Amendments would be made to Clause 19. It was discovered that these would involve a recommittal of the Bill. It is largely technical, but we are keeping in order by moving this Motion.
  Question put, and agreed to.
  Bill immediately considered in Committee.
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    Clause 19.—(UNREMITTABLE OVERSEAS PROFITS.)
    The Chairman: It may be convenient to consider all the Amendments together, as they all deal with the same point.
    The Economic Secretary to the Treasury (Mr. R. Maudling): I beg to move, in page 18, line 15, to leave out "if," and to insert "in so far as."
    Between them, these Government Amendments meet the three points which I undertook to meet in the course of the Committee stage. The first point was made by some hon. Friends and hon. Members opposite that the Bill, as originally drafted, provided that where someone had income in a blocked currency for which there was a market through which the blocked currency could be transferred he would not be able to claim the benefit of the Clause and have his tax postponed. It was pointed out that this was unfair and the Government accepted that it was unfair. Consequently, in place of the existing provision, we are putting in the new paragraph (b) in line 21 in the place of the second of the conditions.
    1058
    The position, therefore, is that the person will get the benefit of this Clause and postponement of tax deduction if the currency which he has earned is blocked overseas even though there is a market in which that blocked currency can be exchanged for sterling.
    The other two points were made by the right hon. and learned Member for Neepsend (Sir F. Soskice). The first was that the Clause should make provision for a case in which the overseas income is not wholly but partially blocked and we have met that point by the first and third Amendments and the first part of the fourth Amendment. We have provided that where the income is only partially blocked the benefit to the taxpayer should only run to the extent to which the income is blocked.
    The third point was also made by the right hon. and learned Member for Neepsend. It was that the taxpayer should not have the benefit of the Clause unless he could show that he had made reasonable efforts to get the money transferred into sterling. That point we have met by the second half of the fourth Amendment and the two Amendments preceding, which are consequential to it.
    Of the seven Amendments the first six meet the three points we undertook to meet in Committee. The final Amendment, to page 19, line 16, is in a sense consequential. Subsection (5) deals with the position where a person has some overseas income which is blocked but chooses to pay tax on it notwithstanding the fact that it is blocked. We are providing that if the blocked income has a market in which it can be transferred at a discount, if the person chooses to pay tax he shall not pay it at the official exchange rate but at the rate current in the market in that blocked currency. On the whole, this is likely to be to the benefit of the taxpayer and will be consequential on the other changes we have introduced. I hope that the Committee will consider that in this group of Amendments we have met the undertakings we gave at an earlier stage.
    Mr. Hugh Gaitskell: I am much obliged to the Government for meeting the points raised by my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice). I certainly

    1059
    think that the concessions improve the Clause.
    Mr. F. J. Erroll: Those of us on this side of the Committee who also tabled Amendments, to which several hon. Members opposite added their names, are glad to see that these Amendments cover the points we raised.
    3.45 p.m.
    Mr. Charles Williams: I wish to add my thanks to the Government. There have been a large number of cases in my constituency, sometimes of great hardship, and I welcome the change on which both sides of the Committee have combined to redress a grievance. I congratulate the Opposition on being on a good point for the first time for many years.
    Amendment agreed to.
    Further Amendments made: In page 18, line 21, leave out from beginning, to end of line 23, and insert:
    (b) he has not realised the overseas income outside that territory for a consideration in sterling or a consideration in some other currency which he is not prevented from transferring to the United Kingdom."
    In line 26, leave out "after having given," and insert "gives."
    In line 28, leave out from "subsection," to end of line 30, and insert:
    "then, in the first instance, account shall not be taken of the overseas income to the extent to which he shows to the satisfaction of the Commissioners of Inland Revenue that the following conditions are satisfied with respect to it, that is to say—

    (a) that it is unremittable; and

    (b) that paragraph (a) of the foregoing subsection would continue to apply notwithstanding any reasonable endeavours on his part."

    In line 34, leave out "it is unremittable," and insert:
    "the said conditions are satisfied."
    In line 39, leave out "it ceases to be unremittable," and insert:
    "the said conditions cease to be satisfied with respect to it."
    In page 19, line 16, after "determined," insert:
    "by reference to the generally recognised market value in the United Kingdom (if any) or, in the absence of any such value."
    [Mr. Maudling.]
    Clause, as amended, ordered to stand part of the Bill.
    Bill, as amended, to be reported.
    Bill reported, with Amendments; as amended (in Committee, and on recommittal), considered.

    New Clause.—(MECHANICALLY - PROPELLED VEHICLES DUTY ON AGRICULTURAL TRACTORS CARRYING FITTED IMPLEMENTS.)
    A vehicle falling within paragraph (a) of subsection (2) of section four of the Vehicles (Excise) Act, 1949 (which relates to ploughing engines, tractors and other agricultural engines), shall not be chargeable with duty under section five of that Act as a goods vehicle by reason of the fact that it is constructed or adapted for use and used for the conveyance of farming or forestry implements fittted thereto for operation while so fitted.—[Mr. Boyd-Carpenter.]
    Brought up, and read the First time.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): I beg to move, "That the Clause be read a Second time."
    This new Clause is designed to secure that an agricultural or forestry tractor does not lose the advantage of the low rate of tax appropriate to agricultural and forestry tractors by reason of the fact that it has mounted on it some form of agricultural implements. It has been pointed out by the National Farmers' Union and a number of hon. Members that there is an increasing custom of mounting some agricultural implement or other on a tractor and some doubt as to what is to be the result of a recent decision of magistrates on whether the mounting of such an implement upon a tractor had the effect of depriving the tractor of the low rate of duty. The Clause is designed to make quite clear that the tractor retains the low rate of duty appropriate to a tractor, whatever implement is mounted upon it.
    I ought, at the same time, to say that the inter-connected problem of the transport box has so far defied satisfactory definition. I am very glad, however, that so far as the mounting of an agricultural implement on a tractor is concerned we have found what we believe to be a solution to the difficulty
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(IMPORT DUTIES ON CERTAIN SOUND-RECORDED MATERIAL.)
    (1) Where duty is chargeable under Part I of the Import Duties Act, 1932, in respect of any goods being tapes, wires, discs or other articles which have been recorded with sound by any means, except—

    (a) exposed cinematograph film; and

    (b) goods appearing to the Commissioners to have been produced in quantity for general sale as so recorded,

    and the amount of that duty would apart from this subsection exceed the amount which would be so chargeable if those goods had not been used for recording sound, the duty chargeable on those goods shall be charged only up to the last-mentioned amount.
    (2) In heading (b) of sub-paragraph (iii) of the Table set out in paragraph 1 of the Third Schedule to the Finance Act, 1939 (which specifies the duty chargeable under Part I of the Import Duties Act, 1932, on exposed cinematograph film containing only a single sound track), the words "a single" shall be omitted; and heading (b) of sub-paragraph (iii) of paragraph (20) of Group XVIII in the Second Schedule to the Import Duties Consolidation) Order, 1949, shall be amended accordingly.
    (3) The provisions of the Schedule (Duties on Exposed Cinematograph Film) to this Act shall have effect with respect to the duties which are chargeable on exposed cinematograph film in accordance with the said Third Schedule to the Finance Act, 1939, and the said Order of 1949.—[Mr. Boyd-Carpenter.]
    Brought up, and read the First time.
    Mr. Boyd-Carpenter: I beg to move, "That the Clause be read a Second time."
    This new Clause, as hon. Members will appreciate, is somewhat more complicated in character than the one I have just moved. It is designed to deal with a difficulty which has arisen in the calculation of the import duty upon various forms of sound recording. Modern developments, particularly in connection with the 3D type of film, have involved the recording of sound not photographically, but magnetically, more usually, I understand, upon cellulose acetate, metallic tape or wire.
    The particular difficulty which this Clause is designed to meet is that under the law as it stands at present the import duty payable is calculated on an ad valorem basis. It is, of course, a matter of extreme difficulty for the Customs, presented at the ports with a strip of sound recording material, to put any sensible value upon it. The difficulty is very similar to that which confronted us a few years ago in connection with
    1062
    cinematograph film, and which was overcome in Section 3 of the Finance Act, 1939, by doing away with the ad valorem basis and imposing a specific duty of, I think, 5d. per foot of film. This is the solution proposed in another new Clause on the Order Paper in the name of the hon. Member for Islington, East (Mr. E. Fletcher). Both the hon. Member and the Government are endeavouring to tackle the same rather awkward problem.
    Our proposal is upon a somewhat different basis, but what, in substance, it amounts to is that we propose to disregard the recorded sound and charge the duty simply on the material on which the recording is made. The ad valorem duty upon a sound track of, shall we say, 100 feet of cellulose acetate tape will be the duty payable on a plain strip of that material of the same size. The sound recording is disregarded and the duty is assessed solely on the material. That gets rid of the complication of valuation and I recommend it to the House as a satisfactory solution.
    This is not a great matter. As hon. Members who are familiar with the industry will appreciate, the import tax upon films is very small in its incidence. I think that last year the yield was about £140,000. Of course, the protection to the home industry depends not on the tariff, but on the quota system. On the other hand, these new developments have caused considerable difficulty and we are trying to tackle them in this way. We are taking advantage of so doing to tackle the general problem of recorded sound which is covered by this new Clause, not only film sound tracks but other forms of recorded sound.
    If I may be allowed to mention the new Schedule which goes with this Clause, one or two rather technical adjustments are made in the tariff law dealing both with cinematograph films in the strict sense, and those recorded magnetically to which the Clause mainly refers. This is a somewhat technical and perhaps unexciting proposal, but I suggest that not only does it facilitate the task of levying the duty but makes easier the task of the trade interests concerned, with whom discussions have taken place.
    Mr. Eric Fletcher: I am obliged to the Financial Secretary for his explanation. He has indicated that this new Clause is designed to serve the

    1063
    same purpose as a new Clause in my name and the names of my hon. Friends which was put down for the Committee stage but was not selected, and which appears again today on the Order Paper.
    I entirely agree with what the Financial Secretary has said. It is very difficult to find the right form of words to deal with the new problems which have arisen. I am prepared to accept the view that the words devised by the Government are more apt than the words in my proposed new Clause. This is really a case of trying to make Parliamentary language catch up with the improvements in scientific technique and skill.
    As the Financial Secretary has said, this problem arose over a very simple matter. Hitherto, the sound film, which is part of a film, has been produced by exposure to light. In the words of the Schedule under the Import Duty Act under which Customs Duties are levied, reference is made to "unexposed" and "exposed" film. Recently, owing to improvements in science, sound has been reproduced photographically on wire, on a strip or a belt. It is produced, not by exposure to light, but by exposure to magnetic attraction.
    It became a matter for argument as to whether "exposed" film was the relevant term to describe film produced by exposure to a magnetic field, and I think there was legitimate room for argument between the industry and the tax commissioners. No doubt if this problem could have been foreseen when the Act was originally introduced a form of language would have been devised to cover it. What has been done is what we hoped would be done. A practical problem has been solved in the proper way, not by allowing the commissioners to make an interim administrative arrangement, but by introducing a Clause in the Finance Bill to deal specifically with the problem and put it right.
    Question put, and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(REBATE ON LIGHT HYDROCARBON OILS.)
    On and after the first day of September, nineteen hundred and fifty-three, there shall be allowed from the duties of Customs and Excise a rebate of sixpence a gallon on light
    1064
    hydrocarbon oils which are not used as fuel in mechanically-propelled vehicles constructed or adapted for use on roads.—[Mr. Erroll.]
    Brought up, and read the First time.
    Mr. Erroll: I beg to move, "That the Clause be read a Second time."
    Mr. Speaker: I would point out that on a later page of the Order Paper there appears a proposed new Clause in the name of the hon. and gallant Member for Hull, Central (Captain Hewitson) and other hon. Members dealing with a rebate on white spirit, etc., for paint manufacture. Perhaps it would be convenient if the two Clauses were discussed together, although I did not propose to call the second one.
    Mr. Erroll: This Clause deals with the rate of duty levied on light hydrocarbon oils used for purposes other than as fuel for vehicles constructed or adapted for use on roads. When the original duty was introduced it was for the purpose of taxing motor fuel by a simple, rough and ready definition, inserted in the appropriate Finance Bill and designed to tax all petroleum products of a certain sort which it was considered would be used exclusively by motor vehicles.
    That was many years ago and since then, due to the technical progress of the industry and engineering developments throughout the country, not only have many additional and further uses been found for the class of hydrocarbon products known as motor spirit, but there have also grown up a number of additional light hydrocarbon oils falling within the definition of light hydrocarbon oils for the purpose of taxation.
    4.0 p.m.
    Those many uses which were never intended, expected or anticipated at the time of the passage of the original legislation now find themselves contributing substantial amounts in taxation for what was first intended as a means of raising money to improve the road system of Great Britain. It is because of these technical developments that the position is now anomalous.
    The purpose of the new Clause is to seek a reduction in the rate of duty for those light hydrocarbon oils which are used for industrial and other purposes—that is to say, for purposes other than as fuel for vehicles on the roads. I should like to quote a few examples.

    1065
    Specially important is the use of light hydrocarbon oil for industrial purposes as a solvent in rubber processing or in the manufacture of certain paints and varnishes. In both these cases the light hydrocarbon oil—white spirit—evaporates and is lost after use and, of course, the duty paid disappears with it at the same time.
    The amount of taxation may not appear to be large but, nevertheless, it is an appreciable factor in the cost of manufacture. During the last Finance Bill of the late Labour Government a small Amendment was introduced whereby a drawback on the duty could be secured when an identifiable quantity of light hydrocarbon oil was exported as part of the export drive. The difficulty was only partially met because that did not take account of those light hydrocarbon oils used in the manufacture of articles and not themselves exported.
    That, to some extent, accounts for why this drawback has not been greatly used by manufacturers. It is partly because it does not apply to all industrial uses of light hydrocarbon oil which are part of the export programme, but also because, since it only applies to those paints and solvents actually exported and not to the whole range of a company's manufactures, it has been found by some not to be worth the administrative cost of applying for only a proportion of the duty paid.
    There are other industrial uses, the most popular of which is the dry cleaning industry, where light hydrocarbon oils known as white spirits are used for the dry cleaning of clothes and industrial garments. The evaporation of solvent is quite considerable in these cases and even where recovery plant has been installed only a proportion can be recovered. There is thus a substantial increase in the real cost of dry cleaning garments because of the very high rate of duty which light hydrocarbon oils now attract.
    Then there is another serious increase in cost in the bench testing of engines. These may be engines ultimately for use on the road or they may be aero engines. Whatever their ultimate purpose the light hydrocarbon oil necessarily used as fuel during the testing of the engine is subject to duty at the full rate although the engine itself is not, of course, anywhere near the road.
    1066
    On the farms, the position has become extremely serious. When petrol—that is to say, light hydrocarbon oil—is used on the farm it attracts duty at the full rate. A petrol driven tractor or a petrol driven engine on a farm uses duty paid fuel and the duty, now that it is much more than the cost of the fuel itself, is a serious element in the cost of production. Should the farmer use a paraffin powered tractor he will not have to pay any duty on the fuel because the paraffin is a medium hydrocarbon oil and does not attract duty.
    The plain fact is that, were there no differential taxation on petrol as distinct from paraffin, no farmer would think of using a paraffin powered tractor because, on all counts, a petrol driven tractor is more efficient, more reliable and economical. Because the tax element in the fuel cost is so considerable most farmers are driven to use paraffin powered tractors which are less efficient. Here is a plain case of taxation engineering as a result of the taxation policy of successive Governments.
    The position on the farms is rendered even more absurd by the fact that, if a farmer should use a diesel fuel tractor, although that diesel fuel will attract the full rate of duty if the tractor is used as a road vehicle, the farmer gets a rebate on the amount of tax when the fuel is used in a diesel tractor employed only on farm land or in a similar engine used for stationary purposes. For diesel fuel, which is not a light hydrocarbon oil, there is, in addition to the exemption for farm tractors, an exemption for diesel rail cars which are a form of transport; but if the diesel engine is used on the road the full amount of duty must be paid on the fuel.
    Representations have been made frequently to successive Chancellors about this matter. Proposals have been put forward in the House from time to time ranging from complete exemption for non-road uses to part exemption. In the new Clause I suggest only a small differentiation of 6d. per gallon because to give a complete exemption would, I fear, cost the Treasury too much this year. But even a small reduction would be a most welcome sign from the Treasury to industry and agriculture that there was to be some preferential treatment.
    In previous representations the reply has always been that administrative difficulties and the possibilities of evasion

    1067
    would make it impossible to operate a system of rebates fairly. I submit that that is not really the case. It would be possible to operate a system of refunds and repayments. Such a system has already been submitted to the Chancellor for his consideration. After all, it is no uncommon event in taxation to find that one must first pay the tax in full and then apply for a rebate or refund afterwards.
    It happens in the payment of company dividends. Tax is deducted at the full rate at source and it is up to the individual to claim back any reliefs to which he is entitled. The same might be said of various Income Tax allowances where the onus is on the individual to make the claim. With the system proposed in the representations which have been made the idea is that the consumer should pay the tax first and then, if he wishes, claim the rebate to which he would be entitled, making the full disclosure which might be required by the Customs and Excise authorities.
    This is the system which has operated in a number of other countries where it is regarded as important to give some preferential rebate to industrial and agricultural users. What can be applied in other countries can surely be operated here, especially when we remember how important it is to keep down our export costs and not to inflate them needlessly by including as an item of production the taxation on a vital raw material, whether it be in the rubber making, the road haulage or the aviation industry.
    I should like to point out, in passing, that in aviation the position is specially anomalous in that when light hydrocarbon oil—aviation spirit—is used to power the aircraft on an internal flight duty has to be paid at the full rate. A similar aircraft using a turbo-prop or jet engine, which only requires paraffin, which is a medium hydrocarbon oil, therefore does not pay any duty at all, so that there is a very distinct advantage, from the fuel point of view, in favour of the jet-powered aircraft. In any event, of course, an aircraft which is refuelling in this country for a destination outside Great Britain can get a drawback of the duty, because such fuel is not taxable, but, should it be an internal flight, the
    1068
    aircraft would have to pay duty at the full rate.
    This shows that a system of rebates can be applied to aircraft, as it is, in fact, being done already, and I should like to urge upon the Chancellor that we should like to see an energetic attempt being made by the Treasury to introduce a system of rebates which would give effect to the purpose of this new Clause. If it be said that the Treasury are too busy and overworked at present to undertake the necessary investigation, then, perhaps, the Chancellor would set up a committee of the type which he set up last year—like the Hutton Committee or that which reported upon the Purchase Tax uplift—to investigate the matter, hear all the evidence afresh and reach a conclusion which could be examined by this House next year.
    It is in those terms that I submit the new Clause, because I do not wish, at this comparatively late stage of the Finance Bill, which has so far proceeded smoothly and successfully, to provoke a Division, if that can be avoided.
    Mr. Norman Cole: I beg to second the Motion.
    A number of firms in my constituency are very much affected by this matter, which, in the eyes of many people, may be a technical one. It is a matter which has been brought very much to my notice by a firm in my constituency which deals exclusively with rubber production. This firm is very seriously affected by the lack of a rebate of this duty. Their products are in competition with those brought into this country from Czechoslovakia and Hong Kong and other areas where rubber articles are produced. In fact, home sales in this country are in competition with such imports, and the home trade in any industry of this type offers very large support for the export trade. That is the first point to be borne in mind.
    In addition, the exports of this particular firm, and others of a like nature, are also in competition with the rest of the world and with the products of those countries which I have mentioned, which do, in fact, allow a rebate of taxation on light hydrocarbon oils to firms producing in their countries. It seems to me that, if we are having to compete with other countries, the latent

    1069
    skill and craft of the people in this country employed in making these products ought not to be so seriously handicapped.
    This matter has been brought up in previous years to other Chancellors of the Exchequer, and some attempt has been made to get somewhere, but the fact remains that these industries—rubber producers and others which use these oils—pay 2s. 6d. duty on every gallon which they use in their manufacture. This is a very reasonable and very humble proposal which we are submitting in asking, for a start, for a rebate of at least 6d. per gallon.
    I would ask the Financial Secretary or the Economic Secretary, whoever is to reply, whether, in recognition of the great effort which we are making and must make to keep our place in the markets of the world, they can make this gesture to this particular type of industry by allowing this rebate. It is true that it will not solve the whole problem, because there is much difference between 6d. and 2s. 6d., but it will, at least, be some indication that the Government are giving encouragement to industries of this nature.
    4.15 p.m.
    Captain M. Hewitson: I welcome the opportunity of supporting the hon. Member for Altrincham and Sale (Mr. Enroll), but I regret the statement in the closing part of his speech, that he would not press his new Clause to a Division. I should have thought that the difficulties we are facing today in building up our export markets are such that this House would have taken an opportunity, especially with a Clause of this description, to express its will that we should be encouraged in the task facing our industry in winning markets abroad.
    The Chancellor never fails at any time to make approaches to the trade unions and ask them, first, to restrict their wage applications, because that can only have the effect of raising prices and the cost of living, and, secondly, to ask for every effort to be made by industry to boost our production. The trade union leaders of the country, over the last two years, have loyally supported the Chancellor in his efforts in this direction. They have soft pedalled and kept down wage demands to a minimum, and, further, they have used every means at their disposal
    1070
    to lift production in all our industries throughout the country, and especially for the export market.
    Here is an opportunity for the Minister to say that he can agree to this token concession of 6d. per gallon, because, after all, the duty on a gallon is 2s. 6d. The industry in which I am particularly interested, which is in my own constituency, is the paint manufacturing industry, and I should add that, outside London, Hull is the largest paint manufacturing area in this country. At present, in Hull, there is a great shadow of unemployment hanging over our city. Twenty per cent. of our fishing fleet is tied up and not going to sea, and we have a hard core of 5,000 unemployed in the city which we do not seem to be able to reduce. The shadow of unemployment which is hanging over our greatest manufacturing interest—the paint industry—has caused grave concern in Hull, where there is much support for any efforts aimed at bringing down manufacturing costs, to enable us to retain our export markets and keep our people in regular work.
    I do not think this is too much to ask, because the new Clause which stands in my own name asks for twice the reduction which is sought in this one, and we should take into consideration the fact that the paint manufacturing industry uses 35 million gallons of light hydrocarbon oils and pays the Treasury something like £4 million per annum in taxation. Those are round figures, and I do not want the Financial Secretary to tell me that the bulk exporter of paint pays nothing in duty, because he can get a drawback. I am well aware of that. The paint on machines and materials that are exported is paying the full tax. I hope we shall be told that we can get some part of this tax returned. I am told of a motor firm who are exporting and who tried this scheme of drawbacks. The sum due to them was £23,000, but it cost them £30,000 to get the drawback, and after that they did not bother to claim it. This thing is really serious. We are fighting for markets where pence count.
    I am given to understand that some of our commodities are exported in wooden packing cases and that the paint on the packing cases costs more than the commodity in the cases that we are exporting. That means that we have reached a ridiculous position. In some export markets

    1071
    a difference of 1d. per article determines whether or not we get the contract. If we do not get the contract it means unemployment somewhere in this country.
    In previous years I have been rather rude to the Chancellor of the Exchequer and his assistants on the Front Bench and I have possibly been a little threatening about what would happen in the workshops if they did not listen to reason. Today, I have lost all that. I am appealing to them because I do not like to see people out of work, knowing what it means to have years of that myself. I make an appeal to the Financial Secretary to have another look at this question.
    Countries like Germany are coming into our markets and will leave us behind, because they are giving assistance to their industries. When I say "Germany" I mean the German Government. There are various ways of giving assistance, not only by direct subsidy but by such ways as relief of transport charges which brings down the cost of a commodity at the delivery point.
    Something should be worked out. What can be done by assistance to industry in Germany and Italy can be done in this country. It is wrong in principle to tax the raw materials used in building up manufactures but that is what happens in this instance. I make my plea to the Treasury, and I shall give every support, even in the Division Lobby, to the hon. Member for Altrincham and Sale, if the Treasury will not grant a small little concession on this occasion.
    Squadron Leader A. E. Cooper: I hope that the Financial Secretary to the Treasury will not turn a deaf ear to the pleas that have been made. During the years when we were in Opposition we put forward similar pleas, and they were supported by one or two hon. Members on the other side who felt as strongly on this subject as we. The hon. and gallant Member for Hull, Central (Captain Hewitson) put up a very strong case. The real strength of it was contained in his last few sentences, when he said that it was wrong in principle to tax raw material of industry. This is one of the only raw materials which is so treated.
    Many years ago somebody at the Treasury decided that these oils had
    1072
    some relation to petrol. That was the genesis of this tax. Every time that petrol has gone up, light hydrocarbon oils have gone up by half that amount. When petrol has been reduced, the oils have come down.
    Mr. Douglas Jay: The "someone at the Treasury" to whom the hon. and gallant Member referred is the present Prime Minister.
    Squadron Leader Cooper: The right hon. Member for Battersea, North (Mr. Jay), on an earlier occasion, said that the effect of the tax was something like 2d. or 3d. on the gallon of paint, but he was quite wrong. If we take white spirit formulations that may be the effect, but white spirit is used in synthetic resins, metallic paint driers and certain pigment formulations. All these have the effect of piling up the cost and making it more difficult for us to compete in the export market. There is considerable loss in manufacture due to the volatility of these things and the difficulties in getting a drawback on white spirit.
    This affects not only the paint industry but the printing, linoleum and textile industries and many others. They add to our costs and make export competition difficult. I suppose that the answer will be that revenue will be lost to the Treasury. If that is so, we must look for other ways to recoup ourselves for the revenue which will be lost. It is wrong in principle to tax the raw material of industry.
    Mr. Ralph Morley: I hope that whoever replies to the debate on the proposed new Clause, which was so ably moved by the hon. Member for Altrincham and Sale (Mr. Enroll) and supported by the hon. and gallant Member for Hull, Central (Captain Hewitson), will bear in mind that hydrocarbon oils are the raw material in a very large number of manufactured commodities, such as paint and rubber and that, therefore, a tax upon them is a tax upon industry. Any tax upon industry is bad but in this case it is very heavy and is equivalent to a tax of 150 per cent. more than the tax on jewellery and that on mink coats, which seems to have symbolic significance in political controversy on both sides of the Atlantic.
    Hydrocarbon oils are used not only in the manufacture of rubber and paint but

    1073
    in many commodities which are necessary to agricultural production. For example, it is used in the manufacture of the sprays which are used for the extermination of weeds. Therefore, this tax is not only a tax upon industry, but also a tax upon food production. There is no doubt that it affects our export trade because we are now in competition, in the export markets for rubber and paint, with a large number of other countries, and we have not the advantage of the sellers' market which we enjoyed a few years ago.
    4.30 p.m.
    Many countries either remit taxation altogether on light hydrocarbon oils if they are used for non-motive purposes or give a very considerable rebate of the tax if they are used for purposes of industry or agriculture. The United States of America and Canada both remit taxation altogether on light hydrocarbon oils which are used for non-motive purposes, and nearly all the major countries of Western Europe impose a discriminatory tax upon them so that if used for industrial or agricultural purposes they do not pay so high a tax as if used for other purposes.
    This tax is a severe handicap to our manufacturers in competing with the manufacturers of those countries. I understand that at present the exporters of paint are suffering very considerable competition from Czechoslovakia, and that the exporters of rubber are experiencing similar considerable competition from Hong Kong, which would be lessened if this Clause were adopted.
    It is a very modest Clause and would not entail a very large financial loss to the Treasury. Indeed, the financial loss incurred by the acceptance of the Clause might, perhaps, be more than compensated for by the additional foreign currency that would come to this country through the expansion of exports that would result. I hope, therefore, that the Economic Secretary will give the Clause his sympathetic consideration.
    I also hope that the mover of the Motion, if he does not get a favourable answer, will take the matter to a Division. I imagine that there is a very strong majority feeling on both sides of the House that the Clause should be accepted. If the Economic Secretary does not accept
    1074
    it, and if the hon. Member for Altrincham and Sale takes it to a Division—as, we hope, in that case he will—there will, of course, be a danger of the Government being defeated. But the defeat of the Government on a minor matter of this sort would not be serious, and all that would happen would be that, the House having decided in favour of the new Clause, the Chancellor would have to accept the decision of the House and give effect to it in the appropriate way.
    In the first place, therefore, I hope that the Economic Secretary will look favourably on the Clause, and that, if he does not, the hon. Member for Altrincham and Sale will take his courage in both hands and divide the House upon it.
    Mr. Frederic Harris: I hope that my hon. Friend the Economic Secretary will not put us into the difficult position which the hon. Member for Southampton, Itchen (Mr. Morley) has just described. Perhaps he will be able to make a concession. During the five years that I have been in this House, this matter has come up for discussion on each successive Finance Bill. I think that my hon. Friend the Member for Altrincham and Sale (Mr. Erroll), who moved this new Clause so ably this afternoon, has been trying for about eight years to get something done about it.
    I must confess that I sometimes find it very difficult to understand why Governments do not face up to issues such as this which do not call for a great deal of consideration, or even concession. After all, this is a matter of a tax on a raw material used in manufacture. Reference has already (been made by hon. Members on both sides of the House to the fact that light hydrocarbon oils may very well be the only raw materials used in manufacture which are taxed at present, but, at 2s. 6d. a gallon, it is a very heavy tax.
    Reference has also been made to specific industries affected. The hon. and gallant Member for Hull, Central (Captain Hewitson) specifically mentioned the paint industry. In my own constituency we have one of the largest firms of dyers and cleaners, who are very directly affected by this considerable burden in their manufacturing processes. In the last few years there has been only one concession in regard to exports. In that case, it could be defined and

    1075
    allowances in the form of drawback were made.
    It seems to me basically wrong that home manufacturers should have to operate under difficulties of this kind. When this tax was first put on it was, obviously, never intended that manufacturers should have to bear this additional burden. It would not be very difficult for the Government to meet us on this point. It is the general desire of all hon. Members who have spoken that a future Government should face up to the difficulties which now confront manufacturers. I sincerely hope that the case so ably put by my hon. Friend will result in a reasonable concession being granted to manufacturers who now have to carry this very excessive burden.
    Mr. Maudling: As my hon. Friend the Member for Croydon, North (Mr. F. Harris) has pointed out, this is a subject which with slight variations has been discussed on a number of occasions in recent years and under different Governments, and the arguments both for and against the proposal have, therefore, been fairly often rehearsed and have a certain familiarity about them. I cannot claim that the arguments which I propose to lay before the House will present any particular novelty; nor are they likely to depart very far from the answers given by right hon. Gentlemen opposite in dealing with this problem when they sat on this side of the House.
    I shall deal, first, with something which appears to have general currency. It is that when this tax was first introduced, in 1928, it was intended as a motor fuel tax for the purpose of improving the roads. That is not the case, and my right hon. Friend the present Prime Minister, who introduced the tax—as has been pointed out on more than one occasion by the right hon. Member for Battersea, North (Mr. Jay)—said at the time that, in the main, hydrocarbon oils were used for motor transport and for various industrial purposes. He made it quite clear that the duty was one on hydrocarbon oils and was not specifically intended as a road tax on motor fuel for the purpose of improving the roads.
    The first difficulty that one encounters in considering this proposal is its cost to the Revenue. The amount being asked
    1076
    for on this occasion is a rebate of 6d. a gallon, and I am informed that the cost of that reduction in a full year would be about £6 million, which is a very large sum indeed. As has been pointed out by one of my hon. Friends, if my right hon. Friend the Chancellor granted this rebate he would have to raise the money elsewhere.
    As the hon. and gallant Member for Hull, Central (Captain Hewitson) pointed out, this 6d. rebate would be regarded as only a token concession. I am quite sure that hon. Members who have put this point to various Governments with such assiduity and vigour would not be satisfied with 6d. They would press for the complete abolition of the tax, which would cost £30 million a year. This would be a very large sum indeed.
    The first objection to the proposal is, therefore, one of cost. The second objection, which has been put forward on many occasions, is that it would be very difficult indeed to administer a system of rebates and would require a very large number of additional Customs officials. Indeed, I am advised that it is considered that the number of officials needed to police a system of rebates of this kind would substantially exceed the total number of officials engaged at present in the collection of the whole duty which yields £290 million a year to the Exchequer. It would be a very large and difficult administrative problem.
    It has been said—I think the hon. Member for Southampton, Itchen (Mr. Morley) and the hon. and gallant Member for Hull, Central mentioned it—that in other countries there are schemes for rebates of this kind. We have examined a number of these schemes which are operating in other countries, and we find that they prove conclusively the great administrative difficulty involved because they are all based on the keeping of very detailed and comprehensive records by an immense number of people and their regular inspection by a number of Customs officials. I am informed that a number of countries have found the difficulties so great that they have confined the rebates to large firms and refuse the rebates to small firms, which is a system which I am sure would not be acceptable to this House or to the country.
    The other point which is sometimes made is that if a drawback is arranged

    1077
    for exports there should be a drawback for the home market. I would emphasise that there is this drawback for exports, as the hon. and gallant Member for Hull, Central mentioned. It has been implied by a number of hon. Members that a continuation of this duty on the light hydrocardon oils used in manufacture places a heavy burden on exports, but, as I have said, there is a provision for drawback on exports. It does not apply in all cases, but there is this provision. It would not be easy to extend the drawback from the relatively simply question of exported goods containing a proportion of hydrocarbon oil—on which Customs officials are already in their normal duties engaged—to the immense number of home uses of light hydrocarbon oils, of which the outstanding example is the dry cleaning industry to which reference was made by my hon. Friend the Member for Croydon, North.
    Mr. Jay: Before the hon. Gentleman leaves the question of the export rebate, which seems to me to be the most promising line of advance in dealing with this argument, can he tell us what steps have been taken to overcome the difficulties which have arisen?
    Mr. Maudling: I have not the figures of the extent to which advantage has been taken of the drawback, but it would depend on the amount involved in the case of each article. I will give figures later to show that the amount involved in individual cases is so small that it would not be worth while for the manufacturer to reclaim it. Whether or not the export drawback scheme is satisfactory, its extension to the home market raises a much wider problem.
    There is also the principle involved, that although, obviously, we wish to remove taxes which raise the price of exported goods, it is not by any means the same thing to remove a tax on goods sold in the home market, if it has to be replaced by a tax on something else sold in the home market. These taxes which fall on raw materials used in production are, broadly speaking, passed on to the consumer and are paid by the consumer. If they are not paid by the consumer of light hydrocarbon oils, they have to be paid by additional imposts placed on other articles, such as tobacco and alcohol.
    4.45 p.m.
    Mr. Douglas Houghton: Put it on the Income Tax.
    Mr. Maudling: That is an agreeable speculation, but I do not think it would assist us in this debate. All indirect taxes fall on the consumer, and if there were no tax on light hydrocarbon oils there would have to be an additional tax on some other commodity.
    Some hon. Members have made the distinction between light hydrocarbon oils used in manufacture and those used for road transport. I should have thought there was a large number of articles sold and exported, to transport which the cost of the petrol used was greater than the cost of the hydrocarbon oil which has gone into the paint with which the packing cases were painted. If there was an argument for giving a special rebate on the light hydrocarbon oil used in the paint, there would be an equally strong argument for removing the petrol duty on the petrol used by firms transporting the goods.
    I think it would be a good thing to give one or two figures to show the extent of the problem. I have been provided with a number of figures showing the extent to which this tax affects various articles. Let me take, first of all, rubber gloves, which have been mentioned already. The effect of the tax varies from 7d. to a maximum of 3s. 4d. a dozen pairs. I believe that that is one of the highest examples. One the other hand, for each motor car tyre the figure is 1½d.
    For proofed cloth the figure varies from 2s. 2d. on 100 square yards to a maximum on special sheeting of 31s. on 100 square yards. On tennis balls the figure is 10s. per 100 dozen, and on linoleum, of which we hear a good deal, it is 3s. 6d. to 18s. 6d. a ton. Therefore, it does not seem as though the addition to the cost of production resulting from the imposition of this duty is serious inmost cases compared with the general level of cost.
    Mr. Ede: Can the hon. Gentleman say what percentage those figures are of the total cost of those articles?
    Mr. Maudling: I think it would be easy to work it out. Certainly, 10s. on 100 dozen tennis balls or 18s. 6d. on a ton of linoleum would not amount to

    1079
    much. Perhaps the right hon. Gentleman could make a few of these calculations.
    To sum up the reasons why the Government cannot accept this new Clause, as preceding Governments have been unable to accept similar proposals: first, there is the cost of the token proposal, which would be £6 million a year, and the full rebate would cost £30 million. Secondly, there are the real administrative problems involved which we have studied with great care on a number of occasions when we have been approached by hon. Members interested in this matter from the point of view of their constituencies. We should like to be able to settle the problem in order not to have it pressed upon us so often. There is no lack of will on the part of the Government to solve the problem, but it does not seem possible to devise satisfactory administrative means of dealing with the question. For those reasons I regret to say that I cannot accept this new Clause.
    Mr. Ede: The hon. Gentleman has said that there is no lack of will on the part of the Government to deal with this question. I suggest that the Government would find a great deal more will to deal with it if the hon. Members for Altrincham and Sale (Mr. Erroll) and Croydon, North (Mr. F. Harris) and the hon. and gallant Member for Macclesfield (Air Commodore Harvey), who spoke on the matter last year and who apparently wishes to speak this year, found sufficient physical strength to walk into the Lobby against them on this occasion.
    Mr. Maudling: Would that not have applied to the right hon. Gentleman himself a few years ago?
    Mr. Ede: Very likely, but there is no reason why one should not give the hon. Gentleman, who is just a beginner, the result of one's experience. I had hoped that it would have been accepted in the spirit in which it was tendered.
    I am like the hon. Member for Croydon, North, in that I have a dry cleaning firm in my constituency, and I am a little surprised from the inquiries that I have made to learn that the problem of administration is as difficult and great as the hon. Gentleman suggests. I often hear that story from the Treasury Bench,
    1080
    until the moment when they make up their minds that it is as well to give way and then it is astonishing how, with that decision made, the difficulties suddenly seem to vanish. After all, every hill looks steeper than it really is as one approaches it, and if the Government would only start on the upward path, difficult as it now appears, they would be surprised at how the road appears to level out once they have made up their minds that the journey is worth while.
    There can be no doubt that this tax is very greatly resented by a number of small but important industries in the country and I do not think that it is much good quoting to us today what the Prime Minister said 25 years ago. Once one starts going back to what the right hon. Gentleman said in the past it will be found that some of our memories go back a good deal further than 25 years ago.
    Mr. Maudling: I was about to quote a quotation from the Prime Minister made by the right hon. Gentleman two years earlier.
    Mr. Ede: I know. There are occasions when I feel tempted to quote what the present Prime Minister said 50 years ago, which would be even more uncomfortable for the Treasury than what the right hon. Gentleman said 25 years ago.
    I am informed by those skilled in these matters that there is not much difficulty, from the technical point of view, in dealing with this subject, because the flashpoint of the oils in question is very different from the flashpoint of petrol that is more generally consumed, and the distillation range is sufficient to make it quite easy to make a differentiation. I quoted the figures last year and I do not intend to quote them again today. They were not challenged on that occasion by the present Minister of Materials who was then Minister of State for Economic Affairs and I assume, therefore, that they were accepted.
    It would appear that the concessions that were made by my own right hon. Friends when they dealt with this matter did not involve as much administrative trouble as at one time was expected, and I should have thought that in view of the arguments that have been put forward from both sides of the House today, in perfectly good temper, the Government could have made a concession along

    1081
    the very modest lines suggested by the hon. Member for Altrincham and Sale.
    This is a subject that has been before the House on several occasions and the prices in some of these industries have risen rather considerably in recent years as a result of economic changes. The small sums that the Economic Secretary to the Treasury mentioned today are, after all, the kind of sums that really count when one is getting into competition in foreign markets. It is no use the hon. Gentleman and his colleagues saying that we must be very careful because we are now in a buyers' market and every increase in cost makes it more difficult for commodities to be sold abroad, and then make little of such charges as result from their own policy when they are applied to the cost of commodities.
    I hope that the Economic Secretary will think again and that he will come to the conclusion that the time has at last arrived when this real differentiation between the use of various forms of hydrocarbon oils ought to find expression in the Finance Bill. As far as I am concerned, if the hon. Member for Altrincham and Sale is prepared to tell a Division I can assure him that he will have at least one to count.
    Air Commodore A. V. Harvey: I was disappointed that my hon. Friend the Economic Secretary did not refer to light hydrocarbon oils used by the aviation industry, to which my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) referred when he moved his Motion. I have an interest in this industry, but I am concerned mainly with the engine manufacturers. As we all know, jet engines are gradually taking the place of piston engines in aircraft, but, nevertheless, there is a great demand for piston engines in helicopters throughout the world, and that demand will exist for many years to come. I know of a firm which is spending very large sums of money in developing piston engines for helicopters. The engines will have to be run on the bench for several thousand hours and duty will have to be paid. Then there will have to be proving flights of a great many hours and duty will have to be paid again.
    1082
    The helicopter industry is waking up and good aircraft are being produced. We shall have new competitors from France where their export price will be more in line with ours than will be the export price in America and Canada. In a year or two B.O.A.C. will be operating jet aircraft almost entirely, using kerosene on which duty is not paid; but B.E.A.C., on their lines in Great Britain, and small operators up and down the country and in the Highlands and Islands of Scotland in which you, Mr. Speaker, no doubt are interested, will be using petrol and will have to pay duty. That is an anomaly which ought to be examined.
    We have a very flourishing and promising aircraft industry which can earn for this country foreign currency and render great help to our economy. I think that in this matter the Treasury will be very unwise to proceed in the present way year after year. I was pleased to hear that the right hon. Gentleman the Member for South Shields (Mr. Ede) and his hon. Friends would come into the Lobby to support us if this Motion were pressed to a Division, but my hon. Friend the Member for Altrincham and Sale has spoken on this subject on many occasions during the last seven or eight years and there was no rush from the party opposite to support him. I leave it to the good will of the Government, if they cannot do something immediately, to give an assurance that in the next 12 months something will be done to regularise this anomaly.
    Mr. Erroll: I rise with the permission of the House to say that, naturally, I can hardly describe myself as satisfied with the statement that has been made. However, I detected some favourable signs. I thought I noticed a more receptive attitude than I had noticed for several years past. If it was not as receptive as I should have liked, that was possibly because the Economic Secretary to the Treasury had not had time to digest fully the very cogent arguments put forward today.
    Mr. Jay: Could the hon. Member tell us what those favourable signs were, because we did not detect them?
    Mr. Erroll: It was the fact that most of the arguments which the Economic Secretary used were so well worn that,

    1083
    obviously, they had been used many times before, and that, therefore, he would look at the new arguments which we used today, refresh himself on the matter in the next few months and be more favourably disposed towards us next year. It would be unfortunate to harden the heart of the Government against us by pressing this Motion to a Division. I therefore beg to ask leave to withdraw the Motion.
    Motion, and Clause, by leave, withdrawn.

    New Clause.—(AMENDMENT AS TO WHOLESALE VALUE FOR PURCHASE TAX.)
    For subsection (1) of section twenty-one of the Finance (No. 2) Act, 1940, there shall be substituted the following subsection:—
    "(1) The wholesale value of any goods in respect of which tax is chargeable shall be taken to be the price which in the opinion of the Commissioners the goods would fetch, on a sale made at the time when the tax in respect of the goods becomes due by a person selling by wholesale in the open market in the United Kingdom to a retail trader carrying on business in the United Kingdom only, if no tax were chargeable in respect of the sale and it were made in the circumstances specified in the Eighth Schedule to this Act:
    Provided that—

    (a) where goods are sold to a retail trader under a chargeable purchase made in the circumstances specified in the Eighth Schedule to this Act, the wholesale value of the goods shall not be taken to exceed the price at which they are sold under the purchase (excluding any amount due from the buyer to the seller by reference to tax for which the seller may be accountable in respect of the purchase) by more than such amount, if any, as in the opinion of the Commissioners equals the costs of wholesale distribution which will subsequently be incurred or borne by the buyer; and

    (b) where goods, of a kind normally sold to retail traders in the circumstances specified in the Eighth Schedule to this Act at a price including the cost of delivery to the buyer at his place of business, are sold to a retail trader under a chargeable purchase at that price and in those circumstances save that an additional charge for delivery is borne by the buyer, that additional charge shall be disregarded in determining the wholesale value of the goods."—[Mrs. Castle.]

    Brought up, and read the First time.
    5.0 p.m.
    Mrs. Barbara Castle: I beg to move, "That the Clause be read a Second time."
    1084
    This Clause deals with the question of uplift—a matter which is less simple than it might appear at first sight. In fact, I am a little overwhelmed by the difficulty of dealing with this highly technical matter and explaining it to the House, and I am encouraged to do so only in the belief that the Financial Secretary probably knows a good deal less about the subject than I do.
    Last year I drew the attention of the House to the fact that the Chancellor of the Exchequer was getting more Purchase Tax than he was entitled to get, owing to the basis on which it is calculated. My revelations so shamed the Chancellor that he set up a special Committee—the Grant Committee—to inquire into the whole question of wholesale valuation for Purchase Tax purposes. The Committee have now reported, and they have made it quite clear that the practices to which I have referred do exist, are wrong, and should be dealt with. I am rather surprised and a little alarmed to find that the Chancellor of the Echequer has not put down a Clause to deal, either in whole or in part, with the recommendations of the Grant Committee.
    I am wondering if there is not some significance in the fact that, whereas last year, when I was merely explaining and exposing the problem, the Chancellor took the trouble to be present and to answer me, this year, after a full investigation has taken place and the Committee have reported to the effect that many uplift practices are wrong and should be abolished, the Chancellor is not present. Much as we enjoy the company of the Financial Secretary, it is obviously a matter of political significance that the Chancellor is not here to tell us what he proposes to do about the Grant Report and why he proposes to do it.
    This behaviour is in marked contrast to the Chancellor's interest in the Report of the Hutton Committee, when he rushed publicly to pronounce upon and adopt the recommendations of that Committee on the question of rebate. I would go so far as to say that the reason for this silence, and for the evasiveness of the Chancellor, is that he is getting considerable sums of revenue to which, on a fair interpretation of Purchase Tax law, he is not entitled and which he will lose if uplift is abolished and this injustice to the consumer rectified.

    1085
    I believe that consumers today are paying considerably more in Purchase Tax than they should be if fair practices of valuation were adopted. In their Report the Grant Committee make it quite clear that in considering this question they felt that the decision whether or not uplift was desirable should not be taken on revenue grounds. They said that such considerations were irrelevant. The Chancellor therefore owes us his presence here, and he also owes us a very full explanation of his attitude and actions. Until we get that explanation he must remain under the suspicion of having dodged this issue because he wants to retain revenue which he is at present unfairly obtaining.
    I want the House to be patient while I explain the situation which the Grant Committee have revealed, and the way in which my new Clause proposes to deal with it. Under Section 21 of the Finance (No. 2) Act, 1940, Purchase Tax is to be calculated upon the open market wholesale value of chargeable goods, and it is to be levied on the retailers' purchases from manufacturers or wholesalers. The present difficulty has arisen from the fact that the Customs and Excise authorities, in administering the Act, are interpreting "wholesale value" in certain arbitrary ways, to the detriment of the consumer.
    Where a retailer buys through a wholesaler no difficulty or argument can arise; the wholesale price in that case is obvious and clear. The whole difficulty has arisen in connection with those cases where the retailer buys direct from the manufacturer. In those cases, the Customs and Excise authorities have argued that the actual price paid by the retailer for his chargeable goods is not the wholesale price, and they have therefore uplifted the actual buying price of the retailer by certain quite arbitrary percentages, fixed in relation to a notional wholesale price.
    In justification of this procedure, which obviously means that the ultimate consumer is paying more tax than he otherwise would, they say that if they were to take the actual retailer's buying price as the basis on which to calculate Purchase Tax, first, it would not reflect the cost of certain wholesaler functions which in some cases are carried out by the retailer—and my Clause deals with that, because it is a point of substance—and, second, it would give an unfair advantage to large
    1086
    buyers, who get a reduced price for buying in quantity, and, therefore, as their actual buying price is lower, would pay a reduced amount of tax.
    With regard to the first point, only in a very small number of cases does the retailer who buys direct from the manufacturer perform wholesaler functions. Those cases are dealt with in my new Clause, and I shall come to them in a moment. Dealing with the question whether, if the actual buying price is taken, it adequately reflects the wholesale element, in my speech last year on another Clause dealing with uplift, I pointed out that over a whole range of goods, in particular furniture and clothing, the normal channel of sale for both large and small buyers is direct from the manufacturer to the retailer.
    As the sale is direct in those cases, even to the small retailer, it is obvious that the manufacturer is doing his own wholesaling, and the cost of that wholesaling is reflected in his actual selling price to the retailer. The manufacturer is carrying considerable stocks to replenish the demands of the small retailer as those demands arise. He is employing travellers, he is paying delivery charges, and is acting as wholesaler as well as manufacturer. As, therefore, the cost of wholesaling is reflected in his selling price to the retailer, it is ridiculous that the Customs and Excise should say, "You have by-passed the wholesale stage and somehow or another have cut something out, so we will put it back again."
    It is ridiculous for them to do what they have been doing—arbitrarily fixing a percentage by which to uplift his selling price. Last year I gave the normal percentages of uplift which they added in these cases—7½ per cent.; they add 7½ per cent. to the actual selling price in order to reach this notional wholesale value. On that figure, including the arbitrary 7½ per cent., they calculate the Purchase Tax which the poor old consumer has to pay. At a time when we are all anxious to relieve the burden of taxation, there is an additional element of tax as a result of uplift.
    The Chancellor obviously had no answer to my case when I made it last year. He appointed the Grant Committee who, in their Report, have unanimously accepted the sense of this argument. I hope that at any rate we shall

    1087
    have this afternoon the Government's pronouncements on the unanimous recommendations of the Grant Committee. They unanimously recommend, in recomdation (1, a):
    "the actual price should not be increased by the interposition of an imaginary wholesale merchant;"
    Secondly, they recommend that,
    "the actual price should not be increased by reference to wholesaling costs unless these are actually incurred or borne by the purchaser."
    The Committee also agreed unanimously, as does my new Clause, that in the small number of cases where the retailer does some of his own wholesaling, the retail buying price should be uplifted. I agree that that is the one case in which uplift is justified, because if it were not done in that case, then a wholesale element would be missing from the price on which the tax was charged. But this applies only to those cases where the manufacturer delivers to a central stockroom, perhaps to a firm with a number of shops or branches, and the retailer in that case pays the delivery charge to his various shops or branches. In such a case an element of delivery charge is missing from the price which the retailer pays, and uplift is clearly justified.
    But there is also the opposite type of case, where the Committee unanimously agree, as does my new Clause in its second proviso, that where the price which the retailer pays usually includes a carriage charge, but on some occasion he is charged extra carriage for a special order—perhaps because it is a special delivery or small in size—then the extra carriage charge should be disregarded for tax purposes. The Grant Committee were unanimous in that recommendation, and I include it in my Clause.
    So far, so good. It is at this point that the minority of the Grant Committee parts company with the majority and it is at this point that I part company with the majority Report. What the majority say is this: that uplift should not be abolished where the retailer's actual buying price is lower because he has bought a larger quantity than usual or where he enjoys any other buying advantage. The Grant Committee are extremely vague about what can be included in the term "any other buying advantage."
    1088
    They just think there may be something somewhere; they do not define or specify it, they merely stick that in. They make this recommendation, although in their Report they agree that logically there is a good deal to be said for the tax being charged in all cases on the actual retailer's buying price, whether or not this reflects a quantity discount.
    5.15 p.m.
    I am delighted to see that the Chancellor of the Exchequer has joined us, and I hope that we shall have some precise announcement of Government policy as a result of his presence here today. The Grant Committee, therefore, accept the logic of the argument, which is certainly more just to the consumer, that Purchase Tax should be levied on the actual retailer's buying price and not uplifted because the wholesaler has been by-passed, or because there has been a quantity discount or because in some other respect a smaller price has been paid by a certain type of retailer. Although they admit the logic of this argument and agree that there is very little justification for playing about with any "notional" element in the calculation of wholesale value—which can only be a purely arbitrary figure—they none the less recommend that uplift should not be abolished in cases where the price is reduced as a result of a larger quantity being bought.
    When we examine their reasons I think we shall find that they ought not to be acceptable to the House. The first and major ground on which they reject the logical argument is that it would cause some difficulty in the case of price-maintained goods. The problem, they say, is this: where a retail buying price is reduced for any reason, that reduction ought to be passed on to the consumer if we are to take that lower price as the basis for the calculation of tax. But in the case of price-maintained goods, by the very nature of the contract between the manufacture and the retailer, any reduction which the retailer gets for buying in quantity cannot be passed on to his consumer because the goods are price maintained. The manufacturer has fixed the price at which the retailer must sell. Consequently, if the manufacturer gives a discount because the retailer has bought in quantity, the retailer

    1089
    will not be able to pass it on to the consumer, so that if tax were calculated taking the quantity discount into consideration, then in that case the retailer would get a windfall.
    This little problem has, therefore, become the major ground on which the Committee have not recommended the abolition of uplift in this case. I suggest to the House and to the Chancellor that this is a supreme example of the tail wagging the dog. Whereas it is true that quite a large proportion of the goods sold in this country may be price maintained, it is also true that only a very small proportion of those price-maintained goods are sold through channels which bring a quantity discount. In fact what the Report is saying is that as the abolition of uplift in these cases would make a present to the retailer in what would be 10 per cent. of the cases the consumer is to be deprived of his possible advantage in 90 per cent. of the cases, because in 90 per cent. of the cases where the retailer is buying cheaper because he is buying in larger quantities he is not buying price-maintained goods and he is passing the advantage on to the consumer.
    Therefore, what the Grant Committee have said is that because there is this problem of price-maintained goods justice is not to be done to the consumer. I suggest it is quite wrong that the Report should in this way bolster up the price structure of price-maintained goods. There is a good deal of division of opinion in this House on the desirability of price maintenance at all, and the Grant Committee recognise that this is a highly controversial question by going out of their way to say it is not part of their job to come down on either side of the argument or to frame their recommendations in such a way that they might seem to be either for or against the principle of price maintenance; but in fact, by distorting the logic of their own argument to avoid creating difficulties for manufacturers of price-maintained goods, the Committee are just doing that: they are coming down on the side of price maintenance, and we on this side of the House certainly cannot accept that as an argument.
    I agree, therefore, with the minority Report when they say quite emphatically that the difficulties outlined in the majority
    1090
    Report and the dangers which will arise by abolishing uplift are outweighed by "the more certain benefits to the community of adopting a basis of tax valuation which more easily accommodates more competitive trading techniques." The minority Report comes down emphatically in favour of the total abolition of uplift except in the one case I have mentioned, namely, the case in which the actual retail buying price does not reflect a certain transport element.
    Why do they do that? They do that primarily on the argument that any reductions in price down the chain of distribution ought to be passed on in their totality to the consumer, and surely it is monstrous that the consumers in these difficult times should, by administrative devices of Customs and Excise, be compelled to pay more tax than they otherwise would. The Chancellor may argue that uplift makes a very small difference in most cases, that the element of uplift in the final price which the consumer pays is a very small one, but I think that that is an argument which the Chancellor, who claims to be a champion of the consumer, ought not to adopt in this House.
    Let me give a couple of examples which I have tried to calculate. If I pay 1s. 6d. for a comb the chances are I am buying it from a channel of distribution which is affected by uplift. In that 1s. 6d. there is an element of 2½d. in respect of Purchase Tax, and of that 2½d. a halfpenny will be attributable to uplift. The Chancellor may say, "What is ½d. in 1s. 6d.?" Every housewife in this country knows that halfpennies here and halfpennies there add up to a pretty oppressive total by the end of a week. In any case, if this element of tax is being levied quite arbitrarily it is intolerable that it should be paid.
    Let me give another example to bring out more clearly, more dramatically, how the housewife is being charged extra tax. If I go into a big store and buy a fibre suitcase for 45s. the tax element will be about 12s., and of that 12s. I shall pay 2s. in respect of uplift. It takes a good deal of justifying to continue levying that additional tax at this difficult time.
    One of the arguments which has always been used in favour of uplift is that it protects the small retailer from the unfair advantages which the large buyer enjoys. The Grant Committee make the point

    1091
    that unless the actual buying price of the retailer is uplifted to offset any discount he gets for quantity then the poor small shopkeeper will be driven out of business. We really must look at this argument a little more carefully. I know it is a good sentimental wicket on which the Chancellor will no doubt some time later attempt to bat, but the Report itself, with its evidence of the representations which were made to the Committee, does not really bear out that point of view, because if we examine who are the small retailers who are making an outcry against the abolition of uplift we find that they are a very special small group.
    There are two types of small retailer. First there is the small retailer who specialises in a particular line of goods—the draper, for instance. He is not protesting against the minority Report. In fact the Drapers' Chamber of Trade made representations to the Grant Committee that uplift ought to be abolished altogether, including uplift in respect of quantity discount. They know perfectly well that uplift is unjustifiable, and they have said so, including the small shopkeepers. Again, the National Chamber of Trade made representations in favour of the total abolition of uplift.
    Who is the small retailer who protests? He is the village shop type of retailer, the all-in man. It is interesting that the Grocers' Federation have protested against the abolition of uplift for quantity discount. Why? There is no Purchase Tax on groceries. The small grocer is not thinking of his main line of sales when he protests. What he is thinking of are the bits of stationery that he carries as a sideline, or the bits of haberdashery he carries as a sideline. The only situation in which he carries stationery and sewing thread as a sideline is the situation in which he is the one general purposes store for the whole of a local community.
    In other words, he is the village shop sort of man, and the whole raison d'etre of that type of shop is its convenience to the consumer. I agree completely with the minority Report that the village shop which sells the bits of stationery and haberdashery is going to get its customers anyhow, even if a large store in a town several miles away is able to sell a little bit more cheaply as a result of abolishing
    1092
    uplift, for the raison d'etre of the small retailer in a village is that he serves a neighbourhood which depends on him for convenience.
    I suggest to the House, therefore, that the principle which we ought to adopt today, and which is reflected in my new Clause, is that Purchase Tax ought to be levied only on the actual retailer's buying price. If we had in this country, as some hon. Members opposite have often argued we ought to have, instead of Purchase Tax a retail sales tax—and when introducing the Purchase Tax Bill in 1940 the Government spokesman of the time said that Purchase Tax was intended to be a kind of sales tax—then obviously that tax would be levied on the actual retail price.
    5.30 p.m.
    We should not make Woolworth's accept an uplift on their actual selling price for the purpose of calculating a sales tax. We should have the actual selling price taken as the criterion. If we move the point of levying purchase tax back along the chain of distribution in order to suit the convenience of the Treasury, it is quite intolerable that the consumer should have to bear an additional element of tax as a result.
    There is a final point that I want to make in connection with the reasons why the House should accept the minority Report of the Grant Committee, abolish uplift entirely and accept my Clause. The majority believed that the uplift levied in the cases I referred to last year was wrong and ought to be abolished. It is very interesting that since the debate which we had in the House at this time last year, administrative action has been taken, and Customs and Excise have considerably altered the amount of uplift paid on the types of cases to which I referred.
    If the House will turn to Appendix C of the Grant Committee Report they will find that in July of last year revised tax values were brought into operation as a result of negotiations and bargaining between the Customs and Excise and certain trade associations. Quite arbitrarily, behind the scenes, there was bargaining about what level of uplift should operate and in what cases. This resulted in the reduction of uplift in a certain number of cases. That, in fact, was an admission

    1093
    that the anomalies and injustices to which I referred last year did exist and ought to be dealt with.
    So long as uplift remains at all, however, it is outside the control of this House to stop Customs and Excise putting the whole situation back where it was before. If we are going to say, "We will abolish uplift in these cases where it is the normal trade practice to by-pass the wholesaler, but we will not abolish uplift where the retailer gets a lower price for bying in quantity," then we give a wonderful administrative handle to Customs and Excise to reverse the reforms which they have introduced in the last 12 months. They can say, in a number of these cases, "There is a quantity element here." If the retailer buys two instead of one of a thing it can be said that there is a quantity element involved. We can argue about it indefinitely and no one can prove how much of the price reflects a quantity reduction.
    As the minority Report rightly says, it is a notional figure, and so long as we have Purchase Tax fixed purely on notional figures, there is no protection for the consumer against the abuses of the administrative machine. There are too many arbitrary administrative decisions already taken in the operation of our finances outside the control of this House. I want the control of this matter and the protection of the consumer brought back within the confines of the decisions of this House. The only way to do that is by deciding, in accordance with the minority Report, this afternoon, that we will abolish uplift altogether and that we will get rid of this notional calculation and base Purchase Tax on the actual retailers' buying price in every case, except in the small one to which I have referred.
    In that way, we shall save the consumer millions of pennies here and sixpences there. We owe this to the consumers of this country. It is no good the Chancellor of the Exchequer saying at one moment that he wants to reduce the cost of living by cutting Purchase Tax and, at another time, for purely revenue considerations, refusing to operate a logical and fair administrative principle. It is because my new Clause would introduce that logical and fair administrative principle that I ask the House to accept it this afternoon.
    Mr. Anthony Greenwood: I beg to second the Motion.
    1094
    I think that the House will agree that my hon. Friend has moved it so clearly and well that I am in a position to discharge my responsibility with comparative brevity. Like my hon. Friend, I am a little amazed at the coyness which the Chancellor of the Exchequer has shown in respect of the Grant Committee's Report. On a previous occasion, he welcomed the Report of the Hutton Committee with some alacrity, but in the case of the Grant Committee's Report he has dillied and dallied in a way more appropriate to Marie Lloyd but a little unbecoming, I think, in the Chancellor of the Exchequer. Perhaps now that the Chancellor is with us this afternoon, he may explain why he has shown this remarkable coyness in respect of the Grant Committee's Report.
    We can understand that the Chancellor is reluctant to join issue with Mrs. Hall and Mrs. Jay who come from that remarkable generation at Oxford which produced both the Financial Secretary to the Treasury and my hon. Friend the Member for Blackburn, East (Mrs. Castle), but I cannot understand the Chancellor's reluctance to accept the unanimous recommendations of a Committee which he himself appointed. The hon. Member for Blackburn, East referred to the Chancellor as being the champion of the consumer. I think that a flicker of incredulity ran through the House at the Chancellor of the Exchequer even claiming that he was that. We regard the party opposite as being charged with the Government responsibility of protecting the traders of this country.
    When discussing Purchase Tax we find the remarkable situation that no representative of the Board of Trade is present on the Treasury Bench. We do not expect the spokesmen of the Board of Trade in this House to make very many contributions to our discussions, but we feel that their presence here would be an act of courtesy to the House. I should like to say briefly, for the benefit of hon. Members who have come into the Chamber since this debate began, what I consider this Clause to do.
    It seems to me that in this new Clause we are doing three things. We repeat the present statutory definition of the wholesale value but in addition make it subject to two provisos.

    1095
    The first, as my hon. Friend said, is in subsection (1, a) and abolishes the uplift on retailers' purchases from manufacturers, except where the retailer himself incurs wholesaling cost. My hon. Friend has spoken at some length on that point and I do not propose to develop it. The second proviso, which is contained in subsection (1, b), and which is the unanimous recommendation of the Grant Committee, is that Purchase Tax should not be levied on extra delivery charges paid by retailers on small orders for special delivery.
    I am glad to see the hon. Member for Bridgwater (Mr. Wills) sitting in some obscurity on the fourth bench back, because he made a remarkable speech on this subject when we were discussing it a year ago. On that occasion he said:
    "… there is an anomaly which arises out of the provision which states that, for the purpose of computing the wholesale price of goods on which Purchase Tax is charged, the cost of such things as postage, insurance, packaging and other things is to be brought in before the percentage is charged. That is another form of uplift and extra charge which is really anomalous, and which should be done away with. It means, in fact, that the tax is not based on the true price of the goods, but on a price to which is added the cost of carriage between wholesaler and retailer, and I think this is a false basis. It places the small shopkeeper who is at some distance from his wholesaler at a disadvantage against one living close to his wholesaler."—[OFFICIAL REPORT, 27th May, 1952; Vol. 501, c. 1301–2.]
    That was a very sound exposition by the hon. Member, and I hope we may find him in the Lobby with us when we continue to show our loyalty to the principles which he expounded a year ago. I have never understood why it was that the hon. Gentleman was made an acting Whip, unpaid, shortly after that speech. Whether it was as a reward for services rendered, a punishment for what he had done or an act of appeasement I have never been able to understand.
    As my hon. Friend has confessed, there will still be anomalies even if the new Clause is accepted, but, at any rate, in spite of anomalies, we shall be doing something to protect the consumer. We admit that some concessions and relaxations have been made during the past year, and, I think, made in the light of criticisms expressed from both sides of the House a year ago, but nevertheless the imposition of uplift still tends to
    1096
    militate against any rationalisation of distribution and, in effect, the Treasury are saying to retailers, "If you make any saving, we will see that we get part of it in the Treasury."
    That is not a healthy attitude. It is bad for trade. It tends to increase the rate of tax which is chargeable on cheaper goods and, as the Chancellor admitted a year ago, in some cases it has the effect of making comparatively cheap goods sufficiently expensive to come above the D level and be liable for tax which would otherwise not be payable. For those reasons, I have pleasure in seconding the Motion.
    Mr. F. A. Burden: I and my right hon. and hon. Friends have lost no opportunity in stating our objections to Purchase Tax in principle, and I have spoken about uplift on several occasions since I have been in the House. While I do not wish to follow at any great length what has been said by the hon. Lady the Member for Blackburn, East (Mrs. Castle), in putting her case so forcefully and persuasively to the House, I want to join issue with her on one point She is not alone in her opposition to uplift. Many of my hon. Friends are equally opposed to it.
    My right hon. Friend took a very big step forward when he set up the Grant Committee to report on that aspect of Purchase Tax. I have no doubt that he did so because he had serious misgivings about the equity of the tax. Equally, in the past two years my right hon. Friend has done more to ease the burden of Purchase Tax than any other Chancellor of the Exchequer has done in the eight years since the end of the war. That should be borne in mind, for it is very creditable.
    5.45 p.m.
    I hope that my right hon. Friend will today announce that uplift will be abolished. It has been, and is, a source of considerable annoyance to the trade. It has imposed, above the normal Purchase Tax, an added tax upon goods which, if it went, could be sold more cheaply than they are at present. The most glaring example of the inequity of the tax—which was supposed to raise the cost only of goods sold directly by the manufacturer to the retailer, and only in cases where there was no question of the

    1097
    person selling to the retailer carrying the normal costs of distribution—is that of cosmetics, which exposes completely the fallacy of the argument.
    Only last year, as the result of advice which I gave it, one firm in the cosmetics trade obtained relief from uplift. In the cosmetics trade, each large manufacturer almost invariably carries his own selling staff, advertises his own goods and has to carry large stocks, and in this trade, above all trades, the manufacturer carries the normal costs of the wholesaler, although he sells to the retailer. I believe that to this day many manufacturers of cosmetics—I have no interest in the trade—are charged uplift, and one moment's thought should convince the Chancellor that that is completely inequitable in this trade.
    The same thing has occurred in many other trades. When I came back from the war I found that some firms in the trade in which I was interested were charged uplift of 7½ per cent., but if the firm agitated very strongly with Customs and Excise for remission of the tax, and fought hard enough, almost invariably the tax was removed or considerably reduced. In the case of the unfortunate firms who, because of lack of knowledge or failure to press their case sufficiently hard, still paid the Purchase Tax, either their sales suffered or the public had to pay more for their goods.
    One of the strongest arguments which can be made against uplift is illustrated by a certain retailer who manufactured goods to sell in his own store. He went to court on the issue. Judgment was given against him, but the judge said that he could not understand how uplift was arrived at and asked whether a Customs and Excise official tossed a coin, saying that if it came down heads the firm would be charged Purchase Tax and if it came down tails it would not. The judge said that it was a queer way of arriving at whether uplift should be charged, and he made it clear that, in principle, he was opposed to it.
    I believe that my right hon. Friend is anxious to take every possible step to reduce the cost of living. Abolishing uplift might not slash the cost of living to any great degree, but it would be a step in the right direction. Under the present
    1098
    system of uplift there are glaring anomalies which, on examination, cannot be justified. The Grant Report has made that clear. The Committee were set up by my right hon. Friend to advise him, and I am sure that, on examination of the Report, he will agree with it in principle. I hope that he will take action which will please not only the hon. Lady and some of her hon. Friends but also those of us on this side of the House who have campaigned for the abolition of uplift.
    Mr. Percy Shurmer: Then vote for the new Clause.
    Mr. Boyd-Carpenter: Uplift, as a word, has a faintly theological ring, but, if hon. Members had not previously appreciated it, I think this debate would have made it clear to them that it is a subject of quite horrible complexity. I agreed with the hon. Lady the Member for Blackburn, East (Mrs. Castle) when she said that it was a topic which was a little less simple than it might first appear to be, an observation which perhaps might also be, not inappropriately, applied to herself. The hon. Lady was good enough to preface her observations with the comment that I knew less about the subject than she did. It was only as her speech progressed that I began fully to appreciate the brutality of that comment.
    May I say at once how grateful my right hon. Friend and I are, as I am sure the whole House is too, to the Grant Committee, both to those who composed the majority and the minority Reports, for their devoted labours into the complexities of this enormous and difficult subject. Whether or not one accepts any of the particular conclusions to which they came, one ought to express the gratitude of the whole House, as I hope I am doing, for their labours on this subject. It is perhaps not without a certain interest that the two extremely able ladies who signed the minority Report have a matrimonial connection with Her Majesty's Treasury.
    For reasons which I shall make clear in a moment, I do not want to enter into any very prolonged arguments on the theoretical basis of uplift. I am bound to remind the House that uplift, whatever the hon. Lady may think of it, is a system

    1099
    which has been in operation in connection with Purchase Tax virtually from the beginning of the operation of the tax in 1940, and has been operated under a variety of Governments.
    I hope, therefore, that we may be able to discuss these complexities without generating too much indignation. In substance, as the hon. Lady herself made clear, a part of the case for uplift—and I am not at this moment expressing any opinion as to its validity—is perhaps founded upon the desirability of seeing that fairness and equity are done to the different kinds of traders with whom we deal, the large and the small. I think the hon. Lady rather brushed this off so far as it affected the small trader. Her attitude this year is different from the line she took last year, when she went out of her way, in moving a new Clause, to describe it as an attempt to avoid discrimination between the big buyer and the small buyer. But it is quite clear that the proposals contained in paragraph (a) of this new Clause would, of course, militate greatly in favour of the large trader, who is able to buy, by reason of the large scale of his purchases, at a lower price per article than is possible for the small trader.
    The House will be aware, for example, that a large departmental store, either because it is purchasing large quantities of a particular kind of article or because it is purchasing a large number of many articles, is able, perfectly properly, to obtain supplies of these articles at lower prices per article than the small trader who buys only a few at a time. The problem to which I think hon. Members should address their minds is that there is, broadly speaking, but with some qualification, an objection to assessing the tax on the actual price paid by the retailer because, of course, that would cause the small trader to pay more tax than the large departmental store buying on a large scale. It would, therefore, accentuate through taxation the buying advantage of the large store.
    I am not at this stage saying that that is necessarily an insuperable objection, but it is a serious factor, and I think that hon. Members on both sides of the House might well bear in mind, in considering this matter, that it is desirable to operate the tax as fairly as possible
    1100
    as between two categories of traders. It is very largely with that consideration in mind that a variety of Governments from 1940 have operated some kind of system of uplift.
    Mrs. Castle: How does the hon. Gentleman explain the strong representations made by the chambers of trade such as the Drapery Chamber of Trade and the National Chamber of Trade, many of whose members are small retailers?
    Mr. Boyd-Carpenter: The hon. Lady is deluding herself if she thinks that I am not coming in due course to the representations I have received, but perhaps it would be more convenient if I took them in a coherent order because otherwise I might detain the House unduly.
    There is a clear fact which I do not want to repeat but which should be clearly in the minds of hon. Members, that a tax assessed solely on the actual price of the particular transaction must increase the relative and competitive buying advantage of the person, shop, institution or business that has already a buying advantage over its competitor. That is one aspect of the matter to which the Grant Committee paid a very great deal of attention, and it is one that we should bear in mind.
    The Committee will recall that after the Grant Report was published my right hon. Friend answered a Question put to him by my hon. Friend the Member for Handsworth (Sir E. Boyle) on 12th May, when he said:
    "I am at present considering this Report, which is not unanimous. The subject, as the House knows, is a complicated one and the views of traders may well differ. I shall, therefore, be ready to consider any representations that those concerned may wish to make to me in the near future."—[OFFICIAL REPORT. 12th May, 1953; Vol. 515, c. 1048.]
    Since then a number of trade representations have been received, but by no means all the trade organisations have responded to my right hon. Friend's invitation. That is no doubt owing to the fact that the period of the annual conferences of these organisations is upon us, and I understand that some of them will be awaiting the meeting of these conferences before making their representations.
    A certain number have been received, and I can tell the House that there is a

    1101
    great variety of testimony and of view. I have a number of them here, but I do not want to inflict on the House either a selective—which would be unfair—or a comprehensive—which would be exhausting—resumé of what they have said. What I am bound to tell the House is that the general effect is that some of them favour the present position, some favour the majority Report, some favour the minority Report and some do not care very much for any of those alternatives. It is clear, first of all, that there is no unanimity of opinion in any direction in the trades concerning this issue. And it is still a fact that quite a number of organisations which may well be concerned have not yet responded to my right hon. Friend's invitation.
    In those circumstances my right hon. Friend has not come to a firm and final decision on the major issue, as between the majority and the minority opinion and the status quo. He is still paying attention to the recommendations which are being made from outside, and he will also pay attention to the observations which have been made by hon. Members in the House.
    The hon. Lady tried to suggest that there was something rather curious in the fact that my right hon. Friend had not come to a firm decision on this matter in view of the fact that it was possible to announce a firm decision on the recommendation of the Committee set up last year under Sir Maurice Hutton. Apart altogether from the fact that the Hutton Committee made a unanimous recommendation, the recommendation of that Committee did not involve complicated legislation, which either this majority Report or minority Report would involve. Therefore, I should have thought it was fairly natural, and indeed essential, that a somewhat longer period must necessarily elapse before a decision could be made.
    6.0 p.m.
    Equally I thought that the hon. Lady tried to obscure the issue a little by her reference to the revenue point of view. In view of the fact that my right hon. Friend is proposing in this very Bill reductions of Purchase Tax which will cost £45 million this year and £60 million in a full year, I do not think we need attach much weight to the suggestion of the hon. Lady that uplift was being retained from
    1102
    a revenue point of view. If there is any force in that criticism, it could fall against all her right hon. Friends in the former Government and the wartime National Government, but it does not make sense to try to suggest that revenue considerations are dominant when much larger amounts of revenue than are involved in the whole of uplift have been conceded by my right hon. Friend as part of his policy of relaxation of the Purchase Tax.
    On the major point, therefore, my right hon. Friend has not come to a firm and final decision; that is to say, he has neither accepted nor rejected either the majority Report or the minority Report. He is considering, in the light of the representations made to him, the right course to be taken. It is for that reason undesirable that I should seek to argue the case either for or against the majority or the minority view, since that might indicate some prejudicing of the ultimate decision. It is for the hon. Lady to decide, in the light of what I have said, whether she thinks that a useful purpose will be served by making this issue a matter of Parliamentary and party controversy.
    I would refer to the second part of the new Clause, paragraph (b), which relates to the postal and special delivery charges. Unlike the other matter which we have been discussing, that was a unanimous recommendation of the Grant Committee, and my right hon. Friend authorises me to say that he accepts that recommendation in principle. The provision in the proposed new Clause goes a little further than the terms of the Grant Committee recommendation, and what my right hon. Friend is accepting in principle is the Grant Committee recommendation on this point.
    My right hon. Friend is at present advised that the implementation of that recommendation under this heading does not require legislation but can be effected administratively. He is looking into that aspect of the matter, however, and should any technical or legal difficulty arise he would not hesitate, in the Finance Bill next year, to ask for the necessary Clause, if necessary retrospectively. I am in a position to say that this Grant Committee recommendation will, it is hoped, be in operation by the end of the summer. The matter is one that has caused a great deal

    1103
    of irritation, an irritation perhaps disproportionate either to the strictly equitable considerations or to the revenue considerations involved.
    As regards the larger issue of uplift generally, my right hon. Friend does not want to be compelled to take a firm and final attitude on this question. He is anxiously and seriously considering it in the light of the observations which have fallen from hon. Members during this debate. For that reason my right hon. Friend cannot accept the proposed new Clause. It is equally a matter for the hon. Lady to decide whether she wishes, any more than is strictly necessary, to embroil this issue as a matter of party controversy, involving perhaps the adoption of positions from which it may be difficult to recede.
    That, however, is not a matter for me, and I will conclude by saying that Her Majesty's Government are much concerned about this matter. They realise its importance, from the angle of both the consumer and the trader, and they are anxious that their final decision, when arrived at, shall be one which, while combining fairness between trader and trader, gives the maximum possible benefit to the consumer.
    Mr. Gaitskell: Once again, I am happy to congratulate my hon. Friend the Member for Blackburn, East (Mrs. Castle) on a speech on this subject. When, at the beginning of her remarks, she said that she knew more about uplift than the Financial Secretary, I thought she might have been using the word in another sense, in the theological sense, but as she went on with her speech and displayed such a masterly knowledge of the subject. I realised she had meant it in the sense of the Grant Committee Report. What the Financial Secretary has just told us does not lead me in any way to differ from her in her estimate of their relative knowledge of the subject.
    I am sure that this should not be treated as a revenue question and I believe that the Chancellor will agree that it would be quite wrong to decide the highly complicated and difficult issue of whether or not uplift should be charged simply on the basis of whether we are to get revenue in from it or not. Secondly, I hope we would agree that there is something unsatisfactory
    1104
    in any tax if it involves the officials concerned in arbitrary individual decisions.
    We all realise that to some extent such decisions have to be made in view of our immensely complicated tax system. For the most part, however, they are made according to rules which are clearly understood. I do not think that the Financial Secretary will disagree when I say that uplift falls into one of those categories where the decisions made often appear to be extremely arbitrary, and where there does not appear to be any particular rule which justifies the decision of the Customs official.
    I think, too, that we could agree that if Purchase Tax is levied on the wholesale value of the article there are bound to be cases where what one might describe as an adjustment has to be made in the apparent retail buying price in order to arrive at the correct value for tax purposes; where, for example, the retailer is, in effect, acting as a wholesaler and, although he as retailer is buying at a certain price, it is one which a wholesaler would have paid. That is a point on which the Grant Committee were unanimous. They recognised that in such cases there must be adjustment or uplift.
    Then there is the even simpler case where there is no actual sale between a manufacturer or wholesaler or retailer and, therefore, an estimate has to be made. That we can also agree about. The disagreements begin after that point and, as the Financial Secretary has said, there are really three possibilities. One can take the view that the system which has existed in recent years, certainly up to last year, should be continued; a system in which it was the habit of the Customs officials always to introduce a notional stage where there was not an actual wholesale stage and accordingly to add uplift in order to ascertain the value for tax purposes.
    On that I think the circumstances have changed substantially since uplift was introduced in 1940 or 1941. I can recall, from the time I spent in the Board of Trade then, that there was great concern for the position of the small retailer. It was felt that it would be unfair to him if he were made to pay a larger absolute tax than the large retailer who bought direct and not

    1105
    through a wholesaler. In those circumstances, when, owing to the war, the channels of trade were very restricted and when it was by no means easy, and, indeed, sometimes impossible for a retailer to change his supplier and when, in other words, the normal competitive conditions really did not exist at all, I think it was reasonable to give the small retailer that degree of protection.
    However, I think we can agree that the circumstances today are different. We certainly do not have the same rigid controls over distribution as we had during the war, and we have, as the Government are constantly reminding us, something much more like a buyers' market than a sellers' market. Competitive conditions have returned and the opportunities for all retailers, whether large or small, to alter their supply arrangements are very much greater. That, I think, is the justification for taking a new look at this problem and seeing whether in present circumstances the system that we have had up to now ought to be continued.
    We are then faced with the Grant Report with its majority and minority proposals. I do not propose to argue the case in great detail, because my hon. Friend did that with her usual ability. I only want to draw out one particular and, as it seems to me, quite vital argument. The Financial Secretary said that the real question was whether the small retailer suffered a disadvantage by reason of the fact that the large retailer was able to buy more cheaply, implying that it would be unfair to the small retailer if that were to happen. If I misunderstood the hon. Gentleman, I hope he will forgive me.
    But the essential point which should be realised is that the large retailer buys more cheaply because his methods of distribution, the size of his orders and other considerations enable the manufacturer to produce more cheaply. Therefore, the large retailer is contributing to a higher degree of efficiency. There can equally be no doubt that the uplift, right or wrong, as administered up to last year involved a penalty on the more efficient distributor.
    That, I think, is really the most vital point, and it comes out very clearly in the Report, because the majority, in fact, propose some modification. As I understand, they propose that where a manufacturer has a wholesale side to his business
    1106
    and succeeds through greater efficiency in reducing his selling price to the retailer, the advantage of that is, as it were, to be passed on. No uplift is to apply in that case. The retailer, large or small, is to get the advantage of it without the Customs coming along and taking their share.
    But the majority continue to deny the benefits—if I may put it that way—of efficiency to the retailer, and I must confess that I find that an extremely difficult point of view to sustain. If we take the view that we want to encourage efficiency at the manufacturing stage, when the wholesaling is done at that stage, then, surely, it is logical to conclude that we ought to encourage efficiency when the wholesaling is done at the distributing stage. The basis for a distinction there is far from clear.
    For example, the majority proposals would. I think, come up against very serious administrative difficulties. If, for instance, a retailer places a large order which enables the manufacturer to produce and perform the wholesaling function more efficiently, under which heading, so to speak, is the situation to be classified? Is it a case where uplift is to be applied or not? There is really no way of seeing from the majority Report.
    Nor is there any clear indication as to what is meant by advantages from quantity buying. One can see clearly, in the case of quantity discounts, that the uplift is to continue to apply, but, of course, that may not always appear. The price may be a special price arranged for a large quantity which, as I say, enables the manufacturer to produce more cheaply. Therefore, I feel that it is extremely difficult to see the logic of the majority point of view.
    6.15 p.m.
    In the main, although I think we all recognise that this is a difficult problem, there seems a great deal to be said for the minority proposal. I say this, let me hasten to add, not because of the relationship which exists between one of the members of the minority and my right hon. Friend; nor, let me also add, is it on that account that he is not speaking in this debate. As far as I know, there is no disagreement in the family on this point. It is not because he does not want to disclose disagreement that he is remaining silent this evening.

    1107
    I think that the minority view is a more logical one, and it seems to me that if in present circumstances we are really serious about trying to increase productivity and efficiency, then the case for abolishing uplift, subject to the few special cases where it has to be introduced to prevent evasion, is a very strong one. Can we afford to give a subsidy to inefficiency? Should we not do everything we can to encourage a greater degree of competition in the distributive trades?
    One of the arguments used by the majority in favour of their point of view and against that of the minority is that of resale price maintenance. I must confess that I have very little sympathy with their argument, because I am extremely doubtful whether resale price maintenance as a system ought to be allowed to continue at all. There is the Lloyd Jacob Report, which proposed very considerable changes in the law relating to resale price maintenance.
    At the same time, perhaps we could have an explanation from the Government of their point of view on that issue. I certainly would not take it as an adequate reason for maintaining the system of uplift that if it were abolished we should get into difficulties about resale price maintenance, and that there would either have to be a different price at the retail level or that it would simply mean increasing the profits of the larger retailers. I do not think that that is a convincing argument when weighed against everything else.
    Finally, I come to the point of view of the Government, and I must confess that I find it extremely disappointing. After all, this is not a new problem. My hon. Friend raised it a year ago, and she then put forward some very cogent arguments for a review of the situation. The Chancellor, I think very wisely, appointed this Committee. The Committee reported 2½ months ago, but since then we have had no indication of the Government's attitude. Even today, the only thing about which the Government have been able to make up their minds is this very small and relatively uncontroversial change to which the Financial Secretary referred.
    The only excuse we get for the delay in his matter is that the Chancellor is anxious to hear the views of the trade. Has the Chancellor read the Report? He
    1108
    will find the views of the trade set out in it. As the Financial Secretary says, he will find every point of view in the Report. It is perfectly clear that the Chancellor's answer and that of the Financial Secretary are simply stalling replies. They are unwilling and unable, too timid and too evasive to make up their minds on this issue.
    That really is not very creditable to the Chancellor. We all know that he is extremely busy at the moment and we sympathise with him. He must be very overworked. Nevertheless, I feel that this is a matter to which he should have given attention a little earlier. It may be a difficult decision to make, but that is no reason for not coming to a decision on it. We have made our point of view on this very important matter quite clear, and I give the Financial Secretary warning that we are prepared to press the matter further.
    It really is not good enough to say, "Do not divide the House; you are making a party issue of it." As a matter of fact it is not a party issue. All the speaking has been on one side today, but we invite the hon. Member for Gillingham (Mr. Burden) and any of his hon. Friends to come into the Division Lobby with us when we vote on the new Clause.
    Mr. Burden: It is curious that the right hon. Member should adopt this line now, because he did nothing at all about abolishing uplift during the whole period when he was Chancellor, whereas my right hon. Friend has made concessions.
    Mr. Gaitskell: I dealt with that very fully and explained that there was a case for uplift when the tax was introduced during the war and in the immediate post-war period. So far as I can recollect there was no particular pressure for any change, while I was at the Treasury at any rate. But I think it has increased substantially as competitive conditions have returned. We have had a Report and the Report lays bare the situation. There really is no case for further delay and I suggest to the Committee that we should register our views in the Division Lobby.
    Mr. R. A. Butler: I would not have taken part in the debate had it not been for the observations of the hon. Lady the Member for Blackburn, East (Mrs. Castle), when opening the debate, about my absence and also the observations of

    1109
    the right hon. Member for Leeds, South (Mr. Gaitskell). The hon. Lady complained about my not being here and used language which has been reported to me. I do not propose to waste the time of the House in traversing what she said, but I did ask to be informed when her Clause was called.
    I was engaged on rather important duties and, unfortunately, was delayed on my way here. But I did get here for at least 22 minutes of her speech, which, on a Report or Committee stage, is a fair share and I was able to gain an idea of what the hon. Lady had in mind. To those who read our debates I would point out that in missing the first 12 minutes of her speech I did not mean any injustice or underestimate the importance of the issues before us.
    The right hon. Member for Leeds, South said that the Government were timid, evasive and extremely disappointing, and that they should have come to a decision already. It is to that aspect of his remarks that I wish to address myself. The position is not at all as he attempted to make out. We understood there was a problem connected with uplift during the debates on the last Finance Bill. I pointed this out to the Grant Committee. I wish to endorse what the Financial Secretary said in paying tribute to the excellent work that has been done by the members who signed both the majority and the minority Reports.
    In this connection, I think it a great pity that the right hon. Member for Battersea, North (Mr. Jay) has not taken part in the debate. For once the right hon. Member had an opportunity of being properly briefed on a subject when taking part in our discussions. I know that many of the briefs have been provided by his hon. and learned Friend the Member for Kettering (Mr. Mitchison), his hon. Friend the Member for Gloucestershire, South (Mr. Crosland) and other hon. Friends, but never has there been an opportunity to hear a really good speech from him. We are sorry that he did not take part in this debate owing to his usual modesty.
    Mr. Gaitskell: He may do so yet.
    Mr. Butler: I trust that he may. In his remarks about the attitude of the Government, the right hon. Member for
    1110
    Leeds, South asked if I had read the Report. The answer is, yes; I have read the Report. I have studied it very carefully and no extent of public duty would persuade me in any way to go back on the detailed work which must be done in connection with the Finance Bill. Nor will it have any effect on the work I do at the Exchequer.
    The right hon. Member said that the trade made representations which may be read in the pages of the Report. To an extent that is correct and one can gain an idea of the attitude of some of the trade to it. But what the right hon. Member did not say was that the trades had not had an opportunity to give their opinion on the majority or the minority Reports.
    That is precisely the position in which the Government are today. Not only have the trades not been able to give a final decision on the majority or minority Reports, but we have not yet received sufficient evidence from the trades themselves. In fact, there has been a lack of evidence from the trade as to what their view is since we asked their opinion on the majority Report and the minority Report.
    Mr. Jay: Since the right hon. Gentleman is so anxious for me to make a contribution, may I ask him why the Government did not think it necessary to have the comments of traders on the Hutton Report before they made up their minds about that?
    Mr. Butler: We very carefully took into account the view of the trade before we came down in favour of the recommendation of the Hutton Report. We took great care to ascertain the position. In this case, we have an extremely complicated situation. I have had a digest made of the evidence from the trade on the majority and minority Reports to date. In my view, that does not represent an adequate sample on which the Government should make a decision.
    There is no doubt that a very substantial element in the trade is in favour of the status quo. That is the first section; there is a section in favour of the majority recommendations and a very large section representing retail distributors and multiple shops—big stores and chain stores—who are represented by the view expressed in the minority Report

    1111
    which is supported in this proposed new Clause. I am not satisfied that we should be right today to come to a conclusion to give up £15 million of public money and accept views as put forward essentially from the point of view of the big stores, the multiple and chain stores. That would be a mistake——
    Mr. Gaitskell: The consumers.
    Mr. Butler: The right hon. Member says, "the consumers." We understand the motives from which the Clause has been moved and appreciate the importance of the consumer, but we do not think that the evidence given in the speeches of the hon. Lady or the right hon. Member is sufficient to justify us in accepting the loss of £15 million of public money and accepting the Clause as put forward.
    We come to the question of whether we could have legislated on the majority Report. In my opinion, the evidence in favour of that is not adequate at present to justify us doing so. The evidence in favour of the status quo is just as strong as the evidence we have received in the last few weeks in favour of the majority Report. Under the circumstances, I do not feel I can take a decision on the evidence before me. That does not mean that we think the matter should be indefinitely or permanently put off. I hope we shall now come to a decision on this Clause and that meanwhile, before next year, we shall be able, on the evidence put before us on the basis of the minority and majority Reports, to come to a decision which is agreeable to the House as a whole.
    Mr. Austen Albu: Before we come to a decision on this Clause—and I hope my hon. Friend the Member for Blackburn, East (Mrs. Castle) will press it to a Division—I wish to refer to what my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said about retailers buying in quantity. We shall probably not get an opportunity of
    discussing this matter again before the next Finance Bill and it is very important that the Government should take fully into account this important effect.
    It is not only a question of costs of distribution, but the present method of the tax on uplift does, of course, penalise the placing of long-run orders, which is one of the major ways in which we can keep the costs of consumer goods down. In my view, this is by far the most important effect of the present system. I hope the Government will consider this particular aspect very carefully when they are about to make up their minds on the Report.
    One could argue from the point of view of the small retailer, and so on, but anybody who regards what has been taking place in retail distribution, particularly in the clothing trade and with women's clothing in recent years, can see what has been the effect of large-scale purchases by retailers direct of goods for which very long-run contracts are placed. This is one of the most effective ways of getting down the cost of consumer goods and, therefore, the cost of living. I do not think we can allow the interests of a group of small shopkeepers to prevent the development of this type of trading, which has been one of the most successful ways of bringing down the cost of living.
    Mrs. Castle: With permission, I would make another brief intervention. I appreciate the courtesy of the Chancellor in meeting my request that he should intervene. But, having listened to him, I find that he is in effect doing the work of the Grant Committee all over again, and collecting evidence again, which is an insult to the Committee after all the work which has been done. I am left with the impression that he is trying to collect evidence in favour of doing nothing, and in view of that I propose to press the Clause to a Division.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 224; Noes. 251.

    Division No. 214.]

    AYES

    [6.31 p.m.

    Acland, Sir Richard

    Baird, J.

    Blackburn, F

    Adams, Richard

    Balfour, A.

    Blenkinsop, A.

    Albu, A. H.

    Barnes, Rt. Hon. A. J

    Blyton, W. R.

    Allen, Scholefield (Crewe)

    Bartley, P.

    Boardman, H.

    Anderson, Alexander (Motherwell)

    Bence, C. R.

    Bottomley, Rt. Hon. A. G

    Anderson, Frank (Whitehaven)

    Benn, Hon. Wedgwood

    Bowden, H. W.

    Awbery, S. S.

    Benson, G.

    Bowies, F. G.

    Bacon, Miss Alice

    Bing, G. H. C.

    Braddock, Mrs. Elizabeth

    Brockway, A. F.

    Hughes, Hector (Aberdeen, N.)

    Pryde, D. J.

    Brook, Dryden (Halifax)

    Hynd, H. (Accrington)

    Pursey, Cmdr. H

    Broughton, Dr. A. D. D.

    Irvine, A. J. (Edge Hill)

    Rankin, John

    Brown, Rt. Hon. George (Belper)

    Irving, W. J. (Wood Green)

    Reeves, J.

    Burke, W. A.

    Isaacs, Rt. Hon. G. A.

    Reid, Thomas (Swindon)

    Burton, Miss F. E.

    Janner, B.

    Reid, William (Camlachie)

    Butler, Herbert (Hackney, S.)

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

    Rhodes, H.

    Callaghan, L. J.

    Jeger, George (Goole)

    Richards, R.

    Carmichael. J.

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

    Robens, Rt. Hon. A.

    Castle, Mrs. B. A.

    Jenkins, R. H. (Stechford)

    Roberts, Goronwy (Caernarvon)

    Clunie, J.

    Jones, Frederick Elwyn (West Ham, S.)

    Rogers, George (Kensington, N.)

    Coldrick, W.

    Jones, Jack (Rotherham)

    Ross, William

    Collick, P. H.

    Jones, T. W. (Merioneth)

    Shackleton, E. A. A

    Corbet, Mrs. Freda

    Keenan, W.

    Short, E. W.

    Cove, W. G.

    Key, Rt. Hon. C. W.

    Shurmer, P. L. E.

    Craddock, George (Bradford, S.)

    King, Dr. H. M.

    Silverman, Sydney (Nelson)

    Crosland, C. A. R.

    Kinlay, J.

    Simmons, C. J. (Brierley Hill)

    Crossman, R. H. S

    Lee, Frederick (Newton)

    Skeffington, A. M.

    Cullen, Mrs. A.

    Lee, Miss Jennie (Cannock)

    Slater, Mrs. H. (Stoke-on-Trent)

    Daines, P.

    Lever, Leslie (Ardwick)

    Slater, J. (Durham, Sedgefield)

    Darling, George (Hillsborough)

    Lewis, Arthur

    Smith, Ellis (Stoke, S.)

    Davies, Harold (Leek)

    Lindgren, G. S.

    Smith, Norman (Nottingham, S.)

    Davies, Stephen (Merthyr)

    Logan, D. G.

    Sorensen, R. W.

    de Freitas, Geoffrey

    MacColl, J. E.

    Soskice, Rt. Hon. Sir Frank

    Deer, G.

    McGhee, H. G.

    Sparks, J. A.

    Delargy, H. J.

    McGovern, J.

    Stewart, Michael (Fulham, E.)

    Dodds, N. N.

    McInnes, J.

    Stokes, Rt. Hon. R. R.

    Driberg, T. E. N

    McKay, John (Wallsend)

    Strachey, Rt. Hon. J.

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

    McLeavy, F.

    Strauss, Rt. Hon. George (Vauxhall)

    Ede, Rt. Hon. J. C.

    McNeil, Rt. Hon. H.

    Summerskill, Rt. Hon. E.

    Edelman, M.

    MacPherson, Malcolm (Stirling)

    Swingler, S. T.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Mainwaring, W. H.

    Sylvester, G. O.

    Edwards, W. J. (Stepney)

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

    Taylor, Bernard (Mansfield)

    Evans, Albert (Islington, S. W.)

    Mann, Mrs. Jean

    Taylor, John (West Lothian)

    Evans, Edward (Lowestoft)

    Manuel, A. C.

    Taylor, Rt. Hon. Robert (Morpeth)

    Evans, Slanley (Wednesbury)

    Marquand, Rt. Hon. H. A

    Thomas, David (Aberdare)

    Fernyhough, E.

    Mason, Roy

    Thomson, George (Dundee, E.)

    Forman, J. C.

    Mayhew, C. P.

    Thornton, E.

    Fraser, Thomas (Hamilton)

    Mellish, R. J.

    Timmons, J.

    Freeman, John (Watford)

    Messer, Sir F.

    Tomney, F.

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

    Mikardo, Ian

    Ungoed-Thomas, Sir Lynn

    Gibson, C. W.

    Mitchison, G. R

    Viant, S. P

    Glanville, James

    Monslow, W.

    Wallace, H. W.

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

    Moody, A. S.

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

    Greenwood, Anthony (Rossendale)

    Morgan, Dr. H. B. W.

    Weitzman, D.

    Grenfell, Rt. Hon. D. R.

    Morley, R.

    Wells, Percy (Faversham)

    Grey, C. F.

    Morris, Percy (Swansea, W.)

    Wells, William (Walsall)

    Griffiths, Rt. Hon. James (Llanelly)

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

    West, D. G.

    Hale, Leslie

    Mort, D. L.

    Wheeldon, W. E.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Moyle, A.

    White, Mrs. Eirene (E. Flint)

    Hall, John T. (Gateshead, W.)

    Nally, W.

    White, Henry (Derbyshire, N. E.)

    Hamilton, W. W.

    Neal, Harold (Bolsover)

    Whiteley, Rt. Hon. W.

    Hannan, W.

    Noel-Baker, Rt. Hon. P. J

    Wigg, George

    Hargreaves, A

    Oldfield, W. H.

    Wilcock, Group Capt. C. A. B.

    Harrison, J. (Nottingham, E.)

    Oliver, G. H.

    Wilkins, W. A.

    Hastings, S.

    Orbach, M.

    Willey, F. T.

    Hayman, F. H.

    Oswald, T.

    Williams, David (Neath)

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

    Padley, W. E.

    Williams, Rev. Llywelyn (Abertillery)

    Herbison, Miss M.

    Paget, R. T.

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

    Hewitson, Capt. M.

    Palmer, A. M. F.

    Williams, W. R. (Droylsden)

    Hobson, C. R.

    Pargiter, G. A.

    Wilson, Rt. Hon. Harold (Huyton)

    Holman, P.

    Paton, J.

    Winterbottom, Richard (Brightside)

    Holmes, Horace (Hemsworth)

    Pearson, A.

    Woodburn, Rt. Hon. A.

    Houghton, Douglas

    Peart, T. F.

    Yates, V. F.

    Hoy, J. H.

    Plummer, Sir Leslie

    Hubbard, T. F.

    Popplewell, E.

    TELLERS FOR THE AYES:

    Hudson, James (Ealing, N.)

    Price, Joseph T. (Westhoughton)

    Mr. Royle and Mr. K. Robinson.

    Hughes, Emrys (S. Ayrshire)

    Proctor, W. T.

    NOES

    Aitken, W. T.

    Bell, Ronald (Bucks, S.)

    Brooman-White, R. C.

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

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

    Browne, Jack (Govan)

    Alport, C. J. M.

    Bennett, Dr. Reginald (Gosport)

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

    Amory, Heathcoat (Tiverton)

    Bennett, William (Woodside)

    Bullard, D. G.

    Anstruther-Gray, Major W. J.

    Bevins, J. R. (Toxteth)

    Bullus, Wing Commander E. E.

    Arbuthnot, John

    Birch, Nigel

    Burden, F. F. A.

    Ashton, H. (Chelmsford)

    Bishop, F. P.

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

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

    Black, C. W.

    Campbell, Sir David

    Astor, Hon. J. J.

    Boothby, Sir R. J. G.

    Cary, Sir Robert

    Baldock, Lt.-Cmdr. J. M.

    Bowen, E. R.

    Channon, H.

    Baldwin, A. E.

    Boyd-Carpenter, J. A.

    Clarke, Brig. Terence (Portsmouth, W.)

    Banks, Col. C.

    Boyle, Sir Edward

    Clyde, Rt. Hon. J. L.

    Barber, Anthony

    Braine, B. R.

    Cole, Norman

    Baxter, A. B.

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

    Colegate, W. A.

    Beamish, Maj. Tufton

    Brooke, Henry (Hampstead)

    Conant, Maj. R. J. E

    1114

    1115

    Cooper, Sqn. Ldr. Albert

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

    Prior-Palmer, Brig. O. L

    Cooper-Key, E. M.

    Hyde, Lt.-Col. H. M.

    Profumo, J. D.

    Craddock, Beresford (Spelthorne)

    Hylton-Foster, H. B. H.

    Raikes, Sir Victor

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

    Johnson, Eric (Blackley)

    Rayner, Brig. R.

    Crosthwaite-Eyre, Col, O. E.

    Johnson, Howard (Kemptown)

    Redmayne, M.

    Crouch, R. F.

    Joynson-Hicks, Hon. L. W.

    Rees-Davies, W. R.

    Crowder, Sir John (Finchley)

    Kaberry, D.

    Remnant, Hon. P.

    Crowdor, Petre (Ruislip—Northwood)

    Kerr, H. W.

    Renton, D. L. M.

    Davidson, Viscountess

    Lambton, Viscount

    Roberts, Peter (Heeley)

    Deeds, W. F.

    Lancaster, Col. C. G.

    Robertson, Sir David

    Digby, S, Wingfield

    Langford-Holt, J. A.

    Robinson, Roland (Blackpool, S.)

    Donaldson, Cmdr. C. E. McA.

    Law, Rt. Hon. R. K.

    Rodgers, John (Sevenoaks)

    Donner, Sir P. W.

    Leather, E. H. C.

    Roper, Sir Harold

    Doughty, C. J. A.

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

    Ropner, Col. Sir Leonard

    Douglas-Hamilton, Lord Malcolm

    Legh, Hon. Peter (Petersfield)

    Russell, R. S.

    Drayson, G. B.

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

    Ryder, Capt. R. E. D.

    Drewe, Sir C.

    Lindsay, Martin

    Salter, Rt. Hon. Sir Arthur

    Duncan, Capt. J. A. L.

    Linstead, Sir H. N.

    Scott, R. Donald

    Duthie, W. S.

    Llewellyn, D. T.

    Scott-Miller, Cmdr. R.

    Eocles, Rt. Hon. Sir D. M.

    Lloyd, Maj. Sir Guy (Renfrew, E.)

    Shepherd, William

    Erroll, F. J.

    Lockwood, Lt.-Col. J. G.

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

    Fell, A.

    Lucas, P. B. (Brentford)

    Smithers, Peter (Winchester)

    Finlay, Graeme

    Lucas-Tooth, Sir Hugh

    Smithers, Sir Waldron (Orpington)

    Fisher, Nigel

    McCallum, Major D.

    Smyth, Brig. J. G. (Norwood)

    Fleetwood-Hesketh, R. F.

    McCorquodale, Rt. Hon. M. S.

    Snadden, W. McN.

    Fletcher-Cooks, C.

    Macdonald, Sir Peter (I. of Wight)

    Spearman, A. C. M.

    Ford, Mrs. Patricia

    Mackeson, Brig. H. R.

    Speir, R. M.

    Fort, R.

    McKibbin, A. J.

    Stanley, Capt. Hon. Richard

    Fraser, Hon. Hugh (Stone)

    Mackie, J. H. (Galloway)

    Stevens, G. P.

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Maclean, Fitzroy

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

    Fyfe, Rt. Hon. Sir David Maxwell

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

    Stewart, Henderson (Fife, E.)

    Galbraith, Rt. Hon. T. D. (Pollok)

    MacLeod, John (Ross and Cromarty)

    Stoddart-Scott, Col. M.

    Galbraith, T. G. D. (Hillhead)

    Macphereson, Niall (Dumfries)

    Storey, S.

    Gammans, L. D.

    Maitland, Patrick (Lanark)

    Strauss, Henry (Norwich, S.)

    George, Rt. Hon. Maj. G. Lloyd

    Manningham-Buller, Sir R. E.

    Stuart, Rt. Hon. James (Moray)

    Godber, J. B.

    Markham, Major Sir Frank

    Summers, G. S.

    Gough, C. F. H.

    Marlowe, A. A. H.

    Sutcliffe, Sir Harold

    Gower, H. R.

    Marples, A. E.

    Taylor, William (Bradford, N.)

    Graham, Sir Fergus

    Marshall, Sir Sidney (Sutton)

    Teeling, W.

    Gridley, Sir Arnold

    Maude, Angus

    Thomas, Rt. Hon. J. P. L. (Hereford)

    Grimond, J.

    Maudling, R.

    Thomas, Leslie (Canterbury)

    Grimston, Hon. John (St. Albans)

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

    Thompson, Kenneth (Walton)

    Grimston, Sir Robert (Westbury)

    Medlicott, Brig. F.

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

    Hall, John (Wycombe)

    Mellor, Sir John

    Thorneycroft, Rt. Hn. Peter (Monmouth)

    Harden, J. R. E.

    Molson, A. H. E.

    Tilney, John

    Hare, Hon. J. H.

    Monckton, Rt. Hon. Sir Walter

    Touche, Sir Gordon

    Harris, Frederic (Croydon, N.)

    Moore, Lt.-Col. Sir Thomas

    Turner, H. F. L.

    Harrison, Col. J. H. (Eye)

    Nabarro, G. D. N.

    Turton, R. H.

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

    Neave, Airey

    Tweedsmuir, Lady

    Harvey, Ian (Harrow, E.)

    Nicholls, Harmar

    Vane, W. M. F.

    Harvie-Watt, Sir George

    Nicholson, Godfrey (Farnham)

    Vaughan-Morgan, J. K

    Hay, John

    Nicolson, Nigel (Bournemouth, E.)

    Wade, D. W.

    Heald, Sir Lionel

    Nield, Basil (Chester)

    Wakefield, Sir Wavell (St. Marylebone)

    Heath, Edward

    Nutting, Anthony

    Walker-Smith, D. C

    Higgs, J. M. C.

    Odey, G. W.

    Ward, Hon. George (Worcester)

    Hill, Dr. Charles (Luton)

    O'Neill, Phelim (Co. Antrim, N.)

    Ward, Miss I. (Tynemouth)

    Hill, Mrs. E. (Wythenshawe)

    Ormsby-Gore, Hon. W. D.

    Waterhouse, Capt. Rt. Hon. C.

    Hinchingbrooke, Viscount

    Orr, Capt. L. P. S.

    Watkinson, H. A.

    Hirst, Geoffrey

    Orr-Ewing, Sir Ian (Weston-super-Mare)

    Webbe, Sir H. (London & Westminster)

    Holland-Martin, C. J.

    Osborne, C.

    Wellwood, W.

    Hollis, M. C.

    Partridge, E.

    Williams, Rt. Hon. Charles (Torquay)

    Holmes, Sir Stanley (Harwich)

    Peake, Rt. Hon. O.

    Williams, Sir Herbert (Croydon, E.)

    Holt, A. F.

    Peto, Brig. C. H. M.

    Williams, Paul (Sunderland, S.)

    Hornsby-Smith, Miss M. P.

    Peyton, J. W. W.

    Williams, R. Dudley (Exeter)

    Horobin, I. M.

    Pickthorn, K. W. M.

    Wills, G.

    Horsbrugh, Rt. Hon. Florence

    Pilkington, Capt. R. A.

    Wilson, Geoffrey (Truro)

    Howard, Hon. Greville (St. Ives)

    Pitman, I. J.

    Hudson, Sir Austin (Lewisham, N.)

    Pitt, Miss E. M.

    TELLERS FOR THE NOES:

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

    Powell, J. Enoch

    Mr. Oakshott and Mr. Vosper.

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Price, Henry (Lewisham, W.)

    New Clause.—(EARNED INCOME ALLOWANCE.)
    Subsection (5) of section fourteen of the Finance Act, 1952 (which relates to earned income relief), shall be amended by the substitution of one thousand pounds for four hundred and fifty pounds in the reference to subsection (1) of section two hundred and eleven of the Income Tax Act, 1952.—[Mr. Stevens.]
    Brought up, and read the First time.
    Mr. G. P. Stevens: I beg to move, "That the Clause be read a Second time."
    We regard this Clause as exceedingly important, because it seeks to do something which has not been attempted since before the war. It seeks to give taxation relief specifically and solely to those who direct and manage British trade, industry, commerce and professional life, the

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    successful administration of which is essential for the benefit of all.
    It is true that three post-war Chancellors of the Exchequer, the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and my right hon. Friend the present Chancellor have all at one time or another increased the earned income allowance; but in every case a ceiling was put upon the allowance granted. The present ceiling, which is the maximum reached since the war at two-ninths of £2,025, is £450, so that the full earned income allowance can only be attained proportionately by those with earned incomes of £2,025 a year and below.
    This relief is unique in that it is limited to those with incomes between £2,026 and £4,500. It is true that those taxpayers who have earned incomes up to £4,500 and above £2,025 have benefited by earlier earned income allowance increases, but they have not benefited proportionately. It is also true that these same taxpayers benefited by the reduction given in this Finance Bill of 6d. in the standard rate of Income Tax; but that benefit went to those in receipt of unearned as well as earned income—a thing with which I entirely and cordially agree but this concession differs in that respect.
    I have four groups of reasons for believing that this new Clause is most desirable. Those groups can be stated under four main headings—incentive, saving, common justice and common sense. First, incentive. In the debate during the Committee stage the hon. Member for Sheffield, Park (Mr. Mulley) said:
    "I am not convinced that any extension of earned income reliefs to those in the large income groups would have any effect on productivity. It would be a very sad thing if it did. If people who are benefiting by earning incomes of £4,000, £5,000 and £6,000 a year are not aware of the pressing need for the utmost productivity, and are holding back because they are having to pay to the Chancellor of the Exchequer what they regard as too much, they have a poor sort of patriotism."—[OFFICIAL REPORT, 11th June, 1953; Vol. 516, c. 543.]
    I have an exceedingly high regard for the ability, technical attainments and qualifications of the hon. Gentleman, but I do not think that I have ever heard the point
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    so completely missed. The question of patriotism does not arise in any shape or form. I can best explain what I mean by a simple illustration. It so happens that it is a factual illustration but, for obvious reasons, I have changed certain details so that the specific case cannot be recognised.
    6.45 p.m.
    Let us assume that there is a large industrial concern with head offices in London and branch offices throughout the provinces. The general manager, full of years, retires and in the normal course of events the assistant general manager is promoted to take his place. The board of directors then look around the managers of their provincial branches for the man to take the post of assistant general manager. Let us assume that they find what they consider to be a suitable man in the manager of their Birmingham branch, the brightest of all their branch managers.
    That man—an excellent fellow coming from Birmingham—is considered by the Board to be the best man to fill the vacancy at head office. Perhaps the salary of the branch manager is £2,000 a year. The board decide to give him a fine increase in view of the responsibilities of the new post, so they offer him £3,000 a year. But he turns it down and says that it is not good enough, not because of any lack of patriotism but for good sound material reasons. Apparently he would get a gross increase of £1,000 a year, or 50 per cent. of the salary that he is getting.
    But then my right hon. Friend the Chancellor comes along and takes away from that £1,000, because the man will have exhausted all his personal allowances: 9s. in the £ for Income Tax, 2s. in the £ Surtax on the first £500 and 2s. 6d. on the second £500. The total tax the man would have to pay from his additional £1,000 would be £562 10s., very much more than half, to leave him with a net increase of £437 10s. That may seem reasonable. He would have £8 a week extra in cash; but what does he have to meet for that extra £8 a week? First he has to leave the house which he may have in the suburbs of Birmingham at Sutton Coldfield or somewhere like that, and he has to find—somewhere in the suburbs of London, in

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    Wimbledon, Putney or Hampstead, or wherever it may be—a house suitable for himself, his wife and family. It must be a house suitable to the post of assistant general manager of a large industrial concern.
    That will cost at least £100 a year more with very little real gain. In addition, he will find travelling expenses greater. He will find that it will cost him more to eat. His amusements will cost him more. At least another £100 a year will go on things of that sort with no real benefit or advantage to himself. He will be left with about £5 a week in cash with which to maintain the greater dignity of a more senior post and as a reward and return for giving up those amenities which he, his wife and family may have known for perhaps 40 years or more, and trying to start life again in a new and different district.
    We cannot blame the man who says, "No, thanks very much. I am quite happy where I am. Five pounds a week is not a sufficient inducement to make me go to London to this larger and more important post." The consequence is that, instead of the best man for the job being appointed for the post of assistant general manager, the board has to go to the second best and industry suffers. It may be an exporting industry and then the result is that the country suffers as well.
    I do not know why right hon. Gentlemen opposite are grimacing. I have never found that grimacing is a good substitute for argument.
    Mr. Gaitskell: We were wondering from which part of the country the second assistant general manager would come.
    Mr. Erroll: Leeds.
    Mr. Stevens: My hon. Friend says Leeds. I think it is very possible; it is quite a reasonable suggestion.
    I do believe that decreasing differentials are a tragedy. They have been for a number of years, and craftsmanship and standards of management will suffer if it is not worth a man's while to make these sacrifices on leaving his familiar and happy home ground, and if it is not worth a man's while to weary himself with the extra care and strain demanded by craftsmanship or the extra responsibility
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    of more senior management, but that is the position we have reached today.
    Secondly, savings. As far as savings are concerned, it is true that, however much real wages rise and standards of living may improve, the lower income groups will always be the marginal livers, and will not be able to save, the reason for that being that improved standards derive from increased prduction, which, in turn, means that the desirables of today become the necessities of tomorrow. Therefore, we have to turn to the higher income brackets for individual savings, and it is debatable whether individual saving is desirable. Indeed, the right hon. Gentleman the Member for Dundee, West (Mr. Strachey) has views on that subject, because, in that same debate on 11th June, he said:
    "It does look as if under the old rate of taxation, very high indeed compared with our traditional rates, it was possible to produce by various means, Budget surpluses and the like, an adequate degree of saving for the purposes of real capital accumulation."—[OFFICIAL REPORT, 11th June, 1953; Vol. 516, c. 496.]
    I think that is a most dangerous half-truth. It is perfectly true as far as it goes, but it does not go far enough, for the simple reason that it entirely overlooks the human factor and the long-term result. I believe that the saving habit—what my father used to call thrift, which is a word we do not hear very often these days—is a valuable feature of a man's character. I believe that, if we take away a man's ability to save, his desire to save will also be lessened.
    The right hon. Gentleman the Member for Dundee, West, in the same speech, also said that business was mostly run by limited companies. I am not sure how far he was right in that comment. There is a surprising amount of business in this country which is still carried on by unincorporated bodies, such as partnerships and firms, so that it is not entirely true to say that, in all cases, the limited companies are running the business of the country. They are acting as entrepreneurs. It is the directors who "entreprenne."
    If it is the case that the director is a man who is a spendthrift in his private affairs, he will also be a spendthrift in the company's affairs, and, if he is, the company's savings will dwindle and so will vanish the Budget surplus and the national capital accumulation. The income groups which this new Clause will benefit have

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    not lost the desire to save, and, so long as that remains, the National Savings of the present will be the national capital of the future. Unless the ability to save is restored before very long, the desire to save will fade away.
    Thirdly, common justice. Certain pseudo-economists whom I know have said and still say that it is the workers who create the wealth of the world. [HON. MEMBERS: "Hear, hear."] Of course, hon. Gentlemen opposite say, "Hear, hear." They would say "Hear, hear," if I said that, unless a motor-car had four wheels, one at each corner, it would not move along the road, and that is very true, but even that motor would not go far unless it had an engine, in exactly the same way as a wheel-less car with an engine would not go very far. Both workers and managers are essential, and, whereas the workers have, in the last six post-war Budgets received incentives from those Budgets in the shape of tax reductions, I think it is common justice to suggest that the time has come for a proportionate concession to be made to the management.
    The last heading is common sense. It is often said that we are living in the days of the managerial State, and there is no doubt a good deal in it. If that is true, surely, we need the best possible management, and, unless we pay those managers well, we shall not keep them in this country, unless we put an iron curtain round the country. No one benefits more from efficient management than the workers, so that it seems to me to be plain horse sense that we should take active steps to see that we have the best management.
    Now one word on the cost of the concession. Obviously, I can only hazard a guess, but my guess is that the cost of this concession would be something of the order of £15 to £16 million. I agree that that is a substantial sum, but it is very much less than the very large sum involved in the concession to which we on this side are very much looking forward to in due time—a further reduction in the standard rate of Income Tax by 6d. or by 1s. 6d. That would be much more desirable, applicable to unearned as well as to earned income, but it would cost far more than my right hon. Friend can possibly spare this year, although we hope that, by reason of the
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    success of his policy so far, next year we may see the realisation of that hope.
    This concession may well cost about £16 million, but I believe it would be cheap at the price, because I think that the urge and stimulus which such a concession to the managers of the country would produce would result in such a leap in productivity that, in a very short time, the Chancellor would reap more than that £16 million from the taxation on increased profits which would accrue.
    Mr. Erroll: I beg to second the Motion.
    This new Clause proposes to place in the hands of certain moderately well-to-do people rather more spending money than they would get without it. I share the apprehensions which hon. Members opposite may feel—if a man cannot live well on £2,000 a year, why should he be given any more? Surely, they would say, he ought to be able to do his job on £2,000 a year when so many millions of people have to do their jobs on only £400 or even less a year.
    I fully understand, and, in part, sympathise with, the feelings of hon. Members opposite, and I think they spring from deep and sincere origins, but I cannot agree with the equalitarian tendency which has been shown so clearly in the last two years by hon. Members opposite, because I think we are beginning to see in this country that it does not work out in practice, and we are essentially a practical country.
    I have noticed that hon. Members opposite, both inside this Chamber and outside in the country, have frequently pointed out the essential need to reward a man for the job he is doing—the man at the bench, the man behind the plough and the man in the mine. In fact, it was a Labour Chancellor of the Exchequer who altered the rates of Income Tax in such a way as to reduce the incidence of Income Tax on those people getting overtime pay, because it was quite fully recognised that, if a man at the bench or in a mine was doing extra work, he ought to be able to keep a bit more of the extra reward which he earned.
    If that principle holds good, and I am sure that all of us agree that it does, for men who toil with their hands, it surely must be accepted that it is a principle which holds good for those who

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    toil with their brains. I know that toiling with one's brains looks cushy to the man who toils with his hands, and, if I was getting my hands dirty by working, I should think that the manager was having a cushy time in his office. Some of them do have a soft time, but many more tire themselves out in a harder way than the man at the bench. There are probably more deaths among general managers at an early age than there are among men who work at the bench.
    7.0 p.m.
    If hon. Gentlemen opposite accept the principle of an increased retention of reward for manual or clerical workers in this industrial country, they ought to accept it for the salaried or managerial classes. It is not practical politics to say to a man who is a manager and is actuated by very much the same motives as the man who works in a lower status in the organisation, "The more you earn gross, the less you are to be allowed to keep." Human nature being what it is, he tends to ease off. He is not being unpatriotic. He says, "It's not worth the candle. Why should I wear myself out with extra work and responsibility if I can't keep a little of what I earn?"
    It concerns not only himself but his wife and family. He has to make the choice between working extra hours, taking on greater responsibility, and perhaps more travelling, greater enjoyment and pleasure with his wife and family. He has the same feeling as some engine drivers who resist having to spend time away from home, even though they get overtime. A salesman may have to go abroad and be away from home.
    Mr. Jack Jones: When a salesman gets his expenses paid for doing a job abroad it is very unusual for those expenses to be shown in his Income Tax declaration. The driver of an engine gets his expenses in his wage packet and they are shown every week in his P.A.Y.E.
    Mr. Erroll: As a matter of fact, this Conservative Government have just introduced a new form upon which expenses are shown, and as the result of it sales managers who go abroad will, in the normal course of events, have to show those expenses. They will be assessed to tax unless it can be shown
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    that they have been wholly and necessarily incurred in the course of his duties. There is very little difference between their position and that of the sales manager. If the sales managers did not go abroad there might not be so many goods for the engine drivers to pull about in this country.
    Mr. Frederick Gough: This subject is very important. I know of many cases of sales managers going abroad. When it comes to assessment they often get assessed on the savings they made in their housekeeping by going abroad. I know of many such cases.
    Mr. Enroll: I am very grateful to my hon. Friend for making that point.
    I do not want to be diverted on to the subject of the expense allowance, although I shall be very glad to argue with the hon. Member for Rotherham (Mr. Jack Jones) at any time. The point I am making is that increased effort deserves an increased retention of the reward and it is no use insisting upon it in one case without agreeing to it in the other. If the equalitarian attitude of hon. Gentlemen opposite prevents the highest salaried workers from retaining an increasing share of their earnings the result will be what we all deplore, a preference for leisure rather than earnings which men cannot retain, particularly among the men at the top.
    Such a man may say, "I hope that the money which I earn, and which is taken away from me in taxes, will be spent with the same care as I earned it. In the choice between leisure and hard work he may choose leisure because there is no reward to be gained in extra work. On the other hand, if he is of energetic disposition, he may say, "I will pack my bag and go abroad where I can not only earn money but can keep a bit more of it for myself." It is all right here provided one does not earn more than about £600 a year. As soon as one starts earning at the £2,000 or £3,000 a year level one is supposed to go on working indefinitely for a decreasing reward.
    Our proposed new Clause seeks to remedy that state of affairs in a small way. I hope it will be received by hon. Gentlemen opposite with sincerity, as it is intended as a sincere contribution to a better life for Britain.
    Mr. Roy Jenkins: The two hon. Gentlemen on the Government side of the House have advocated this new Clause with great correctness. The hon. Member for Langstone (Mr. Stevens) drew a most effective picture of the type of person who is to be allowed this concession. He spoke rather as though this particular group of people were left out from the Budget. As a matter of fact, this group more than any other group in the country have already done well out of the Budget.
    Mr. Stevens: I am sure that the hon. Member would not like to misquote me. I said that they had proportionately been left out. That is a most important word.
    Mr. Jenkins: With a cut of 6d. in the standard rate I would say that people at about £3,000 a year—the people concerned—have done very well both absolutely and in proportion to their total incomes. Their net income has gone up a great deal more than that of most other classes, so it can be assumed that we are dealing with people who have already done very well out of the Budget.
    The hon. Gentleman's argument contained a non sequitur. He said that we wanted the best people to take the vitally important jobs and that we should not get them if the rewards left in their hands were too low. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) took the hon. Gentleman up upon a logical fallacy and asked why the second-rate people then took the jobs. Surely it could not be argued that the second-rate people are less affected by financial considerations and more attracted by responsibility than are the first-rate people. I should have thought that it was the other way round.
    Mr. Stevens: Does not the hon. Gentleman think that the second-best men normally have second-rate judgment?
    Mr. Jenkins: I do not quite follow that argument, unless it is to suggest that second-rate men cannot work out their tax liability in advance. All the responsible jobs are filled by somebody. It cannot be argued that a great number of highly paid jobs are open for many months of the year from inability to get people to go into them, either first-rate or second-rate people.
    The hon. Gentleman's next argument was that the proposed new Clause would
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    help savings. That is a bit contradictory. He argued the case with great force of somebody accepting much more responsibility with his salary raised from £2,000 to £3,000 a year—about £450 a year net—and referred to the expenses in which this man would be involved in getting a new house, etc. The result was that he could hardly manage. If we are by this proposed new Clause to help people who cannot manage and who desperately need money I cannot see how they will be able to save money. That is the difficulty in which the hon. Gentleman is placed. On the whole, I would have hoped that the Government would not accept the Clause.
    There is a great deal to be said, as we argued during the Committee stage, for increasing the reliefs for earned incomes; but if the Government took the view—falsely as, I think, they did—in Committee that they could not accept the Amendment then moved by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), not merely to increase the limit, but to increase the amount for earned income relief throughout the whole scale, I think it would be highly undesirable to accept the Clause, which, as its sponsors have frankly said, would affect only those in an income range of between £2,025 and £4,500 a year. It would be quite wrong to accept the one without having accepted the other.
    We were told that the Clause would cost only £15 million a year, whereas my right hon. Friend's Amendment during the Committee stage would have cost something like £50 million. This is, of course, a lesser figure, but, even so, £15 million is a great deal of spend each year on such a limited number of people as there must be within this income range.
    If hon. Members on the other side are sincere, as, I have no doubt, they are, in their anxiety to help people with earned incomes as opposed to those with unearned incomes, it would be much more desirable to think in terms of a complete split between the standard rate of Income Tax on earned income and that on unearned income. That, it seems to me, would be a logical and helpful move.
    At the present time, when we have a standard rate of 9s., we have a position in which people think they are paying more Income Tax than they are, in fact, paying. Nobody on an income of up to £2,000 a year pays tax at the rate of

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    more than 7s. in the £. It would be much better to have the standard rate at 7s. in the £ and not to have any of this 9s. nonsense, which is psychologically disadvantageous in many ways. In addition, once the two rates were split, we could look at them independently of each other, and this also would be a great advantage.
    Mr. Ian Horobin: At this stage of the Finance Bill I do not want, even on such an important Clause, to occupy very much time, and I shall concentrate briefly on one point. Before doing so, however, as the hon. Member for Stechford (Mr. Roy Jenkins) has endeavoured to convict my hon. Friend of illogicality, I may, perhaps, be forgiven for entering for a moment into the kindergarten stage and answering the point which he has made.
    The hon. Member seems to have omitted the sad possibility that the second-rate man may take the job, realising that he will not be paid very much for it, with the full intention of not doing all the work that the first-rate man would have done, by deciding that if he expended that amount of energy and took on all that amount of work and responsibility, the game would not be worth the candle. Unfortunately, that is much too common in this sad world today, when jobs are being filled by people who are not really giving of their best, either because they cannot give what is required or because, although they could, they do not. That goes for all sections of society, and not only for the £2,000 to £5,000 a year man. That is the simple and sad answer to the hon. Member's remarks.
    It is not really necessary to take a great deal of time on arguing and disputing what the Clause is intended to do. It is intended to help the managerial £2,000 to £5,000 a year man. There are people on the other side of the House who are prepared, at any rate, when it suits them, to pretend that that kind of man is not, apparently, even a worker within the definition. Hon. Members opposite are prepared to assume, contrary to all the evidence, not only in this country, but even in countries like Russia, that we can get that kind of rather scarce and very valuable work done by people for the same amount of money as we can get much
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    commoner work done. We cannot. All experience is to the contrary. Therefore, it is not really worth while from a practical point of view arguing whether those people need to be paid or whether their contribution to economic welfare is important, for it obviously is. They really hold the key to our industrial future.
    7.15 p.m.
    We can discuss the position of those men without in the least going into the wider issues of getting rid of great differences of wealth. We are not talking now about millionaires, or whether they ought to have money taken away and give to the wage earner. These men are a class of people who on no sensible description can be called the idle rich or the wealthy. They are the sort of people, incidentally, who, throughout the whole of their income, spend far more in doing for themselves what other ranks of society expect to be done by the ratepayer and by the taxpayer.
    The whole point at issue is whether it is desirable to help those people more than they have been helped recently, and to help them only in the sense of leaving them a little more of the money that they themselves earn. For my part, and, I think, for the part of most people on this side of the House—and, I honestly think, a good many Members on the other side—there is a good deal of feeling that as and when it can be done, those people should be helped by tax reliefs.
    This is the simple point I want to make to my hon. Friend the Financial Secretary. This proposal would cost some money. I do not know whether the figures that have been suggested are accurate, but the cost, obviously, would be substantial. If it was not, it would be no use. The whole point is that we are endeavouring to leave in the pockets of these people, on the grounds of equity and incentive, a substantial amount of the money that they earn.
    If the Financial Secretary says that the Chancellor of the Exchequer has given away all the money that he has to give away this year and we cannot afford this proposal, then that, in this Budget, settles the issue for me. I felt already—I have said so during these debates—that the Chancellor has, if anything, gone to the limits of what he could safely afford and that it would be an ill service for this or

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    any other section of society if we did anything which encouraged a return to inflationary tendencies.
    If my hon. Friend simply says that this proposal is excellent but that the Chancellor cannot afford it this year, well and good. I hope, however, that he will feel able to say, if he cannot accept the Amendment this year on that ground, that he has no other ground for refusing it and that he will give a sympathetic consideration among the highest priorities when, in the development of the so far so successful financial administration of our affairs by the present Government, it is possible to give further reliefs.
    There are few directions in which the real wealth produced in this country, for the benefit of all sections of society, could be more quickly increased than by relieving somewhat the burden upon the key section, the people who have to go out and get the orders, who have to compete with their counterparts in Germany, Japan and the United States, this section of society who, in the economic world, really are key men, just as much as—in some ways more than—some of the highly skilled craftsmen, whose wages, as we all rejoice to know, have in recent years been well advancing to the level of those in any other country.
    The incomes of what we would, roughly, call the managerial section—this £2,000 to £5,000 section—have not been increasing; they have been falling back in the race compared with other countries. I believe that not only to their own advantage, but to the advantage of the firms that they run, and, therefore, to the advantage of the people they employ, there are few sections of society where reliefs of this kind could be invested in efficiency to greater advantage. Therefore, I very much hope that the Financial Secretary will be able to say that, if not this year, earnest attention will be given next year to the possibility of making some such relaxation in their burdens.
    Mr. Jack Jones: I should have hesitated to enter into this debate except for the speeches made from the opposite benches. I was almost reduced to tears when I heard the story of the man who came to London and found himself in a better house, in better surroundings and with more responsibility, but that he did not have quite as much money as he had
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    expected, although he still had an increase compared with what he had been getting and the opportunity to serve the country in a higher and more effective sphere.
    These statements that we have had from the other side are a slander on the managerial classes. They are a slander upon them in this respect. We have been told illogically—I use ordinary workmen's logic in these discussions when I can—that if the Financial Secretary or the Chancellor were to accept this new Clause, immediately it became operative the production of this country would receive a tremendous upsurge. That is utter nonsense. If that is true the managerial section of the country stand indicted for not having done for the country what they should have done during the last few years, and particularly since the Tory Party have been in power.
    It is wrong to suggest that all those engaged in industry look upon financial reward as the be all and end all of what they ought to do in industry. I speak as one who has been paid an incentive bonus for the whole of my working life. Every additional ton I produced was paid for at a less rate than the ton prior to it. Every ton over 200 and up to 3,000 was paid for at a less rate, but the aggregate wage earned was greater and the satisfaction I got was that I did a better job for my company and for my country. By the brown book agreement ·004 of a penny is deducted for every ton over a certain amount.
    The suggestion that sufficient financial reward will get us out of our economic difficulties is completely wrong. Reference has been made to the case of a man who was invited to come from Birmingham and take a job in London. He has proved that he is the best man for that type of job and has already given to his company and to his country the highest possible service. He and others like him are the sort of fellows we want these days of economic stress and strain—not the person who, because of advantages derived from a Clause of this sort, says "I shall get more than I have been earning and I shall be able to take things easy." That is the way to get less production.
    I know the difficulties of this section of the wage earning group. All this talk about these people not being workers is nonsense. All managers are workers. The

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    chairman of directors of the company for which I worked was not looked upon as a fellow who did no work just because he did not wheel a barrow or mix cement. We realised that he was a man who was working in a different sphere and that without him we would not have got very far, and of course without us he would not have been needed at all.
    I know that if the Financial Secretary could be induced to believe by any stretch of the imagination—and he is not much of an imaginative person; he is very factual as a rule—that the acceptance of this Clause would increase production, he would certainly accept it. The suggestion that financial reward is the only inducement may sound all right, but it is not true. I wish people would stop condemning those persons in that sort of job as being the type who would have done better if they had been paid more in the past. It is wrong and it does not help the country to suggest that the managerial section are not doing what they could or should. We have had from the benches opposite today a slanderous statement, and it is wrong.
    Mr. Frederick Mulley: I agree with my hon. Friend the Member for Rotherham (Mr. Jack Jones) that this is a strange debate in which we on this side of the House have to defend the managerial classes earning between £2,000 and £4,500 a year from the serious attacks that have been made on them from the benches opposite. I believe that there are some who are not doing as much in their various capacities as they might, but I would be very surprised to learn that this lack of a sense of responsibility is as widespread as has been suggested.
    Mr. Jack Jones: It is slanderous.
    Mr. Mulley: I do not object to the distinction which is made between earned and unearned income. There is a good deal in the statement of my hon. Friend the Member for Stechford (Mr. Roy Jenkins) that if there is to be a further remission of taxation it should be in the earned rather than the unearned section.
    Mr. Ralph Assheton: Does the hon. Gentleman refer to earned income as income that has been earned in a certain year, or does he also
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    refer to income which has been earned in the previous years and put aside?
    Mr. Mulley: I do not want to go into the whole question of taxation on pensions and that sort of thing. I do not want to go into the peculiar position of barristers, although I understand they use this argument to some personal advantage. From the point of view of the Revenue, one has to take income earned in a particular Income Tax year. The Financial Secretary does not often agree with me, but I think he will agree that there would be considerable administrative difficulties in trying to get any other basis of assessment.
    The point that I am making is that we cannot have this kind of reduction in taxation as well as a reduction in the standard rate. I understood that the thon. Member for Langstone (Mr. Stevens) who moved the Clause wants both. He wants remissions in the standard rate and at the same time he wants an extension of earned income relief.
    Mr. Stevens: Is the hon. Gentleman referring to this year only or to next year? If there is a choice next year between a reduction in the standard rate or an increase in the earned income allowance, I do not think there will be any difficulty at all in choosing the standard rate.
    Mr. Mulley: The hon. Gentleman is being frank. Those who speak for the unfortunate people earning between £2,000 and £4,500, should decide whether their £15 million should have prior claim to the £100 million which would go to companies if the standard rate were reduced by 1s. 6d. He should get his sense of priorities right. We on this side of the House would prefer, if there were to be a large reduction in taxation, that it should go to earned income rather than to unearned income.
    I find it difficult to follow arguments based on incentives in this matter. An argument has been based on a gentleman in Birmingham. I shall not deal with it at length, but I would say that it is fortunate for the country and for the companies concerned if men of that character do hold back in Birmingham instead of taking jobs in London for an additional £1,000 a year. Clearly those people have no ambition, drive or anything else. If it is put to me that a

    1133
    man will not take an assistant manager's post with the prospect of becoming a general manager and receiving further advancement of £450 a year net as well, he is not the kind of man we want in any managerial position.
    It seems odd, after hearing in these platitudinous debates about the virtues of private enterprise, that a man will not take a risk for £450 a year. What kind of money do we have to pay people in order to get a sense of adventure back into private enterprise again? If hon. Members opposite really believe in the case that they have put forward today in support of this Clause, they ought to join this party and say that we are too slow in dealing with private enterprise. There cannot be any enterprise left.
    I know of many people at the lower managerial and working foreman level, who have taken promotion at a gross financial sacrifice in order to further their earning capacity in the future. If that attitude is prevalent among the charge hand and foreman level, it is a pity that those people are not promoted to the £2,000 and £3,000 a year jobs because they have the outlook that is wanted in a managerial community.
    Is it supposed that by spreading £15 million among the managerial class we can make them work so much harder, when every one knows of the great need of this country for production and increased exports, which is preached repeatedly throughout the year by the Chancellor and the President of the Board of Trade, who incidentally I am glad to see in his place.
    If that were the case the £15 million would be well spent, but what a terrible indictment of those people it would be, an indictment which I am sure is not justified. There may be odd characters here and there to whom the indictment applies and hon. Members opposite have the advantage over me of probably knowing such people, but I do not believe that the number is very great or that it is right to say that £15 million is required to buy them so that they will work for the national good as a result of having this additional advantage.
    7.30 p.m.
    I would say to hon. Members opposite what was said to me by an American who was a fairly shrewd observer of the industrial scene in this country. He said, "The lower management levels in British
    1134
    industry are very good, but the trouble with your management people is that they work only to get an expense account and when they get it they are so busy entertaining their friends and reciprocating hospitality that they do not have time for management."
    Mr. Horobin: Will the hon. Member tell us how much his American friend was earning?
    Mr. Mulley: I did not ask him, but certainly I think that he would have put as a priority in obtaining more production from managers the abolition of the expense account rather than putting up their earned income relief. If, however, hon. Members opposite would go so far with us as to support the abolition of the expense account we might go some way with them in supporting further Income Tax relief for this income group.
    I do not believe necessarily that if people have the prospect of a larger net income they will want to earn more. There are many people who want a standard of living which is beyond their actual net income, but it may well be that in fields where their income is directly related to their energies, such as in the case of barristers, they might work less if they are able to maintain the standard to which they are accustomed without need to make extra effort. Therefore, half of this proposed expenditure of £15 million might go to people of that kind and the net effect would be a disincentive rather than an incentive to extra work. I therefore ask the Financial Secretary to the Treasury not only to reject this Motion this year but to use such influence as he has in the Treasury so that this proposal is never put forward either as an incentive or as a measure of social justice.
    Mr. Stevens: Has the hon. Member ever studied the figures of emigrants from this country, and has he ever asked any of those emigrants why they were going out to different countries, and have any of them, in all income brackets, by any chance said, "To get higher real wages"?
    Mr. Mulley: I have never stood on the dockside to take a Gallup poll, but if people will not come to London for an extra £450 they will hardly go to the Dominions.
    Mr. Jack Jones: I have asked them and very often they have said, "I was denied an opportunity in this country owing to nepotism and other reasons."
    Mr. Erroll: The hon. Gentleman did all right.
    Mr. Jones: Yes, because I worked damn hard.
    Mr. John McKay: I am surprised that any body of men should press a Motion which is likely to involve the Government in about £20 million of extra expenditure without putting forward some very strong argument in its favour. If we are in such a good position that the Government can afford to give about £20 million to any particular section of the community, one ought to ask what class of people should receive that benefit. If any argument has been put forward in this debate at all, it is that this proposal would be a good thing because it would be such a great incentive to the managerial class in this country and because, as a result of that incentive, something extraordinary would happen to the productive power of the country.
    Mr. Jack Jones: What nonsense.
    Mr. McKay: I think that my hon. Friend the Member for Rotherham (Mr. Jack Jones) dealt with that fairly emphatically. This proposal is a strong public condemnation of the people whom it is supposed to benefit. We have about 200,000 people in the managerial class in this country who receive high salaries and who have already received an incentive of at least £100 each in Income Tax relief this year. These are the people who want the workers to produce more and to put more energy into their work when those workers can hardly live on the money which they receive.
    Like the old woman with the poker, I want to show what side I am on. If there are £20 million to give away I, like many others, believe that it is all wrong to offer it as an incentive to the managerial class, to men who go to their offices usually about 10 o'clock in the morning and then have about two hours for lunch and come away at about 5 o'clock. If a census were held and a close scrutiny made I do not suppose that it would be found that these
    1136
    men do more than 30 hours of real work a week. If we do have more production it will be because we have more men and material and machinery, and the men in managerial positions will merely direct the work as usual. As long as the labour power is used in a business-like way what we need for more production is not more incentive but more labour and machinery.
    If and when we can consider giving away money and giving people relief we should look to the people who most need the relief. The Income Tax returns show that there are about 200,000 married people, with two or more children, who earn less than £5 a week. In the next income group there are about two million married people, with two or more children, whose average income is about £6 17s. a week. They are part of a middle-income group numbering nearly 10 million. It is estimated that it takes at least £7 7s. to provide a very low standard of economic life to a family of man and wife and three children.
    In view of these facts, the proposal embodied in this Motion indicates that hon. Members opposite are not particularly anxious to raise the standard of life of the common man. In all their suggestions they are continuously trying to give more to the people who already have the money. There can be no question of supporting this new Clause.
    Mr. Houghton: We ought not to decry the value of the work of our managerial classes. We must keep this question in proportion. It was a pity that the hon. Member for Langstone (Mr. Stevens) introduced the factor of incentives into his reasons for urging this additional relief. I do not believe that the cost to the Revenue would pay for itself in an increase of the national product. It is a tribute to the persons who would benefit under this Clause to say that they will go on working just as hard and as skilfully, and with just as much desire to help the country as well as themselves, whether or not we pass this new Clause.
    I have had wide experience in the public service. It may be that rewards are more modest and standards of public duty are higher in the public service than outside; I would make no extravagant claim for that; but long experience has shown how rarely any person refuses

    1137
    advancement on account of economy or the domestic disturbance which follows that advancement. How many Members are dissuaded from coming here because it will cost them money to serve as Members? The truth is that men cannot resist enhanced esteem, prestige and power. Their wives cannot understand this. Many of them think that the game is not worth the candle, when they find their husbands are willing to pack up home, move long distances and take on additional responsibilities for a modest increase in remuneration and probably a net reduction in their standard of life.
    I remember an officer in the Inland Revenue service—which is highly mobile—who was transferred from Northern Ireland to London. When all the consequences of that transfer, following his promotion, became visible to his wife, she said, "Look here, do not have any more promotions of that kind, because we are worse off after your promotion than we were before." But nothing will stop the ordinary man with vitality, ambition, and a desire to succeed, from wanting to do better. Nothing will dissuade him from enduring sacrifices in order to achieve his ambition.
    The hon. Member for Langstone did a dis-service to the managerial class when he suggested that a relief costing £16 million to the Revenue would pay a dividend to the nation. We must rule out that suggestion. There is no question of principle involved. If we differentiate between earned income and unearned income for taxation purposes, I suppose there ought to be no limit to the point in the scale of earned income at which relief should stop. But it has been a feature of this form of earned income relief that there has been a limit to the amount of tax conceded. It is higher now than it has been for a dozen years, at least, and the amount of the relief is also higher than it has been previously.
    7.45 p.m.
    We are in favour of giving reasonable relief, from Income Tax to earned income. That was shown in the Amendment we moved during the Committee stage, to increase the earned income relief from two-ninths to one-quarter, though we proposed to retain the existing ceiling to the relief, which this new Clause seeks to raise. We have to accept the fact
    1138
    that, in addition to the principle of differential rates of tax between earned and unearned income, there is another principle of fair distribution of the burden, and we have to harmonise the two.
    There is probably no reason, in theory, why the Chairman of the Board of Inland Revenue should have half his earned income treated, for tax purposes, as if it were unearned income, whereas a subordinate officer, such as an assistant secretary in the same Department, has his whole income treated as earned income. There is no justification in principle for that differential. It exists because we have regard to the other principle of a fair distribution of the burden.
    There is one point about earned income relief which is anomalous. Where a husband and wife are both working the same ceiling applies to both their earned incomes. I cannot see any justification for that. Where a man has earned income, his wife is in a job, and the two incomes, taken together, exceed the maximum amount to which the relief applies, there is a very aggravating entry on the P.A.Y.E. coding notice, called "Earned Income Relief Restriction." It is not easy to see why a wife's earnings should reduce the earned income relief of the husband, but that is one of the compromises between the principle of the relief itself and that of a fair distribution of the burden.
    I must comment upon the suggestion made by my hon. Friend the Member for Stechford (Mr. Roy Jenkins), who raised the question of a differential rate of tax as between earned and unearned income, as distinct from the form of earned income relief that we have at present. His proposal would raise some administrative nightmares. The present method of allowing one income relief is undoubtedly the most convenient from an administrative point of view. I know that administration must not govern our desire for an Income Tax system that can be fully understood and is fair in its operation. I fully acknowledge the fact that many people mis-read their Income Tax notices and believe that they are paying at the highest rate of tax when, in fact, the earned income relief reduces the effective rate of tax, as is always shown in the tables in the Financial Statement at Budget time.

    1139
    No one pays at the standard rate of 9s. in the £ on any of his earned income. Earned income relief reduces the standard rate to a lower effective rate in all cases, and in some cases to a greater extent than others. I do not fall for the suggestion of my hon. Friend that, merely for the sake of clarity in the minds of the taxpayers, we should introduce further complications not only into its administration but into the intelligibility of the tax from the point of view of the taxpayer.
    I want to clear up two misunderstandings which appeared to creep into the speeches of my hon. Friend the Member for Rotherham (Mr. Jack Jones) and the hon. Member for Horsham (Mr. Gough) Do not let us make Income Tax worse than it is. When a subsistence payment is made for a lodging turn, or for absence from home on business, that subsistence allowance is not taxable. I am astonished that the hon. Member for Horsham knows of cases where business men going on business trips abroad have had their Income Tax assessment raised on the ground of the hypothetical saving in domestic expenses at home. There are many complexities about these things and many anomalies, but those two matters are, happily, not part of them.
    I think the sum and substance of it is, as the hon. Gentleman the Member for Langstone said, how much relief we can give to this group of taxpayers this time beyond that given already by the reduction in the standard rate and beyond the increase in the earned income relief given last year? Whether the ceiling of this relief should be carried further still, whether the amount of earned income relief should be further increased, are matters which have to be brought into the general balance of taxation when a fresh review of the whole situation falls to be made. At the moment, however, I am sure that the hon. Gentleman the Member for Langstone would not press his new Clause upon the House, because if he did, as I am sure he will not be surprised to hear, we should not support him.
    Mr. Jay: Just in case the Financial Secretary has not yet made up his mind, I would advise him not to accept this Clause. The hon. Member for Langstone
    1140
    (Mr. Stevens), not, I am sure, a place from which second rate men come, put forward a persuasive argument on what is a very serious question. He wants quite openly and explicitly to give help to the class of people whose earned incomes are between £2,025 and £4,500 because he regards the managerial and other professional workers whose incomes come within those brackets as highly important and valuable members of the community.
    We believe that it is desirable, other things being equal, and in its due priority, to make a reduction of direct taxation on earned incomes, and we should not wish to exclude from such reductions altogether those very important workers who fall into the bracket that the hon. Gentleman had in mind. But we do think that a reduction of this kind should not be confined to those whose incomes are above £2,000 a year, certainly at a time when they have already benefited more than most people from the reductions in tax that have been made in the Budget already.
    I agree with the hon. Gentleman that I should have preferred the Chancellor to have made this change than to have made the positive differential in favour of unearned income that he did as a result of the changes he made in the Budget. I would also recall, what, I think, the hon. Gentleman did mention, that in the various Budgets of the Labour Government earned incomes of this kind did benefit on quite a number of occasions. I do think, however, that the hon. Gentleman fails to make his case when he now wants to confine his reduction to those with incomes above £2,000 a year.
    Indeed, how confused the position of hon. Members opposite is on this matter of the earned income allowance. In the Committee stage they voted against and defeated our proposal to put the proportion at a quarter rather than the present two-ninths. The effect of that would have been to have helped everybody most of the way up the scale. Therefore, the combined result of the desire of hon. Members opposite first to defeat that proposal and second to push this one is, of course, deliberately to confine the benefit to those at the top of the scale.
    Mr. Stevens: The proposal of the right hon. Gentleman did not include a suggestion to increase the ceiling. The ceiling, if I remember rightly, remained the same. Therefore, the benefit proportionately was less higher up the income scale, was it not?
    Mr. Jay: Yes, but it would have given some benefit to everybody at most levels of earned income. In so far as the hon. Gentleman first votes against that and then makes his own proposal, he is seeking to confine the benefit to this particular level.
    Mr. Stevens: Surely, if the ceiling remains the same, even though we increase the proportion, the total allowance for a person over that ceiling would be exactly the same?
    Mr. Jay: The same reduction in tax, I think the hon. Gentleman will agree, would be made, although, of course, it would be proportionately less than to those lower down.
    However, the main point I want to make tonight is that we are opposed to this present proposal to confine the next benefits of tax reduction to those in the higher brackets of income. I think that, even if we lay aside the pure argument from equity that it is undesirable to give benefit to those whose incomes are larger than others farther down the scale, on the ground of incentive, on which the hon. Gentleman largely rested his case, there are at least three strong arguments against this proposal.
    First of all, although it is very true that the managerial and professional workers whom the hon. Gentleman had in mind are exceedingly valuable and important members of the community, it is ridiculous to suppose that the manual workers' efforts and productivity are not also exceedingly important in our total production. I agree with the hon. Gentleman, from experience of such large organisations as those of which I have been a member, that the efforts of the key personnel, who are very often at the top of one department or another, are exceedingly important in the working of the whole. But I would not draw the inference from that that the productivity of those all down the line is of lesser importance.
    Suppose we were to apply the hon. Gentleman's proposal, for instance, to the
    1142
    coal industry. I think it is probably true that the efforts of the comparatively few managerial, technical, planning workers and so on in the coal industry at the present time are of crucial importance to the industry. But surely we should not say that the efforts of the actual miners at the coal face are not also of enormous effect in deciding the total production of coal. Indeed, the attitude of hon. Members opposite here again seems to me slightly anomalous. They are inclined sometimes to join, when discussing the coal industry, in the rather prejudiced and ignorant outcry about the black coated or white collared administrative workers who, it is implied, are not making any valuable contribution as compared with the manual workers. But when we come to this question of taxation, they want to confine tax reductions and the argument from incentive to the managerial and administrative type of worker.
    In our view there is a case for giving this concession and accepting, with a due sense of proportion, this argument in the case of both sections. I think it was the hon. Gentleman the Member for Lang-stone who spoke of the leap in productivity that might occur if his proposal were accepted. Surely he will agree that we should not in the coal industry get a leap in productivity merely by confining tax reductions to incomes of £2,000 a year and over.
    Viscount Hinchingbrooke: I just wanted to make certain that the right hon. Gentleman is convinced on his own behalf and that of his party that if greater tax reductions were given to the ordinary coal miner, the man working at the face, and improved conditions and a greater increase of wealth in the home, we should have higher productivity of coal. Is he convinced of that?
    Mr. Jay: I think there is some force in the argument so constantly put forward by hon. Gentlemen opposite, and, I think, by the noble Lord among others, that reductions in direct taxation would have some effect in an increase of production all along the line. In so far as this is true, I am arguing that it certainly extends to the manual workers as well as to those who are receiving higher incomes. I was going on to my second

    1143
    argument in criticism of the hon. Gentleman's thesis. Surely, as my hon. Friend the Member for Rotherham (Mr. Jack Jones) said, the motives of pride in work, of pride in responsibility, of prestige, influence and so on are not merely exceedingly important in many sections of the community, but, on the whole, have tended to be more important as we go higher up the scale.
    8.0 p.m.
    In the very nature of the case, the attraction of responsibility, of power and so on must become stronger among those earning the higher incomes. I think that hon. Gentlemen are committing rather a slander on managerial and professional workers when they suggest that they are hanging back, not working, and refusing to accept promotion because they cannot earn quite as much net income as they might expect to do. After all, do we ever meet in the Civil Service, in industry or in the Services those people who are unwilling to accept promotion? I should have thought that was a completely unreal picture of the country in which we live, and that in actual fact we find remarkable anxiety and willingness to accept promotion in the Civil Service, in industry or whatever it may be.
    I think, too, that the picture of managing directors leaving this country in order to earn higher incomes is equally far from reality, and is equally a reflection on the patriotism and sense of responsibility of the people concerned. The hon. Gentleman, introduced the question of emigrants, asked how often did one come across emigrants from this country going elsewhere in order to earn higher incomes. I think that argument really tells against his thesis because if we ask to which countries the average emigrant from the United Kingdom normally goes, we find that, on the whole, it is to those countries with comparatively higher rates of direct taxation. They go to Australia, New Zealand, Canada and, to some extent, to the United States. We do not find them going to countries like Spain, Italy and Egypt where there are very low rates of income tax. The fact of the matter is, of course, that it is not comparative taxation one way or the other—it is a quite different emphasis and argument which determines their decision in
    1144
    those cases. Therefore, again, I think, this argument cannot really be made out.
    Thirdly and finally, I would add this in comment on the hon. Gentleman's argument. After all, if we are going to try by reduction in taxation on earned income to produce a stimulating and encouraging effect upon productivity throughout the country, surely we want to get the maximum effect for each £1 million of revenue which we forgo. I expect that the Financial Secretary will tell us that he cannot accept this Clause because he cannot suffer in revenue. We all agree that that is one of the considerations to which we have to look. If that is so, it is desirable to make the reduction as comprehensive as possible, because the more people affected, the greater is the likelihood that the influence on the production of the country as a whole will be greater.
    For all these reasons, it seems to me that we cannot possibly make out a case for confining a concession involving so large an amount of money as £15 million—if that is the correct estimate—to such a very narrow group in the community. We on this side of the House are in favour, as and when it can be done, of reductions in taxation on earned incomes, and we recognise that there may be some argument on the ground of incentive for making such reductions when it can be done, but we emphatically do not think that this is the way to do it or that it should be confined to a narrow group at the top of the income scale.
    Mr. Boyd-Carpenter: The effect of the Clause that my hon. Friend the Member for Langstone (Mr. Stevens) has moved, in his very agreeable and interesting speech, would be to raise to £1,000 the maximum amount of income which could be relieved by earned income relief or to put it another way, to allow the present 2/9ths scale to run from the present ceiling of £2,025 up to £4,500.
    My hon. Friend did express with great clarity and force some of the reasons which impelled him to put down this Clause. Let me say at once that I fully appreciate the very serious effect which high taxation over a prolonged period has had on the professional and managerial classes. It is, I think, beyond doubt, both from a relative and absolute point of view, that they have suffered very

    1145
    seriously, and with a great deal of what he said as to the desirability of giving them as much relief as possible I would not for one moment quarrel. It is, of course, part and parcel of these ill-effects of too high taxation, too long maintained, which we discussed at an earlier stage of this Bill and on which I said at greater length something similar to that which I have said more briefly this evening.
    There is a real problem, too, I think, in what my hon. Friend said as to the position which sometimes arises when it is desired to transfer on promotion some manager or other to a higher position. I think that my hon. Friend rather spoiled his case when having emphasised the type of man he had in mind—the first-rate type of man—he indicated that when he came to the London area he would want to settle in Wimbledon or Hampstead, when it is well known that when he comes to the London area he would want to live in the Royal Borough of Kingston-on-Thames or in the borough of Surbiton.
    Apart from that trifling blemish in his argument, I think that most of us in our own experience have come across cases of that sort. I thought that it was a little unfair of one or two hon. Gentlemen opposite to suggest that by drawing attention to that difficulty my hon. Friend was suggesting a kind of "go slow" among the professional or managerial class. No one, I think, who has had any experience of the work which that section of the community has done in the difficult circumstances of war and in the post-war years would believe that for one moment. In assessing the burden of taxation that can be properly borne we must bear in mind the effect of that taxation, particularly when prolonged, on certain sections of the community. I do not propose, for reasons which I will give, to enter into discussion with my hon. Friend as to whether, assuming that this sum of money were available, this would be the best way for my right hon. Friend to make use of it.
    I think, as my hon. Friend himself clearly understood, the difficulty which stands immediately in the way of this proposal is its cost. The actual figure of cost is not the £15 million which my hon. Friend suggested, or the £20 million suggested from the benches opposite, but, so far as I am able to ascertain, is of the order of £17 million a year. That is, I am
    1146
    afraid, when looked at on top of the reductions in taxation which my right hon. Friend has effected this year, more than can be afforded, because we have to bear in mind, not only that substantial concessions in taxation have been made this year but equally the fact that this country has to maintain and sustain a very large defence programme and a very large and complex system of social services. Therefore, I am sorry to have to say to my hon. Friend that the cost of his proposal does of itself make it impossible for my right hon. Friend to accept it.
    I do not want to over-emphasise, but nonetheless it is fair to comment that the section of society to which I have been referring has certainly obtained some relief from my right hon. Friend's proposals, notably, as the hon. Member for Stechford (Mr. Roy Jenkins) pointed out, by way of the reduction in the standard rate. Thus, we are dealing with the question of relief to a section which, although heavily taxed, has not been denied some relief in the proposals in this Finance Bill.
    I do not want to be led into an intellectual argument as to whether it is better to give relief by way of earned income allowance or alterations of the standard rate. In moving the proposed Clause, my hon. Friend went out of his way to say that he regarded the method embodied in the Clause as a second best and said that it was put forward on grounds of relatively lower cost. Some hon. Members opposite appear to take the other view. It is a problem which, when funds are available, ought to be looked at in the circumstances of the time. I do not think it would be particularly wise or sensible of me to give any wide general statement of opinion at the moment.
    However, it may be of interest to hon. Members to note that both the earned income relief fraction of two-ninths and the maximum amount of income which can be relieved from tax in this way are at present higher than they have ever been. That is the direct result of the changes in respect of these reliefs which were effected in my right hon. Friend's proposals last year. Consequently, I say to my hon. Friend and to other hon. Members who have concerned themselves with the matter that we are at least starting on a basis where the relief,

    1147
    whether it be at the right level or the right limit or not, is actually bigger than it has ever been before. It is true that it is one way, but one way only, of bringing the relief which it is desired to bring.
    I hope I may be allowed to say that we have had a very interesting and thoughtful debate. It has certainly indicated that, as and when funds become available for further tax relief, if funds do so become available, there will be no difficulty in finding suggestions as to the way in which they can be disposed of. It is equally clear that there is a very wide variety of views—I am sure, most sincerely held—in all quarters of the House as to the best methods of using such a surplus. But, as I have had to point out—as I can do with some confidence in view of the very large tax reliefs which have been conceded—my right hon. Friend has gone a long way in the direction of reliefs this year and it is just not compatible with his responsibilities to accept a further load.
    One of my hon. Friends asked me to say something about this in connection with next year's Budget. The House will recall that even shortly before a Budget it becomes necessary for my hon. Friend the Economic Secretary and myself to stand at the Despatch Box at Question time and say that we regret that we cannot anticipate our right hon. Friend's Budget statement. I really do not think that, while we are discussing one Finance Bill, I can reasonably be pressed to anticipate the next.
    Mr. Harold Wilson: At the same time, surely the hon. Gentleman would not want in any way to diminish the satisfaction, such as it is, in cinema circles by the degree to which his right hon. Friend anticipated his Budget speech of next year in relation to Entertainments Duty in the case of cinemas?
    Mr. Boyd-Carpenter: I should certainly not wish to diminish the pleasure which my right hon. Friend has given in that direction, but the right hon. Gentleman is perfectly well aware of the terms of these observations and I do not think they are material to this very different and very precise suggestion as to a method of adjusting the Income Tax allowances.
    1148
    This interesting debate is on record and the views expressed will be available to my right hon. Friend or to others as and when circumstances arise in which the agreeable subject of relief from tax can again be considered.
    Mr. Stevens: Having been very much impressed by the cogent arguments of my hon. Friend, rather than by the somewhat vulnerable arguments of right hon. and hon. Gentlemen opposite, and having regard to the fact that he accepts the idea underlying the Clause, I look to the future and beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(EXPENSES OF EMPLOYEES IN TRAVELLING TO AND FROM THEIR WORK.)
    In paragraph (a) of section one hundred and fifty-nine of the Income Tax Act, 1952, there shall be inserted after the words "nineteen hundred and thirty-nine," the words "or consequent upon a change of employment or a change in the place of the employment on or after the sixth day of April, nineteen hundred and fifty-two."—[Mr. Houghton.]
    Brought up, and read the First time.
    8.15 p.m.
    Mr. Houghton: I beg to move, "That the Clause be read a Second time."
    Hon. Members may be a little surprised at the provisions in Section 159 of the Income Tax Act, 1952. The Section puts into the consolidated Income Tax Act a wartime concession which was given on account of removal of place of employment or of residence involving additional travelling expenses through circumstances connected with the war. It will assist the House to understand what I propose if I read from the Section. It says:
    "If it is shown in the case of a person assessed to income tax under Schedule E in respect of any office or employment—

    (a) that his place of work or his residence has changed through circumstances connected with the war which began in the year nineteen hundred and thirty-nine; and

    (b) that in consequence he is obliged to incur, and defray out of the salary … arising from the office or employment, additional expense in travelling between his residence and his work, the additional expense so incurred and defrayed shall be allowed as a deduction …"

    for Income Tax purposes
    "… so, however, that not more than ten pounds shall be so allowed in the case of any person in any year."

    1149
    That was a reasonable concession introduced in the exceptional conditions of disturbance during the war, but it has not been brought to an end, and there must be a very large number of allowances still being made in respect of changed circumstances which arose during the war or immediately after the war. What surprises me is that new claims are still being admitted under this Section of the Income Tax Act.
    My proposal seeks, in fairness, either to bring the existing concession to an end or to extend it to an additional class of taxpayer. The words which I propose to insert after paragraph (a) of the Section extend the relief to those who incur additional travelling expenses between their home and their work consequent upon a change of employment or a change in the place of the employment on or after 6th April, 1952.
    If additional claims are still being admitted on account of additional travelling expenses connected with the war, then a change of employment or a change of the place of employment in circumstances at this date equally merits the concession which is being given in the case of changes arising from the circumstances of the war.
    Moreover, I think it would be a good thing to mitigate some of the hardship of change of employment or change of the place of employment by an allowance of this kind because we all realise that some degree of mobility is required. In present circumstances people should not hesitate to change their jobs or change the place of their employment if it is in the national interest that they should do so.
    Certain changes in the pattern and location of industry are inevitable in present conditions if our industry is to remain flexible and adaptable, and we can adjust ourselves to the changing needs and circumstances of world conditions. We must not just stick in a rut and think that because we have a job near our homes which enables us to get there conveniently and cheaply that we should not move to another one which might be of greater importance in the national interest because it might involve us in additional travelling expenses.
    On the administration of the existing Section, I believe that there is a substantial inequality as between one section
    1150
    of taxpayers and another, because as far as I know nobody has ever sought to say what is meant by the words:
    "through the circumstances connected with the war."
    That is, obviously, wide open. Almost any change of residence and any change of location might conceivably be held to have arisen out of circumstances connected with the war. One might say that the building of a new housing estate on the fringe of one of our large towns to which many workers have had to go to live, increasing the expense of travelling to and from their work, was caused through circumstances connected with the war. Had it not been for the war this housing shortage would not have arisen; had it not been for the war there would have been the steady development of the housing programme; and had it not been for the war something else might have made a difference to what has actually happened.
    I imagine taxpayers could put forward most ingenious reasons for this allowance on the grounds that something has happened through circumstances connected with the war. For instance, had it not been for the war there would not have been an enlargement of a particular establishment; had it not been for the enlargement of a particular establishment it would not have been necessary to hive part of it off to be housed in new premises some distance away; had it not been necessary to hive part of it off to be housed in new premises some distance away then those additional travelling expenses would not have been incurred; and, therefore a claim could be made that there had been an increase in costs arising from circumstances connected with the war.
    I think the House would like to know just how wide open this Section is, and if it is that wide open, as I believe it to be, my proposed new Clause would not make it much wider, because many people change their employment or change their place of employment and under the existing Section the reason advanced is that that arose through circumstances connected with the war. But I think there is a positive rather than a negative reason for the proposed new Clause, and that is the one I have given.
    I have no desire to withdraw from those who are getting the allowance, or can get the allowance, the benefit that

    1151
    they receive, but I think that we want to draw a line much more clearly between those who can claim under the existing circumstances and those who cannot so that we shall bring within the Section all the people who are just as deserving of this relief as those who are entitled to claim it now. In some cases may be they are more in need of this relief because they are probably making a move, not through circumstances connected with the war or at any rate not directly connected with it, but through circumstances connected with the change of the pattern of industry and the need to get additional manpower in essential jobs in order that production may be maintained and increased.
    Although I fully understand the problems of administration, which I am always conscious of because I am so close to them, I submit they raise no new problems of administration within the existing Section, and it would in any case be worth while going to the trouble of considering and deciding all the claims under the proposed addition to the Section within the limits prescribed by it. The House will realise that the maximum relief is a tax of £10, so that there is nothing either in the Section or in the new Clause that I propose which will enable the person concerned to travel to and from Brighton or from some other expensive residential area with some relief to his Income Tax burden. This would be related to those who change their employment or change the place of their employment, and not to those who change for their own convenience or for their own purposes. It would not, in fact, bring a change of residence into the matter at all.
    Finally, the House will appreciate that not only is there a limit on the relief that can be given, but the relief itself is restricted to the additional expenditure incurred. Therefore, it is only the extra cost arising from the change of place of employment or change of employment which would qualify for the relief in the same way that only the additional cost of travel qualifies for the relief under the existing Section.
    Mr. Maudling: My impression was that the existing Section says that a person must show that his place of work or residence has changed through circumstances
    1152
    connected with the war. The hon. Gentleman proposes to add after the words
    "nineteen hundred and thirty-nine"
    the words
    "or consequent upon a change of employment. …"
    I take it that that means that a man's place of work or residence is changed consequent upon the change of employment. Is that what the hon. Gentleman intended?
    Mr. Houghton: It was not my intention, but I see that as drafted it would bring in a change of residence. I did not intend to bring in a change of residence, and I did not realise that the words before paragraph (a) would govern the extension to the new Clause, but as drafted it looks as if the whole preceding words would apply. In any case, I do not think that that would be a disqualifying feature of the proposed new Clause, because the change of residence through circumstances connected with the war is, of course, an entirely different matter from a change of residence connected with an extension of a factory, and so on. It would have to be related to a change of employment or a change in the place of employment.
    Furthermore, one can assume—and this is probably the reason why I did not think that the question of change of residence did come or need come into the extended concession—that it was generally conceded that if there was a change of residence on account of a change of employment or a change of the place of employment it would be a change of residence nearer to the place of employment and not further away, whereas circumstances connected with the war drove people further away from their work than previously was the case. Having thought the matter out as I stand here there is nothing very serious about that point, but I freely admit that I had not taken it into account in drafting the Clause. I hope that the Economic Secretary will look at the proposed new Clause in a sympathetic manner, because I think it is something which is worthy of consideration and I wholeheartedly commend it to him.
    8.30 p.m.
    Mrs. E. M. Braddock: I beg to second the Motion.
    I am rather sorry about the last few comments of my hon. Friend the Member

    1153
    for Sowerby (Mr. Houghton), because there are many instances throughout the country where slum clearance is going on and people who live on top of their jobs are compelled, because of the alteration in housing accommodation or the use of housing accommodation for other purposes, to go very far distances.
    In my own particular area dockers recently came to see me on this question. Their accommodation had been scheduled for demolition, and the only alternative accommodation they could get was a distance of approximately seven or eight miles from the centre of Liverpool. They had to travel daily to the docks for their employment, and they have been grumbling about the effects.
    No provision has been made for additional travelling expenses although they have had increased costs because of the alteration in their original housing owing to a new zoning of areas in central Liverpool for slum clearance and redevelopment. I was hoping that that would be included or taken into account.
    There is also the fact that many people change their jobs and remain in the same areas, particularly in a large industrial area like Liverpool where, arising out of the war, such departments as those belonging to the Ministry of Supply have had to go great distances from the residential areas or the central housing areas in Liverpool. That has meant high travelling expenses for the workers to reach their jobs, and they have had to do that because there was not employment in the area where they live and where their firm used to work but which had to be transferred to another centre.
    People come to those of us who hold "surgeries" in our constituencies, and because of the peculiar situation in Liverpool I have had any number of people asking me how they can claim the additional cost of travelling because their employment has moved. One of the big firms in Liverpool moved from the Liverpool docks to Ellesmere Port and its employees had to go with it. People have asked me repeatedly how they could obtain relief. When I pointed out Section 25 to them, they said that the move had nothing whatever to do with the war but was because the firm had closed down in the area where they were living and had started somewhere
    1154
    else, involving them in an additional cost in many instances of between 8s. 6d. and 10s. a week on travelling.
    Recently, when I was in Wolverton, two or three people told me that they had to pay 8s. 6d. a week to travel to Wolverton from some of the outlying areas. People who had been employed in small businesses now had to find employment in the industrial area of Wolverton and, consequently, to spend what were to them large amounts on travelling.
    I agree with my hon. Friend that, administratively, there might be difficulty in operating this proposal, because certain firms provide travelling facilities from a central area to the place of employment. But it should not be outside the powers of the Inland Revenue to find some way of assessing the additional cost in travelling expenses for people who are compelled to move from work which is near their home to a job which is a considerable distance away. The closure of a firm locally can frequently involve a journey of seven, eight or nine miles. In the case of the move from Liverpool to Ellesmere Port, the journey is more like 12, 13 or 14 miles.
    There are good reasons for considering the new Clause. I hope that it may be accepted in principle, even if not in the precise wording put forward by my hon. Friend. In any event, I hope that this matter will be looked at very carefully. People tend to take the attitude that they will not travel away from their own areas when they have been accustomed to working almost on top of their homes, unless in some way they get relief in the shape of additional travelling expenses. Equally, instead of travelling elsewhere to their same employment, people look for other work which is, possibly, less important.
    I hope that the proposal will be examined to see whether it may be possible to administer it, perhaps, through P.A.Y.E. Employers will know the distances that employees have to travel from their homes and will know of the altered circumstances that arise because of the rearrangement of housing areas in large industrial centres. If some way can be found to give effect to this proposal, the relief thus afforded will be very much appreciated by many industrial workers.
    Mr. Ellis Smith: I shall not detain the House long but I want to make a few observations in support of this Clause arising out of my own experience. During the passage of the Finance Bill last year the Financial Secretary gave an undertaking that this would be considered during the next 12 months and therefore, while I have not looked up the exact terms of that undertaking, I hope it has been carried out. If not, it should be carried out during the next 12 months.
    This is becoming an increasing problem in industrial areas. It is well known that housing estates are being built several miles outside the big cities, especially in the industrial North. At Stoke-on-Trent, where the whole city is undermined, the local authorities are having to consider where they can build houses so that they will not be subject to mining subsidence. So that housing estates are being built more and more outside the city, with the result that serious questions of travelling are involved. The same applies to Manchester and Salford and Liverpool. I can endorse every word my right hon. Friend said about Liverpool, because I have a brother living there. While he is not affected to any great extent, a large number of people are affected who live out in the Prescot district on towards Ormskirk on that side of the city of Liverpool where some of the largest housing estates in the country are being built.
    When there are two or three members of the family who have to travel the seriousness of this matter will be readily seen. It is made worse by the fact that they know that in certain circumstances expenses are allowed for other people who are well placed in life. Surely, therefore, it is a legitimate grievance which should be dealt with? Many thousands living in Wythenshawe and surrounding districts work in Manchester, which is many miles distant. I mention these centres because I am familiar with them. Other hon. Members will no doubt be able to provide evidence to substantiate what has been said. I would not have arisen had I not heard my hon. Friend stating the case on behalf of Liverpool and knowing that when the matter was dealt with on the last occasion an Amendment was moved by an hon. Member opposite. Then the Financial Secretary was sympathetic and said
    1156
    consideration would be given to the matter.
    Mr. F. P. Crowder: My only quarrel with the Clause is that it does not go far enough. The attitude of the Revenue authorities at the moment seems to be that if a person does not live near his place of business that is his own fault and no allowance will be made for travelling expenses.
    In these days of housing shortage, particularly after the war, many people are not in a position of being able to live near their place of business. I begin by giving a rather remote example, and I am sure I shall be corrected by experts on Income Tax if I am wrong. Take the position of a recorder who is suddenly promoted to that high office in some county far distant from London where, possibly, he has been practising as a member of the Bar. He has to go there quite a number of times in the year to carry out his duties for a very small remuneration. The fact that he does not happen to live in the town to which he is appointed as recorder and to which he goes, 10, 15 or 20 times a year, means absolutely nothing to the Inland Revenue authorities. Their retort is, "You can have no expenses for travelling to the town to which you have been appointed."
    Probably that is on a high level, and I declare my interest in the matter as a practising member of the Bar, but I can give another aspect of this problem from my constituency. A large number of people have moved into a new estate, many coming from Acton and nearly every one of them against their will. They had no wish to move and their houses are, unfortunately, extremely expensive. But, having returned from the war, as ex-Service men they felt they had a right to marry and settle down and this was the only place where they could find houses. Now they find that with the increase in fares they have to pay far more than they budgeted for each year. This argument falls into line with the proposed new Clause. It was no fault of theirs that they had to move, but the Revenue still insist in taking the dogmatic attitude of, housing shortage or no housing shortage, results of war or not, no allowance can be claimed, one must pay the full fare as a result of not living near one's place of work.

    1157
    I do not for a moment suggest that at this moment the Treasury can afford to give a complete concession in this respect, but I should have thought that in these circumstances the Government could seriously consider giving, say, a 25 per cent. allowance in respect of extra fares in particular in relation to the new Clause so ably put forward by hon. Members opposite. That is not very much to ask and would not make very much difference in the way of revenue.
    Today many people are afraid to take a new job. We of all people, the party of enterprise, should encourage people to move about the country and to take new jobs. I appeal to the Government to give some concession in this respect, however small it may be. I can assure them it is something which is deeply resented by numbers of people who, very much against their will and entirely owing to the difficult housing conditions existing today, are finding it more than difficult to make ends meet, particularly after the recent increase in fares.
    8.45 p.m.
    Mr. Maudling: This is a matter of considerable importance to a great number of people. I was interested in what the hon. Member for Liverpool, Exchange (Mrs. Braddock) had to say about experiences in her constituency and also what the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) said. Representing, as he does, a surburban constituency in North London my hon. Friend the Member for Ruislip-Northwood (Mr. F. P. Crowder) will know that the question of fares and travelling expenses falls heavily upon people who go up to the City each day.
    This matter, which is obviously worrying a great number of people, was raised last year by my hon. Friend the Member for Wimbledon (Mr. Black). I explained then why the Government could not accept the large departure in taxation principles involved in a proposal put forward then which was rather similar, though not on all fours with the present proposal. I said then that my right hon. Friend would no doubt carefully consider what had been said. Hon. Members opposite have leapt at me about an assurance that consideration would be given in the next 12 months.
    This is one of the things being specifically considered by the Royal Commission, to whom representations have
    1158
    been made. They will provide us, in due course, with their advice on what is a complex problem. One of the complexities was illustrated in a point which arose as a result of my intervention in the speech of the hon. Member. I wished to be clear on a point about which I was not clear. But it is clear now that he did not intend an allowance of this kind to apply in cases where there was a change of residence but not a change of employment.
    The hon. Lady, however, put forward a strong case for people who change their residence by moving from what is perhaps an old house to a new housing estate. The position is that there has always been a very clear distinction drawn between expenses which are allowable and those which are not. If people spend money in fitting themselves for their occupation or to put themselves in a position to carry out their occupation that is not allowable.
    What one spends in carrying out the job is allowable. One could give many instances where it is a little difficult to draw the line. Expenses incurred in travelling to one's place of work are not allowable but travelling expenses on business are allowable. I think the case of Ricketts v. Colquhoun is the best known authority. We should be careful in departing from this distinction which had been established and has stood the test of time.
    Once expenditure is admitted which is not incurred actually in the performance of the job we arrive at the position where we may have to consider a very wide range of things. One has to clothe oneself adequately, and a claim might be put forward on that basis. I agree at once that the question of special protective clothing raises quite a different point. There is also the fact that though a great many people may be compelled to live further from their work than they would wish, it is equally the case that a number of people live away from their work from choice. They pay the extra cost of travelling because they prefer to live outside a town, for example. They choose deliberately to enjoy more pleasant surroundings at the cost of paying higher fares.
    In those circumstances, it will be agreed that there is no case for giving a

    1159
    special allowance for what is a matter of personal choice and not a matter of essential and necessary expenditure in the performance of the duty from which the income arises. That is the main question of principle.
    To turn to the terms of the new Clause, I would say that I never listen to the hon. Member for Sowerby (Mr. Houghton) without learning something new about Income Tax law. I was interested in his remarks about the wartime allowance. I agree that the words in which it was framed are not very satisfactory. In practice, this provision has led to certain difficulties when deciding what exactly is allowable and what is not.
    My impression was that, broadly speaking, claims under the Section had ceased shortly after the end of the war, but the hon. Gentleman is right. There are still a number of claims being put forward and accepted. I am told that they are few in number and that the total cost is very small. I do not think that the situation can be regarded as really satisfactory. On the other hand, it seems doubtful whether it would be justifiable to go ahead now and bring it to a stop deliberately rather than to let it peter out.
    Mr. Houghton: The knowledge of this concession has now become more widely known.
    Mr. Maudling: That is interesting. We will take careful account of that information. But when the hon. Gentleman goes beyond that and proposes to extend the concession in the way suggested in the new Clause, a number of considerable difficulties arise. For example, he argued with cogency the desirability of encouraging the mobility of labour. But this new Clause would give its benefit to anyone who changed employment for any reason and in whatever direction. While mobility of labour is in many cases desirable, there is also an argument that excessive turnover in an indiscriminate manner could do harm.
    Then, applying, as it does, to any change of work, a person who took a temporary job near home for a short time could thereafter always claim the allowance. That is a consequence which I do not think the hon. Gentleman wants.
    1160
    Then there would be the position of two people both living in Barnet and working in the same office in the City. One may have lived in Barnet and worked in the same office all his working life and he would get no allowance. His neighbour who had just joined him in the firm, having previously worked in a firm between Barnet and London, would get the allowance. Yet both work side by side doing the same job and one gets the allowance and one does not.
    The Clause as drafted would not be a satisfactory answer to what is certainly a problem about which there is growing feeling. Therefore, my right hon. Friend cannot accept it. But I repeat again—and I hope that hon. Gentlemen have not heard this too often—that my right hon. Friend has thought it better to see what the Royal Commission have to say on the point on the basis of representations made to them. He will study with care what they have to say.
    Mr. Gaitskell: The Economic Secretary has given us his usual courteous, almost disarming, reply and paraded a number of arguments against this Clause and the rather wider proposal which was referred to during the debate of allowing travelling expenses to work as a legitimate expense for Income Tax purposes. I must confess that I find myself somewhat dissatisfied with the situation as it is today.
    My hon. Friend the Member for Sowerby (Mr. Houghton) dealt with great lucidity with the peculiar circumstances which developed during the war and the fact that Section 159 of the 1952 Act continues a war-time arrangement. I have no doubt that, whether or not the news about this was getting around before the debate, it will get around afterwards. I do not know whether my hon. Friend's previous associates will thank him for having made it rather easier perhaps to claim allowances against changes of work and residence.
    Captain J. A. L. Duncan: May I remind the right hon. Gentleman that the 1952 Act was a consolidation Measure? Therefore, we had to continue that Section. We could not take it out.
    Mr. Gaitskell: I fully appreciate that. I am not arguing that the Section should necessarily be brought to an end. I was

    1161
    interested to hear what the Economic Secretary said about that. He said that there are some claims continuing under it. Presumably that is the reason why it has not been repealed. Let us consider for a moment the reason why it was introduced. It was undoubtedly because, during the war, people were obliged to move a good deal in the interests of the country and, in consequnce, it was most unfair that they should have to endure additional travelling expenses without being able to claim them as an allowance against tax.
    Quite apart from all the difficulties of interpreting the Clause in present circumstances, I think we have to face the question why, if it was desirable to make this change in the law during the war, in order to encourage people to move as the Government wished them to move, it should not be continued on a broader basis in peacetime. I should have thought that the Economic Secretary would have been impressed with the very powerful arguments put by all my hon. Friends in favour of encouraging the mobility of labour. If there is one thing on which experts all seem to agree, it is that, in a full employment economy, it is most desirable that the mobility of labour should be encouraged; otherwise, we get far too rigid a pattern, we do not get manned up the industries that ought to be manned up, and people remain far too long in occupations of less national importance.
    We have not been given any reasons why this problem should not be dealt with; nor can I accept the criticism of this new Clause put forward by the Economic Secretary on the grounds that the wording would include a change of residence consequent upon a change of employment. I think my hon. Friend can be perfectly happy about the wording as it now stands. It would be quite reasonable, in our view, that when a change of residence is necessary because of a change of employment, the extra expense should be charged for Income Tax purposes. I appreciate the interest of my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock), and of my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), who think that the Clause should be widened still further, but I know that
    1162
    they will agree that, however desirable it is, we are not actually concerned with it now. They will also agree that, if we can get half a loaf, it is better than no bread at all.
    Therefore, I do not think we can accept the argument that this new Clause is unsatisfactory because of the particular wording involved. As a matter of fact, it would not be in the least difficult to alter it to correspond with what was originally in the mind of my hon. Friend. The Economic Secretary admitted that last year the Chancellor had, in fact, undertaken to consider this whole matter, and he even drew attention to the fact that my hon. Friend the Member for Stoke-on-Trent, South seized upon this fact and thanked him for it. I do not think it is quite good enough to come back to the House and say that the Chancellor has been considering the matter all this year and that he is now asking a Royal Commission to look into it. If it was really to be left to a Royal Commission, it would have been sufficient to have said that last year, but we certainly got the impression that the Government were giving more careful attention to this matter than they seem to have done.
    Finally, there is the point referred to by my hon. Friend the Member for Stoke-on-Trent, South, which cannot be ignored. Admittedly, it goes rather wide of the particular Clause, but the fact is that, although the law does not allow the expenses of travelling to and from work to count against tax, it is well-known to all of us that those who use their cars to go to work, in fact, are in a position to, and I am afraid often do, get away with the expense of getting to and from their work. It is no use the Economic Secretary making a face; he knows perfectly well that it is so, and it is almost impossible to draw a sharp line between the expense of the car while at work and the expense involved while using it in getting to and from work. Exactly the same problem used to arise in connection with petrol rationing. It was a headache to us then, and this ought to be a headache to the Government now.
    I do not know what my hon. Friend who moved the Second Reading feels about this matter. It is his Clause, and he has moved it very ably. I do not feel

    1163
    that the Government's reply can be accepted as in the least satisfactory.
    Mr. F. P. Crowder: Does the right hon. Gentleman realise that what he has said about the use of motor cars is not quite true. I have to deal with the Revenue in this matter, as I go to and from my home to work. I always discuss with the Revenue the mileage over the area, and they take off some of it, having worked out the distance from my home to my place of business, and they arrive at the assessable part of that allowance. It is not fair to say that people are getting away with it.
    I do not think that the right hon. Gentleman wants to be unjust, but what he said is not quite right.
    Mr. Gaitskell: I do not desire to be unjust, and I was not implying that the hon. Gentleman or any hon. Gentleman was getting away with anything; but I still think that a large number of people do get away with it.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes, 221: Noes, 246.

    Division No. 215]

    AYES

    [9.1 p.m.

    Acland, Sir Richard

    Fernyhough, E.

    McLeavy, F.

    Adams, Richard

    Fletcher, Eric (Islington, E.)

    McNeil, Rt. Hon. H.

    Allen, Scholefield (Crewe)

    Foot, M. M.

    MacPherson, Malcolm (Stirling)

    Anderson, Alexander (Motherwell)

    Forman, J. C.

    Mainwaring, W. H.

    Anderson, Frank (Whitehaven)

    Fraser, Thomas (Hamilton)

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

    Attlee, Rt. Hon. C. R.

    Freeman, John (Watford)

    Mann, Mrs. Jean

    Awbery, S. S.

    Gaitskell, Rt. Hon. H. T. N

    Manuel, A. C.

    Bacon, Miss Alice

    Gibson, C. W.

    Marquand, Rt. Hon. H. A

    Balfour, A.

    Glanville, James

    Mason, Roy

    Barnes, Rt. Hon. A. J

    Gordon Walker, Rt. Hon. P. C.

    Mayhew, C. P

    Bartley, P.

    Greenwood, Anthony (Rossendale)

    Messer, Sir F.

    Bence, C. R.

    Grenfell, Rt. Hon. D. R.

    Mikardo, Ian

    Benn, Hon. Wedgwood

    Grey, C. F.

    Mitchison, G. R

    Benson, G.

    Hale, Leslie

    Monslow, W

    Beswick, F.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Moody, A. S.

    Bing, G. H. C.

    Hall, John T. (Gateshead, W.)

    Morgan, Dr. H. B. W

    Blackburn, F.

    Hamilton, W. W.

    Morley, R.

    Blenkinsop, A.

    Hannan, W.

    Morris, Percy (Swansea, W.)

    Blyton, W. R.

    Hargreaves, A.

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

    Boardman, H.

    Harrison, J. (Nottingham, E.)

    Mort, D. L.

    Bottomley, Rt. Hon. A. G

    Hastings, S.

    Moyle, A.

    Bowden, H. W.

    Hayman, F. H.

    Mulley, F. W

    Braddock, Mrs. Elizabeth

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

    Nally, W.

    Brockway, A. F.

    Herbison, Miss M.

    Neal, Harold (Bolsover)

    Brook, Dryden (Halifax)

    Hobson, C. R.

    Noel-Baker, Rt. Hon. P. J

    Broughton, Dr. A. D. D.

    Holman, P.

    Oldfield, W. H.

    Brown, Rt. Hon. George (Belper)

    Holmes, Horace (Hemsworth)

    Oliver, G. H.

    Burke, W. A.

    Houghton, Douglas

    Orbach, M

    Burton, Miss F. E.

    Hoy, J. H.

    Oswald, T.

    Butler, Herbert (Hackney, S.)

    Hubbard, T. F.

    Padley, W. E

    Callaghan, L. J.

    Hudson, James (Ealing, N.)

    Paget, R. T.

    Carmichael, J.

    Hughes, Emrys (S. Ayrshire)

    Palmer, A. M. F

    Castle, Mrs. B. A

    Hughes, Hector (Aberdeen, N.)

    Pargiter, G. A

    Clunie, J.

    Hynd, H. (Accrington)

    Paton, J.

    Coldrick, W.

    Irving, W. J. (Wood Green)

    Peart, T. F

    Collick, P. H.

    Isaacs, Rt. Hon. G. A

    Plummer, Sir Leslie

    Corbet, Mrs. Freda

    Janner, B.

    Popplewell, E.

    Cove, W. G.

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

    Price, Joseph T. (Westhoughton)

    Craddock, George (Bradford.

    Jeger, George (Goole)

    Proctor, W. T.

    Crosland, C. A. R.

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

    Pryde, D. J

    Crossman, R. H. S.

    Jenkins, R. H. (Stechford)

    Pursey, Cmdr. H

    Cullen, Mrs. A.

    Johnson, James (Rugby)

    Rankin, John

    Darling, George (Hillsborough)

    Jones, David (Hartlepool)

    Reeves, J.

    Davies, Ernest (Enfield, E.)

    Jones, Frederick Elwyn (West Ham, S.)

    Reid, Thomas (Swindon)

    Davies, Harold (Leek)

    Jones, Jack (Rotherham)

    Reid, William (Camlachie)

    Davies, Stephen (Merthyr)

    Jones, T. W. (Merioneth)

    Rhodes, H.

    de Freitas, Geoffrey

    Keenan, W.

    Richards, R.

    Deer, G.

    Key, Rt. Hon. C. W

    Robens, Rt. Hon. A.

    Delargy, H. J.

    King, Dr. H. M.

    Robinson, Kenneth (St. Pancras, N.)

    Dodds, N. N.

    Kinley, J.

    Rogers, George (Kensington, N.)

    Donnelly, D. L.

    Lee, Frederick (Newton)

    Ross, William

    Driberg, T. E. N.

    Lever, Leslie (Ardwick)

    Royle, C.

    Dugdale, Rt. Hon. John (W Bromwich)

    Lewis, Arthur

    Shackleton, E. A. A

    Ede, Rt. Hon. J. C.

    Lindgren, G. S.

    Short, E. W.

    Edelman, M.

    Logan, D. G.

    Simmons, C. J. (Brierley Hill)

    Edwards, Rt. Hon. Ness (Caerphilly)

    MacColl, J. E

    Skeffington, A. M.

    Edwards, W. J. (Stepney)

    McGhee, H. G.

    Slater, Mrs. H. (Stoke-on-Trent)

    Evans, Albert (Islington, S. W.)

    McGovern, J.

    Slater, J. (Durham, Sedgefield)

    Evans, Edward (Lowestoft)

    McInnes, J.

    Smith, Ellis (Stoke, S.)

    Evans, Stanley (Wednesbury)

    McKay, John (Wallsend)

    Smith, Norman (Nottingham, S.)

    Sorensen, R. W.

    Tomney, F.

    Wilkins, W. A.

    Soskice, Rt. Hon. Sir Frank

    Ungoed-Thomas, Sir Lynn

    Willey, F. T.

    Sparks, J. A.

    Usborne, H. C.

    Williams, David (Neath)

    Stewart, Michael (Fulham, E.)

    Viant, S. P.

    Williams, Rev. Llywelyn (Abertillery)

    Stakes, Rt. Hon. R. R.

    Wallace, H. W.

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

    Strachey, Rt. Hon. J.

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

    Williams, W. R. (Droylsden)

    Summerskill, Rt. Hon. E

    Weitzman, D.

    Wilson, Rt. Hon. Harold (Huyton)

    Swingler, S. T.

    Wells, Percy (Faversham)

    Winterbottom, Richard (Brightside)

    Sylvester, G. O.

    West, D. G.

    Woodburn, Rt. Hon. A.

    Taylor, Bernard (Mansfield)

    Wheeldon, W. E.

    Yates, V. F.

    Taylor, John (West Lothian)

    White, Mrs. Eirene (E. Flint)

    Younger, Rt. Hon. K.

    Taylor, Rt. Hon. Robert (Morpeth)

    White, Henry (Derbyshire, N.E.)

    Thomas, David (Aberdare)

    Whiteley, Rt. Hon. W.

    TELLERS FOR THE AYES:

    Thomson, George (Dundee, E.)

    Wigg, George

    Mr. Pearson and Mr. Arthur Allen.

    Timmons, J.

    Wilcock, Group Capt. C. A. B.

    NOES

    Aitken, W. T.

    Finlay, Graeme

    McCallum, Major D.

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

    Fisher, Nigel

    McCorquodale, Rt. Hon. M. S.

    Alport, C. J. M.

    Fleetwood-Hesketh, R. F.

    Macdonald, Sir Peter

    Amory, Heathcoat (Tiverton)

    Fletcher-Cooke, C.

    McKibbin, A. J.

    Anstruther-Gray, Major W. J.

    Ford, Mrs. Patricia

    Mackie, J. H. (Galloway)

    Arbuthnot, John

    Fort, R.

    Maclay, Rt. Hon. John

    Ashton, H. (Chelmsford)

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Maclean, Fitzroy

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

    Fyfe, Rt. Hon. Sir David Maxwell

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

    Astor, Hon. J. J.

    Galbraith, Rt. Hon. T. D. (Pollok)

    MacLeod, John (Ross and Cromarty)

    Baker, P. A. D.

    Galbraith, T. G. D. (Hillhead)

    Macpharson, Niall (Dumfries)

    Baldock, Lt.-Cmdr. J. M.

    Gammans, L. D.

    Maitland, Patrick (Lanark)

    Baldwin, A. E.

    George, Rt. Hon. Maj. G. Lloyd

    Manningham-Buller, Sir R. E.

    Banks, Col. C.

    Godber, J. B.

    Markham, Major Sir Frank

    Barber, Anthony

    Gough, C. F. H.

    Marlowe, A. A. H.

    Baxter, A. B.

    Gower, H. R.

    Marples, A. E.

    Bell, Ronald (Bucks, S.)

    Graham, Sir Fergus

    Marshall, Sir Sidney (Sutton)

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

    Gridley, Sir Arnold

    Maude, Angus

    Bennett, Dr. Reginald (Gosport)

    Grimond, J.

    Maudling, R.

    Bennett, William (Woodside)

    Grimston, Hon. John (St. Albans)

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

    Bevins, J. R. (Toxteth)

    Grimston, Sir Robert (Westbury)

    Medlicott, Brig. F.

    Birch, Nigel

    Hall, John (Wycombe)

    Mellor, Sir John

    Bowen, E. R.

    Harden, J. R. E.

    Molson, A. H. E.

    Boyd-Carpenter, J. A.

    Hare, Hon. J. H.

    Moore, Lt.-Col. Sir Thomas

    Boyle, Sir Edward

    Harris, Frederic (Croydon, N.)

    Mott-Radclyffe, C. E.

    Braine, B. R.

    Harrison, Col. J. H. (Eye)

    Nabarro, G. D. N.

    Braithwaite, Sir Albert (Harrow, W.)

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

    Neave, Airey

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

    Harvey, Ian (Harrow, E.)

    Nicholls, Harmar

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

    Harvie-Watt, Sir George

    Nicholson, Godfrey (Farnham)

    Brooke, Henry (Hampstead)

    Hay, John

    Nicolson, Nigel (Bournemouth, E.)

    Brooman-While, R. C.

    Heald, Sir Lionel

    Nield, Basil (Chester)

    Browne, Jack (Govan)

    Heath, Edward

    Nutting, Anthony

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

    Higgs, J. M. C.

    Oakshott, H. D.

    Bullard, D. G.

    Hill, Dr. Charles (Luton)

    O'Neill, Phelim (Co. Antrim, N.)

    Bullus, Wing Commander E. E.

    Hill, Mrs. E. (Wythenshawe)

    Ormsby-Gore, Hon. W. D.

    Burden, F. F. A.

    Hinchingbrooke, Viscount

    Orr, Capt. L. P. S.

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

    Hirst, Geoffrey

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

    Campbell, Sir David

    Holland-Martin, C. J.

    Orr-Ewing, Sir Ian (Weston-super-Mare)

    Carr, Robert

    Hollis, M. C.

    Osborne, C.

    Cary, Sir Robert

    Holmes, Sir Stanley (Harwich)

    Partridge, E

    Channon, H.

    Holt, A. F.

    Peake, Rt. Hon. O.

    Clarke, Brig. Terence (Portsmouth, W.)

    Hope, Lord John

    Peto, Brig. C. H. M.

    Clyde, Rt. Hon. J. L.

    Hornsby-Smith, Miss M. P

    Pickthorn, K. W. M.

    Cole, Norman

    Horobin, I. M.

    Pilkington, Capt. R. A.

    Colegate, W. A.

    Horsbrugh, Rt. Hon. Florence

    Pitman, I. J.

    Conant, Maj. R. J. E.

    Howard, Hon. Greville (St. Ives)

    Pitt, Miss E. M.

    Cooper-Key, E. M.

    Hudson, Sir Austin (Lewisham, N.)

    Powell, J. Enoch

    Craddock, Beresford (Spelthorne)

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

    Price, Henry (Lewisham, W.)

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

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Prior-Palmer, Brig. O. L

    Crosthwaite-Eyre, Col. O. E.

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

    Profumo, J. D.

    Crouch, R. F.

    Hyde, Lt.-Col. H. M.

    Raikes, Sir Victor

    Crowder, Sir John (Finchley)

    Hylton-Foster, H. B. H

    Rayner, Brig. R

    Crowder, Petre (Ruislip—Northwood)

    Johnson, Eric (Blackley)

    Redmayne, M.

    Cuthbert, W. N.

    Joynson-Hicks, Horn L. W

    Rees-Davies, W. R.

    Darling, Sir William (Edinburgh, S.)

    Keeling, Sir Edward

    Remnant, Hon. P.

    Davidson, Viscountess

    Kerr, H. W.

    Renton, D. L. M

    Deedes, W. F.

    Lambton, Viscount

    Roberts, Peter (Heeley)

    Digby, S. Wingfield

    Langford-Holt, J. A.

    Robertson, Sir David

    Donaldson, Cmdr. C. E. McA.

    Law, Rt. Hon. R. K

    Robinson, Roland (Blackpool, S.)

    Donner, Sir P. W.

    Leather, E. H. C.

    Rodgers, John (Sevenoaks)

    Doughty, C. J. A.

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

    Roper, Sir Harold

    Douglas-Hamilton, Lord Malcolm

    Legh, Hon. Peter (Petersfield)

    Ropner, Col. Sir Leonard

    Drayson, G. B.

    Lindsay, Martin

    Russell, R. S.

    Drewe, Sir C.

    Linstead, Sir H. N.

    Ryder, Capt. R. E. D.

    Duncan, Capt. J. A. L.

    Llewellyn, D. T.

    Scott, R. Donald

    Duthie, W. S.

    Lloyd, Maj. Sir Guy (Renfrew, E.)

    Scott-Miller, Cmdr. R.

    Eccles, Rt. Hon. Sir D. M

    Lockwood, Lt.-Col. J. C.

    Shepherd, William

    Erroll, F. J-.

    Lucas, P. B. (Brentford)

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

    Fell, A.

    Lucas-Tooth, Sir Hugh

    Smithers, Peter (Winchester)

    1166

    1167

    Smithers, Sir Waldron (Orpington)

    Teeling, W.

    Wakefield, Sir Wavell (St. Marylebone)

    Smyth, Brig. J. G. (Norwood)

    Thomas, Rt. Hon. J. P. L. (Hereford)

    Walker-Smith, D. C.

    Snadden, W. McN.

    Thomas, Leslie (Canterbury)

    Ward, Hon. George (Worcester)

    Spearman, A. C. M.

    Thompson, Kenneth (Walton)

    Ward, Miss I. (Tynemouth)

    Speir, R. M.

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

    Waterhouse, Capt. Rt. Hon. C.

    Stanley, Capt. Hon. Richard

    Thorneycroft, Rt. Hn. Peter (Monmouth)

    Webbe, Sir H. (London & Westminster)

    Stevens, G. P.

    Touche, Sir Gordon

    Wellwood, W.

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

    Turner, H. F. L.

    Williams, Rt. Hon. Charles (Torquay)

    Stewart, Henderson (Fife, E.)

    Turton, R. H.

    Williams, Sir Herbert (Croydon, E.)

    Stoddart-Scott, Col. M.

    Tweedsmuir, Lady

    Williams, Paul (Sunderland, S.)

    Storey, S.

    Vane, W. M. F.

    Williams, R. Dudley (Exeter)

    Strauss, Henry (Norwich, S.)

    Vaughan-Morgan, J. K

    Wilson, Geoffrey (Truro)

    Stuart, Rt. Hon. James (Moray)

    Vosper, D. F.

    Sutcliffe, Sir Harold

    Wade, D. W.

    TELLERS FOR THE NOES:

    Taylor, William (Bradford, N.)

    Wakefield, Edward (Derbyshire, W.)

    Mr. Kaberry and Mr. Wills.

    New Clause.—(REBATE FOR DIESEL OIL.)
    As from the fifteenth day of April, nineteen hundred and fifty-three, there shall be allowed from the duties of Customs and Excise a rebate of sixpence a gallon on diesel oil.—[Mr. Pargiter.]
    Brought up, and read the First time.
    Mr. G. A. Pargiter: I beg to move, "That the Clause be read a Second time."
    There are precedents for the sort of discrimination which this Clause seeks to make. I find that even with the introduction of the first fuel tax, in 1909, there was an allowance of half the rate of duty for goods traffic, passenger transport and also for doctors. As far back as then it was recognised that it was undesirable to tax industry in this particular form. It is because now, perhaps more than ever, we need to give as much aid as possible to industry, that I am pressing very strongly on the Chancellor the need to do something on the lines suggested by this Clause, and I hope that he will accept it.
    The history of this tax is very interesting. In 1921, it was found that the tax could be abolished altogether; in 1928, it was reintroduced specially to provide for the relief of industry, arising from the de-rating provisions. It was thought at that time that because those who used motor cars or vehicles generally were more prosperous than basic industries they could afford to provide some compensation, and there may be something in that argument. It was also done to encourage coal consumption, because at one period duty had to be paid on heavy as well as light hydrocarbon oils.
    In 1933, the tax was only 1d. a gallon on fuel oil, as against a much higher tax on petrol. In 1935, fuel for road vehicles was brought into the same rate of taxation, very largely because, under the impetus of the reduced fuel tax, design and development had gone ahead very
    1168
    rapidly and, as a consequence, there was a very great increase in the consumption of fuel oil. The Chancellor of the day, in my view very unwisely, decided to take advantage of that situation to provide himself with extra revenue.
    Taking the fuel tax and the motor vehicle tax generally, it is fair to say that Britons are among the highest-taxed motor vehicle owners in the world. That must obviously be a cause of some concern at present. I do not know how many meetings are going on here, but I really cannot make myself heard. [HON. MEMBERS: "Order."] The effect of taxation now is, of course, to add an additional burden on production. The weight of the tax all the time has meant an additional burden on production.
    9.15 p.m.
    We are being urged to make lower prices to compete in world markets. It is up to the Chancellor to set an example. The tax on fuel oil is a tax which applies most particularly to those goods. Passenger transport vehicles in the main are driven with diesel engines. Heavy road vehicles, which constitute an important link in industry, are almost exclusively now driven by oil engines. Consequently, any relief given to the taxation on their fuel would mean a direct relief to industry as a whole. Therefore, the proposal ought to commend itself to the Chancellor.
    The tax on fuel oil has had the effect of stultifying development. I would cite, for instance, the farm tractor. Just before the war when the mechanisation of farming was proceeding very rapidly, instead of using the diesel oil engine tractor of that particular time, farmers used an engine that was devised that was worked by vaporised oil because the oil it consumed was free of tax. It was a much less efficient engine, but it was used. Again, now that diesel oil engines

    1169
    are being developed because the other engine proved less efficient, but farming suffered from having the less efficient tractors because the farmers wanted an engine that would avoid fuel tax. At this time anything that nullifies or stultifies development ought to be removed.
    We want to go still further in designing oil driven engines which are more efficient than petrol driven engines. If it is proved that they are, and that for them we need import less fuel than for petrol driven engines, there is a case for developing that kind of engine. This applies to other types of machinery as well. If that is the case we should expect the Government to encourage the design of those engines.
    I believe that our designers, if they had the incentive of a tax rebate, would be giving consideration to designing oil engines even for light cars; certainly, for larger light cars if not necessarily for the smaller ones. That, I imagine, would give us a very important lead in world markets at the present time. If we can produce something more economical than the petrol driven engine it will certainly attract the motorists, who are fuel minded nowadays because of the high prices of petrol in most countries at the present time. Anything we could do in that direction would be of great advantage to exports as a whole.
    Another consideration is that any tax on a basic material at any time has a cumulative effect on final costs. It cannot be avoided. It always happens. That is why, in the main, I think, it has been the policy of Governments to avoid placing taxes on basic materials, because of their cumulative effect, which is undefinable but inevitable, with the ultimate result that the tax is increased several times by the time an article reaches the final purchaser paying the final price.
    I do not know whether it is realised, but it ought to be, that fuel oil certainly is not a luxury. It may be argued that petrol used for private motoring is a luxury, but used for other purposes it is certainly not, and yet we find that taxation in this field is far higher than is Purchase Tax on luxury articles. There is no logic in that. If luxury articles can have the tax on them reduced at the present time, why should we not give a
    1170
    rebate of tax on fuel oil so that industry can benefit?
    The arguments in favour of this proposal have been advanced often before, and I need not detain the House with a lengthy development of the case and of all the advantages. If something could be done to encourage the use of fuel oil it would be a distinct advantage to industry generally. It might not help to bring the passenger transport fares down, but it would be a factor in preventing a rise in fares. That, again, is having a very direct effect on the cost of living, wage demands and so on.
    As I have said, these arguments have been fully-developed and must be well-known to the Financial Secretary. Therefore, it is only a question of whether he is prepared to heed the very important message which all these things convey to him, and I can only express the hope that he will make this modest remission for which we are asking in order that benefits to industry, to the export trade and to the home market may be achieved to some extent as a result.
    Mr. Ernest Davies: I beg to second the Motion.
    During the Committee stage, there was a brief debate, rather late in the evening, on a somewhat similar Clause for a rebate of 6d. on heavy oil used by public service vehicles. This new Clause, which has been so convincingly moved by my hon. Friend the Member for Southall (Mr. Pargiter), is intended to cover the use of diesel oil for all vehicles. When the Financial Secretary was replying to that debate, in effect, he produced only two arguments against that new Clause.
    One was that it would be discriminatory, and the second was that it would be expensive. First, as regards its being discriminatory, my hon. Friend pointed out that in the early days of the petrol tax there was no tax at all on diesel oil for vehicles. That is to say, that this discrimination was imposed by the Finance Act, 1928, which was the second time that the petrol tax was imposed. The Finance Act, 1928, imposed 4d. a gallon on petrol and no rebate was allowed on petrol for use by hackney vehicles as was allowed in the earlier 1909 Act, but the full 4d. rebate was allowed on heavy oil. That rebate on heavy oil was carried on, and in 1931 when the petrol tax was increased to 8d.

    1171
    the rebate of the full 8d. was allowed on heavy oil. It was later that the rebate on heavy oil was reduced to 7d. Only in 1935 was the position changed so that heavy oil was subject to the same tax as light oil.
    It was found quite administratively possible to have this rebate on diesel oil at that time. It is administratively possible because a rebate can be administered readily on audited certificates of consumption. The Financial Secretary adduced the argument that it was very largely urban buses and coaches which used diesel oil these days and country buses were inclined to run on petrol, and that therefore this would discriminate in favour of the town as against the country. If he has examined the figures a little more closely, as I hope he has done since the Committee stage, he will find that argument does not hold. He should always appreciate that under the present organisation of the transport industry there is averaging as between country and town, and it is only in very rare cases that there is a separate bus company which is serving the country and not also operating in the urban areas. There is an averaging of cost and an averaging of fares. In fact, it is the urban services generally which pay for the less remunerative country services, and, incidentally, it is one of the great advantages of municipal and public ownership which enables that to be done.
    But when we come to the cost, it is difficult to work out. Perhaps the Financial Secretary has gone into what would be the cost of the new Clause. As far as I can make out, there is roughly a consumption of six gallons of light oil to one gallon of heavy oil. That is to say, the 6d. rebate would apply to only one-seventh of the taxable fuel used in road vehicles. Perhaps the Financial Secretary will confirm whether that is correct or not.
    I deduce this largely from some figures which the Financial Secretary gave yesterday in a written reply to the hon. and gallant Member for Knutsford (Lieut.-Colonel Bromley-Davenport). In column 67 of today's OFFICIAL REPORT the Financial Secretary gave a series of figures and stated that the total receipts in duty on light oils was about £228 million and on heavy oils £36 million and the Excise Duty on light oils was £9
    1172
    million and on heavy oils some £2 million. If those figures are added together, we get a figure for light oils of about £238 million and for heavy oils practically £39 million. That shows, incidentally, the very heavy tax on fuel used in road vehicles today.
    Those figures show that the heavy oil consumption is roughly one-seventh of the total. That means that the 6d. rebate on a seventh of the total consumption of 318,750,000 gallons per year would cost about £8 million. The Financial Secretary will no doubt say that a concession of £8 million cannot possibly be granted, but when the benefit which would accrue to the community from such a concession is appreciated he ought to consider it. Unquestionably, by far the greatest proportion of the concession would accrue to the travelling public. It would be very important to the road passenger, because there has been a steady increase in the use of diesel oil as opposed to light oil in road passenger vehicles. My hon. Friend touched upon that, and all the figures which have been published in recent years show the very steady rise in the substitution of diesel fuel vehicles for petrol operated vehicles.
    The latest Ministry of Transport figures—they are regrettably behind the times—relating to a census taken in September, 1951, show that out of 132,000 hackney vehicles—which include not only omnibuses and coaches but also taxis—there were some 76,000 petrol vehicles and 55,000 diesel vehicles. Since then the substitution has been proceeding steadily and the proportion is today far more favourable to diesel vehicles than it was some 18 months ago.
    If we take simply the figures for omnibuses and coaches, we find that some 78,000 were operating and that no fewer than three-fifths of them were large vehicles operating on diesel fuel. Thus, if we compare not the number of petrol vehicles with the number of diesel vehicles but the carrying capacities of the vehicles, there is a far greater total carrying capacity of diesel vehicles than of petrol vehicles, and that is what is important. Of the same 55,000 diesel vehicles no fewer than 30,000 had between 48 to 56 seats whereas there were some 400 fewer petrol vehicles with that number of seats operating according to the Ministry of Transport statistics.

    1173
    9.30 p.m.
    If one bears that in mind one realises that the incidence of this rebate would affect a far greater number of passengers and passenger journeys by bus and coach. This would appear from a comparison simply of the figures of the number of petrol driven vehicles and the number of diesel fuel vehicles. In other words, the effect on the travelling public would be far higher than appears on the surface and of considerable advantage to them.
    We all know the way that fares have been going up in recent years, and each time, of course, that the petrol tax has been increased so it has been followed inevitably by a rise in fares. While none of us would suggest that other factors are not also responsible and that this small rebate could not possibly lead to a reduction in fares or perhaps prevent some further increase, it might assist in halting the upward trend in fares, which we all regret and which has to be stopped at some stage.
    In the case of London Transport this 6d. rebate would effect a saving in fuel costs of some £900,000. That is a little less than one-quarter of the increased revenue which they are seeking before the Transport Tribunal, and whose Report appears to have been somewhat delayed. We are all anxiously awaiting it. I suggest to the Financial Secretary that serious consideration should be given to this new Clause because it would enable the Government to redeem themselves to a very slight extent from their terrible record over this question of transport costs and transport fares.
    We all recall the Government's interference in 1952 with the Transport Commission, and the admission of the Prime Minister himself that there were political considerations involved. It happened to coincide with the municipal elections in London, and the Prime Minister blatantly admitted that it had some influence upon his decision in the matter. That interference by the Government meant a temporary saving in fares to the travelling public of £1¼ million per annum, but at the very same time as the Government were interfering with the Transport Commission and preventing them from implementing the Transport Tribunal's Report to the extent of £1¼ million, the Chancellor put on an additional tax of 7½d. on petrol which offset completely that £1¼ million.
    1174
    The 7½d. additional tax cost London Transport practically the same as the Government insisted they should reduce the fares.
    That, of course, had the inevitable result that we on this side predicted, for within a very few months London Transport Executive had to go to the Transport Tribunal and ask for a further increase in fares, and the Tribunal is about to report upon that. Not only did this increased petrol tax of 7½d. cost London Transport Executive £1¼ million, but it cost the Transport Commission £1 million through their undertakings of Tillings and Incorporated Provincial Buses, while in Scotland the buses operated by the Commission cost another £500,000. They were not then arguing for the concession of the full 7½d. imposed. We are only asking for the remission of 6d. on diesel oil. If that were conceded by the Government it would be a small recompense to the Transport Commission as well as to the rest of the transport undertakings of this country.
    Many of them are local authorities, because a large section of the local passenger services are operated by the municipalities and they have been faced, since the increased costs and the further rise in the petrol tax a year ago, with grave difficulties. They have either had to raise their fares or to reduce their contribution to the rates, or to allow a deficit to accumulate. Perhaps it is not always appreciated that in a large number of cases the municipalities are able to relieve the rates to the extent of the surpluses which are made on their transport operations. In some cases, of course, there are deficits and the ratepayer pays, but on balance, up till recently, there has been a net gain to the ratepayers through the successful operation of municipal transport. Thanks, however, to the increase in the petrol tax, that situation is not as favourable as it was, so this concession by the Government would also assist the municipalities who operate their own undertakings.
    Further, if this proposed new Clause were accepted it would assist the road haulage industry but here the percentage of vehicles operating on diesel oil is much less than in the case of the road passenger service. In fact there were in September, 1951, 43,000 diesel-operated goods vehicles compared with 900,000 goods

    1175
    vehicles on the roads, so the proportion is not high. That only emphasises the point I am making that this concession would benefit so much more the travelling public, and that was the reason why it was put down.
    I want to refer to the fact, to which this new Clause is relevant, that Britain is lagging behind a large number of countries in the amount of money spent on road construction today and for which these taxes were originally imposed. Today we are a very heavily taxed country as far as fuel and motor vehicles are concerned, and yet we are spending far less on road construction than are most of the countries in Western Europe. I have gone to some trouble to ascertain the figures and I find that in the United Kingdom we are spending today only about £1 per head per annum on road maintenance and construction——
    Mr. Speaker: I do not think road maintenance comes into this new Clause.
    Mr. Davies: With all respect, Mr. Speaker, my reason for introducing this aspect of the matter is that this tax, in respect of which we are asking that there should be some concession, was imposed for the purpose of maintaining the roads of this country and to enable construction, but I will bow to your Ruling. All I will say is that if this concession were made by the Government it would in no way affect the amount of money which would be spent on our roads, because so much more is being realised in tax than is being put to the purpose for which it was originally imposed.
    The petrol taxes and the other taxes on vehicles have become a penal imposition on transport and they are not being spent for the purpose for which they were imposed. Their incidence on the community is great and they have a cumulative effect because the cost of transport enters into so many stages of production and consumption.
    In seconding the new Clause, I therefore urge upon the Financial Secretary to consider whether the cost is not so great that it could be conceded and that the result of conceding it would accrue to the community in such a way that it would be well worth while.
    Mr. David Jones: In supporting what my hon. Friends have said in introducing the Clause, I want, first, to refer to one at least of the arguments used by the Financial Secretary, on the last occasion when this matter was debated in Committee, for rejecting a Clause with much narrower limits. The hon. Gentleman suggested that it would be quite wrong to differentiate between two different classes of user of this form of fuel. He did not seek to tell us—I hope he will do so tonight—why it is necessary to impose all this taxation on passenger carrying road vehicles that use diesel oil whereas passenger carrying railway vehicles are given a rebate from the tax.
    The hon. Gentleman is not being consistent with the pleas of his right hon. Friend. Last Saturday, as I understand, the Chancellor of the Exchequer, in painting the picture of the economic future of the country, said that we ought to be steady. Very many municipalities up and down the country, because of the circumstances revealed by their 1952–53 balance sheets, are already making preparations, to go to the licensing authorities with applications to increase their fares. Figures published recently by the Municipal Passenger Transport Association show that at least 64 municipalities, operating mainly vehicles with diesel oil engines, have greater deficits at the end of their financial year in 1953 than in 1952.
    I agree with my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) that that deficit is not all due to the increase in the tax on fuel, but a very substantial proportion of it is due to that reason. Because of the increasing deficiencies in their annual accounts, the municipalities are having to go to the licensing authorities to secure increases in fares. That, in turn, is bound to mean that the workpeople, at least, and the business people who have to use these municipal buses day by day to and from their work, will use that as an added argument for an increase in wages because of the increased cost of travel. So the vicious circle continues. The Government would be wise at this time if they were carefully to examine this position from the point of view of the diesel engine road vehicles.
    The argument was advanced during the Committee stage that it would not

    1177
    be proper to regard passenger carrying vehicles using diesel oil as being in a special category. To meet the complaint of the Financial Secretary on that occasion, the present Clause has been widened to embrace the goods carrying vehicles.
    9.45 p.m.
    I do not want to enter into arguments advanced by my hon. Friend the Member for Southall (Mr. Pargiter), but it is true that municipalities particularly, and other passenger undertakings also, have increasingly developed the diesel engine because of its greater efficiency in operation. The initial cost of securing those vehicles in the first instance has been greater than securing petrol engines and the initial cost of purchasing diesel buses has been considerably higher than that of petrol buses, but in the long run they serve a useful purpose and give a greater degree of efficiency. In their own interest, if they are anxious to encourage efficiency in industry, the Government ought to regard that development as deserving of consideration in the taxation of this form of fuel.
    The hon. Gentleman argued on the last occasion that a rebate of 6d. per gallon on diesel oil would not make any substantial difference in the fares to be charged, but it would at least make a substantial contribution towards reducing the overall costs of operating these services and would be a gesture by the Chancellor in support of the principle we adumbrated last Saturday afternoon. I appeal to the Financial Secretary to give this matter careful consideration because in all the circumstances this new Clause is fully justified
    Mr. A. G. Bottomley: My constituents, like those in other constituencies represented in this House, are concerned with all matters presented in the Finance Bill. Of all the communications I have had most have been as a result of this new Clause. Perhaps my division is in many ways very transport-minded. Constituents are aware of the great difficulties caused by the bottleneck which leads into Rochester, about which I spoke in the House last week, and also of the transport problems arising from the terrible accident in Chatham some time ago.
    I have been pressed by the local authorities to say that one of the burdens
    1178
    they have to carry today arises from the high charges and the high price of fuel. I have had representations of all kinds that something should be done to bring down the cost of fuel in such a way as would have a two-fold effect. It would enable fares in transport services to be reduced and I am sure that many hon. Members share the feeling that fares of transport undertakings today are preposterous.
    Constituents have complained to me of the amount they have to spend on fares. It is not necessary to remind the House that many have to travel from Chatham to London. Trains are overcrowded and many resort to buses. At one time that was a cheap method of travelling, but it is not so now. If it were possible to reduce the tax on fuel it would make that method of transport cheaper and better for all concerned.
    Municipal authorities, not only in my division, but throughout the country, are troubled about charges imposed upon them as a result of rendering municipal services. That is not only true of municipalities but of industry as a whole. If one went into the overhead costs of industry it would be found that a large proportion is in respect of fuel.
    I would, therefore, endorse the appeal of my colleagues that everything possible should be done to make an adjustment for the two-fold purpose of reducing the charges to the travelling public and the overhead costs to industry. In that way we shall be able to achieve what the Government have not yet been able to do—stop the rising cost of living. We shall help industry to produce cheaper goods, which would assist our export market. Although I have advanced arguments form a constituency point of view this is a national as well as a local problem.
    Mr. Boyd-Carpenter: The hon. Member for Southall (Mr. Pargiter) moved an Amendment during the Committee stage which was somewhat similar to this new Clause and, with rather engaging frankness, admitted that the one of his two Amendments which was selected was not his favourite. He did not this evening tell us whether this new Clause is his favourite. The difference between the two is that whereas his Committee stage Amendment sought to grant this rebate for diesel fuel used in the operation of

    1179
    passenger vehicles, this Clause would have the effect of giving a rebate in respect of diesel fuel used in all road vehicles, whether passenger or goods.
    I pointed out during the Committee stage that one of the difficulties facing the mover of a proposal like this is that it is all but inevitable that it will involve either striking anomalies or excessive costs. It would appear to me that this Clause embodies both. As the hon. Member for Enfield East, (Mr. Ernest Davies) correctly worked out, the cost would be £8 million in a full year. That is a very substantial figure, and is not made less substantial when, in a speech advocating it, the hon. Member, at the same time, advocated increased expenditure. In any event, a diminution of revenue of about £8 million this year, over and above the concessions which my right hon. Friend has made, is, I am afraid, an impossible barrier to accepting the argument of the hon. Gentleman.
    In this proposal there would not be the discrimination evident in the original proposal, that the rebate would be for diesel propelled passenger vehicles as opposed to other diesel propelled vehicles. This proposes a discrimination in favour of diesel operated vehicles, both passenger and goods, against petrol operated vehicles of all kinds. It would operate somewhat differently. As the hon. Gentleman pointed out, the diesel propelled vehicle is the predominant passenger vehicle. Most of the modern passenger vehicles, particularly those in great cities, are diesel driven.
    The hon. Member for The Hartlepools (Mr. D. Jones) appeared to overlook the fact that petrol driven passenger vehicles are used in the countryside. The hon. Member for Enfield, East was quite wrong in seeking to counter that argument by saying that country buses were operated by combines who also operated urban buses. It is the case from my experience that country transport is provided by small operators with petrol driven vehicles, who are sometimes in competition with diesel propelled vehicles from the nearest town.
    With taxation so high we must bear in mind that the load must be fairly distributed and that to create anomalies of this kind requires a great deal of justification.
    Mr. Pargiter: Would the hon. Gentleman say how many of these petrol driven buses there are operating on country roads because, from my observation and experience, there are very few indeed?
    Mr. Boyd-Carpenter: I travel in one from time to time. It is very uncomfortable. I cannot give figures, but I think that the House will accept that, be they substantial or less substantial, there are some of them. For the purpose of my argument I do not think that the precise numbers matter at all.
    The hon. Member for Enfield, and the hon. Member for Southall raised the most important subject of fares. I will not be tempted to follow them into an analysis of passenger fares. If I did I might be tempted to a considerable extent beyond the bounds of order, but I must point out that the question of fares is not affected in any very substantial degree by this proposal. As I pointed out during the Committee stage this proposal, if adopted, would reduce the cost of operation by the equivalent of one-tenth of a penny on a 3d. fare.
    Mr. Ernest Davies: Will the hon. Gentleman explain why the Government intervened in connection with passenger fares in London to save the London traveller £1,250,000 when this would save the travelling public almost £1 million? Why is £1,250,000 important and £1 million not?
    Mr. Boyd-Carpenter: I should certainly not be permitted to enter into a discussion with the hon. Gentleman as to the action of the Government in respect of the proposed increase in fares, though that was an action which I hope I may be allowed to say was warmly approved by public opinion.
    The point I am making is that the effect of this new Clause, notwithstanding its substantial cost to public funds, would be equivalent only to one-tenth of a penny on a 3d. fare. There may be marginal cases where that one-tenth of a penny may make a difference between an increase in fare or not. Obviously, there must be a point where the smallest additional amount tips the balance in favour of an increase. I do not think that that would be frequent. When we are concerned with a substantial suggested loss of revenue, I think that the

    1181
    fare argument has been very much over-stressed. [Interruption.] If the hon. Gentleman cannot distinguish between the revenue of London Transport and the revenue of the Exchequer I am surprised.
    Mr. Davies: The point is that if £8 million is lost to the Exchequer £8 million are gained by the travelling public. We cannot brush aside the fact that because it means only one-tenth of a penny on a 3d. fare the public would not save that £8 million. The public would be paying £8 million less.
    Mr. Boyd-Carpenter: They would only gain that £8 million if every penny of it was passed on. It was the whole essence of the hon. Gentleman's case that the bus operators needed some of this to meet their own costs. The hon. Gentleman cannot have it both ways. He cannot have it that the £8 million will be passed on to the public and that it will simultaneously relieve the needs of the bus operators.
    The second discrimination is in the case of goods vehicles. About 14 per cent. of the number of goods vehicles are diesel operated. I agree that they are among the larger operators and, therefore, it is probably the case that something above 14 per cent. of actual carrying capacity is represented by them. None the less, we have here a relatively small minority. It seems to me very difficult to justify a tax discrimination in favour of one minority type of goods vehicle as compared with the great majority. Equally, that percentage does make it clear that what one or two hon. Members opposite said about the effect on industrial costs was greatly overstated, because this would not affect industrial costs in respect of six-sevenths of the vehicles operated, and is not, therefore, a very strong factor in the situation.
    The discrimination seems to me to be a serious one, but I do not rest my argument upon that. I rest it on the proposition that £8 million, which is the cost of this proposal, is more than my right hon. Friend can afford in view of the other concessions which have been made, and which have been authorised by the House or by the Committee. Therefore, while I fully appreciate the force of the contentions that have been made, which have really been arguments against
    1182
    the general weight of the fuel tax rather than in favour of the particular proposition in this new Clause, and that heavy taxation in this direction as in others has its patent disadvantages, I must tell the House that my right hon. Friend is not able to face the heavy loss of revenue which is involved in this proposal, and must ask the House not to accept this new Clause.
    10.0 p.m.
    Mr. Jay: Negative and unresponsive as the attitude of the Government has been in this debate, I must say that the Financial Secretary was nowhere so negative as in the speech which he has just made. I would add to those hon. Members who rather seem to resent my hon. Friend raising this topic that, though it may not appear of interest to them, it is of great interest to millions of people who travel in buses, and, in our view, ought to be seriously considered. Hon. Members opposite will only prolong the discussion if they try to shout down my hon. Friends when making legitimate interventions.
    This is really a very modest proposal. All that is being proposed is that, of the 7d. increase made by the Government in the tax a year ago, 6d. should be remitted in the case of diesel fuel. There are two strong arguments for the proposal which my hon. Friend advanced. The first is on the grounds of the admitted superior efficiency of the diesel engine. I do not think anybody would question that the diesel engine is more efficient than the ordinary petrol engine.
    Here is a case whereby taxation can give a definite stimulus and incentive to greater industrial efficiency. The Financial Secretary said that it was illegitimate or unjustifiable to discriminate in favour of the diesel engine, whether in a passenger or a commercial vehicle. But it would be just as reasonable to speak, not of discrimination in this case, but of an active stimulus to greater efficiency in this branch of engineering. I do not think that argument has been answered at all.
    The second argument is that of the relief which could be given in this way to fares which so notably, particularly in London and the larger cities, enter into the cost of living, and, therefore, into wage negotiations. To my mind, it is one of the greatest weaknesses of the

    1183
    present Chancellor s economic policy—most notably by the food subsidy decisions, but also by raising the petrol tax—that he contributed actively and unnecessarily to a number of wage claims, resulting in rises in wage rates and in costs and export prices, which, undoubtedly, have reacted unfavourably on our export trade in the past 18 months.
    It is one of the disadvantages of this petrol tax that, on the one hand, in the present economic circumstances of the country, there are strong arguments for a reasonably high tax in so far as it affects the private motorist and some other consumers of petrol. It operates, in the absence of petrol rationing, which we all wish to be rid of in peace time, to restrain consumption of a commodity which bulks very largely in our balance of payments and still has quite a considerable dollar content.
    The second argument is this. The rises in petrol taxes in recent years, in so far as they affected the private motorist, have raised revenue without inflicting so much hardship and inconvenience as alternative ways of raising the same amount of revenue might do. But to achieve these objectives one is compelled at the same time to impose, for example, a tax upon the industrial use of this fuel, and compelled, probably contrary to the wishes of the Government—this certainly applied to the earlier increases of petrol tax made by the Labour Government—to put a burden upon public service vehicles, with the possible and eventually the inevitable result of some rise in fares. That is the dilemma which faces one when dealing with the petrol tax.
    The advantage of the proposed new Clause is that it enables one to raise the tax where the case is strongest, and, at the same time, to give relief in such matters as fares and, therefore, wage claims, where the inflationary spiral is likely to be affected. I do not think-that the Financial Secretary dealt with that argument, which becomes all the stronger as the tax becomes higher. It may be that, three or four years ago
    when the petrol tax was so much lower, it would not have been worth the trouble and the administrative change, and so on, to introduce a differential of this kind.
    The Chancellor himself said the other day, when he was rather unwarily defending his reduction in the higher rate of Purchase Tax on things like furs and jewellery, that no tax ought to stand above 100 per cent. This tax stands at more than 100 per cent. and affects an essential fuel for an essential public service. When we get to that point, especially after the increases in petrol tax in the last year or so, the argument for some discrimination is very strong.
    The only reason advanced by the Financial Secretary for rejecting the proposed new Clause was that discrimination, as he called it, was undesirable. He did not say that it was impracticable. My right hon. Friend has already pointed out that discrimination exists in the case of agricultural tractors used on farms, the diesel fuel for which is exempt from tax altogether. My hon. Friend the Member for The Hartlepools (Mr. D. Jones) also said that that applies in the case of certain rail cars using diesel oil on railways. Discrimination is, therefore, already in force without, so far as I know, causing any great administrative difficulty.
    We propose a modest extension of that discrimination which would have the dual effect of giving incentives to the use of an engine which is admittedly of greater efficiency, and would also restrain the further rise in passenger bus fares which is otherwise almost certainly inevitable, with all the injurious effects which are likely to follow upon wages and price levels. For these reasons, and unless the Government can advance stronger arguments to the contrary, I advise my hon. Friends to press this modest proposal to a Division.
    Question put, "That the Clause be read a Second time."
    The House divided: Ayes. 212: Noes, 240.

    Division No. 216.]

    AYES

    [10.10 p.m.

    Acland, Sir Richard

    Bacon, Miss Alice

    Beswick, F

    Adams, Richard

    Balfour, A.

    Bing, G. H. C.

    Allen, Scholefield (Crewe)

    Barnes, Rt. Hen. A J

    Blackburn, F.

    Andereon, Alexander (Motherwell)

    Bartley, P.

    Blenkinsop, A

    Attlee, Rt. Hon. C. R.

    Bence, C. R.

    Blyton, W. R.

    Awbery, S. S.

    Benn, Hon. Wedgwoor

    Boardman, H

    Bottomley, Rt. Hon. A. G.

    Houghton, Douglas

    Price, Joseph T. (Westhoughton)

    Bowden, H. W.

    Hay, J. H.

    Proctor, W. T.

    Braddock, Mrs. Elizabeth

    Hubbard, T. F.

    Pryde, D. J.

    Brockway, A. F.

    Hudson, James (Ealing, N.)

    Pursey, Cmdr. H.

    Brook, Dryden (Halifax)

    Hughes, Emrys (S. Ayrshire)

    Rankin, John

    Broughton, Dr. A. D. D.

    Hughes, Hector (Aberdeen, N.)

    Reeves, J.

    Brown, Rt. Hon. George (Belper)

    Hynd, H. (Accrington)

    Reid, Thomas (Swindon)

    Burke, W. A.

    Irving, W. J. (Wood Green)

    Reid, William (Camlachie)

    Burton, Miss F. E.

    Isaacs, Rt. Hon. G. A.

    Rhodes, H.

    Butler, Herbert (Hackney, S.)

    Janner, B.

    Robens, Rt. Hon. A.

    Carmichael, J.

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

    Robinson, Kenneth (St. Pancras, N.)

    Castle, Mrs. B. A.

    Jeger, George (Goole)

    Rogers, George (Kensington, N.)

    Clunie, J.

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

    Ross, William

    Coldrick, W.

    Jenkins, R. H. (Stechford)

    Royle, C.

    Collick, P. H.

    Johnson, James (Rugby)

    Shackleton, E. A. A

    Corbet, Mrs. Freda

    Jones, David (Hartlepool)

    Short, E. W.

    Cove, W. G.

    Jones, Frederick Elwyn (West Ham, S.)

    Simmons, C. J. (Brierley Hill)

    Craddock, George (Bradford, S.)

    Jones, Jack (Rotherham)

    Skeffington, A. M.

    Crosland, C. A. R.

    Jones, T. W. (Merioneth)

    Slater, Mrs. H. (Stoke-on-Trent)

    Crossman, R. H. S.

    Keenan, W.

    Slater, J. (Durham, Sedgefield)

    Cullen, Mrs. A.

    Key, Rt. Hon. C. W.

    Smith, Ellis (Stoke, S.)

    Darling, George (Hillsborough)

    King, Dr. H. M.

    Sorensen, R. W.

    Davies, Ernest (Enfield, E.)

    Lee, Frederick (Newton)

    Soskice, Rt. Hon. Sir Frank

    Davies, Harold (Leek)

    Lever, Leslie (Ardwick)

    Sparks, J. A.

    Davies, Stephen (Merthyr)

    Lewis, Arthur

    Stewart, Michael (Fulham, E.)

    de Freitas, Geoffrey

    Lindgren, G. S.

    Strachey, Rt. Hon. J.

    Deer, G.

    Logan, D. C.

    Strauss, Rt. Hon. George (Vauxhall)

    Delargy, H. J.

    MacColl, J. E.

    Summerskill, Rt. Hon. E.

    Dodds, N. N.

    McGhee, H. G.

    Swingler, S. T.

    Donnelly, D. L.

    McInnes, J.

    Sylvester, G. O.

    Driberg, T. E. N.

    McKay, John (Wallsend)

    Taylor, Bernard (Mansfield)

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

    McLeavy, F.

    Taylor, John (West Lothian)

    Ede, Rt. Hon. J. C.

    McNeil, Rt. Hon. H.

    Taylor, Rt. Hon. Robert (Morpeth)

    Edelman, M.

    MacPherson, Malcolm (Stirling)

    Thomas, David (Aberdare)

    Edwards, Rt. Hon. John (Brighouse)

    Mainwaring, W. H.

    Thomson, George (Dundee, E.)

    Edwards, Rt. Hon. Ness (Caerphilly)

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

    Thornton, E.

    Edwards, W. J. (Stepney)

    Mann, Mrs. Jean

    Timmons, J.

    Evans, Albert (Islington, S. W.)

    Manuel, A. C.

    Tomney, F.

    Evans, Stanley (Wednesbury)

    Marquand, Rt. Hon. H. A.

    Ungoed-Thomas, Sir Lynn

    Fernyhough, E

    Mason, Roy

    Usborne, H. C.

    Fletcher, Eric (Islington, E.)

    Mayhew, C. P.

    Wallace H. W.

    Foot, M. M.

    Mikardo, Ian

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

    Fraser, Thomas (Hamilton)

    Mitchison, G. R.

    Weitzman, D.

    Freeman, John (Watford)

    Monslow, W.

    Wells, Percy (Faversham)

    Freeman, Peter (Newport)

    Moody, A. S.

    Wells, William (Walsall)

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

    Morgan, Dr. H. B. W.

    West, D. G.

    Gibson, C. W.

    Morley, R.

    Wheeldon, W. E.

    Glanville, James

    Morris, Percy (Swansea, W.)

    White, Mrs. Eirene (E. Flint)

    Gordon Walker, Rt. Hon. P. C.

    Mort, D. L.

    White, Henry (Derbyshire, N. E.)

    Greenwood, Anthony (Rossendale)

    Moyle, A.

    Whiteley, Rt. Hon. W.

    Grey, C. F.

    Mulley, F. W.

    Wigg, George

    Hale, Leslie

    Nally, W.

    Wilcock, Group Capt. C. A. B

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Neal, Harold (Bolsover)

    Wilkins, W. A.

    Hall, John T. (Gateshead, W.)

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

    Willey, F. T.

    Hamilton, W. W.

    Oldfield, W. H.

    Williams, David (Neath)

    Hannan, W.

    Oliver, G. H.

    Williams, Rev. Llywelyn (Abertillery)

    Hargreaves, A.

    Orbach, M.

    Williams, W. R. (Droylsden)

    Harrison, J. (Nottingham, E.)

    Oswald, T.

    Wilson, Rt. Hon. Harold (Huyton)

    Hastings, S.

    Padley, W. E.

    Winterbottom, Richard (Brightside)

    Hayman, F. H.

    Paget, R. T.

    Woodburn, Rt. Hon. A.

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

    Palmer, A. M. F.

    Yates, V. F.

    Herbison, Miss M.

    Pargiter, G. A.

    Younger, Rt. Hon. K.

    Hewitson, Capt. M.

    Paton, J.

    Hobson, C. R.

    Pearson, A.

    TELLERS FOR THE AYES

    Holman, P.

    Peart, T. F.

    Mr. Arthur Allen and

    Holmes, Horace (Hemsworth)

    Plummer, Sir Leslie

    Mr. Popplewell.

    NOES

    Aitken, W. T.

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

    Bullus, Wing Commander E. E.

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

    Bennett, Dr. Reginald (Gosport)

    Burden, F. F. A.

    Alport, C. J. M.

    Bennett, William (Woodside)

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

    Amory, Heathcoat (Tiverton)

    Birch, Nigel

    Campbell, Sir David

    Anstruther-Gray, Major W. J

    Boothby, Sir R. J. G.

    Carr, Robert

    Arbuthnot, John

    Bowen, E. R.

    Cary, Sir Robert

    Ashton, H. (Chelmsford)

    Boyd-Carpenter, J. A.

    Channon, H.

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

    Boyle, Sir Edward

    Clarke, Brig. Terence (Portsmouth, W.)

    Astor, Hon. J. J.

    Braithwaite, Sir Albert (Harrow, W.)

    Clyde, Rt. Hon. J. L.

    Baker, P. A. D.

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

    Cole, Norman

    Baldock, Lt.-Cmdr. J. M.

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

    Colegate, W. A.

    Baldwin, A. E.

    Brooke, Henry (Hampstead)

    Conant, Maj. R. J. E.

    Banks, Col. C.

    Brooman-White, R. C.

    Cooper-Key, E. M.

    Barber, Anthony

    Browne, Jack (Govan)

    Craddock, Beresford (Spelthorne)

    Baxter, A. B.

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

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

    Bell, Ronald (Bucks, S.)

    Bullard, D. G.

    Crosthwaite-Eyre, Col. O. E.

    1186

    1187

    Crouch, R. F

    Hylton-Foster, H. B. H

    Price, Henry (Lewisham, W.)

    Crowder, Sir John (Finchley)

    Jennings, R.

    Prior-Palmer, Brig, O. L

    Crowder, Petre (Ruislip—Northwood)

    Johnson, Eric (Blackley)

    Profumo, J. D.

    Cuthbert, W. N.

    Keeling, Sir Edward

    Raikes, Sir Victor

    Darling, Sir William (Edinburgh, S.)

    Kerr, H. W.

    Rayner, Brig. R.

    Davidson, Viscountess

    Lambton, Viscount

    Redmayne, M.

    Deedes, W. F.

    Langford-Holt, J. A.

    Rees-Davies, W. R

    Digby, S. Wingfield

    Law, Rt. Hon. R. K

    Remnant, Hon. P.

    Donaldson, Cmdr. C. E. McA.

    Leather, E. H. C.

    Renton, D. L. M.

    Donner, Sir P. W.

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

    Roberts, Peter (Heeley)

    Doughty, C. J. A.

    Legh, Hon. Peter (Petersfield)

    Robertson, Sir David

    Douglas-Hamilton, Lord Malcolm

    Lindsay, Martin

    Robinson, Roland (Blackpool, S.)

    Drayson, G. B.

    Linstead, Sir H. N.

    Rodgers, John (Sevenoaks)

    Duncan, Capt. J. A. L

    Llewellyn, D. T.

    Roper, Sir Harold

    Erroll, F. J.

    Lloyd, Maj. Sir Guy (Renfrew, E.)

    Ropner, Col. Sir Leonard

    Fell, A.

    Lockwood, Lt.-Col. J. C.

    Russell, R. S.

    Finlay, Graeme

    Lucas, p. B. (Brentford)

    Ryder, Capt. R. E. D

    Fisher, Nigel

    Lucas-Tooth, Sir Hugh

    Scott, R. Donald

    Fleetwood-Hesketh, R. F

    McCallum, Major D.

    Scott-Miller, Cmdr. R

    Fletcher-Cooke, C.

    Macdonald, Sir Peter

    Shepherd, William

    Ford, Mrs. Patricia

    McKibbin, A. J.

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

    Fort, R.

    Mackie, J. H. (Galloway)

    Smithers, Peter (Winchester)

    Fraser, Hon. Hugh (Stone)

    Maclay, Rt. Hon. John

    Snadden, W. McN.

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Maclean, Fitzroy

    Spearman, A. C. M.

    Fyfe, Rt. Hon. Sir David Maxwell

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

    Speir, R. M.

    Galbraith, Rt. Hon. T. D. (Pollok)

    MacLeod, John (Ross and Cromarty)

    Stanley, Capt. Hon. Richard

    Gammans, L. D.

    Macpherson, Niall (Dumfries)

    Stevens, G. P

    George, Rt. Hon. Maj. G. Lloyd

    Maitland, Patrick (Lanark)

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

    Godber, J. B.

    Manningham-Buller, Sir R. E.

    Stewart, Henderson (Fife, E.)

    Gough, C. F. H

    Markham, Major Sir S. F.

    Stoddart-Scott, Col. M.

    Gower, H. R.

    Marlowe, A. A. H.

    Storey, S.

    Graham, Sir Fergus

    Marples, A. E.

    Strauss, Henry (Norwich, S.)

    Grimond, J.

    Marshall, Sir Sidney (Sutton)

    Stuart, Rt. Hon. James (Moray)

    Grimston, Hon. John (St. Albans)

    Maude, Angus

    Sutcliffe, Sir Harold

    Grimston, Sir Robert (Westbury)

    Maudling, R.

    Taylor, William (Bradford, N.)

    Hall, John (Wycombe)

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

    Teeling, W.

    Harden, J. R. E.

    Medlicott, Brig. F.

    Thomas, Rt. Hon. J. P. L. (Hereford)

    Hare. Hon. J. H.

    Mellor, Sir John

    Thomas, Leslie (Canterbury)

    Harris, Frederic (Croydon, N)

    Malson, A. H. E.

    Thompson, Kenneth (Walton)

    Harris, Reader (Heston)

    Monckton, Rt. Hon. Sir Walter

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

    Harrison, Col. J. H. (Eye)

    Morrison, John (Salisbury)

    Thorneycroft, Rt. Hn. Peter (Monmouth)

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

    Mott-Radclyffe, C. E.

    Touche, Sir Gordon

    Harvey, Ian (Harrow, E.)

    Nabarro, G. D. N.

    Turner, H. F. L.

    Hay, John

    Neave, Airey

    Turton, R. H.

    Heald, Sir Lionel

    Nicholls, Harmar

    Tweedsmuir, Lady

    Heath, Edward

    Nicholson, Godfrey (Farnham)

    Vane, W. M. F.

    Higgs, J. M. C.

    Nicolson, Nigel (Bournemouth, E.)

    Vaughan-Morgan, J. K

    Hill, Dr. Charles (Luton)

    Nield, Basil (Chester)

    Vosper, D. F.

    Hill, Mrs. E. (Wythenshawe)

    Nutting, Anthony

    Wakefield, Edward (Derbyshire W.)

    Hinchingbrooke, Viscount

    Oakshott, H. D.

    Wakefield, Sir Wavell (St. Marylebone)

    Hirst, Geoffrey

    Odey, G. W.

    Walker-Smith, D. C.

    Holland-Martin, C. J

    O'Neill, Phelim (Co. Antrim, N.)

    Ward, Hon. George (Worcester)

    Hollis, M. C.

    Ormsby-Gore, Hon. W. D.

    Ward, Miss I. (Tynemouth)

    Holmes, Sir Stanley (Harwich)

    Orr, Capt. L. P. S.

    Waterhouse, Capt. Rt. Hon. C.

    Holt, A. F.

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

    Webbe, Sir H. (London & Westminster)

    Hope, Lord John

    Orr-Ewing, Sir Ian (Weston-super-Mare)

    Wellwood, W.

    Hornsby-Smith, Miss M. P

    Osborne, C

    Williams, Rt. Hon. Charles (Torquay)

    Horobin, I. M.

    Partridge, E.

    Williams, Sir Herbert (Croydon, E.)

    Horsbrugh, Rt. Hon. Florence

    Peake, Rt. Hon. O.

    Williams, Paul (Sunderland, S.)

    Howard, Hon. Greville (St. Ives)

    Peto, Brig. C. H. M.

    Williams, R. Dudley (Exeter)

    Hudson, Sir Austin (Lewisham, N.)

    Pickthorn, K. W. M.

    Wills, G.

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

    Pilkington, Capt. R. A

    Wilson, Geoffrey (Truro)

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Pitman, I. J.

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

    Pitt, Miss E. M.

    Hyde, Lt.-Col. H. M.

    Powell, J. Enoch

    TELLERS FOR THE NOES:

    Sir Cedric Drewe and Mr. Kaberry.

    Question put, and agreed to.

    New Clause.—(AMENDMENT OF SECTION 149 OF CUSTOMS AND EXCISE ACT, 1952.)
    Subsection (6) of section one hundred and forty-nine of the Customs and Excise Act, 1952, shall be amended by the deletion of paragraph (d) and the proviso thereto.—[Mr. Mitchison.]
    Brought up, and read the First time.
    Mr. G. R. Mitchison: I beg to move, "That the Clause be read a Second time."
    1188
    This Clause is designed to remove a provision in the Customs and Excise Act which restricts the quantity of spirits that may be sold at what is commonly called an off-licence. At present the law is that, in general, at an off-licence, at least a quart bottle must be sold, with a proviso that, where there is a justices' licence, the quantity may be at least a pint. The history of this rather curious piece of legislation is that the original provision was for a quart bottle, and no

    1189
    less than a quart bottle; and in 1933 the rather limited concession of a pint bottle in certain circumstances was inserted.
    This matter was considered by the House not so very long ago. We are now in 1953, and it was only a couple of years ago that a similar provision was sought to be introduced into the Finance Bill of that time. The course of the discussion then is interesting, and the arguments put forward for what we seek to do tonight, namely, to remove altogether the minimum quantity provision, were cogent and almost unanimous.
    I propose to begin by referring to the very clear and excellent speech made on that occasion by the hon. Member for Wolverhampton South - West (Mr. Powell). He pointed out, and I should like to adopt his arguments, that this was a somewhat absurd matter because in the first place the holder of an on-licence could sell retail even the smallest quantity of spirits; and second that not only was that the case but that there was no means for the ordinary person, unless he happened to know the position, to distinguish clearly what happened. He could, for instance, go into a place where there was a restaurant—the hon. Gentleman instanced a Lyons Corner House as one—and buy a perfectly small quantity retail. To all appearances the place was the same, but at what really was an off-licence he was still bound to buy the larger quantity of a pint or a quart. In addition to that there is the further absurdity in the matter that, provided a large bottle is sold, then a very small bottle may be sold with it.
    One pauses to consider for a moment the social effects of this curious piece of legislation. It seems to me that the present position is that if a person, for good or for ill—and I see my hon. Friend the Member for Ealing, North (Mr. J. Hudson) very close to me, watching attentively—wishes to buy a small quantity of spirits he is unable to do so at an off-licence, and he is, therefore, obliged to do one of two things. He must either buy a larger quantity than he needs, and proceed, in the terms of my hon. Friend, to destruction more rapidly than he otherwise would, or, in the terms of those of us who are not quite so strenuously minded in these matters, be forced to buy, at what nowadays is a very high price,
    1190
    a great deal more spirits than he actually needs.
    I do not believe it can be a very good result, whether looked at from the point of view of those who believe in moderation, or to those who believe in total abstention and regard even the smallest bottle as a lapse of some sort; and I should have thought, from the latter point of view, that the larger the bottle the larger the lapse, and I see no particular reason to suppose that the Gadarene swine would have gone to destruction any more rapidly if the slope had been a great deal less steep than I believe it actually was.
    The other alternative is that in order to get the small bottle, if he is a person of determination, perhaps with an eye on economy, he will be obliged to go to a pub to get it—to an on-licence, as the phrase goes, and having got there he will then, with the absurdity peculiar to this legislation, be able to buy that which he was unable to buy at the other place. I cannot really see the point of that.
    When this matter was canvassed before, the absurdity of this was, of course, pointed out, and it is exceedingly interesting to notice the very cogent support that was produced from both sides of the House on that occasion. The matter was raised by the hon. Member for Croydon, East (Sir H. Williams), whom I see sitting here today, and he, in rather timid language, referred to the time when he was a boy and three-star brandy cost 5s. 6d. a bottle. He had already assured the House that he had no connection with the industry except as a moderate consumer, and in that capacity he said—and I on this occasion, at least, agree with him—that the whole business was rather childish. He went on to say that it was the legislation of a lunatic asylum. That is going rather far, but there sometimes does occur, even in the licensing laws, a certain absurdity which is none the less absurd because it is founded in the history of that industry and the attempts of Parliament from time to time to deal with it.
    He was followed by my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton), who said that it was one of the rare occasions on which a point had been put by the hon. Member for Croydon, East which deserved consideration. I wish to disassociate myself

    1191
    with any criticism of the hon. Member for Croydon, East on this occasion, because I am looking for his support both in debate and, of course, since he is a man of courage and principle, in the Lobby afterwards.
    I feel certain that the hon. Member for Wolverhampton, South-West, if he were here, would find it impossible today to say the opposite, however ingeniously, of that which he said on that occasion. We also had the valuable support of two Members of the Government. First, the present Parliamentary Secretary to the Ministry of Transport gave us a little vivid reminiscence about the discussion he had had with a Somerset publican about three of his customers. He described those three customers and went on to an even more family reminiscence with which I need not trouble the House on this occasion. He then ended, in characteristic style, by saying that he did not think that the argument used by the Financial Secretary, to which I will refer in a minute, held water. He corrected himself hastily by saying, "It does not hold alcohol." I am not at all sure on mature consideration that either phrase was logical, but one sees exactly what he meant.
    Then there was support from the hon. and gallant Member for Ayr (Sir T. Moore), and again one notices how widespread over the country this feeling was because we had a word or two from the former hon. Member for Bolton, West and a word from an hon. Member representing one of the Midland constituencies, and finally we had what I would really call the plum of the piece—one of those strong vigorous speeches which the present Leader of the House used to deliver when in opposition. He really put it in a way which will commend itself, I feel certain, to the Chancellor and the Economic Secretary or the Financial Secretary, whichever of them replies to the debate. He said:
    "The case for this new Clause is overwhelming, and the Government will have seen that there is support from all sides of the Committee for the proposition that in these days, whatever may be the history of the business, it is perfectly ridiculous that a certain number of people cannot sell smaller bottles whereas other people can sell smaller bottles."
    1192
    10.30 p.m.
    That is a very simple proposition, and I have no doubt that it will commend itself now as it commended itself then to those who felt that there was some absurdity in the matter.
    The right hon. Gentleman went on to clinch the matter:
    "If nobody could sell any small bottles, there might be something to be said for the other argument. One could argue that it was dangerous to allow people to buy spirits in these minute quantities and all the rest of it. But whereas one class of licence holders can sell the smaller bottles, another class of licence holders cannot because of an accident of the law."—[OFFICIAL REPORT. 18th June. 1951; Vol. 489, c. 75.]
    He went on to develop the case he had so clearly made, and that was the conclusion of the discussion.
    Perhaps the most interesting part of it was the argument put up by my right hon Friend the Member for Battersea. North (Mr. Jay). He was most sympathetic. Clearly he had his heart in the small bottle. But he could not go quite so far. Reading through the speeches—there were two or three of them—it is clear that he was merely deferring the matter. This was 1951, and my right hon. Friend felt that
    "… on the whole the case had not been made out in present circumstances …"
    but that was before further pressure had been put upon him, and his last words were:
    "In the course of the next year I see no reason why we should not hold similar consultations …"
    In a minute or two I will say what those consultations were to be.
    "… and if there were to be any sort of agreement whereby the conflict would be diminished, then, of course, a different situation would certainly arise."—[OFFICIAL REPORT, 18th June, 1951; Vol. 489, c. 68, 75.]
    I hope I am not doing him any injustice if I say that his sole objection, so far as I can see, to what was proposed then was that it would damage the on-licence holders and that they might ask for a reduction in their licence fees.
    I realise that times have changed. We have been told by right hon. Gentlemen and hon. Gentlemen opposite that they have pulled all the skeletons out of Government offices, that they have saved the country from bankruptcy and that we are now getting along in a most prosperous way. [HON. MEMBERS: "Hear,

    1193
    hear."] They do not expect me to accede to those rather remarkable arguments, but if they are so convinced—I thought I heard some applause—surely they must support us in something which they supported then and which was only refused then on the ground that in those circumstances it was hardly time yet.
    I hope that in a matter of this sort the conflict and discussions which I have just mentioned—and their nature is very obvious—will not weigh too heavily with hon. Members opposite. The conflict was that between the on-licence and the off-licence holders and the discussions were with those two sides. We know quite well that the Tory Party is completely independent of any undue tenderness towards the holders of on-licences. I am waiting for loud applause from the benches opposite. I feel certain that they would not let any feelings which they have in that direction weigh too heavily in this matter. For, let us not try to deny that the on-licence holders and the brewers have already been paid very largely in good measure for the help given by the Tory Party. Have they not had a special piece of legislation introduced in this House concerning licensed premises in the new towns, and have they not had unqualified support from the Tory Party in return for the support which the Tory Party expects to get at other times?
    Cannot we, therefore, remove this perfectly absurd position in which the off-licence holders find themselves? Or do the soft hearts of hon. Members opposite now harden towards these small men? Let us remember that the off-licence holder is, by and large, a small man; and let us remember that, roughly speaking, there are only about a third of them compared with the number of on-licence holders. Furthermore, they find it a little difficult to make both ends meet. These spirits are so expensive nowadays that if a person wants to buy a small quantity at an off-licence, then, because of this absurd position, the licence holder naturally enough suffers and complains.
    I ask hon. Gentlemen opposite now to show that independence of spirit in dealing with the brewing industry to which I have referred. I ask them to show their feeling for the small man and, thirdly, I ask them not to forget their own past. It is not so long since this
    1194
    overwhelming argument—this massive argument—was adduced by hon. Members, who now sit opposite, in favour of this very thing. Surely they will not throw overboard with a resounding splash the Parliamentary Secretary to the Ministry of Transport and the Leader of the House. Where should we go without the guidance of the right hon. Gentleman; and what of his moral reputation? In this spirit, I ask the House to accept this Clause about spirits.
    Mr. I. Mikardo: I beg to second the Motion.
    After what has been said by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), it is necessary for me to add very little in order to commend our proposal to the House and also to those hon. Members opposite who supported it so warmly on a previous occasion.
    It is not unknown for parties, when they change sides in this House, also to change roles as well, and for each to quote in support of an argument what the other side said only a year or two previously. The only snag about this is that the procedure cuts both ways, and one quotation naturally invites a counter-quotation. But while this is normally the case, we are tonight concerned with a special instance in which hon. Gentlemen opposite will be hard put to use the technique of tu quoque, because here is an instance in which the party opposite has committed itself to a particular attitude and a particular line of policy, because their agreed plan is to remove all restrictions wherever possible. Their creed is to set the people free. We are asking them this evening to set the people free to buy a quarter bottle of spirits at any place where it is on sale. That does not seem to be a great deal to us. All we are asking is that hon. Gentlemen opposite who make it their prime creed to set the people free should give just this tiny practical example of removing a silly, irritating and quite meaningless restriction.
    Spirits are sold commonly either in public houses or in off licences. Milk is sold commonly either in dairies or grocery shops. Suppose the law were that one could buy any size bottle of milk in a dairy but that anyone who went to a grocery shop would be compelled to buy a quart bottle and would not be

    1195
    allowed to buy a pint bottle or a half-pint bottle of milk. Such a situation would be so obviously and manifestly ridiculous in the eyes of the whole country that any Government that sought to maintain or retain it would be laughed out of existence.
    But the law with regard to the sale of bottles of spirits is no less ridiculous than that. We have to bear in mind that a certain part of the consumption of spirits—true, only a very small part, but a certain part nevertheless—is not for the purposes of entertainment or self-entertainment, but for medicinal purposes. I sometimes doubt whether all that is purported to be sold for medicinal purposes is actually sold for those purposes, but there is some that is. Some of this is bought by people who do not look upon drinking as a normal recreation or as an act of conviviality, and, indeed, possibly by people who disapprove of drinking for drinking's sake.
    It is all wrong that such persons—it matters not for the purposes of my argument or the purposes of the responsibility of this House that the number of them be small—should be impaled on the horns of the dilemma described by my hon. and learned Friend that if they want to go out to buy a small quantity of spirits for medicinal purposes, they have either got to buy a much larger quantity than they want, or they must go to a public house in order to buy it. Some of those people—I respect the feelings of folk even when I happen not to share them—do not like public houses and do not like to go into public houses. It is quite wrong—I repeat, no matter how few they may be and how small the number of occasions on which this occurs—that this House should compel people to go into public houses to get what they want in the quantities in which they want to buy it.
    There is one point which indicates how in the last few years this problem has intensified and become more serious. As the House knows, we have during the years since the war, and, indeed, for a period before the war, increased the practice of building large housing estates. In very many of these large housing estates there are few, if any, public houses. I have a large housing estate
    1196
    in my constituency which has no public house at all. Indeed, from parts of this estate to the nearest public house is a substantial distance. In cases like that, what right have we to say that we are setting the people free when we say to them, "Here is a shop round the corner where you can go and buy what you want, but you are not free to do so unless you buy a larger quantity than you want"? And especially with the increasing tendency to build houses in large blocks with no public house for long distances—it may be for good reasons which I will not go into.
    10.45 p.m.
    There is no more reason to compel people to go long distances for one commodity than to compel them to go long distances for bottles of milk because only the dairy can sell small bottles and the grocery shop cannot. I do not see how on any basis, short of making oneself ridiculous, it is possible to maintain this totally anomalous position. Here is an opportunity for the Government, who have not been very forthcoming in offering concessions to the feelings of the House today, to make a concession at little or no cost to the Revenue. It is clearly a concession which would be welcomed by hon. Members on both sides of the House, and by many people outside, and which can do no real harm to anyone.
    One hesitates to impute motives, but one has to ask oneself why it is we have this discrimination about spirits and not milk? In trying to answer that question one reaches the conclusion reached by my hon. and learned Friend the Member for Kettering, that there is some connection between the unfair advantage in competition given to the holders of on-licences and the continual favouritism shown by this and other Governments to the brewers and their subsidiary organisations. I am sorry to have to say it, but it seems to me that as a fact that is inescapable.
    We have the party opposite saying, "Let us have free competition. Do not let us try to control things, or direct things. Let us have a display of initiative. Let us have a fair, open and free field. Let everyone come into the market on the same terms and compete

    1197
    one with another. Let the best man win, with no fears and no favours, no unfair advantage and no undue restrictions." But here we have two traders in the same commodity with one being hampered by being able to sell only one quantity of that commodity.
    What should we say if there was no free trading in gents' underwear: if one establishment was allowed to sell any amount of mens' shirts and another could not sell more than three at a time? We should say that potential customers were being directed from one establishment to the other. That is what is being done in the case of spirits. There is unfair discrimination between competing establishments.
    I appeal to hon. Members opposite to support this proposal, now that their Government is in power, in the same way as they supported it when they were in opposition.
    Mr. James Hudson: My hon. and learned Friend the Member for Kettering (Mr. Mitchison) based most of his arguments on the case made for him by hon. Members opposite, like the hon. Member for Croydon, East (Sir H. Williams) and other hon. Members to whom he referred. He also referred to me, and I suggest that if he had used my arguments instead of those of hon. Gentlemen opposite he would not have been led into inconsistencies in the proposals he put before the House. I thought the hon. Member for Reading (Mr. Mikardo), by his own statement of the case, supplied the answer to the proposal which he makes. He wants to know why there should be a difference between milk and spirits. When one examines the matter in the light of the consequences of the free drinking of spirits and the free drinking of milk, I would say that the difference is so obvious that even my hon. Friend could answer the question.
    Mr. Mikardo: I hope the hon. Member will permit me to say that I am a moderate drinker of spirits and a very large drinker of milk.
    Sir Herbert Williams: Perhaps the hon. Member does not know that all cases of surgical tuberculosis are due to drinking milk.
    Mr. Hudson: I am still prepared to say, as I tried to prove the other night, that few would complain if there were to be an increase in the milk consumption of this country; but if there were to be a large increase of spirit drinking, there would be a general deploring of that fact, particularly by those who remember the consequence of the larger amount of spirit drinking in the past. It is because of that difference that I cannot support the contention my hon. Friends have advanced. The Excise licence shop—the bottle shop, as some people call it—is an institution added to the many which all parties in the past have said are too numerous for the general health and welfare of the community.
    In the days before the bottle shop, when the main drinking institutions were the public house and the off-licence shop, the Tory Party and the Labour Party were of the opinion that there ought to be a great reduction in these places. The Excise licence shop has come as an anachronism when all parties believed that there ought to be a reduction rather than an increase in the number of places where drink could be obtained.
    If people can buy spirits in smaller bottles than is now laid down by law, there will be more people drinking spirits. This will mean that later in life these people will be drinking much larger quantities of spirits. I should like to see some proposal for limiting the drinking of spirits in public houses and in off-licence shops. Such drinking has been limited in other countries.
    I do not think my party ought to be putting forward a proposal to popularise the drinking of spirits. I speak very earnestly. I can hardly enter into the joking side of it, although I see the joke. I know that my hon. and learned Friend when he referred to me was trailing his coat that I might tread on it. I tread on it very respectfully, but at the same time very firmly. I put it to the House that whoever was responsible for this proposal, from whichever party, we might well be content with the little flutter of argument we have had on it and not push it further to a Division.
    Sir H. Williams: If I wanted to make a rather frivolous speech in answer to that of the hon. Member for Ealing, North (Mr. J. Hudson), I would point out that all the cases of surgical tuberculosis in this country are the result of drinking milk, which causes three or four thousand deaths per annum. That does not alter the fact that when I get home tonight I shall drink some milk. I am going to take the risk. The consumption of milk has increased by about 80 per cent while the consumption of spirits has decreased since 1939, yet there are more cases of violence now than we have known for a long time.
    I am delighted that the hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Reading, South (Mr. Mikardo) were enabled to make such good speeches after reading the speech I made on this subject in 1951. What is behind all this? A silly quarrel is going on inside what is called "The Trade." Off-licence holders are prohibited from selling less than half a bottle of sprits, and the on-licence holders can sell any quantity and think they would lose some of the trade if the proposed new Clause was carried. I think that is a complete illusion. The hon. Member for Reading, South pointed out that the people who want these quarter bottles in the off-licences are those who, for a variety of reasons, do not like going into a public house. In the old days we could get a whole bottle of Martell's Three Star brandy for 5s. 6d. A bottle now costs over 40s. and the quarter bottle would cost over 10s. I do not buy quarter bottles. I tabled an Amendment in 1951 with the same purpose in 1951, but it was differently drafted.
    In view of this conflict within the licensed industry, I have put down a new Clause on the next page of the Paper to give some concession to on-licence holders. It would cost the Treasury some money. They always object to any proposal that costs money, but they cannot object to the present proposal on that ground. It would actually give the Chancellor more money and not less, and he cannot use the customary argument, "I can't afford it." I have been challenged about speaking in favour of this proposed new Clause and not voting for it. I do not think I would sacrifice this very
    1200
    admirable Government for the sake of a quarter bottle of brandy; not even for a full bottle. We have done very well in the Lobby tonight, I am glad to say, and on nearly every other occasion.
    I think this nonsense should be stopped. It really is a lot of nonsense. I happen to know the two protagonists on both sides. They are both personal friends of mine. One speaks for the off-licence holders and the other speaks for the on-licence holders. I have known both for many years. [An HON. MEMBER: "Who are they?"] No names, no pack-drill.
    11.0 p.m.
    Seriously, here are people whom I know as two personal friends, and on this issue they are both pushed by those whom they represent. I appeal to the Chancellor to have the courage on this occasion to cosh them both. [HON. MEMBERS: "Oh!"] I have been provoked into using that word by the hon. Member for Ealing, North whose guidance in this matter is not much use because, whether the Clause is accepted or not, he will not have even a quarter bottle. He is completely disinterested.
    This silly discrimination ought to come to an end, and although the Chancellor, for some extraordinary, half-hearted, obstreperous and difficult reason, may not agree and says "Vote with me," I shall vote with him, but it will be with reluctance that I shall go into the Lobby. The time has come to stop what has become a bit of unadulterated nonsense.
    Mr. Geoffrey Bing: I hope that those who I know hold very sincere temperance views on this side of the House will not necessarily suppose that by compelling someone to buy a larger bottle of whisky than he intended is the way to true temperance. There are people who, when they have got a larger bottle of whisky than they can afford, feel that they ought not to waste it. In those circumstances, I hope that those who are in favour of temperance will at least consider that aspect of the matter and consider that if perhaps smaller bottles of whisky were sold it might, at any rate, be an approach to a more temperate outlook. I appreciate that it is only a point of view, and that the opposite point of view can equally well be held.

    1201
    I also hope that those of my hon. Friends on this side of the House who take a temperance point of view will remember that the principal opponents of this proposal are the brewers. We know that from time to time the brewers have made considerable contributions to temperance. Indeed, in order to have a temperance movement that was not contemplated by such persons as my hon. Friend the Member for Ealing, North (Mr. J. Hudson), they founded their own which put forward a number of principles in the interests of what they consider to be true temperance.
    Therefore, I do hope that the temperance movement here will be a little careful in dealing with an attitude which is strongly influenced by the brewers because this is a conflict between the tied house and the free house. The off-licensees are, on the whole, free and indeed passed a resolution opposing the tie, while the unfortunate tied licensees all got together to pass a resolution which was sent round, I think, to a few Members of Parliament, saying that they were all grateful to their brewers for having tied them so thoroughly.
    Perhaps I may call the Chancellor's attention to the Clause. If I may say so, I am grateful that the House has an opportunity of considering the Customs and Excise Act, 1952. I myself put down an Amendment to deal with another aspect of it, which unfortunately was not selected, and I thought for a moment that it might be because it was felt that this Act as a whole was outside the scope of the Finance Bill. I am glad to think that it is not so, and on another occasion perhaps we can deal with other difficulties which seem to me to occur in the Customs and Excise Act.
    Perhaps I may address this question to the Chancellor. Does he know what is a "reputed quart" or a "reputed pint"? If he does, he is a wiser man than the brewers, and that would be a most unusual thing for anyone sitting on the opposite side of the House. Perhaps I may refer him to the way in which this matter is delicately dealt with in the "Brewers' Almanac." After dealing with what are proper weights and measures, that great work then comes to a kind of miserable footnote which refers to beer casks and "to a capacity in excess
    1202
    of their nominal capacity," whatever that means. It also says:
    "The reputed pint and the reputed quart bottle are nominally one-twelfth and one-sixth of a gallon respectively, but there is some variation in practice."
    How, under such circumstances, can one prosecute a man for selling a reputed quart or a reputed pint if there is no definition of what a reputed pint or a reputed quart is? But the matter is even worse than that, because to sell anything either by the reputed quart or the reputed pint is illegal.
    This was a matter which was dealt with rather more in sorrow than in anger by the Committee appointed by the Chancellor of the Exchequer on Weights and Measures Legislation. If the Chancellor will turn to paragraph 355 of their Report, he will see the following:
    "Reference has already been made to the fact that, although the terms 'reputed quart' and 'reputed pint' are illegal for use in trade, they are used in certain statutes. We consider that all reference to these terms should be removed from the Statute Book at the earliest possible."
    Here is an opportunity for the Chancellor to carry out that valuable recommendation. There is no point in having these terms on the Statute Book, because they do not mean anything. Nobody could be prosecuted for selling what was less than a reputed pint because what is a reputed pint is what he says it is.
    Sir H. Williams: If the hon. and learned Gentleman will read Section 149 of the Customs and Excise Consolidation Act of last year, he will find this reference to the reputed pint as late as last Session.
    Mr. Bing: It is deplorable, and we should all get together to put the matter right. These are forms of weights and measures which, in fact, are illegal. Why should we continue to punish people because they refuse to sell things by a measure declared by Parliament to be illegal? That seems an illogical attitude.
    I do not want to delay the Chancellor, but I want to ask him why he should not remove the blemish in this particular regard. I have one further word to make on the general issue. There are about five-and-a-half off-licences for every 10,000 of the population. So they are, as compared with public houses, only

    1203
    about one-third or one-fourth the fraction, but they are increasing in numbers more rapidly than public houses. This is because public houses do not provide those services the public require. They do not provide, for instance, cups of tea.
    One reason people buy from an off-licence is because there is one member of a family who wants a small drink while the other three members want a cup of tea. If one wants to bring home a bottle of drink, however guided or misguided it may be, according to one's feelings, it enables people to drink as their fancy suits them. It does not compel them only to drink spirits, as is the case if they go into a public house. We should not stand in the way of people who are opposing the domination of the brewers, as the off-licensees are.
    It is interesting to note that so long as hon. Gentlemen opposite could merely strike, but not wound, they were only too willing to make a feint against the brewers. But, when they felt their votes would achieve what they were always promising their supporters to do, they would not cast them in this way. If this matter goes to a Division I hope that all my hon. Friends will support a vote which is in essence an anti-brewers vote and will support what is a provision to enable people to buy smaller bottles of whisky if they do not wish to buy larger ones. I am glad that my hon. Friends have raised the matter, and I hope that at the next Budget we shall have the opportunity to discuss a number of other matters in the Customs and Excise Act which, like the problem of the gravity of beer, require to be discussed in this House.
    Mr. Maudling: It was quite clear that this debate would be an amusing and vigorous one, partly because it would give the hon. and learned Member for Hornchurch (Mr. Bing) a chance to renew his wider-ranging onslaught on the brewers in general and the drafting of the Customs and Excise Act in particular, and hon. Members opposite a chance to quote from speeches made on 18th June. 1951. The hon. and learned Member for Kettering (Mr. Mitchison) has made considerable use of arguments put forward on that occasion by those who are now on this side of the House. I can say
    1204
    two things in reply. The first is that whatever was said in the debate the hon. and learned Member's Government did nothing. The second is that the hon. and learned Member, his hon. Friend the Member for Reading, South (Mr. Mikardo) and the hon. and learned Member for Hornchurch did not add their voices in support of this urgent matter at a time when those voices carried such great influence with the then Government.
    Mr. Anthony Crosland: Three Labour Members did.
    Mr. Maudling: But none of the three was prepared to support it in the Lobby.
    As the right hon. Member for Battersea, North (Mr. Jay) said, there is here a real conflict of interest, indeed a historical controversy with a longstanding background. There are considerable arguments for saying that the present law is a restriction on the public's power to spend money which should be swept away. There is, of course, a good deal of confusion as to what can and cannot be sold. I have found that in my own experience—considerably to my annoyance at times when I have been told that an off-licensee was not in a position to sell something which I have found later he could have sold.
    The position is slightly anomalous and confusing. For example, I am told that an assortment of four quarter-bottles of French liqueurs can be sold, and so can an assortment of British liqueurs, whatever those are, and of British gin, but not a Scotch whisky and a foreign brandy, and not an assortment of British gin and foreign liqueurs. There is also the difficulty that a member of the public who does not wish to go to a public house but wishes to buy brandy has to go to a public house because the small brandy that he requires cannot legally be sold at an off-licence.
    Those are the sort of arguments put forward over a period in support of this proposed amendment of the law. On the other hand, there are arguments sincerely put forward by the hon. Member for Ealing, North (Mr. J. Hudson) and others who think that the proposed new Clause is a bad thing in principle, because it would extend the temptation to people to drink more spirits. I do not

    1205
    know whether, on balance, it would lead to drinking more or drinking less. People might be inclined to drink more at home and less in the public house—I do not know. But there is clearly a considerable measure of public opinion opposing this proposal.
    There is also the feeling of the on-licence holders that it would be quite unfair to sweep away this restriction on the sale of small bottles by the off-licence holders. It is not the Brewers' Society, as the hon. and learned Member for Hornchurch would have us suppose, who are active in opposing this proposal, but the on-licence holders. I understand that the Brewers' Society were officially consulted some two years ago and they did not wish to make representations on the subject.
    Mr. Bing: Would the hon. Gentleman give the House the figures of the number of licensees who are tied and those who are free, respectively, who have made this protest?
    11.15 p.m.
    Mr. Maudling: I have not the figures available, but what I have given are the facts.
    The position in 1951 when this subject was last debated was that there was this unresolved conflict between the two sides of the trade, and there was also this considerable difference in genuine public opinion. In those circumstances the right hon. Gentleman the Member for Batter-sea, North (Mr. Jay) said that the Government were not prepared to take any action on these lines. In 1952 the Chancellor of the Exchequer, in answer to a Question, said that he would be quite willing to review this question in the light of agreed proposals not involving a loss to the Revenue. It might be fairly easy to obtain agreement with substantial loss of revenue, but in present circumstances my right hon. Friend cannot contemplate that.
    But my right hon. Friend's offer still stands, and he is still willing to review this question if proposals can be put forward introducing an agreement not involving loss of revenue. But, in the absence of such agreement, or evidence that there is widespread public agitation and strong enough feeling to counterbalance the feeling on the other side, my
    1206
    right hon. Friend feels he must maintain the position, and he cannot in those circumstances accept the new Clause.
    Mr. Mitchison: For two reasons—first of all because this matter appears to be going to be decided by the brewers, and secondly because I have the highest possible regard for my hon. Friend the Member for Ealing, North (Mr. Hudson), whose opinions I do not always share—I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.
    Mr. Gaitskell: I beg to move, "That further consideration of the Bill, as amended, be adjourned."
    It will not have escaped notice that during the last debate no member of the Opposition Front Bench rose to speak. This was not because of any pusillanimity, fear, or anxiety in our minds about a difficult and delicate situation between the Member for Ealing, North (Mr. J. Hudson), and the hon. Members for Kettering (Mr. Mitchison), Hornchurch (Mr. Bing), and Reading, South (Mr. Mikardo), but because I felt that the arguments had been so thoroughly canvassed that, for once, there was nothing to be said. It was also in my mind that it was getting rather late and that we might adjourn further consideration of the Bill until to-morrow. The next new Clause is an important one, and I feel sure the Chancellor will agree it is much better that we should discuss it in the afternoon rather than at a late hour this evening. I hope therefore he will be able to accept the Motion.
    Mr. R. A. Butler: Under certain conditions I would be ready to accept this Motion. We have almost finished the new Clauses. We have next a subject which we debated in Committee, and each year previously, so at least we know the arguments, and may feel quite satisfied, despite the extension which has been drafted into it, that it will not take a great deal of time. I mention this because we might have some difficulty in finishing the Bill round about the time we had hoped. If we do not take too long over the new Clauses, then we should finish the Bill at a reasonable hour. In view of the need to press forward with public business, we had

    1207
    better take the risk in the circumstances and let the right hon. Gentleman deploy his case on a rather more massive front on the next Clause in the proper light of day. In the circumstances, and on the understanding we do finish the Bill at a reasonable hour, I would be ready to accept the Motion.
    Bill, as amended (in Committee and on recommittal), to be further considered Tomorrow.

  DOUBLE TAXATION RELIEF
  Resolved,
  That an humble Address be presented to Her Majesty, praying that on the ratification by the Belgian Government of the Convention set out in the Schedule to the Draft of an Order in Council, entitled the Double Taxation Relief (Taxes on Income) (Belgium) Order, 1953, a copy of which was laid before this House on 14th May, an Order may be made in the form of that Draft.—[Mr. R. A. Butler.]
  To be presented by Privy Councillors or Members of Her Majesty's Household.

WOOD GREEN BUNGALOWS (REPAIRS)
Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Vosper.]
11.20 p.m.
Mr. William Irving: I wish, first, to take the opportunity of expressing our regret that the Minister of Housing and Local Government is indisposed and our wish that he will soon be restored to the Government Front Bench.
In the spring and autumn of 1946–47, the Ministry of Works erected on the Wood Green Borough Council's Perth Road playing fields 89 temporary aluminium bungalows to accommodate families on the council's housing list. The bungalows, which remained the property of the Government, were of prefabricated construction. The roofs were of very low pitch, and the underside of the sloping roof had an insulation attached to it by bitumastic adhesive. Within two years of the occupation of the bungalows the summer heat melted the adhesive and the weight of the insulation caused it to part from the metal, leaving the under side of the roof bare to the elements. The result was that during the cold winter nights there was acute condensation on the exposed metal surface and water dripped on the furniture and the bed clothes, causing great discomfort to the occupants.
Another danger is that there is electrical wiring in the U-shaped members of the roof structure, and these members fill with moisture because of condensation. It is only a matter of time before a short-circuit occurs, possibly with very serious consequences. On one occasion at least the fire brigade was called for this reason.
The tenants have had to put up with deplorable conditions for five years, and many complaints have been received. Investigations were made by the council's officers, and exploratory remedial measures were taken to alleviate the trouble. The Ministry's officials have inspected the bungalows and have agreed to the carrying out of the remedial work.

1209
In October, 1951, the council received the proposals of the Ministry of Local Government and Planning for combating the condensation in the bungalows, which expressed the view that the cost of carrying out the measures should not exceed £25–£30 per bungalow. A further communication about the financial arrangement was promised to local authorities, but this has never materialised.
As a result of a further examination of the bungalows, it appeared that 14 of the 89 were badly affected and should receive treatment on the lines suggested by the Ministry of Housing and Local Government on the recommendations of the Department's officials. Following the inspection, quotations were invited from three firms for carrying out remedial measures to the Ministry's specification. None of the firms had any experience of this type of building and quoted for only one bungalow, reserving the right to amend the quotation after having had experience of the pilot bungalow.
The lowest quotation received was from a local firm, amounting to £26 2s. 9d., which was accepted by the Ministry of Housing and Local Government. On completion of the work to the one bungalow, the firm quoting the lowest tender put in an amended quotation for £33 3s. 6d. per bungalow for the remaining work. This figure has not been accepted by the Ministry.
The council consider that the whole cost of the remedial measures, in addition to repairs and decorations, should be borne by the Government. Now, arising from this complaint which I received from the borough council, I put down a Question to the Minister of Housing and Local Government to ask if the Minister would increase the figure of £30 allowed by his Department for remedial measures to combat condensation in these temporary bungalows, and to agree to meet the cost of repairs arising directly from that condensation. I thought that that was a reasonable request, and expected a sympathetic reply; but the reply, when I had it, was disappointing. It was to the effect that £30 had generally proved adequate to meet the cost of the remedial measures recommended by the Building Research Station, particulars of which had been
1210
sent to Wood Green Borough Council in September, 1951.
I suggest that costs do not remain stationary in these years, and this added burden is proving to be a great difficulty to Wood Green and other local authorities. We have heard today about the Exchequer Equalisation Grant, and we have also heard recently about de-rating, and since that latter provision was placed on the Statute Book, the burden on local authorities has increased considerably with the result that last year new high levels were reached in increased rates throughout the country. I hope that tonight the Parliamentary Secretary will say that he will meet the cost of these remedial measures; for one thing, the property is not that of the borough council. It is the property of the Government, and the council is merely acting as an agent for the Government which. I suggest, ought reasonably to accept the responsibility.
11.28 p.m.
The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Marples): I am grateful to the hon. Member for Wood Green (Mr. Irving) for his expression of sympathy for my right hon. Friend, who, at this moment, is in hospital, and I will convey those sentiments to him. I am sure he will join with me in appreciation of them.
The House has just listened to a feast of reason on a subject which the hon. Member has raised on more than one occasion. He has given it unremitting and devoted attention, but I would like at the outset to consider the background of the aluminium bungalows because there has been some difficulty due to condensation; and if I call them A-L-U-M-I-N-U-M, instead of "aluminium," I hope that the House will forgive me. During an extensive tour of Canada and the United States, nobody understood me unless I referred to "aluminum," and I find it difficult now to use the word more currently used here.
In March, 1950, trouble occurred in some of the aluminium bungalows, and was found to be due to condensation. They were erected by the previous administration, and the fault was discovered during their term of office. The Building Research Station was invited to examine the bungalows. May I explain that this organisation is the technical branch of

1211
the Government concerned with technical defects and errors in buildings of all sorts. It has no political connections. But it has the equipment, and the personnel, and resources to examine any defect. It found that the only way in which the condensation could be removed, with any guarantee of satisfaction, was by thermal insulation of the roofs. That is very expensive, and the experts also found that in most cases, satisfaction could be given by modifying the existing heating systems.
Therefore, the building research station, in August, 1951, advised the then Government—not this Administration, but the previous one—that two alternative methods of amending the heating system should be adopted. Their cost was £25 to £30 for each bungalow, as the hon. Member has said. Full details of these methods were circulated by the Government—again, I stress that that was the previous Administration—and it was agreed, Treasury consent being obtained, that a cost of not more than £30 should be borne by the Exchequer. This was discussed with the local authority associations, who agreed to it.
There were 42,000 of the aluminium bungalows in the country as a whole, of which Wood Green had 89, or just under one-quarter of 1 per cent. Of the 42,000, only 10 per cent., or 4,200, had this defect. Therefore 90 per cent. were satisfactory and 10 per cent. unsatisfactory. Wood Green had 14 which were unsatisfactory, which was just over one-quarter of 1 per cent. of the total that were unsatisfactory. Therefore, Wood Green is a representative sample of the country as a whole. They had just under one-quarter of 1 per cent. of the total bungalows, and just over one-quarter of 1 per cent. of those that were defective were in the hon. Gentleman's constituency. That is the background.
Consider the case of Wood Green in particular. Wood Green, I think, made a mistake. Details of the remedial measures which should be taken were issued to local authorities in September, 1951. Had Wood Green been like other authorities and effected the remedial measures in August and September, 1951, or perhaps later that year, they would have been able to carry out those measures at a cost of £30 or less per
1212
bungalow. Wood Green did not, however, act on the advice given by the hon. Gentleman's own Government. They experimented themselves, and they did not act with that degree of celerity with which one would expect Wood Green to act.
Mr. Irving: Was that not because a further circular was promised in 1951, but it never materialised? They may have been waiting for that circular.
Mr. Marples: The reason why Wood Green were tardy and a little timorous is not for me to say.
Mr. Irving: I think that that is the answer.
Mr. Marples: It may be the reason, but it is not an excuse.
Most local authorities carried out the remedial measures at once, at a cost of under £30. Wood Green tried some of their own measures. They had their own technicians. They altered the ventilators, put lining on the ceilings, and carried out their own remedial measures for about 12 months. Their remedial measures were not successful, however, whereas those of the Building Research Station were successful. Therefore, it was not until a year later, in September, 1952, 12 months after the original instructions were sent out to local authorities, that Wood Green decided to carry out the recommendations of the Building Research Station.
Mr. Irving: Is it not true to say that they carried out this remedial work with the consent of the Ministry's officials?
Mr. Marples: It may be true, but it does not absolve Wood Green from responsibility. The Ministry officials did not control the matter and did not take the initiative. The initiative came from Wood Green, and they took it entirely on their own responsibility.
As I say, in September, 1952, after waiting a year, Wood Green tried the measures recommended by the hon. Gentleman's own Government on advice from the Building Research Station. They had 14 houses suffering from condensation, but they were rather timid and ventured only on one house. They got the work for that one carried out for the sum of £28. When that was successful, they waited until January, 1953—a

1213
considerable time after September, 1951—to carry out remedial measures on the remaining 13 houses. On this occasion it came to £33.
The hon. Member said that costs did not remain stationary, and I agree. That is all the more reason why Wood Green should have moved earlier in the matter rather than later. Shakespeare said:
"Call back yesterday, bid time return."
But time will not return. It would appear that this will cost Wood Green more than about £30 which most local authorities paid. There is no hope of the Government providing more than £30.
Mr. Irving: How can the local authority carry out the work if no contractor will contract for less than £33?
Mr. Marples: The point I am trying to make is that from September, 1951, to September, 1952, the work could have been carried out for £30. If Wood Green does not move until 1953, 1954, 1955 or 1956, obviously it will cost more, and not only from the contractural point of view. It is a trite saying, but "A stitch in time saves nine." This is a powerful argument in the case of repairs. We all know that if a leaking roof or a sea wall is not repaired immediately more damage is done. The fault here lies with the Wood Green authority. If they had carried out the work straight away it would have been done, as for other local authorities, for less than £30. There is no hope that this will be reviewed by the Government.
Mr. Irving: Fourteen of the 89 have been affected and quite a number more may be affected this year or next year. Are we to take it that £30 is all that will be allowed in spite of rising costs?
Mr. Marples: If it has not occurred already it is hardly likely to occur in the future.
Mr. Irving: I hope the Minister is right.
Mr. Marples: It only occurs in houses where conditions are exposed or there is a great deal of moisture.
The £30 grant will not be increased, I want to make that clear. But if the total annual outgoings on the aluminium bungalows are in excess of £8 the local authority can apply for a reduction. So far there has been no sign of Wood Green wishing to take advantage of that facility.
Wood Green is the only authority I know about who have complained. Of the 42,000 bungalows, 4,200 were found with moisture. Most of them have been settled satisfactorily. The reason the £30 was not adequate in the case of Wood Green was because the local authority did not carry out the work quickly enough. They had their own ideas of how to remedy the defect. Unfortunately their ideas were not as sound as those of the Building Research Station. If they had been the authority would not afterwards have carried out the recommendations of the Building Research Station. If Wood Green spends more than £8 a year on the maintenance of the bungalows there is provision whereby the council can make application to the Minister.
Mr. Irving: Does that £8 include decoration? Because of condensation, the bill for decoration has increased considerably.
Mr. Marples: The Wood Green Council has given no sign, so far, of wishing to make a claim under the Section. If it does make a claim, the Minister or I will consider it sympathetically.
Adjourned accordingly at Nineteen Minutes to Twelve o'Clock.

  BRITISH ARMY (No. 1 DRESS)
  BRITISH ARMY (No. 1 DRESS)
TRADE AND COMMERCE
  New Factories, Peterlee (Applications)
  New Factories, Peterlee (Applications)
  Commonwealth Tobacco Imports
  Commonwealth Tobacco Imports
NATIONAL FINANCE
  Canada (Payments to United Kingdom)
  Canada (Payments to United Kingdom)
  Japan (U.K. Capital Transfer)
  Japan (U.K. Capital Transfer)
  Auckland Bridge Project (Refused Loan Issue)
  Auckland Bridge Project (Refused Loan Issue)
LOCAL GOVERNMENT
  Local Authorities (Insurance Funds)
  Local Authorities (Insurance Funds)
  Tees Valley Water Board (Grant Application)
  Tees Valley Water Board (Grant Application)
  Cooling Towers, Cardiff (Nuisance)
  Cooling Towers, Cardiff (Nuisance)
  Sewage Schemes
  Sewage Schemes
  Derating
  Derating
HOUSING
  Derequisitioning (Completion)
  Derequisitioning (Completion)
  Softwood
  Softwood
  Prospective Tenants (Financial Conditions)
  Prospective Tenants (Financial Conditions)
  Mortgages (Local Authority Guarantees)
  Mortgages (Local Authority Guarantees)
  BRICK OUTPUT
  BRICK OUTPUT
EMPLOYMENT
  Transferred Workers (Lodging Allowances)
  Transferred Workers (Lodging Allowances)
  Travel Vouchers
  Travel Vouchers
  Night Baking
  Night Baking
  Prescot
  Prescot
SCOTLAND
  Rural Electrification Expenditure
  Rural Electrification Expenditure
  Hydro-Electric Board
  Hydro-Electric Board
  Crofters, Armadale (Water Supply)
  Crofters, Armadale (Water Supply)
  School Places (Completions)
  School Places (Completions)
  House Building Programme
  House Building Programme
  CIVIL AVIATION (PUBLIC RELATIONS STAFF)
  CIVIL AVIATION (PUBLIC RELATIONS STAFF)
  SHIPBUILDING
  SHIPBUILDING
  EMBAKASI AIRPORT, KENYA (LABOUR)
  EMBAKASI AIRPORT, KENYA (LABOUR)
  COLONIAL EMPIRE (SUGAR DERATIONING)
  COLONIAL EMPIRE (SUGAR DERATIONING)
  NAZI VICTIMS (COMPENSATION)
  NAZI VICTIMS (COMPENSATION)
  EDUCATION (PUBLIC EXPENDITURE STATISTICS)
  EDUCATION (PUBLIC EXPENDITURE STATISTICS)
Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

  VISCOUNT WOOLTON
  2.38 p.m.
  The Right Honourable Frederick James, Baron Woolton, C.H., having been created Viscount Woolton, of Liverpool in the County Palatine of Lancaster—Was (in the usual manner) introduced.

  LORD GLYN
  Sir Ralph George Campbell Glyn, Baronet, M.C., having been created Baron Glyn, of Farnborough in the County of Berks—Was (in the usual manner) introduced.
  The Lord McGowan—Took the Oath.

  MESSAGE FROM THE QUEEN
  THE EARL OF SCARBROUGH: My Lords, I have the honour to present to your Lordships a Message from Her Majesty the Queen, signed by her own hand. The Message is as follows:
  "I have received your Address praying that the Transfer of Functions (Ministry of Pensions) Order, 1953, be made in the form of the draft laid before Parliament.
  "I will comply with your request."

  TELEVISION DEVELOPMENTS
  2.57 p.m.
  THE EARL OF LISTOWEL: My Lords, I beg leave to ask Her Majesty's Government the Question of which I have given private notice—namely, whether they can now make a statement on the Report of the Television Advisory Committee.
  THE POSTMASTER GENERAL (EARL DE LA WARR): My Lords, first of all, I should like to thank all the members of the Television Advisory Committee for the admirable Report that has just been published, and especially their
  266
  energetic and resourceful Chairman, Admiral Sir Charles Daniel, who has done so much to ensure its early presentation. We owe a great to him and his colleagues, including the two members from the radio industry. I have arranged for copies of the Report to be placed in the Printed Paper Office of this House and the Vote Office of another place.
  The Report deals wilt highly technical matters, but in brief it states that television broadcasting in this country will develop in future in three separate ranges or bands of very high and ultra high frequencies, in addition to that now in use. Techniques for the two ultra high bands are not yet fully developed in this country, and it is only for the lowest of the three bands, namely, that referred to in the Report as Band III, that new receiving sets, or adaptors for current sets, and the necessary transmitting equipment, can be produced reasonably quickly. In this band, however, only two channels are at present available for broadcasting, and the questions about the ultimate use of the whole band, which in any case provides only a limited number of channels, are therefore hypothetical at present. It is certainly desirable for the full development of television in this country that at least some of them should be ultimately cleared; but other interests, some of them of great importance, are involved, and this would in any event take some time. The Government accept the Television Advisory Committee's recommendation that the permanent use of these limited channels, including both those now available and those that may later be freed, should be mainly for stations covering large areas. It might, however, be possible to consider their use by short-range stations on a temporary basis, with an undertaking from the user to transfer to a higher frequency, if required to do so, when technical developments make such a change possible.
  To those in the radio industry who wish to design and develop adaptors and new sets in readiness for any possible alternative programmes, I would therefore say that Band III is the only hand likely to be used during the next few years. I take this opportunity also to reassure intending purchasers of television sets. I have spoken of new programmes and new frequencies. I am

  267
  satisfied that there will be no difficulty in fitting the adaptors I have mentioned on current sets, and in some cases on older sets. I emphasise this so that the public should know that they will be able to receive alternative programmes on current types of television sets if they are fitted with suitable adaptors and aerials.
  THE EARL OF LISTOWEL: My Lords, may I thank the noble Earl for his statement, and ask him how soon he will be likely to be in a position to decide about the allocation of frequencies within Band III?
  EARL DE LA WARR: I think that is a point I shall have to deal with as one of the many points arising out of the discussion on the White Paper on television to be issued in the autumn.
  EARL WINTERTON: My Lords, may I ask whether this technical Committee went into the question of how soon it will be possible to televise to this country from overseas? The question is of some importance, as if it were possible to do this it might dispose of the current controversy.
  EARL DE LA WARR: My Lords, this Committee will continue to sit for some time, and the matter referred to by the noble Earl in his question is one which will doubtless be dealt with by them at some later stage.

  THE CANADIAN LOAN
  LORD BARNBY: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
  [The Question was as follows:
  To ask Her Majesty's Government whether, with a view to facilitating United Kingdom participation in Canadian industrial development and making better use of the present large United Kingdom holdings in Canada (reported to exceed 2 billion dollars), they intend to put forward proposals to fund the remaining unpaid balance of the 1946 Loan by Canada.]
  THE EARL OF SELKIRK: My Lords, I can assure the noble Lord that Her Majesty's Government are fully aware of the importance of this subject. They are
  268
  keeping in touch with the Canadian Government, but I am not yet in a position to say anything about the outcome.

  LEGAL AID CASES
  3.2 p.m.
  VISCOUNT ELIBANK: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
  [The Question was as follows:
  To draw the attention of Her Majesty's Government to the statement by Mr. Justice Roxburgh in the Chancery Division on 23rd June that the action before him—in which both parties were legally aided and in which he approved a settlement which "had ended days and nights of wasted time and money"—was one in which neither party could gain anything, but that it was inevitable that the taxpayer would lose more and more each day, and that, as it seemed to him, a problem calling for attention was whether there ought not to be devised machinery where under some body of persons should have the right to bring pressure to bear to stop actions which were going to be barren of any worthwhile results; and to ask Her Majesty's Government whether, in the interests of the taxpayer, they will consider the advisability of devising legislative or other machinery which could stop actions of the aforesaid nature.]
  THE LORD CHANCELLOR (LORD SIMONDS): My Lords, my attention has already been called to the case to which the noble Viscount's Question refers. The Law Society are, at my request, considering among other things, the situation which arises in such cases, and their report is nearly completed. I should prefer not to make any definite statement on that matter until I have considered that report.
  VISCOUNT ELIBANK: I beg to thank the noble and learned Lord, the Lord Chancellor, for his answer.

  HOUSE OF LORDS OFFICES
  Order of the Day read for the consideration of the Third Report from the Select Committee.
  The Committee reported as follows:
  1.—LIBRARY
  The Report of the Sub-Committee on the Library was laid before the Committee and approved.

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  The Committee authorised an extension of service to Mr. Charles Travis Clay, C.B., the Librarian, to 31st October, 1954.
  2.—RESIGNATION OF THE COUNSEL TO THE LORD CHAIRMAN OF COMMITTEES
  The Chairman of Committees informed the Committee of the resignation of his Counsel, Sir John Stainton, K.C.B., K.B.E., Q.C., as from the 1st of July.
  The Committee authorised a pension and an additional allowance to Sir John Stainton under the Superannuation Act, 1935, as from the date of his retirement.
  The Chairman of Committees informed the Committee that he had appointed Mr. Thomas George Talbot to be his Counsel.
  3.—HISTORICAL RECORDS
  The Committee were informed of the purchase from Lord Braye of further historical manuscripts.
  The Clerk of the Parliaments was requested to ask the Leader of the House to send a letter of appreciation to the Pilgrim Trust for their generosity in providing for this purchase.
  4.—BOOKS OF REMEMBRANCE
  The Committee decided to ask the Sub-Committee on the House of Lords War Memorial to advise upon a suggestion by Lord Saltoun that the Books of Remembrance be placed in the Bishops' Corridor instead of being put into the recess in the Royal Gallery.
  5.—REVISED SCALES OF PAY
  The Committee sanctioned the application of Treasury Establishments Circular No. 22/53, dated 26th June, 1953, to the analogous grades of officials of the House of Lords.
  6.—CUSTODIANS
  The Committee approved revised rates of pay for the Custodian staff.
  7.—SPECIAL PAYMENTS FOR ATTENDANCE ON CORONATION DAY
  The Committee authorised special payments to the Custodian staff and certain Housemaids in connection with extra duties on Coronation Day, 2nd June, 1953.
  8.—SENIOR CUSTODIANS—DUE FOR RETIREMENT
  The Committee sanctioned a pension and an additional allowance under the Superannuation Acts to Andrew White Falls, who attained 65 years of age on 22nd May, 1953, and to Albert Thomas Shields, who is due for retirement from 6th July, 1953.
  The Committee were informed of the reemployment of both Custodians in an unestablished capacity.
  LORD O'HAGAN: My Lords, I beg to move that this Report be now considered.
  Moved accordingly, and, on Question, Motion agreed to.
  LORD O'HAGAN: My Lords, there are no special points in this Report to
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  which it is necessary to call the attention of the House. I therefore beg to move that the Report be agreed to.
  Moved, That the Report be agreed to.—(Lord O' Hagan.)
  On Question, Motion agreed to.

  RHODESIA AND NYASALAND FEDERATION BILL
  3.5 p.m.
  Debate resumed (according to Order) on the Motion for Second Reading, moved yesterday by the Earl of Munster.
  LORD ALTRINCHAM: My Lords, the noble and learned Earl, Lord Jowitt and the noble Viscount, Lord Samuel, speaking in this debate yesterday afternoon, laid particular stress upon the fact that the debate appeared to them to be unreal. They said that they took that view because it was not within the capacity of this House to alter the Constitution of Rhodesia and Nyasaland as passed by the last Conference held in London, and afterwards confirmed by the referendum held in Rhodesia. I confess that I also regarded the debate as unreal, but not at all for the reasons which those noble Lords gave. In the first place, the fact that the Bill was in no way subject to amendment was not due to obstinacy on the part of Her Majesty's present Government. It is the invariable practice in matters of this kind. When Her Majesty's Government have made an engagement with another Government—whether it be a Government of the Commonwealth or a foreign Government—then the honour of this country is pledged, and always Parliament, in being asked to ratify that particular Treaty or Agreement, or whatever it may be, is asked to do so without amendment. Parliament, in fact, can either accept the decision of the Government of the day, or it can turn out the Government of the day. But it has no other alternative; and this particular debate is certainly no exception in that respect.
  May I remind your Lordships of certain precedents? Let me recall, for instance, the debate on the American Loan. Parliament had absolutely no discretion in that important matter. It could either accept the Loan on the terms which had been negotiated by the Government—there was no question

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  whatever of any capacity on the part of Parliament to vary those terms—or it could turn out the Government, something which there was little prospect of doing at that time. I do not think that any of your Lordships who remember that debate will consider it a debate which was unreal or without value on that account. I remember it as being one of the most interesting debates to which I have listened in this House. I think it was the occasion on which the late Lord Keynes made his last speech.
  I will take another precedent, one which is perhaps even closer to what we are doing to-day. Let me take the case of the decision made by His late Majesty's Government in favour of the immediate partition and emancipation of India. That was announced in another place on June 3, 1947, and simultaneously in this House, without any previous consultation whatever; and so short was the discussion given to the Act which followed that it was passed before the Summer Recess. And I would remind your Lordships that on that occasion noble Lords on my side of the House certainly felt as deeply about India as any noble Lords on the other side of the House at the present moment can feel about what is happening in Africa. There was no question as to how profoundly distressed they were concerning what was being done, but they recognised—
  THE EARL OF LISTOWEL: If the noble Lord will forgive my interrupting him, I am sure he will agree that the establishment of the independence of India was agreed between all three parties, and that is not the case with regard to the present Bill.
  LORD ALTRINCHAM: I am afraid that I cannot accept that statement. The agreement of the parties then was made on two conditions—I am sorry to have to go into this, because I think it is really irrelevant, but since I have been questioned I must do so. In the first place, it was a condition of taking the step that there was agreement on the part of all parties in India. In the second place, it was a condition that there should be a period of Dominion status, during which India and Pakistan should have the freest possible discretion as to whether or not they remained in the Common-
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  wealth. As a matter of fact, there were many other conditions attached to that declaration which were subsequently added by the Government. Therefore, I cannot accept the correction offered to me by the noble Earl. Let us consider the parallel in that case. Deeply as noble Lords in this House felt, they recognised that the honour of the King's Government, as it was then, had been pledged, and they felt that it would not be right or wise to vote against the Second Reading of the measure. I have not consulted the records, but I am certain that they did not do so. I think that is an exact parallel, and I hope it will be followed by noble Lords opposite in the present instance.
  Is it to be said that the parallel is not a real one, because conditions are very different in the case of this Bill for the federation of the two Rhodesias and Nyasaland? With that I would disagree entirely. I think the parallel is remarkable. Let me give your Lordships one instance alone. We heard a good deal yesterday from the noble and learned Earl, Lord Jowitt, about the Nyasaland Chiefs. I hope that he has not forgotten those even greater chiefs, the Indian Princes, who were responsible for two-thirds of the area of India and for one-third of its population. Under the decision which the then Government took, their treaties were repudiated and they had no means of re-establishing their position. One of them, I know—and perhaps more than one—asked the question which has been asked by the Nyasaland Chiefs: whether they could not remain as independent Territories or Dominions directly subject to the Crown—exactly the question asked by the Nyasaland Chiefs. The answer given by Lord Mountbatten was, No; that was not open to them.
  Let me say to the noble Earl that, so far as I know, no single voice was raised in this House among noble Lords belonging to the Conservative Party to suggest to the Indian Princes that they should take this question outside the Commonwealth and submit it to the United Nations. They accepted the decision of His Majesty's Government as being responsible within the Commonwealth, and that was the end of it. Whether the Indian Princes would have succeeded in an appeal to the United Nations, I do not

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  know. I am familiar with the Agreement under which the Nyasaland Chiefs came under the protection of Her Majesty, Queen Victoria, and I should say that the case of the Indian Princes was immensely stronger than theirs. Nevertheless, the decision was then accepted. In all humbleness, I beg noble Lords to remember that precedent and to recognise the great harm that may be done, when once the honour of the British Government and the honour of the British people have been pledged, if Parliamentary and Party division is carried too far. It is the function of this House to try to prevent that from happening in our domestic and our Commonwealth affairs. I beg noble Lords to consider whether that might not be a good precedent to follow in the present instance.
  EARL JOWITT: My Lords, I did not suggest or express any opinion about the claim of the Nyasaland Chiefs. I merely stated, as I believed to be the fact, that they contemplated trying to get their case put before the United Nations. I say nothing as to the merits of the case, nor do I advocate or express any opinion on it; but I say as a fact, that they are trying to get their case put before the United Nations.
  LORD ALTRINCHAM: Of course, the noble and learned Earl is quite right upon the facts, but he is not a political innocent, and he knows perfectly well that if the late Lord Chancellor makes a speech, as he did, saying that the Nyasaland Chiefs have a case, in fact he is encouraging them to put that case before the United Nations.
  EARL JOWITT: My Lords, I stated that the case of the Nyasaland Chiefs—this is no laughing matter. If the noble Lord will forgive me, he made an attack on me, and there is no reason why he should laugh when I answer. I merely stated that the case of the Nyasaland Chiefs was not to my mind fanciful or imaginary, and could not be dismissed as merely a question of the Africans being afraid of the dark. That is all I said.
  LORD ALTRINCHAM: In the first place, let me apologise to the noble and learned Earl. I was not laughing at the interruption which he had made, which I welcome. I was laughing because my neighbour had asked me how long I should be, and I replied that that depends on how much I was interrupted. That
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  was the sole reason that I smiled when the noble Earl rose a second time. Of course, he is perfectly right and his description of his own speech is absolutely correct; but really he must realise that a former Lord Chancellor, now the Leader of the Opposition in this House, does not say that kind of thing without its being taken very seriously and being regarded as encouragement. I do not think he would differ from me about that, otherwise he is greatly understating his own position in politics and his influence in the Commonwealth.
  I have mentioned the case of the Indian Princes, but there was another aspect of the Indian decision which has some bearing upon the Bill which we are discussing to-day. Under the Indian Independence Act this House and another place completely repudiated all the responsibility which they held for the protection of the under-dog in India. They were pledged to look after the under-dog in India, and they abdicated from that responsibility. I do not believe we are doing that in this case. Under this proposed Constitution Parliament retains a large measure of responsibility for the African who cannot speak for himself. Parliament, through the Colonial Office, is retaining practically complete control of native affairs, and therefore the extent to which this Parliament is abdicating responsibility in Central Africa is much less than was the case with India. I do not wish to put this matter controversially. I am really quoting precedents. I am sure the noble and learned Earl will give me credit for that. I think it is extremely important that we should recognise what the precedents are. In this House we should regulate our procedure in accordance, with what matters most on such questions as this, which is not merely to pursue our Party disputes in this country, but to do our utmost to maintain good relations and good will between this Parliament and the four Parliaments to which we are delegating responsibility in the Rhodesias and Nyasaland. That is the most important consideration. I believe that the way in which we conduct ourselves in the final stage of this debate, and, in particular, the way in which we deal with the Second Reacting, will have a great effect upon that vital issue.

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  We are unquestionably devoting ourselves to an act of faith in passing this Bill, just as we made an act of faith when we handed over all responsibility to two completely independent Governments in India. We accepted the position in the case of India because, despite the dangers and the doubts which were involved, and despite also—and I must say this—the breaches of faith which were involved, we believed that that was the best and wisest course which could be pursued in very difficult circumstances; and because it was the best and wisest, it was the right course, which, whatever it cost, ought to be pursued. It was an act of faith. I remember, sadly, that we made that act of faith upon the assurance from both great Parties in India that the change would be carried out peacefully and without bloodshed. Unhappily, that was not the case in India. But I believe we are going to have the exact opposite in Africa. A great deal of protracted opposition is being threatened in Africa. I do not believe it will be anything like what is predicted. It will certainly bear no resemblance to what took place in the case of the transfer of responsibility for government in India. I say that with conviction. But I should like to add that I say that without in any way underrating the importance of African feeling in this matter.
  Nobody who knows Africa can doubt that at the present moment there is a tremendous wave of unrest, suspicion, fear and ambition running throughout Africa; no one who is not a political idiot would fail to recognise that most important fact. That condition of mind among the African peoples at the present time, however it is being aroused—and I do not want to argue thatpoint—is not open to question. I know a good deal about Africans—at any rate, I have dealt with them for a great many years of my life. I do not know them as well as do many noble Lords in this House—for instance, the noble Lord, LordHarlech—but I know that on such matters as this the great mass are not open or equal to argument. Argument means nothing to them. For one thing, very few of them understand the terms which you use; they misunderstand even the terms with which you are trying to convince them.
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  The only thing which will convince Africans is a demonstration that the evils they fear are not going to occur; and that I am absolutely confident we can give them. But if we are to give that demonstration, the essential thing is to have the co-operation of the Governments and of our own people in the two Rhodesias. Without that we cannot do it. I feel that the result of the referendum in Rhodesia shows that we can do that with the greatest confidence.
  To my mind, the significance of that referendum has been greatly underrated. It certainly ties our hands in this House, because it was taken on the understanding that, if the Rhodesian electorate approved the Constitution which was agreed to at the last Conference, then it would be passed by this Parliament. But it was a great decision which was taken in the referendum by the Southern Rhodesian electorate. With one exception, it is, I believe, the only example of a self-governing nation accepting any derogation from its powers of self-government. The only other example is Newfoundland, and Newfoundland accepted it because she was absolutely bankrupt and incapable of carrying on. That is not the case in Southern Rhodesia: Southern Rhodesia is extremely prosperous. Nevertheless, Southern Rhodesians accepted a serious derogation from their powers of self-government, which they had enjoyed for thirty years.
  Why did they accept that? They accepted it—and this is why I have confidence in them—not from any financial motives but because they were loyal to the British system and because they wished to do their utmost to see that the British system was established beyond challenge in Central Africa. I am convinced that that was the prevailing motive. It was certainly the motive most strongly argued by Sir Godfrey Huggins in the meetings before the referendum; and I believe it was the strongest motive with the white electorate, and indeed, also, with the black electorate, in Southern Rhodesia. They announced, as no other self-governing community in the Commonwealth has ever before been ready to do, that they were prepared to share responsibility in Africa with the Colonial Office, with Downing Street—the very thing from which most self-governing Governments revolt, and always have revolted

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  throughout our Imperial history. Not only did they do that, but they accepted a grave new commitment, because, after all, Southern Rhodesia made itself responsible—indirectly, but nevertheless responsible—for great expenditure and great decisions of policy in regard to native territories, such as Nyasaland.
  Even before that referendum I had a great admiration for, and trust in, our people in Rhodesia; now, I am bound to say, that admiration is greater than ever. They accepted this system, I believe, with great faith and great generosity. So far from deserving our criticism or our doubt, they deserve the utmost confidence from us, and I trust that it will be given. If we give them good will and co-operation, they will certainly reciprocate. A great deal depends upon your Lordships as to the atmosphere in which that system of co-operation will start. It is not my affair, but I hope that on that account—and I have tried to present the case fairly and broadly—therewill be no Division upon the Second Reading of this Bill to-day. Noble Lords opposite have said, I am sure with complete sincerity, that once this Bill is through they will do their utmost to make it a success. Well, it is going through; and, certainly they can do nothing more to give it a good start than to realise that it is going through, and must go through, unless we are to repudiate the word which we have given. Realising that, I hope they will decide—as Conservative noble Lords agreed on a previous occasion—not to divide upon the Second Reading of this Bill.
  I do not wish to detain your Lordships much longer, but I must deal with another reason, different from those given by the noble and learned Earl and the noble Viscount, why I found the debate of yesterday unreal. In common with the noble Lord, Lord Harlech, I felt very strongly that the speeches made by Lord Jowitt and Lord Samuel, and by some other noble Lords, showed no appreciation whatever of the pace at which events are moving in Africa, or of what would be the alternative if this federation were not carried through at the present moment After all, practical statesmen have to consider alternatives. What would happen if this measure were repudiated? I agree with the noble Lord, Lord Harlech, that the days of Downing Street control in Africa are narrowly
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  numbered. They have practically gone in West Africa; they have gone in the Sudan, and in existing conditions they will not last very much longer anywhere unless we secure the support in Africa itself of people who share our own Christian democratic scheme of values and give us their support in that Continent. You cannot maintain what you are striving to maintain in Africa by remote control. The day for that is passing very rapidly; I am not sure that it has not passed already. I consider, therefore, that, so far from federation being premature, it is perhaps too late. I hope it is not too late, but it may be.
  Unless a Federation is established now, the consequences will be quite certain. What would happen if we were unable to intervene in any manner whatever? There would be a Union between the two Rhodesias. What was once united would once again be united. Unless we were prepared to go to war over it, nothing in the world would prevent that one self-governing community and the other very close to self-government from coming together in the present situation. What then would happen to Nyasaland and the other native Territories? In my opinion, if that happened it would be a disaster for the native Territories, and I say that despite the fact that, because they do not understand the situation, some of them have even suggested it. What would it mean? It would mean that all wealth, all promise of wealth and practically all production of wealth, would be concentrated in the white areas, and poverty would be concentrated in the native areas. No wonder that the white minority in Southern Rhodesia—including, so I am told, the whole trade union vote in Southern Rhodesia—were strongly in favour of a solution of this kind! What a disaster for the native people! But that is the alternative. Nothing in the world could prevent those two communities from coming together. They were one; we separated them. And they will certainly come together again. The only question is, in what manner and with what responsibilities?
  Let no one, however, think—I repeat and insist.—that in this question of imposing federation, I regard African opinion as negligible. I believe federation should be imposed not because I have a disregard for African opinion, but

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  because I am absolutely convinced that the greatest sufferers would be Africans if it were not imposed at the present moment. African suspicion and unrest are very grave. What is the remedy? Certainly not the vote. You might give the vote to everybody who on any conceivable qualification could qualify at the present moment, and it would not make the slightest difference to the real mass of the people in the two Rhodesias and Nyasaland. Nor will it be done by higher education. I am all for university training without a colour bar of any kind. I am all for hostels in one wide location so that there may be no question of colour discrimination. But when every conceivable African who can qualify for a degree has done so, it will not for years make the slightest difference to the welfare and progress of the great mass of Africans in the two Rhodesias and Nyasaland. Let us get on with it; it is an important element in the situation; but it is not going to help the great mass of the people.
  And most certainly they are not going to be helped by speeches in this Parliament. On the whole, speeches in this Parliament do harm. They create opposition to what might otherwise be done very easily without opposition. I believe we all have at heart the raising of the great mass of the people in Africa. I believe the white people of Rhodesia also have it at heart. They know that there can be no such thing as white domination. They know that white guidance and white control, if it comes from the West, must be white guidance and white control in accordance with the principles and the sentiment of the West. That may not be accepted in the Union of South Africa, but in the Rhodesias it is accepted, well appreciated and thoroughly approved. They know all that. But the advancement of Africans cannot be pursued effectively by speeches in this Parliament.
  What is going to raise the mass of the people in the Rhodesias and Nyasaland is good administration. Now of what does that consist? It consists, in the first place, of a great number of services: education, health, better agriculture, good communications, irrigation and all that is necessary to help production, and, above all—and I insist on this—the education of women. But all that costs money, and the money will certainly not
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  come from this Parliament. The taxpayer in this country will not have the revenue or the capital to put into the Rhodesias on the scale that is required. Therefore, it must come from other sources. If, moreover, you are going to have good administration you must have a good Civil Service. I agree absolutely with what the right reverend Prelate, the Bishop of Chichester, said yesterday, that in this matter the king-pin is the administrative officer.
  I remember many years ago when the noble Lord, Lord Harlech, and I were discussing Kenya, having an argument with him upon this subject. Great pressure was then being applied for the appointment of specialist officers, biochemists, agricultural officers, and every kind of specialist. I was not opposed to that, but I did argue that, while science was absolutely essential to progress, it must be given to the African with acceptance; and acceptance could be secured only by good administrative officers. I believe that part of the trouble which has arisen in Kenya lately is due to the fact that there has been too much insistence on trying to get ahead with technical advice, and too little insistence on good and close administration, particularly on administration by sufficient numbers to keep the administrative officer in constant contact with his own people. I believe that to be absolutely and vitally important. The first need, then, is good administration and good district officers.
  The only other essential for a Civil Service is security. I observed with some amusement yesterday that the noble Viscount, Lord Samuel, talked of equal status having been achieved for the races in West Africa. I can assure the noble Viscount that so far as West Africa is concerned it is not now a question of equal status; it is a question of black supremacy. That is the actual situation in West Africa. The Civil Service feels, in consequence, that it has no security. That is the plain fact; and that is what is going to happen elsewhere in Africa unless we give up the foolish belief that we here in this country can give sufficient security to a service operating in Africa, and unless we realise that it must be anchored to a system of government in Africa itself which shares its own schemes of values. Without that, your only instrument, the Civil Service, will be lost to you.

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  Without good and close co-operation between this Parliament and the Parliaments of Central Africa, without the revenues which can be derived from the development of the central spine of Africa, and without the capital which will be attracted only if you establish security, you cannot have a good Civil Service. I would only ask that the Government here should do their utmost to promote the welfare of that Civil Service and to see that when it asks for men, as it is bound to do, it is given the best men who can be spared from service here or elsewhere. Some will probably be found from among those who are to be discarded from the Sudan; but in any case we should send the best we can.
  Remember this, my Lords: that you are putting upon a very small white population an immense responsibility, because you have no alternative. They are the only representatives of our civilisation who can do the job at the present moment, and they are going to have great difficulty in meeting the demands which will be made upon them. They have got to man no fewer than four Legislatures, one of them a federal one, and that is a great demand on a population of that kind. They must therefore be given a good Civil Service. If you give them a Civil Service which wins their confidence and which has confidence in them, then you will be establishing in Central Africa a medium through which your influence here will be very strongly felt and which will be a harmonising, progressive and educational influence in the whole process of Central African government.
  I beg, therefore, that the Government will pay special attention to the establishing in Africa of a good Civil Service, anchored to Africa, because that is what Central Africa most requires at the present moment. Given that, I believe that this decision will justify itself. Faith in our own system is indispensable. We are fighting a challenge from a materialistic and dogmatic religion which is absolutely fanatical, which has no lack of faith in its own formulæ, and which believes it can predict clearly what is going to happen. We do not make any claim of that kind. Faith, I would remind the right reverend Prelate, the Lord Bishop of Chichester—I regret he is not here at the moment—is the "evidence of
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  things not seen." He seemed to me to be asking for assurances which are never given in this world—certainly not given by practical statesmen. We have got to act with faith. Our human vision in these matters is very limited. Statesmen can only do what they think best. Let them act, not drift, and, for the rest, put their confidence in Divine wisdom. I have always felt that our Christian British statesmen should echo Newman's Prayer, that hymn which is so familiar to all of us:
  "Keep thou my feet; I do not ask to see The distant scene; one step enough for me."
  My Lords, so far as Central Africa is concerned I am most profoundly convinced that this is the right step, and I hope that, despite all the doubts and differences which we may feel, your Lordships will act as a united House in giving this great scheme a send-off, with generosity and confidence.
  3.47 p.m.
  VISCOUNT HALL: My Lords, it is some time since we had the pleasure of seeing or hearing the noble Lord who has just spoken. He has apparently come to your Lordships' House to-day to unload a lecture mainly on the opposition to this scheme. He started his speech by going back to an Indian precedent with which, it appears, he disagreed. If we spent the time which was allocated to this debate in going back to dealing with precedents of injustice in the past we need not go to India; many instances can be found of injustices which have been meted out to the people of this country on very many occasions. I must say that I thought the noble Lord's speech was a most dangerous speech: certainly the most dangerous speech I have listened to in this debate and throughout the discussion—I will not call it controversy—in another place. In the discussion there on the Third Reading of this Bill it was admitted on all sides that there was a desire that controversy should, so far as possible, be eliminated. The principle of federation of Central Africa—perhaps the noble Lord had not recognised this—was admitted and agreed to eighteen months ago. It is not the principle that has given rise to controversy in another place or, indeed, in this debate.
  I do not wish to strike a note of controversy in this House but I thought the

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  noble Lord's references to the speech of the noble and learned Earl, Lord Jowitt, and also to the speech of the noble Viscount, Lord Samuel, in the debate yesterday were most unfair and undeserved. The two speeches were, I thought, most helpful, and every speech which was delivered was directed to seeing that this great scheme of federation for Central Africa should be launched under auspices that would almost guarantee its success. Really, why the noble Lord ever delivered this speech this afternoon I just cannot understand. No reference was made yesterday to endangering or harming the European population in Southern Rhodesia, in Nyasaland or in Northern Rhodesia.
  LORD ALTRINCHAM: The last thing I desired to do was to promote controversy: let that be perfectly clear. I think it was made perfectly clear by the noble and learned Earl that he was against the imposition of this scheme. He said so himself. That was the point against which I was arguing, a legitimate matter for debate. So far as the noble Viscount is concerned, he said: Why this year; why not next year or the year after? Against that point I thought it my duty to argue. But I am not promoting controversy. All that I am saying is that imposition in present circumstances is inevitable and that. if you do not do now as you are pledged to do, you will regret it.
  VISCOUNT HALL: It is a question of timing; that is all. Several opinions have been expressed in this House, even by noble Lords in the Conservative Party, suggesting that the timing was a little unfortunate. But now, in view of the fact that this Bill is going through, there was an expression that it should go through without controversy, which I am afraid the noble Lord may have started. I am not going to follow that train at all, because I am convinced that the attitude adopted in the first three speeches yesterday—of the spokesman on behalf of Her Majesty's Government, of the noble and learned Earl on behalf of the Opposition and of the noble Viscount on behalf of the Liberal Party—is the line to follow. Indeed, the purpose of those speeches was the bringing together of both the white and the black populations in this great country. It is to that that I am going to
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  address myself this afternoon. In what I say I shall not detract for one moment, or indeed in a single word, from what the noble Lord has said in relation to the responsibility of the white population, the European population, of these three Territories. At the same time, however, we must have some regard for the interests of the millions of others who are resident in those Territories.
  LORD ALTRINCHAM: Surely the noble Viscount is not suggesting that I did not say so. I spoke about it continuously and I explained how it was to be done.
  VISCOUNT HALL: There was more than one implication in the speech of the noble Lord, which he took some time to deliver. Again, do not misunderstand me. I do not intend to enter into controversy with regard to the white population. They are doing and have done, a grand job, and they should be encouraged to continue to do it. From this side of the House we will encourage them in every possible way. But there is no doubt about the African attitude in connection with the bringing into operation of this Constitution. They are definitely against it, and the Government themselves must have some anxiety as to the reaction of the Africans in this matter.
  In a recent debate in another place the Secretary of State himself said (OFFICIAL REPORT, Commons, Vol. 515 (No. 103), Col. 416) that there was
  "a very hard core of African opposition"
  to this scheme of federation. The Minister of State, Mr. Hopkinson, tried to water it down by stating that 90 per cent. of the Africans involved in this scheme had no opinion. It is dangerous that he or anyone in this House should think that the Africans have no opinion, because they are guided by others who have opinions and, indeed, opinions which perhaps are not always advantageous to the Africans. That is one of the difficulties with which we are confronted. I should like to refer to one of the most convincing speeches made on this subject of the African attitude by a noble Lord belonging to the same Party as the noble Lord who has just spoken—I refer to the noble Lord, Lord Hemingford. He described himself as a proud member of the Conservative Party, and he had every

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  right so to describe himself. He looked at the African question in the light of convictions formed by him during twenty-six years in Africa. True, it was mainly in West and East Africa; but that qualification applies to many other people who have spoken in favour of this proposed new Constitution. I could name a number of others who have not been to Central Africa but who pose as experts on Central Africa. However, there is little difference in the attitude of mind of the native if he is in Africa.
  Let us see what the noble Lord, Lord Hemmingford, said in relation to this matter. I am now paraphrasing. His convictions were that British leadership avails little unless it wins a large African following, that infinite patience is required to persuade the Africans; that Africans will accept even unpalatable proposals from leaders they fully trust, and that it is wiser to defer the best laid plans than to forfeit that trust. He was convinced that no Federal Scheme would work, either economically or politically, without the general support of the Africans. He maintained that opposition against it was overwhelming, and he cited five influential groups of Africans, officially recognised by the Government as entitled to speak for African opinion. He gave the names of those organisations: the African Representative Council of Northern Rhodesia, the Protectorate Council of Nyasaland, the African Mineworkers' Union, and, in Southern Rhodesia, the Supreme Council of eight African organisations.
  I should like noble Lords to remember that we are not dealing with small groups of people in considering this scheme of federation. At the present time the population of the three Territories—the figures were given yesterday by the right reverend Prelate the Lord Bishop of Chichester—is something like 6,250,000. The Europeans in the three Territories number round about 200,000—that is, one European to every thirty Africans. If we take Nyasaland, where there is no settled European population—if there is, it is a Very small one—we found that the number of Europeans there is 2,000, out of a population of over 2 million—or one European for every 1,000 Africans. I am quoting these figures to try to impress upon your Lordships the vital importance of securing African support in rela-
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  tion to this scheme, and, indeed, for the working generally of government in this Territory.
  Uneducated though many Africans in these Territories may be, when an injustice, real or imaginary, has been clone, not only do they strongly resent it but they also long remember it. I have known of instances in other countries, and in this country, where possibly the mass of the people have felt that they have been unfairly treated, and I know that it becomes not only a question of resentment at the time but one of memory. That is the thing we must remember. This, too, must be remembered: educated Africans in Central Africa—indeed, in West and East Africa also—now regard the liberal Constitutions of the Gold Coast, Tanganyika, Nigeria and the West Indies as precedents set for the political development of all the British Territories in Africa, and, indeed, for other Territories as well; and they ask themselves why, if these Territories can aim at sell-government, with the assistance of the British Government, it is necessary for them. to federate with a Government for which they care very little. There are the difficulties in relation to this problem.
  I know that there are good reasons for some differences in political development between the various Territories. This has not been fully explained to, or realised by, the Africans. I think that much more care and time could have been given to inform and consult with the Chiefs and other representatives of the Africans on the need for federation, and particularly in regard to the proposals of the Federal Scheme, and what changes, if any, are likely to be brought about by the application of the scheme. A few months ago I met some loaders of African opinion. I endeavoured to persuade them of the safeguards which were provided in the Federal Scheme. They would not be persuaded. They said "Whatever you say about the paper safeguards, they can be so easily disregarded," and they pointed to four matters which were giving them concern. They said that if these four matters could be satisfactorily dealt with, if they could be assured upon them, then it was possible that the whole attitude of African opinion would be changed. The first thing they said was that federation was the thin end of the wedge for amalgamation; secondly, they said that the

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  Protectorate status in Nyasaland and Northern Rhodesia would be lost in federation, and, thirdly, they said that through federation the land of the African people would be acquired by the white population, for the Constitution would ensure them the majority of the votes. Their fourth point was that the political advancement of the African people would be retarded by federation. If we could but persuade these people as to the safeguards, and indeed if the Government themselves could he more forthcoming in this matter, that would do very much more good.
  My Lords, I hope that it will be some little time before the scheme comes into operation, even after the passing of this legislation. In the intervening period great efforts should be made, by contact, by consultation and by more fully explaining to the Africans the proposals, the safeguards, the scheme and also the possibilities of federation. No doubt it is true that the bulk of the population are unaware of the issues and that the vast majority of the people could not be described as being opposed to federation. Nevertheless, the matter cannot be left there, for it is also true that only a very small proportion of the Africans are in favour of federation. These are very grave and important matters. Unless we obtain the good will and support of these leaders and influential Africans, and of other moderate elements within the African community, the great efforts towards building a stable and progressive State in these and other African territories will not mature.
  What a fine gesture it would be if, as soon as possible after this Bill is passed, we sent out a kind of Parliamentary delegation to the three Territories! I think it would be a good thing if the Secretary of State for the Colonies (who I understand has not visited these Territories, notwithstanding the difficulties) and, indeed, the Secretary of State for Commonwealth Relations, together with others, were to go out there and spend some time contacting the Africans and showing them the benefits which will be obtained by federation. I realise that invitations were sent to some of the leaders of African opinion to come to this country and stay, and to attend the Conference, and that this was refused by them. I realise, too, that the Minister
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  of State had discussions with many Chiefs when he was in the Northern Territories in August and September of last year. But that was almost a year ago, and much has happened since that time. I believe that the time is now opportune for another attempt at talks and explanations with the Chiefs and representative African bodies.
  Looking at this scheme, I think one of the key positions is that of the Governor-General. I do not know whether I can refer to the Governor-General designate. If the noble Lord, Lord Llewellin, is, in fact, to be Governor-General, I should say that the Government are very fortunate in having secured his services. I have no doubt that his appointment would be an excellent one, and as a very old friend of his, I would wish him well.
  My Lords, there is little that I wish to say about the Bill. On the Committee stage we shall endeavour to persuade the Government to accept Amendments which will give greater assurance to the Africans on some points. I should like something more definite than the statement in the Preamble to the Federal Scheme in relation to the maintenance of the Protectorate status of the two Northern Territories, Northern Rhodesia and Nyasaland. I would not suggest that the Government should put the whole of the Federal Scheme into a Bill, but there are certain important matters, such as the maintenance of Protectorate status, native land loss, the question of franchise—and, indeed, the set-up of the Assembly and the Government itself—which might be included. The natives would have greater assurance if some of these matters were placed in the Bill instead of in the Order in Council to be made under it.
  I would ask Lord Swinton, whether he could deal with just one point in relation to higher education. The classified list of subjects on which the Federal Legislature alone will be empowered to make laws includes the item:
  "Higher education (including higher education of Africans), that is to say, institutions or other bodies offering courses of a university, technological or professional character."
  Item 29 of the same list refers to:
  "Primary and secondary education of persons other than Africans."
  I should like to know whether this means that the Federal Government are to be

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  responsible for the higher education of all races, but that when it comes to primary and secondary education they are to deal with that kind of education only for the white population, and not for Africans. It is matters of that kind which give rise to suspicion in the minds of Africans. It may be that my own interpretation is wrong. I hope that the noble Viscount will be able to give me a reply upon this matter.
  Then it is not easy to understand the allocation of the seats in the Federal Assembly. The number of seats for elected members is twenty-six. Of those twenty-six seats, I gather, fourteen are allocated to Southern Rhodesia and twelve to Northern Rhodesia and Nyasaland. I should like to know what was the basis upon which this allocation was made. Was it on a basis relating to the white population or to population generally? May I have the attention of the noble Viscount?
  THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT SWINTON): Yes, certainly. I have the noble Viscount's point.
  VISCOUNT HALL: Was this allocation based on population or was it based on area or on income? I ask the same question with regard to the other two areas, because, even taking into consideration African representation, which makes the total number of seats in the Assembly thirty-five, Southern Rhodesia has nearly 50 per cent. of the seats. That appears to be a very large proportion. In the same way, it is not easy to understand the distribution of income tax receipts. The Federation gets 64 per cent., but Southern Rhodesia gets a smaller percentage than that of Northern Rhodesia, and of course Nyasaland gets a smaller amount still. So I am a little puzzled with regard to these questions. But I feel sure that the noble Viscount will be able to reply to them.
  VISCOUNT SWINTON: I certainly will.
  VISCOUNT HALL: We all welcome the announcement, authorised by Sir Godfrey Huggins, that a Central African University of such a high standard is to be established and that it is to be multiracial, undergraduates of any race sharing the same teaching and undertaking the same courses on a foundation of academic equality. This announce-
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  ment has given great satisfaction, and I am sure that every possible assistance will be given in this matter from this country. I have always maintained that it is very much better that these young people, in any of our Colonies, should, so far as possible, be educated and trained in their own areas. I well remember that when I first went to the Colonial Office I was asked to agree to the bringing over to this country of a number of trade unionists for training here, so that they would be able to guide trade unions in Africa. I at once said, "If you bring twenty or thirty native trade unionists to this country every year for training and send them back at the end of the year, I am afraid they will give us very much more trouble than if we left them in their own country. It is far better to train them on the spot. Send people out to help them by all means."
  I was interested to know, too, that another attempt was to be made to settle the question of the advancement of African labour in the Copper Belt. This is a very long-standing and worrying problem. It was the first matter which the late Lord Lloyd and I had to deal with on our entry into the Colonial Office in 1940. We then sought and obtained the valuable assistance of the present Secretary of State for the Colonies, Mr. Lyttelton. That association resulted in a settlement of the African wages question, but did little to assist African advancement. Indeed, this is almost an insoluble problem. As a trade unionist I can understand, to some extent, the attitude of the trade unions, but this rigid application of the rule is not understandable. If this attitude is to be adopted in every industry, indeed in every calling, in the native Territories, what is the use of training these people? What is the use of educating them?
  There must be a much more generous method of dealing w this problem. I think that both employers and trade unions ought to make concessions in connection with this matter. I can understand the trade unions saying, "If a native who is now getting probably forty shillings or forty-five shillings a month is put into a job for which the pay of the skilled or semi-skilled white man is forty-five shillings a day, then naturally an inrush of skilled or semi-skilled natives into

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  such jobs must be feared." Africans will naturally leave jobs in which they are paid a wage infinitely lower than that paid to a skilled man at the present time. America was faced with the same problem, and eventually employers there had to pay the coloured man the same wage as they paid a skilled or semi-skilled white man if the coloured man was equally well able to do the job. I appreciate the difficulties, and I realise that it may take some time before a settlement can be worked out. But a settlement must come, and I shall be happy to see some scheme whereby these things can be put right.
  Central Africa occupies an important key position in the matter of race relations, and it should afford the best chance of trying out the course of partnership by practicable stages, for there is still time to prove the sincerity and good will of European control by proving in practice that African interests will greatly benefit from the federal proposals. The three Colonies could make a viable economy, strong enough to attract not only assistance from this country but other investments of capital, without which the great resources of these Territories cannot be developed in the interests of all the races. The success or failure of this scheme will affect the future of the whole continent, and thereby the future of the British Commonwealth.
  In a few days federation will be given legal effect. It will then be the duty of us all to try and make it work as smoothly and beneficially to all the inhabitants of the Territories as we possibly can. The constitutional provisions of the Bill will be of great importance. I agree that paper safeguards cannot themselves be a solution to all the difficulties, but it is the duty of us all to make these safeguards as effective as possible. To make the Constitution work, we must breathe into it the proper spirit of multiracial co-operation and create an atmosphere which will really make this Constitution a step towards the progressive development of a partnership between the races. It will make all the difference if it comes to be associated in the public mind, European and African, with concrete steps towards the things they want and for which they have been struggling.
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  The moment of the introduction of this scheme is one when new impressions can be given, when a new atmosphere should be created. I appeal to the Colonial Secretary and to Her Majesty's Government to do all in their power to ensure that the introduction of federation will be accompanied by the friendliest approach, particularly to the Chiefs and leaders of African opinion. Now is the time to clear up any misunderstandings which may exist. For under federation Her Majesty's Government still retain in Northern Rhodesia and Nyasaland great power which directly affects African interests. The whole field of such things as pass laws, trade union rights, health, housing and schools in these Territories will be the responsibility of Her Majesty's Government in this country, and, therefore, of Parliament. In these fields further efforts for improvement should be made soon after the introduction of federation.
  Above all, the whole question of political advancement should be dealt with, particularly such matters as the electoral qualifications for Federal elections. I trust that one of the first acts will be to create for elections a common roll with fair and reasonable qualifications. That will be much better for partnership than communal representation, the danger of which perpetuates the colour bar, whereas the common roll cuts across it. It is the wish of my colleagues on this side of the House and myself that when federation comes it should work, and work efficiently, and bring to both races the advantages that this close co-operation could give them. We wish federation well.
  4.24 p.m.
  VISCOUNT STANSGATE: My Lords, I much regret that we are not to hear the views of the noble Lord, Lord Teviot, because I had hoped we should see a certain balance in the debate; but that is his wish, and so it is. Let me say for myself, and I believe I am speaking for many other noble Lords, how greatly we rejoice at seeing the noble Lord, Lord Altrincham, taking part in the debate today. I have known him for many years and respect his public service. He has a profound knowledge of this subject and an enthusiasm and sincerity which we all admire. Having said that, I should like to add that I did not agree at all with anything that he said. I was particularly

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  puzzled at his presentation of the Indian case. How can we compare the Indian case with the African? India was steeped in inquiries—the Simon Commission, the Shrankain Nair Commission, and the first Round Table and second Round Table Conferences: nothing was omitted to get the opinion of the Indians. It was absolutely different from Africa, where no step has been taken to obtain the opinion, far less the assent, of the Africans. But need not go into that now, except to say that I was surprised at what the noble Lord said about the necessity to take this scheme as we find it.
  I do not know what is meant by controversy in your Lordships' House. I always understood that people should speak their mind truthfully, without any reserve or concealed opinion, and regardless of any political affiliation. And that is what I propose to do this afternoon. I shall put the facts as I believe them to be before the noble Viscount, Lord Swinton, who is going to reply, and if I am wrong he will say so and I shall accept any correction he gives me. The first fact I want to bring forward is this. We speak of this as a formal stage. Everybody has said, "Why debate this? It is formal; it is agreed that it should go through." I am no "House of Lords man," and never have been, but I am certainly astonished to hear that debates in your Lordships' House are of no account, and that the matter has been settled in Bulawayo before even the Second Reading of the Bill is taken in your Lordships' House.
  VISCOUNT SWINTON: My Lords, I think what the noble Viscount's leader said was not that it had been settled in Bulawayo but that it had been settled in another place. There seems to be a slight difference. The noble Viscount is absolutely free to divide. I have not spoken yet at all. But it was not Bulawayo, according to the noble and learned Earl, Lord Jowitt: he said it had been decided in another place.
  VISCOUNT STANSGATE: I do not know about the noble and learned Earl, Lord Jowitt. The speeches to-day suggested that the celebrations in Bulawayo disposed of this matter as a living issue—that, combined with the Division in another place. If that is not the opinion of noble Lords opposite, very well; it is
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  a living issue. Then perhaps the Government will permit us to move Amendments and will consider the Amendments on their merits. We are asked to make this scheme work, but have not been permitted to move a single Amendment. Any amendment of the new Constitution must be made by Order in Council, and the power of this House to make any amendment is just nothing at all.
  EARL WINTERTON: My Lords, the noble Viscount and I sat together for nearly forty years in another place. Surely he should be aware of the fact that this is the usual procedure in the case of both Treaties and Constitutions. It is the exact replica of what has happened time and again.
  VISCOUNT STANSGATE: Does the noble Earl mean in the making of what he calls a Treaty? Half the debate yesterday was taken in saying how closely Parliament could control any use of this legislation. Now we are told that it is a Treaty. If we find that the Federation claims, as it will claim before long, the powers of a Dominion, then shall we say, "Not at all, Look at Parliamentary control"? The noble Earl, Lord Winterton, says it is a Treaty. But, of course, the plain fact is, as the noble Viscount, Lord Swinton, said—
  EARL WINTERTON: My Lords, what I said was that this was an exact replica of the system that has always been followed in both your Lordships' House and in another place in matters of this kind, and the noble Viscount will find it so if he studies history.
  VISCOUNT STANSGATE: The question is this: Is it a matter in which Parliament have any control? That is the point; and the whole burden of the argument to-day has been tat Parliament has no control. This stage is a formal one and there can be no amendment. The Bill may be discussed, but no Amendments will be permitted, and an Order in Council, in the form of a White Paper, is to be put before us. And if at any time the Federation itself considers it should amend its own Constitution, it will have to be done by Order in Council, and we have no power of amendment.
  LORD ALTRINCHAM: My Lords, I should not like to be misrepresented or misunderstood. Of course, Parliament is free to discuss anything. But as in the

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  case of the India Bill, the American Bill and everything else, the Government are committed. What we say will go on the record. The alternatives before Parliament are either to accept the Government's decision or to turn out the Government. Noble Lords on the opposite side often put us in that position; now they are in that position themselves. That is the whole situation.
  VISCOUNT STANSGATE: I have not made myself clear. The whole burden of the argument was that we must not complain about the powers in this Constitution, because it was said that Parliament would control the new Federation. Well, will it control the new Federation? No. That supports an argument which will come a little later.
  LORD ALTRINCHAM: Surely, the noble Viscount knows the Constitution. Parliament will not control the Federation. Its responsibility will be confined, so far as I understand it, to the two Northern Territories.
  VISCOUNT STANSGATE: I shall proceed with my argument and I will try to make my meaning clear. To me, the thing is perfectly clear. It is that this is a scheme conceived, as I think, on far too narrow a basis; it is a scheme which we are invited to make work, and yet are not permitted to move any Amendment to it; it is one which can be amended only by future Orders in Council, which we cannot alter; and, in fact, to-day—and this is what makes this debate most important and critical—we are abdicating the power of Parliament to control these Territories. That is the whole gist of what the noble Lord, Lord Altrincham, said. These people are going to be given the job and we are to have no right to interfere. Nobody denies that they are grand fellows; not a word has been said against the Southern Rhodesian people. But why this is such a critical debate is because to-day we are parting with the power to assist in the political development of these Territories; in fact, we are setting up what is an independent Parliament with a permanent white supremacy.
  Does anybody doubt that? Look at the White Paper. Look at the number
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  of members who are to be elected by the whites or nominated by the blacks. There is a present white majority, and to that majority, free from interference by this Parliament, as the noble Lord has said, is conceded the matter of making further amendments to their Constitution; that is to say, Parliament has abdicated its power and handed it over to a white Parliament—excellent men, no doubt—and it is to them that we must look in future for any progress. Therefore, this debate is the last debate in which we shall have any chance of helping to shape the destinies of central Africa.
  Two arguments are used. One is that this is a safe thing to do, because the Federation is to be based on the principle of partnership; and the second is the reference to Mr. Rhodes' dictum about "equal rights for all civilised men south of the Zambezi," south, as he said, but we must now go north. We have asked repeatedly what is the meaning of this partnership. We have asked that it should be defined in the Bill. But we cannot get that done. It is just a vague term. The words occur in the Bill in a vague way in the Preamble, as everybody knows. But I would submit to the Government—and I would ask the noble Viscount to reply to this point—a definition of partnership which is given by Miss Marjory Perham in a remarkable letter which appeared in The Times a few weeks ago. This is what she says—and it is an alarming examination of the case. Miss Perham says:
  "As for rejecting either 'white or black domination' it may be asked whether power can be indefinitely suspended between the two. This Bill legislates for white domination now, but unless the experience of history and all British policy and principles are to be reversed there must one day be black domination, in the sense that power must pass to the immense African majority."
  That is Miss Perham's paragraph dealing with the question of partnership, and really it is the key of the whole thing. How are you going to have a Government of a country with an able white minority and a huge black majority? How are you going to distribute political power between those two in order to secure justice? That is the problem. As regards the equal rights for all civilised men, that is really a form of words. It was

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  quite justly dealt with by The Times, again, which said:
  "…but he"—
  that is, Mr. Rhodes—
  "was already proclaiming in the nineteenth century the principle of' 'equal rights for all civilised men south of the Zambezi.' That ideal has not been attained anywhere in Southern Africa, even where it has been nominally established by law, but it remains the best hope.…"
  So that the two undertakings, one of partnership, which is ill-defined, and the other of "equal rights for all civilised men" appear to some people to be a totally inadequate basis for handing over power to a white oligarchy.
  What are the reasons for this scheme? They are quite simple, and we are all agreed about them. They are that if these Territories are amalgamated greater economic advance may be had; more capital will be attracted; and it will be easier to make roads and railways and to develop and balance the resources. We are all agreed about that. And no doubt higher standards will be afforded to the workmen in the country. But what it will not do is to provide any political protection for the people who are to provide the manpower for this new development. This question of labour in South Africa is quite a common one. The reason why there are 10,000 (I believe that is the right figure) absolutely vote less Indians in the south is because a hundred years ago there were not enough Africans to reap the sugar crops or to build the railways; and so they sent for these Indian people now forming a real sore between the Union of South Africa and the Republic of India. I remember—other noble Lords may remember it too —that in 1906 there was a shortage of labour in the gold mines, and the Colonial Secretary of the day imported Chinese indentured labour to do the work. It destroyed the Government, because public opinion was able to apply itself to the problems of South Africa at that time.
  VISCOUNT SAMUEL: It was 1904, not 1906.
  VISCOUNT STANSGATE: I was thinking of the happy days when the noble Viscount went to the Front Bench and, with the assistance of his colleagues, put the matter to rights. It does not in any way reduce the value of my argument. The need for labour is quite
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  understandable. In modern conditions it is impossible to concede it unless you are willing to give labour some political protection for its own rights. In this Federation you are going to create a vote less industrial proletariat, and that will be an extremely dangerous thing for the British Commonwealth. I say "voteless" but I should like to ask the noble Earl, Lord Munster, or whoever is going to reply (if anybody is taking a note of what I am saying—and I do not say that by way of complaint; I am a humble person) what the position will be.
  They speak about the position of Africans in Southern Rhodesia. What is the position of Africans in Southern Rhodesia? They are to have votes "equal rights for all civilised men." I have done the best I can for figures, but the Colonial Office publications are sedately prepared and not always punctually issued. The latest figures I have are for 1948. I understand that you cannot vote in Southern Rhodesia unless you have an income of £240 a year. I understand from the figure I have—and I should like the noble Earl, Lord Munster, to correct it if it is wrong: this is the figure for 1948 from an official document—that the monthly wage of a miner at that time was 37s. I am told that it is now double that amount. But suppose it has doubled, how can you pretend that you have equal rights for blacks and whites when you cannot get a vote unless you have £240 a year, and when you can work from Monday morning to Saturday night and earn only £3 a month? It is a disability. You may say that it is equal hr everybody—after all, black or white, they must have £240 a year before they can vote. But it is so manifestly and patently a trick as to become almost a reproach.
  Take the position of trade unions, in which many Members on this side of the House are very interested, and about which they have vast knowledge. Whereas in Northern Rhodesia you can have a trade union, in Southern Rhodesia you cannot have a properly registered trade union. You can register a trade union, but in some way it can never he made effective. If you come from Nyasaland to work—and people do not come as tourists from Nyasaland to Southern Rhodesia; they come because somebody wants to employ them and keep the industry going—you have to have a pass.

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  If you are black you cannot move outside your town without going to the police or somebody and showing your pass. Not so if you are white. How can you talk about equal rights when you have these grave disabilities, and when to-day you are surrendering any possibility that this Parliament can put the matter to rights? The truth is that protection is needed for these eight million people. It is extremely dangerous to have these people if you do not give them any protection, and the only protection we know is political protection. That is how it has been done here. The working people in this country have a measure of economic justice because they have political power. My noble friend Lord Samuel always corrects me about dates, because his memory is so retentive, but I rather fancy that he will agree with me when I say that the enthusiasm of the Liberal Party in the matter of the Osborne judgment and the Taff Vale decision in 1906 would not have been so keen had not Liberal candidates like myself been conscious of a large Labour vote which was demanding that something should be done. The secret of economic protection is political power, and in this Bill nothing of the kind is provided.
  Where are these people to turn? The scheme creates a great force of people who are going to earn more money; it is going to be a powerful Federation. Where are these people to turn for protection? In the old days, when I was a young man, people used to say, "We will mount the barricades; we will break windows." What did we say? We said, "My friend there is no need to do that. Register and vote." The result was that we got rid of all threat of violence in this country, and that is why the Communist Party has disappeared in this country, because there has always been political protection. If we are not going to give them that protection in Southern Rhodesia, what is to be the safety valve or the vent hole for these peoples' grievances, if they feel they have any? That is why we are so keen about the status of the Northern Territories. At any rate in Northern Rhodesia and Nyasaland, the Colonial Office has a standing, and Members of Parliament here can be the watchdogs of the rights of the Africans in those Territories. But that will not be so in the South. But when
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  federation comes, whilst technically there may be protection, I do not know that the protective status of the Northern Territories remains intact. If you look at the list of powers which have been transferred from the local Legislature to the centre, you find that the whole source of power is at the centre, and all that power has been put out of reach of Parliament here.
  THE EARL OF MUNSTER: I am sorry, but I must interrupt the noble Viscount. If he will do me the honour of reading my speech of yesterday, he will realise that the Governments of the two Northern Territories have ample power to deal with the day-to-day activities, interests and life of all the Africans.
  VISCOUNT STANSGATE: Let us look at that, because I want to be careful. I have a list here of the transferred powers—these are the matters in which the Colonial Office will not be able to interfere. Emigration and immigration—that is to say, if the labourers are a bit tiresome the right of bringing in labourers from Portuguese East Africa rests with the Government. Aliens, and citizenship of the Federation. If you do not want a man or a class of men, the Federal Legislature can keep them out of citizenship. Duties on customs. I am not familiar with the Rhodesian Budgets, but the Customs duties have a considerable bearing upon the cost of living. Railways, shipping, meteorology. Meteorology may sound a queer thing, but I suppose if you are an African cultivating a field in Nyasaland you are interested in whether or not it is going to rain tomorrow. If you look at the body of these things—I do not think the noble Earl can deny it—you have transferred the major weight of Government power into the centre, and you have transferred it to the centre without permitting the natives any appeal to anybody, except to the white oligarchy which is to control the Parliament at Salisbury. There was U.N.O. Faith in U.N.O. has been considerably shaken by the lamentable happenings in South West Africa, whereby all that vast territory, and the native inhabitants therein, have lost their rights, and it merely provides a field for six additional members of Doctor Malan's Parliament.

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  The noble Lord, Lord Altrincham, abused the noble and learned Earl, Lord Jowitt, for speaking about the right of the Chiefs to bring their case to the Brussels Court. If U.N.O. has gone and the Colonial Office has gone, what are these people to do if they feel aggrieved? That is the question to which I have not been able to find any answer. I spoke of this Bill having been passed in Bulawayo. My broad complaint about the Bill is that it is a Rhodesian conception, where as you cannot wisely alter the Constitution of the British Commonwealth unless you take the broadest possible view. You should not make your survey from the top of the Matoppo Hills; you should make it from the top of Everest. You have to remember this. Then again, we seem to be in danger of losing that affection of brotherhood which at one time existed—I hope it exists still—between the African race and ourselves. We look back with pride to the Governorship shall we say, of Cape Colony a hundred years ago by Sir George Grey. The franchise says the history book
  "was conferred on all British subjects over twenty-one years of age with a low property qualification and without distinction of race and colour."
  That was in 1853. That is a long way from the freedom which we are offering the natives of Southern Rhodesia.
  If we want to know who is to hold the friendship, as I devoutly pray, of the African people, it will be the missionaries—the London Missionary Society, with its glorious record. The modern prophets will be men like Patrick Duncan and Michael Scott. You can conquer the barefooted African with bomber and machine gun, but you cannot govern him without his assent, and that is what we have made no sufficient effort to secure. In the course of the last two or three years we have had many attempts by leading Africans to approach us in one way or another; and I think they have all been rebuffed. Take the Khama case. Seretse Khama took the talk about partnership between black and white too literally, and that cost him his throne. There were the Chiefs from Nyasaland. They came here and wrote a letter to the Lord Chancellor. The Lord Chancellor, quite rightly, as a member of the Government, handed it to a clerk at the Colonial Office to answer. The Chiefs went home bitterly disappointed. They
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  asked whether they could approach the Throne, a natural link in their minds; but they were refused.
  There is nothing strange about the Chiefs' approaching the Throne. There was the famous case of Khama, and even in my own life time I remember Sir Ellis Ashmead Bartlett, introducing the Swazi Chiefs to Queen Victoria. The Nyasaland Chiefs asked to come to the Bar of this House. There is no procedural difficulty about that—it has often been done before. It would have been a wonderful thing if we could have got these men to present their grievances to your Lordships. But the request was turned aside. Yet we want their help. We cannot govern Africa without them, but no real effort was made to secure it.
  It must be obvious to everyone that this is not a question for Rhodesia at all. The whole world is in a volcanic state. In Asia, resistance to white control is universally successful except in the dreary, unsuccessful, futile efforts that are being made in Indo-China. In the Arab world it is the same thing. The difficulty in the Arab world is that their sense of dignity is affronted. They say, "We are not masters in our own house." Even among the neighbours of Russia it is the same thing. Control from outside has become too much. They will not stand control from outside. Surely this is a lesson for all of us to see, and from it to draw our conclusions. So far as Africa is concerned it is a most remarkable picture. You have in West Africa an African method of government advancing, apparently with success, with very rapid strides. The East African tragedy has not yet been worked out to a conclusion. In South Africa, so far as Africans are concerned, you have what is a desert, a gehenna. Now 6 million Africans in Central Africa are screwed down under the lid, so that they cannot get the vote. They car not appeal to us; they cannot appeal to the world. I say it is a most dangerous thing that has been done.
  In conclusion my Lords I want to read from a remarkable speech published this morning by Pandit Nehru. We are not a little country colonising Africa; we are an immense Commonwealth. Your Lordships heard the letter of the Aga Khan, which the noble Lord, Lord Milverton, read yesterday. The only way

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  we can deal with this question on this point is on a Commonwealth basis. It cannot be settled in Bulawayo, by Sir Godfrey Huggins and a few officials of the Colonial Office. It is a world, an Imperial, question, and it is assuming very dangerous forms. Pandit Nehru said that in some parts of the continent Africans "are treated almost as wild animals," adding, "It amazes me that this kind of thing can go on." Mr. Nehru is Prime Minister of the largest constituent of our Commonwealth, the head, the trusted head, of 400 million people.
  EARL WINTERTON: Millions of Moslems were murdered by those people.
  VISCOUNT STANSGATE: The noble Earl's remark is a footnote which will go down in Hansard. Pandit Nehru went on:
  "If there is no solution to this problem very soon the whole of Africa may be ablaze."
  The Indian people, he added,
  "did not wish to interfere in other people's problems, but the Indian people sympathised with the countries which sought their freedom from colonial authority, and they wished to help them with all their heart and soul, because the question of racial discrimination was one which concerned every person in the world."
  That is the opinion of one of the leading statesmen of the British Commonwealth. It is an opinion that we should bear in mind to-day. We are not going to perambulate the Lobby, but I myself claim the right to say, on the first collection of voices, "Not content."
  4.56 p.m.
  LORD BALFOUR OF INCHRYE: My Lords, far be it from me to promote any controversy, and particularly controversy within a political Party, but I think your Lordships on all sides of the House would like to know whether the noble Viscount who has just spoken agrees with his leaders, the noble and learned Earl, Lord Jowitt, and the noble Viscount, Lord Hall, in the very statesmanlike conclusions to both their speeches, when they said that when this Bill has become an Act of Parliament they will try to give it their loyal support.
  VISCOUNT STANSGATE: I am invited to reply. I regard this as a bad Bill and I shall do all within my power to make it a better Bill within the limits of the authority given in the Bill. If you are
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  asking me whether I will promote violence or resistance to the law, the answer is that of course I will not.
  LORD BALFOUR OF INCHRYE: I listened with great interest to the speech of the noble Viscount and I could not make out what its main purpose was. He was destructive; not one word of constructive alternative was put forward in his remarks. I am reminded of the remarks of the noble Earl, Lord Lucan:
  "Men of great experience in public life do not talk at random. They weigh their words and use them for a purpose."
  My Lords, it is not for me to judge of the weight of the noble Viscount's words, but I must say that their purpose, to me, was most obscure.
  I have listened to this debate from the beginning and one of the remarks that struck me was the challenge issued by the noble Viscount, Lord Samuel, who posed the question of our generation as to whether the movement of Europe into Africa was morally justified. Lord Samuel's conclusion was that it was justified, a conclusion which I believe must be shared by everyone who has any knowledge of and has studied this question of our history in Africa. The material benefits we have brought wherever we have touched Africa are enormous. We have lifted great areas from primitive conditions; and there is no part of Africa where our impact has been felt where there has not been tremendous benefit for the indigenous inhabitants. Even African objectors to these proposals, who have raised objections purely constitutionally and within their rights, owe their education which enables them to object, and their economic position which enables them to come forward, to proposals put forward by previous British Governments, which have been successfully implemented for the benefit of the Africans.
  It is only on this economic aspect that I want to speak to your Lordships for a very few moments, because this economic march forward must continue. On it depend all our hopes for raising the standard of life for the Africans in these Territories. There is no question of raising the standard of life by subvention or anything except the economic merits of the Territories themselves. I believe we have reached a stage now when the three units alone cannot render

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  to either Africans or white inhabitants the full benefits of their latent richness without new and special measures, including that of federation.
  There has been no dispute in any part of this House as to the fact that federation is going to bring economic benefits; but there has been some dispute in the minds of the noble and learned Earl, Lord Jowitt, and the noble Earl, Lord Listowel, who have both said that these full economic benefits can be brought about without political federation. That is where I, and many others, must differ from those two noble Lords. I maintain that political federation is necessary if we are going to achieve the first economic necessity, which, I repeat, is fundamentally for the benefit of the inhabitants, African and white.
  The first economic weakness is the danger to the three Territories in varying degrees of depending upon single economies. In the case of Northern Rhodesia, 80 per cent. of its revenue comes from the copper mines; then there Nyasaland, with its tea, cotton and agricultural production; and there is Southern Rhodesia. building up secondary industries on the high lands which are particularly suitable for farming by the white settlers. It is a dangerous position indeed that these three Territories, prosperous as they may be at the moment, should each depend, as it were, on a single economic outlet. Once you have the three put together you have a much firmer foundation for their social and economic life.
  My second claim as regards the need for federation as an essential for economic benefit is that a central economy and budgetary control are necessary far the raising of capital which will be required in the development of existing and latent resources. It is true that federation is not going to increase the individual income yield in the three Territories. What it is going to mean is a backing to lenders on a much sounder basis. If any of your Lordships wanted to borrow money and were fortunate enough to be able to do so, you would prefer to go to someone who you knew was a sound lender. If you are going to be lent money you like to know the person to whom you owe the sum. If these Territories are going to borrow they are going to be able
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  to offer the joint credit of the three Territories instead of having to borrow individually. The hydro-electric schemes alone will require something like £100 million in the not distant future. The last claim I make for the necessity for political federation from the economic aspect is that federation will mean that the interests of one are the interests of all. Southern Rhodesia will, in future, have an interest in the development and production of the copper mines—a far greater interest than at present—and therefore in the allocation of coal and transport; and she is bound to be more sympathetic than she is at present. Equally, Northern Rhodesia will look with greater interest to Nyasaland and southward to Southern Rhodesia. I believe that federation, from an economic aspect, brooks no delay.
  It seems to me the advocates of delay can be divided into two groups. There are those, like noble Lords on the other side of the House, who have a genuine feeling that federation is right but that it should be delayed; and there are those outside this House, amt certain sections in Africa, who want to see this scheme killed, who do not believe in partnership, who believe in eventual black domination, and who will therefore use the proposal for delay as an extra piece of ammunition towards achieving their ultimate purpose. I hope this Bill will pass without delay. I was grateful to hear the concluding words of the noble Viscount, Lord Hall, and of the noble and learned Earl, Lord Jowitt. I must say, however, that Lord Jowitt's words, statesmanlike though they were, seemed to be a little offset in their value after his earlier legal deployment of the Nyasaland Chiefs' position as regards the possibility of their going to U.N.O. It seemed to me that for a legal luminary, with all his skill, to speak of the possibilities of certain people objecting seemed rather to take away something of the value of his declaration that he wishes the scheme well directly it becomes law.
  My final suggestion is this—I do not know whether or not the Government will approve of it. Words of goodwill and good wishes are valuable and are accepted in the spirit in which they are offered; but I wonder whether some of those who have been ardent and sincere critics of this scheme but who have said

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  as Lord Hall and Lord Jowitt have said, that once it becomes law it is our duty to try to make it a success, could not take unto themselves the task of going to those quarters in Africa where their criticism has been most effective hitherto, and declare in firm terms to the Africans in those Territories those fine, good constitutional sentiments which have so heartened our debate in the last two days.
  5.8 p.m.
  LORD HADEN-GUEST: My Lords, this debate has been an extremely interesting one, but I feel that we ought to try to see the problem which we are discussing in a rather wider perspective than has hitherto been envisaged. I believe we must see this question of the federation of the two Rhodesias and Nyasaland in the perspective of the awakening of the whole of Africa—because that is really what is happening. Since the last war, there has been a tremendous development of feeling and, to a certain extent. of organisation which has affected all parts of Africa. I am, of course, not going to deal with all parts of Africa, and I am not going to touch upon the question of the South African Union; that is a separate organisation. But I want just to contrast, from my own experience, what I saw in two or three months before the outbreak of the war in Nigeria, in the Gold Coast, in Sierra Leone and in Gambia. Those are the four Colonies in the West of Africa which are now undergoing such extremely rapid development.
  I went out there with a party of Members of Parliament, and we had two expert advisers, one dealing with the question of farming and one dealing with general scientific development. We also had secretarial assistance, and we had the greatest assistance from the Governments of those areas. We made a thorough examination and interviewed a large number of people in connection with possible developments. We were hoping that there would be no war and that we should be able to bring forward, when we returned to this country, a policy for large-scale Colonial development which would have enabled those countries to go ahead more quickly than they had done in the past. We got back to Great Britain shortly before war broke out, and the fact that war did break out meant that
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  our hopes were dashed to the ground, and any question of large-scale development through the Colonial Office at that time was frustrated.
  But the result of the war in those areas to which I have been referring, and in fact in all parts of Africa, has been greater than anything anyone ever contemplated. Prior to the Second World War, no one ever contemplated that the conditions which now exist in the Gold Coast and in Nigeria would exist. My companions and I interviewed various leading personalities in the African world, in the Gold Coast, in Nigeria and in other Colonies. We discussed with them the possibility of developments, and we have quite elaborate notes of what was said; and though we met some people who are now prominent in local movements, on no occasion, at no time and in no condition, did they ever mention the possibility of their urging on the policies which they are now following. So rapid has been the change. And it has also been rapid in other parts of Africa.
  I happen to know Africa fairly well: at one time I lived for three years in the Union of South Africa. I am not going to refer to that, except to say how much I liked my Afrikaner friends, how well I used to speak (indeed, I think I could still speak it) the Afrikaans language, and how very disastrous I thought the position of the Bantu and other Colonial people who were servants on the farms, in the houses and in the towns of those people. Their condition was deplorable; their wages in those days were about 10s. a month. I do not intend to refer further to that aspect. I referred to it only because I have a background of African experience. On a later occasion, for another purpose in between the two wars, I went from the Cape by train up through all the different parts of the Union of South Africa, revisiting places where I myself had worked as a young man. I also went through the Rhodesias, Southern and Northern. I had one interesting experience then, because on the train, going up from Cape Town to the north of Northern Rhodesia, on the border of the Congo, the train was manned by white men. There was, for instance, a white driver of the engine, and a white man stoking coal. I was told: "The black people cannot do this; they are not able to do this. Anyway the

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  trade union would not allow them to do this." When we got into the Congo, the white men got off and the black men got on the tram and did the same work, showing what a complete farce the situation was.
  It is true that this awakening of Africa is affecting every part of Africa. As your Lordships know, it is affecting Egypt. If we were able to look in detail into the Belgian Congo, French Equatorial Africa, other parts of French Africa and Angola and Mozambique, I have no doubt we should find great changes there. I emphasise the African continental side of these changes. As the noble Viscount, Lord Samuel, said yesterday, all Africa is astir; and it is essential to realise that all Africa is in fact on the move. It is not only a question of the two Rhodesias and Nyasaland. I myself think it is a good thing that they should be federated, because I believe that that will be the best protection against the possibility of anything worse happening, owing to various movements in Africa. I am not thinking of anything happening from the standpoint of the inhabitants of Nyasaland itself, but from those who might go to Nyasaland and who might wish to disturb what was going on there.
  with respect to the Bill that is now before the House, it has been said that we shall not oppose it, but I must emphatically say that the chance of success of the Bill, when it becomes an Act, depends on the most liberal interpretation of its provisions as regards African conditions, economic and political. We must have equal rights, and nothing but equal rights, for all civilised men, not only as Rhodes foresaw it but for the whole of Colonial Africa. These rights must include, in the two Rhodesia sand in Nyasaland, the franchise. I am not going to discuss the details, because, of course, there are different conditions in Southern Rhodesia, Northern Rhodesia and Nyasaland, but we must have the franchise on a basis similar to that existing in this country, and not depending upon the income qualification. The income qualification in Southern Rhodesia at present excludes teachers, who do not get enough money to be able to vote. There must be no property qualification of any kind. I do not say that this state of affairs can be reached at once, but it must be reached in
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  a reasonable period of time, because the tempo of change in Africa is very rapid indeed. From the beginning of this century until the outbreak of the last war, there had been only comparatively minor changes in the status of Africans, although there had been, of course, considerable economic, mining and other developments. Since that time, however, there has been a swift change, not only in the parts of Africa with which we have to deal but in all parts of Africa; and it is no good blinking that fact. It is no good pretending it is not the case. You may not like it. You may say you think the African ought to develop more slowly, ought to be given a longer time in which to develop and so on. But that is not going to happen, because the rate of change in Africa has become very rapid indeed.
  I want to ask the noble Viscount who will be replying for the Government to answer a specific question with regard to the peoples of the two Rhodesias and Nyasaland. Will they, in fact, be given the opportunity of taking part in the Government and in the economic life of the country on equal terms with the white man? I do not mean all of them, of course, because not All white men or coloured men are equal with each other, but I mean on tern-is which might be applicable in this country. The decision is a grave one. Its effects will not be confined to the Rhodesias and Nyasaland but will embrace all Africans. The African wants freedom, he wants education and economic opportunity, and the Constitution which is proposed will allow these aspirations to be met if the new Federal Government set up so agree. Will the Minister tell us by what steps this goal is to be reached?
  5.20 p.m.
  LORD BADEN-POWELL: My Lords, I will detain your Lordships for only a few minutes. I wish to emphasise, as indeed I pointed out to your Lordships on a previous occasion, that I myself was living and working in the Colony of Southern Rhodesia for some fifteen years. Therefore, I feel that I can claim to have some fairly good first-hand knowledge of conditions as they apply to-day. During the course of my very happy domicile in that Colony, I had the honour to serve in the British South Africa Police, and also in the Native Affairs Department of the Southern Rhodesian Govern-

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  ment. Consequently, it is rather from the African side of things that I wish to deliver these few remarks. It will be appreciated that Southern Rhodesia is a very young Colony, as also, I think one may say, are Northern Rhodesia and Nyasaland. As your Lordships possibly know, Southern Rhodesia has been colonised by Europeans only during the course of the last sixty years or so. Development, however, is extremely rapid—so much so that even in the four years that I have been living back in England I am sure that tremendous strides have been made in every direction.
  To my mind, this Federal Scheme is quite the boldest and most far-reaching effort that has ever been made in the whole of Africa. I earnestly hope that it will prove itself and will show, as has often been said, that there really can be this true harmony and partnership between the black and white races. I feel sure that the Africans themselves, in their tremendous thirst for knowledge and for education, will, in time to come, definitely take their part in the proper administration of this new Territory. So, too, my Lords, I feel that the Africans—who, after all, are the original indigenous inhabitants of the Territories to which we now refer—in their thirst for knowledge, will be given by the Governments concerned everything that they could wish for in the way of welfare, which will gradually bring them up to a higher state of civilisation, by way of better housing, improved methods of agriculture, and so on. The tremendous strides that have been made in the various medical services, in housing and other spheres, cannot but help to improve the general lot of the Africans and do much to make them useful citizens.
  The broad general attitude of the Europeans can be commented on, for it seems to me that undoubtedly they are taking a much more lively interest in the lot of the Africans. I still hear frequently from good friends of mine in the Colony, and reading between the lines of every letter I receive I can see that the European is now taking a far more tolerant attitude towards the African than he did in the past. Admittedly, there is still in existence a certain colour bar. I will not dwell upon that. I think it is simply a rather natural prejudice of the one against the other. Undoubtedly, there
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  will come a time when the African will gradually level up to the higher degree of civilisation that we know, and there will come a time when this greater partnership will indeed prove itself—when the black and the white keys of the Central African piano, one might almost say, will be played to the correct harmony of the proper way of life, as it should be in Central Africa. I will not detain your Lordships any longer. There were quite a lot of things I wished to say, but many of them have in fact been said by others who have already spoken. So, in conclusion, may I, as an adopted Rhodesian, once again wish this Federation well.
  5.24 p.m.
  LORD NOEL-BUXTON: My Lords, I think that this is an extremely difficult moment at which to speak on federation, and I think that those of your Lordships who have spoken have felt the same thing. I feel that to-day there has been much for anybody to learn. In the speeches that I have heard there has been much that is provocative and at the same time educational. I am the last person to want to treat this matter of Central African federation in a Party spirit; therefore, I am trying continually to be a learner in this matter. In fact, since our last debate I have thought very considerably as to why we should have differed so much in our opinions—why we, with our similar backgrounds and coming from one Island, should appear to be taking two such fundamentally opposite attitudes to a problem in the overseas Commonwealth. I console myself a little, in realising that federation is bound to come about, by the thought that there are in fact bigger things than federation. I remember a certain labour officer in the copper belt in the autumn saying to me, "Federation or no federation, we have this colour bar on our plate." I think it is a consolatory thought to dwell upon now, because that is the biggest thing that we have to deal with in order to make this plan a success, and it is a thing that has made federation such an extremely live issue.
  The harmonics of this issue of federation are as wide as they possibly can be in terms of human affairs. The noble Lord, Lord Baden-Powell, whose speech I was very interested in (I having been for only three months in Central Africa) spoke of the European attitude towards

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  the African as becoming more tolerant. Without wishing to take the sad view, I must say quite frankly, from moving about everywhere at the end of last year without any ties whatever, that I could not help forming an opposite conclusion—that temporarily at any rate, race attitudes were hardening. In fact, in the last two years this question of federation has been one of the features that has brought this about.
  The noble Lord, Lord Altrincham, from whom I feel I have learned more this afternoon than from anybody else, spoke particularly of the fact that we ought not to deal with federation in a Party manner. I was particularly pleased that he recognised the fact, which is not so universally admitted on the other side of this House, that there is great uncertainty and tension in Central Africa. I feel that the Government's attitude to this question is glaringly out of date. It might have fitted the Africans of Living-stone's day, but it most certainly does not lit the Africans at this present moment. The attitude to federation seems to be really that "Nanny knows best"—but unfortunately, Nanny has not got a very close relationship with her charges.
  I do not think that there are lots of different African opinions about federation. The question is simply whether we respect those opinions. There is no doubt about it that the articulate view is unalterably against federation. We accept that we cannot now stop federation, but that does not alter one's view of Africa in any sense—and, without being Party minded, the present Government are not going to be in power for ever. I think that everything now will depend on the good faith of the Europeans on the spot. One must put faith in that, and in no sense say anything that shows that one is not a friend of the people on the spot. In fact, in the short time I was there I made many friends on the spot. I could not see Africa in terms of whether one knew Europeans or Africans; I felt that one just knew people.
  I was myself criticised in our last debate for saying that the Europeans in Africa did not recognise, or did not view, the African as a human being. I think that is so, but I think that the mature way of putting it is to say that there is something in the European attitude to the native that has to mend if things are
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  not in fact to go from bad to worse. It is not too late for that attitude to mend. It may sound rather strange to speak of talking with Africans in this way, and may suggest that one has, so to speak, lapped up humbly the sort of lectures which they give. But they do say to us: "It is not too late for your attitude to mend." I agree that our culture and our race is, in fact, much superior, and the position is that they have more to learn from us than we from them. I think the fact is that they are in a very exasperated state of mind. But it is interesting that the Africans whom I met did not think it too late for the European attitude to change.
  I do not think the outlook over federation is frightfully good because, for one thing, we have destroyed a tremendous amount of good will through this protracted discussion of federation. We can ill afford that. We can ill afford this destruction of good will through imposition, and of course there has been what one might call the perennial and fundamental falsity of the European attitude towards the native. No doubt most of us would fall for the same ideas if we were part of a comparatively small community in a sea composed of people of another race. It remains true that, despite the dangers pointed out in the last debate in your Lordships' House and in every debate in another place—especially relating to partnership—not a single assurance that will mean anything to any African has been given by the Government. One cannot help having the impression that the Government do not really care what the African thinks. The Government are, in fact, on a dangerous road. And we can only warn.
  If I may just look back for a moment, I should like to say that Cecil Rhodes is not a person whom I consider anything but really great. I admire—if it is not presumptuous of me to say so—Rhodes's character very much indeed, and deeply realise his meaning for the British Commonwealth. But as past things are always so vividly and electrically active in the present, I think it is interesting to look back to the early days. We are now celebrating the Rhodes Centenary. One hundred years ago today Rhodes was a baby of two days old in Bishops Stortford. I think this is a link with what the noble Lord, Lord I Altrincham, was saying about "faith in

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  our system." I agree that we have faith in our system. But though Rhodes was great, I do not think this myth of race which, after all, has been operating in Africa and in other parts of the world, was great enough to build the British Empire, or, rather, is not great enough to be of much assistance at the present stage. It will not work in the present century.
  I think the Government are out of date in their attitude. The Government are sticking to old ideas—and this is true not only of the Government but of the settlers on the spot. I do not know if there is such a word as "psychotic," but the attitude of the European to the African does present an almost psychological problem. I look back over my recollection of various things that happened to me in Salisbury and Southern Rhodesia generally and it seems to me that there is what John Bright called "a Botany Bay view" of their African countrymen, just as many of us a hundred years ago had, no doubt, within our own country. And this feeling is very deeply seated—almost instinctive. But I submit it is that attitude that must change if a crisis of violence is to be avoided at some point.
  I was reading the other day Sarah Gertrude Millins's life of Rhodes, and in it I found recorded a conversation which took place in 1900 between Rhodes and W. T. Stead who was editor of the Pall Mall Gazette. I do not want to linger in the past, so I will be brief. Rhodes told Stead that he had faith in his race. He said to Stead:
  "I believe in my race. It is the only faith left. I believe in my people. I would annex the whole world. I would—if I could."
  I know that while none of us feels like that nowadays, we are, some of us, in the same tradition in our feeling about the British Empire. I am a person of very slender experience, so, rather than be accused of lecturing, I should like, before coming back to the present, to quote what Stead then said to Rhodes. It seems to me that his words would be true with regard to the present. Stead said:
  "It is a fundamental mistake to imagine that you can base the British Empire on the supremacy of one race. It can only last on the condition that it rests on the consent of its subjects. Otherwise it will fail—and it is not the British Empire any more."
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  In my view, federation, in a way, is a rather fatigued proposition. It is non-Elizabethan. I feel it is now very late in the day, but I think we could probably have secured African support for it if we had done many more things for the Africans in the past to convince them of our good faith and belief in partnership. But our attitude need not be like this if we wake up to our responsibilities. As Kenneth Walker says in his latest book, The Healing Arts:
  "The game of the chosen race is one that other races can play."
  That is exactly why I fully appreciate the dangers of words. Lord Altrincham spoke of the dangers of speeches—I think he meant all speeches in this House on this subject. He spoke of the harm they could do at this time.
  In this connection I should like to quote in a minute from a letter which I received from a Nyasalander who is living in Salisbury, Southern Rhodesia, at the present time. Your Lordships might say that if Nyasaland is so much happier a community than Southern Rhodesia, why go to work in Salisbury? I think the answer to that is, that there is great over-population in Nyasaland. Interestingly, African bitterness is directed more at Whitehall than at local inhabitants. The Nyasalanders seem to have the feeling of the position that we have known often in the past, and to think of their country as an island to be defended against hostile invasion. Those who have thought carefully about this matter regard the prospect of becoming merged in the Federation, with a self-governing Colony, in a way which I think is well expressed in the letter from which I should like to quote. This, I suggest, is a real cri de coeur. It represents an attitude of mind, and this is something which I am trying to get across to your Lordships. My correspondent writes:
  "At the moment although federation is not yet, the Nyasaland Government appears to be getting oppressive measures from officials of Southern Rhodesia and bitterness is increasing day by day. We wonder why Britain of fame allows occurrences of this kind to take place in her Protectorates. Who is to protect us?"
  I have had several letters of this sort. It may be that your Lordships will say, "That is the kind of letter which it is interesting to read. It is a letter from a child. Do not bother about it very

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  much." On the same sort of wavelength, one other Nyasalander made this remark to me, and this, I suggest, also shows an attitude of mind worth taking note of:
  "We have been waiting for the British Government to educate us for sixty-one years; now we are giving up hope."
  They have got to the stage where they say that, knowing what Europeans (in their view) mean by it, they do not want partnership. They say that "in federation we shall not have the privilege of self-government."
  I appreciate the terrific—though it is a crude word—trickiness of the situation. I am not advocating a vote for every African. I agree that once you start opening the sluice gates of this sort, it is hard to close them, or even to control them. In fact, in these Central African Territories the proportion of Africans to Europeans is very much greater than in the Union—it is something like thirty to one, I believe. It is a deeply difficult position. The African people of these Territories are very much aware of the Union. Actually, I met more liberal people, as individuals, in the Union than in any other part of Africa, but they are powerless at the moment. It is a mature community. The Africans say: "Many things are done down there—in the Union—but Her Majesty's Government are quiet" Nothing is done about it by the Mother Country. So one can understand the fear of African natives at being handed over to a new near-Dominion.
  I feel that everything now depends on the sort of faith, in themselves and in the Africans, which the European settlers in these Territories can develop. They ought to know that the African does not wish to feel as he does. He says that he does not wish to feel like that but he is forced to do so. The new type of African who has broken away from tribalism through our leadership and lives in towns was brought from barbarism by us and surely we do not wish to push his head down under the water again. I think many people on the spot—especially the post—war settlers—are frightened of the Africans, because the situation is increasingly difficult and the people who have come lately have inherited this more complex situation. I should like to read a letter from Northern Rhodesia, written by a resident of long-standing of whom a noble Lord opposite has said that" no man has done more for the Africans."
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  This letter was written the day after Coronation Day. The writer said:
  "You ask about the troubles in rural Africa brought on by the insane handling of the federation business. They are pretty nasty, not, thank goodness! any bloodshed to speak of so far, but nasty because of the way we, and especially the Government, have thrown away with both hands the priceless asset of these people's confidence and trust. Even in Chinsali, of all places in the world, the school-children threw away the Coronation medals they had been given and stamped on them. There was a march past the District Commissioner twice, singing a near-seditious song, 'We are in misery. The white roan has come to take our country.' Thank the Lord we have not got it here so far, and are as we always were, perhaps even more friendly and serene than of yore. But one doesn't kid oneself that it mightn't come."
  I could tell you of the happier side of the picture where in the copper belt, especially underground, in dangerous work, one sometimes finds excellent relationships between European underground managers and African boss-boys and the African generally. It should not always take danger to make people feel that way—as in an R.A.F. crew. If we are not careful—if we do not face up to the situation as it really is—we shall ruin the reputation of British rule for ever. We shall move far further away the prospect of real peace in the world. And we shall say, in the words of D. H. Lawrence:
  "And so we missed our chance with some of the lords of life."
  5.44 p.m.
  EARL WINTERTON: My Lords, I hope the noble Lord, Lord Noel-Buxton, will not think it discourteous of me if I say that his speech was a good example of the somewhat confuted state of mind of the Socialist Party on the subject of federation. In the course of reading a number of somewhat dreary letters (if the noble Lord will forgive my so describing them; he is not the writer of them) which seem to me to have no possible bearing on the question before the House, the noble Lord proceeded so far as he could possibly proceed to denigrate and attack this scheme in every possible way.
  LORD NOEL-BUXTON: My Lords, I very carefully did not do so. I said it depends on the attitude taken in future.
  EARL WINTERTON: Would the noble Lord allow me to finish my sentence? I repeat that the noble Lord did everything he could to denigrate and attack this

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  scheme and then at the end of it (and this is typical of the speeches we have had from the Socialist Benches in this House), after saying everything possible to make this scheme more difficult by arousing fears in Europeans and Africans alike, the noble Lord said that the scheme was going through and he only hoped that the people on the spot would be reasonable. A great deal has been done in this country, I hope without effect, to make European opinion unreasonable by reason of the attacks made on them. They have occurred in both Houses of Parliament. I repeat the charge made yesterday in an interruption. These attacks have been made in both Houses and in one organ of the Press, which I think has shown a lack of responsibility which is astounding in any responsible Sunday newspaper.
  I do not want to trouble your Lordships with a long speech, since I inflicted two long speeches on the House on previous stages of the Bill. Having criticised the noble Lord, Lord Noel-Buxton, I should like to pay tribute to the obvious emotion that is felt by many noble Lords opposite over this matter. I appreciate that emotion. It is based on almost atavistic feelings of the Left, of the old Liberal and now of the Labour Left. I do not wish to attack the sincerity of their speeches, but I think they had a bad effect. I feel in a very different state. It is with the utmost elation and satisfaction that I see this Bill coming before your Lordships' House this afternoon, because in a small and humble way, perhaps more than any Member of your Lordships' House, I have worked behind the scenes for twenty years to bring about something of the kind.
  Twenty-one or twenty-two years ago I remember visiting Livingstone on a very hot day at this time of the year, to talk to the unofficial members of the then Northern Rhodesian Legislature, who had asked to see me as a Member of Parliament. They were then working through unofficial channels with members of the Legislature in Southern Rhodesia on a possible scheme of amalgamation or federation, and they asked me what I thought of the chances of its being brought about in the near future. I did not think at the moment it could be achieved. I did not think the Imperial
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  Parliament would agree to it. At that time there were only some 15,000 people in Northern Rhodesia and about 30,000 in Southern Rhodesia. I remember, as if it were yesterday, making this observation to the assembled unofficial members. The British mind goes slowly, but since the American Revolution Britain has never refused to grant self-government to a growing overseas community of European descent. And I stand on that assertion. Britain has never done so.
  It may be said, and possibly will be said, by those who hold the views of the noble Viscount, Lord Stansgate—whom I should like to congratulate on his obvious state of good health, because his speech to-day was in thorough accord with those we used to listen to with such delight and disagreement in another place—that the situation was very different in other parts of the world. But the arguments used to-day could have been used about the aborigines in Australia and certainly about the Red Indians in Canada and the American Colonies. British Governments have never refused self-government to developing Colonies, since the Boston Tea Party burned into the political mind of the British. To-day, in Northern Rhodesia there is a population of some 40,000 Europeans, which is being added to at the rate of 7,000 a year. In the case of Southern Rhodesia the European population has increased proportionately more by emigration from this country than in the case of any one of the Dominions. We really must have regard to actualities in this matter. How can we say to these people, even if all the fears of noble Lords opposite and of the Liberal Party were justified, that there is to be no advance in self-government, that there is to be no federation?
  That brings me to my second point. I am the confidant of more than one important leader of moderate opinion in the two Rhodesias and Kenya, and I have to report to your Lordships' House that they are seriously concerned about the effect on their own followers, who, of course, include some extremists, at what they regard as the wounding attitude of a section of public opinion in this country. Some of them might even say, if they read the speech of my noble friend the Under Secretary of State, that he attached immense importance to persuading your Lordships that there were

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  sufficient safeguards for Africans, but that perhaps he did not devote so much of his speech as he could have done to the that these Europeans are entitled to advance on the road to self-government. I think it was the last noble Lord who addressed your Lordships who seemed to think that it was a terrible thing that there should be another British Dominion in Africa. What an astonishing remark to go out from the Legislature of this country!
  LORD NOEL-BUXTON: I should like to say that, on the contrary, I feel that aspiration towards Dominion status is very noble, but not if we are likely to let down the Africans who feel that the people on the spot are not ready for it so far as race relations are concerned.
  EARL WINTERTON: So far as I understand what the noble Lord has said in his interruption, he seems to think that the Europeans on the spot are not ready for self-government. I should have thought that no people were more ready for self-government than the Southern and Northern Rhodesians. After all, as my noble friend Lord Altrincham, in his admirable speech, pointed out, the interesting thing is—and I think it is greatly to the credit of the Southern Rhodesians—that, in order to bring about this Federation, they have to some extent given up some of their attributes of self-government. That is a very remarkable thing indeed, and it shows what moderate-minded people they are. I said to my friends—I thought it was my duty, though I occupy no position of authority, to try and reassure them—that they really need not take too much notice of those attacks which have been made on them by a section only—and it is only fair to say that it is only a section—of the Labour Party, and by a section of the Liberal Party. I reminded them of the phrase of the great past Leader of the Party to which noble Lords on this side of the House belong, Lord Beaconsfield, when he said that, unfortunately, the Liberal Party contained a considerable nucleus of the friends of every country but their own.
  VISCOUNT STANSGATE: But Lord Beaconsfield also recommended that we should gel rid of the Colonies.
  EARL WINTERTON: He may have recommended that we should get rid of
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  the Colonies. If so, he was very foolish. But the statement he made about the Liberal Party at the time was a factual and a true one.
  VISCOUNT SWINTON: And when he was of a riper and more mature age.
  EARL WINTERTON: As my noble friend reminds me, it was when he was of a riper and more mature age. I am sorry to say that the lineal descendants of the Liberal Party have now migrated to the Labour Party, and that is one of the many undesirable things they have taken from Liberalism in its old age and decrepitude. I tried to persuade my friends that that is so. I do not want to be frivolous in a debate of this nature. As a rather new recruit to your Lordships' House, I think it has been a debate of the highest quality. Seriously, I would appeal to noble Lords opposite from now on to try and do something to reassure our fellow subjects in the two Rhodesias that they are not their enemies. I am sure that they are not, and that they do not want to give that impression. I would particularly appeal to the noble and learned Earl, the Leader of the Opposition, for whom I have a great respect. I believe that we should make them feel that we trust them to work this scheme, and that we think they are going to try and make multi-racialism a success.
  Having said that, I hope it will not be considered out of place for me to say to noble Lords opposite that I hope they will not be quite so gloomy as they have been throughout this debate about the future of federation. Of course, there are difficulties and danger. But when has it been the case that this country has failed to face up to any constitutional difficulties and dangers? The British Commonwealth is facing difficulties and dangers now. As say, I do not want to be frivolous, but the situation in Korea, for example, is far more serious than it is in Africa. To listen to some of the speeches this afternoon, one would have thought that the only place where any trouble was boiling up was in Africa. The noble Viscount, Lord Stansgate, in a most eloquent part of his speech, said how the Asians and Africans disliked us. and were going to get rid of us. They seem to be disliking each other quite a lot at the moment in Korea. I do not think, for instance, that the Indians and Pakistanis

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  are very fond of each other—they have been threatening to go to war. I did not see the relevance of what the noble Viscount said.
  The relevance of what I say is this. It is absurd, in my opinion, for Members of your Lordships' House or of the other place to be influenced by the sort of speeches made in both Houses on one aspect of the subject. It has been said, in effect, that there might be civil war in Rhodesia. I think that is nonsense. We should have a sense of proportion in these matters. In fact, if I wanted to be frivolous—and I do not—I would say that the ordinary day-to-day relationship between the European and the African in the two Rhodesias—and I speak with some knowledge—is just as happy as that existing between the Bevanites and other members of the Labour Party in this country. They may well find that the question of solving the problem of Red v. Pink in their Party is just as difficult as solving the problem of Black v. White in Africa. After all, mankind is given to contention. There is, of course, justifiable ground in both cases for the hostility of one to the other. If I were a member of the Party of noble Lords opposite, I should be very suspicious of Mr. Bevan and his followers in the other place. No doubt some Africans are suspicious of Europeans, and vice versa. But it is wrong to suggest that the day-to-day relationship is not a good one.
  I have only two or three other things to say. I was glad that the noble Viscount, Lord Stansgate, quoted Mr. Nehru—and I wish to apologise to the noble Viscount for a somewhat heated interruption. I was astonished at Mr. Nehru making the statement he did. As he chooses to make very controversial statements, he cannot complain if we in your Lordships' House rebut those statements. I understood him to say—and I think it was an inferential reference to federation, although I hope I was wrong—that the whole of Africa will be ablaze. Let me assure Mr. Nehru that what happened in the great peninsula of India is not likely to happen in Africa. Five million people, as the present Prime Minister has stated again and again in another place, were either murdered or rendered homeless. Until the memory of that indelible stain on the great peninsula is removed by time, Mr. Nehru
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  should refrain from giving gratuitous advice to Her Majesty's Government in Great Britain as to how to avoid trouble in Africa. I think that would be generally accepted by the majority of the voters in this country. I may say, in passing, that the voters in Abingdon did not seem to have any great feeling against federation, though I understand the Liberal candidate (who as usual forfeited his deposit) was violently against it.
  I want to say only this in conclusion. I believe that this scheme can be made to work. The real difficulty, as has been pointed out by more than one speaker opposite, and especially by the noble Viscount, Lord Hall—an old personal friend of mine, though not a political friend—is the question of racial discrimination in social and industrial matters. I do not think we ought to be too self-righteous over that. We in your Lordships' House and in the other place, sometimes talk as if there was no racial discrimination in this country. There is a lot of it. I was horrified and shocked to see in the newspaper to-day that a taxicab driver was summoned to take the Sheik of Kuwait who was staying at a hotel in Bloomsbury, to some place. When the driver saw the sheik, he said: "I am not going to drive foreigners. They are no use to me." He was had up before the magistrate, and was fined £2 for failing to take a fare, and £2 for using insulting language. If I had been the magistrate I should have taken away his licence and sent him to prison for a month. I am sorry to see the noble and learned Earl, Lord Jowitt, laughing, for I think that conduct of that kind does infinite mischief to our relationship abroad, and I do not think we should be so self-righteous as we are in this country.
  The only thing I want to say to noble Lords opposite is that over this question of racial discrimination they must recognise that practically nothing happened when they were in office to reduce it. I know their difficulties. I am amused to see the noble Viscount, Lord Hall, laughing, because he knows the difficulties as well as I do. It would be very inconvenient for a Socialist Government in Britain to say to a white trade union in Northern Rhodesia, "You have to do something about this discrimination against native labour." It might even I have to be taken up at the International

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  Confederation of Free Trade Unions, and I do not know what the British representatives would have to say on that subject. It is a very serious matter. Of this I am absolutely convinced, as I think anyone who knows Africa is convinced: that this question of racial discrimination can be settled only by good will on both sides, on the spot. It will never be settled from this country.
  The fundamental mistake of noble Lords opposite—a mistake which I am astonished they should make; and even the noble Viscount, Lord Samuel, fell into it in his most eloquent speech, or at least I thought he did—is the astonishing idea that these things can be settled from Whitehall. It is really amazing that the Labour Party should have such faith in the Colonial Office. It is the first time that they have ever displayed it. For years, they have been attacking them as a most reactionary body. Their questions in another place were always directed against them. But to-day they say that everything can be settled by the Colonial Office. They say that racial discrimination is a dreadful thing, and only the Colonial Office can improve the position. That is a profound mistake, and I sincerely hope that, as a result of the two winding-up speeches which we are shortly to hear from my noble friend Lord Swinton and the noble Lord, Lord Silkin, the result of this debate will be to give boll Africans and Europeans in the Territories concerned the belief that all Parties in this country want to see this scheme work; that despite the dangers which some noble Lords opposite see in it, they agree that it can be made to work; and that if it does work it will be one of the most notable experiments, even in the history of the British Empire, of multi-racial co-operation.
  6.3 p.m.
  LORD LECONFIELD: My Lords, I was interested to hear the noble Viscount, Lord Stansgate, refer to the Cape Franchise in 1853. I do not know whether he is aware of the subsequent history of it. It developed into what was called the "blanket vote." The Parliamentary agents went round and provided the necessary qualifications for the native to vote: they would then put him on to the register, and Parliament had to intervene to prevent it. Eventually, the registration of the Bantus in the Cape was
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  considerably reduced. That is the difficulty of a franchise. You have manhood franchise for the Europeans; are you going to have manhood franchise for the Africans? You would probably create conditions such as those created in the Southern States of America after the Civil War.
  It is all very well to talk of equal civilization, but you have to define it, just as you have to define partnership. The noble Viscount referred to the Union. I was a citizen of the Union, and I feel strongly about it when he referred to the Union as a desert. I have been reading some reports from the Union lately, and I would draw the noble Viscount's attention to two Reports—one by a Professor W. M. Macmillan. This is what Professor Macmillan said:
  "The raising of the general level of the African has, in fact, proceeded further in South Africa than anywhere else."
  The other day I bought a book recently published by Peter Abrahams, who is a strong supporter of noble Lords opposite. In that book he says:
  "There are more educated Africans in the Union than in any other part of negro Africa."
  The importance of these statements lies in the phrases "the general level" and "any other part of negro Africa"—which includes Nigeria and the Gold Coast. The level of education in the African Union is higher than anywhere else in Africa. It seems to me that in West Africa we are inclined to produce what I might call political stars. Is the level of the African in West Africa as high as the level of the African in the Union? According to Mr. Abrahams, it is not. Therefore, I do not think it is fair to call the Union a desert.
  I believe that there are two reasons for this high level of education in the Union. One, of course, is the presence of the large European population. The old Boer, with his ox wagon, the family Bible, and a Mauser rifle, had very little impact on the African; but the modern settler, with his internal combustion engines and his modern civilisation, has a tremendous educative effect on the African. It is the presence of this contact between the African and the European in the Union, and the industrial development which that has introduced into the Union, that has caused this increase in education. The very fact

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  of contact between the African and the modern European is an education in itself, and I believe that that is proved also in industrial developments which have followed in South Africa since the two world wars. The industrial development has been enormous, and consequently the numbers of Africans who earn a better living have been largely increased. Of course, with the modern machine age and mass production, the demand is more for semi-skilled labour than for unskilled labour, and the result is that the chance of Africans earning alongside the Europeans has increased very considerably.
  Figures were published the other day showing that in these modern industries in Africa the percentage employed was as follows: Africans, 35 per cent.; Europeans, 33 per cent.; coloured, 21 per cent.; and Indian, 11 per cent. That is semi-skilled labour. Those figures knock the bottom out of apartheid. They are the basis of partnership. The men are working together on the same benches, in the same factory, although I doubt whether they carry that into their social intercourse afterwards. At any rate, it is a breaking down of the colour bar, and it is by industrial development such as that that the colour bar is being broken down in the Union and, I hope, elsewhere also. Therefore, of course, I warmly support federation. It will lead to industrial development and increase the demand for labour. The labour force in Africa has never been equal to the supply. I was always short of labour in Africa. The more development increases, the more the demand for labour will increase; and I believe that in this federation we are on the right lines towards achieving that object.
  6.10 p.m.
  LORD SILKIN: My Lords, we are coming to the end of what I can describe only as a most memorable two-day debate. It is memorable for a variety of reasons. In the first instance, I suppose there is no gathering in this country where there is such an accumulated amount of knowledge and experience of the subject matter that we have been discussing. Almost every noble Lord who has spoken has spoken from personal knowledge and experience of a
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  great many parts of Africa. Indeed, it may well be that I am the sole representative of the unenlightened persons in this country who have never paid a personal visit to Africa. And, in passing, may I say it is perhaps one of the unfortunate aspects of this controversy that so few people, relatively, in this country know Africa from personal experience, although a great many people have taken part in the controversy.
  I think our debate has been valuable also because it has made Africans themselves realise that this subject is being fully ventilated in this House, by people of all political Parties, people who speak from a great knowledge of the subject. It will be realised by the Africans that there is a great interest in this House, as there has been outside and in another place, on this subject and that it is most unlikely that the views of the Africans and the effects of federation will be lost sight of. In another place, one of my honourable friends said he had made eleven speeches on the subject since the Bill was first introduced. That was on the Third Reading of this Bill and, of course, that is not the end. I imagine that he will make at least one more speech, when the scheme is introduced. That, I believe, is all to the good.
  May I say, also, that the speeches on the whole have been on a very high level and with a great degree of sincerity. It is almost invidious to select particular speeches, but I should like to refer to four in particular. There is that of the right reverend Prelate the Lord Bishop of Chichester, who impressed us all by his sincerity and with his desire to make constructive suggestions; and that of the noble Lord, Lord Baden-Powell, who I am glad to see is here, for I should not like to say things behind his back. He spoke with great knowledge and, if I may say so, with great ability. I should like also to say a word about the noble Viscount, Lord Hall, who spoke with great ability and experience as a former Secretary of State, and I hope and believe in a constructive way. Finally, my noble friend Lord Noel-Buxton spoke with great sincerity and took the trouble to make himself acquainted with his subject.
  I think the debate has been extremely valuable. There have been speeches of a controversial nature. There was the speech

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  of the noble Lord, Lord Altrincham, which I think was foiled by that of my noble friend Lord Stansgate; and there was, of course, the "eternal" Earl, Lord Winterton, who endeavoured to psychoanalysed the Labour Party. May I say to him, with great respect and admiration, that, if I am to be psychoanalysed, I should prefer to choose my own psychoanalyst, and that he would not be the noble Earl. One remarkable thing about this debate has been that so little has been said about the Bill itself—indeed, some noble Lords have succeeded in making speeches of half-an-hour's duration without mentioning the Bill at all. That is something that is possible in this House, but would hardly be possible in another place. There is perhaps some justification, because we have been discussing something much wider, much bigger, much more important, than federation itself. Let me say at once that I think that nearly every noble Lord, and possibly everyone who has spoken, believes federation is a good thing, both for Europeans and for Africans; that it will enhance the economic position of the three Territories, and that, given good will on all sides, it will make for the future happiness of the Africans.
  There is no dispute about federation itself, and there is very little dispute about the scheme. One can, of course, make legalistic points about the difference between discrimination and differentiation. I am not going to do anything of that kind. It may well be that in certain respects this scheme can be improved. I myself—and I hope noble Lords opposite, will agree—shall not regard it as difficult or troublesome or as causing trouble between Africans and Europeans, if, on the Committee stage, we put forward our view as strongly as we can that certain of the principles incorporated in the scheme should be included in the Bill itself. We shall argue for very practical reasons but, by and large, we have no desire, and I do not think any desire has manifested itself in the debate, to make any fundamental alterations to the scheme. Of course we think we could improve it, just as noble Lords opposite could have improved it if they had a scheme in front of them prepared by noble Lords on this side; but that is not a fundamental issue. What we have really been discussing in these two days is the future of Africa, its place in the
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  British Commonwealth, and relations between Europeans and what have been described as black Africans. I believe that this question has repercussions on the relationships between coloured peoples all over the world. Both the noble Earl, Lord Winterton, and the noble Viscount, Lord Stansgate, in their various conflicting ways, indicated this reaction between the different coloured peoples throughout the world.
  One thing has emerged from our debate: that there is a general view on all sides that the Africans are opposed to the scheme, not necessarily on the merits but because they are afraid and suspicious. My Lords, that is not a condition of things which is confined to the Africans and Europeans. This is the situation between the Europeans themselves. It is the position as between, in my view, the United States of America and the Soviet Union. Suspicion and fear account for a great deal of the difficulties that confront us all over the world, and the problem that we have to face, therefore, in Africa is one which is common to the whole world. How can we remove that fear and suspicion between different peoples of different colours, different races, different civilisations and different political systems? By and large, there is no justification for this fear and suspicion; that is the difficulty that faces us. It is, on the whole, an unreasoning fear and suspicion. How can we get rid of it? It is often quite impossible to get rid of an unreasoning fear and suspicion. I think that perhaps the noble Lord, Lord Altrincham, put his linger on the spot when he said that what is wanted is proof that we have no designs on the Africans.
  I think the Government were ill-advised, even if they believed that these fears were without justification, not to do more with the Africans than they have done in an effort to dispel these fears, or even to give the impression that they were prepared to listen. In my limited experience, I have found that when you know that a man wants to say something, it is a good thing to let him say it. I do not want to use a disrespectful term, but I think it is well to let him "blow off steam": let him say what he wants to say and let him, if necessary, say it for days; and days; and listen to him. You may find a grain of wisdom and sense in what he is saying; and he himself is satisfied in knowing that

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  what he wanted to say has been said and has been listened to. These Africans came all the way to England to voice their objections, and it seems a great pity that they should have gone back feeling that they had not been allowed to give utterance to what they had to say. I think the matter could have been handled more wisely. I do not want to be unduly controversial about this, because fundamentally I think there is very little between us: we are all desirous of making federation work, once it comes into operation, and, as a pre-condition of making it work, putting the relationships between Europeans and Africans on a proper footing.
  I do not know that there is any difference between us as to what requires to be done. Many noble Lords have talked of removing the colour bar, and of course that is a pre-condition. The noble Lord who spoke last took the view—which, with respect, I think is mistaken—that you can remove the colour bar by having people working together in the industrial field. While that may be one way of doing it, I would suggest that it is by no means the most important way. I think the most important way of removing the colour bar is to recognise that the other fellow is a human being just like oneself, perhaps with less experience, perhaps less educated, but nevertheless a human being; and to treat him as a human being. Noble Lords must realise that that has not always been done in our treatment of the African people. Perhaps the greatest cause of ill-feeling is not so much economic discrimination or even, with respect to my noble friend, the lack of a vote, as the humiliation which Africans feel in not being treated on equal terms. The noble Earl, Lord Winterton, gave an example from this country. If these most regrettable things can happen here, there is no doubt that they happen in Africa, too; and if we want to preserve our position—and by that I do not mean our position of dominance, but our position as inhabitants of Africa, endeavouring, as our settlers are doing, to earn an honest living from the land—we must, in the long run, recognise that the Africans are as good as we are, and that they are entitled to be, and must be, treated as
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  human beings, with the same amount of respect as we accord to the white people.
  Lord Winterton—and what he said was typical of a number of other speeches—was, I thought, over-optimistic about the future. I am not a prophet of doom; I do not think that inevitably our position in Africa is finished or likely to be finished—I do not think that at all. But let us recognise this simple fact: that we are outnumbered in these Territories in Africa in the proportion of something like thirty to one. In Africa as a whole there are approaching 200 million Africans as against a very small number of Europeans, of white people; and, taking Africa as a whole, I think it is true to say that the African people are increasing at a much greater rate than the white population.
  EARL WINTERTON:I think the noble Lord should get his figures right. He is counting in the Mediterranean peoples, but they are not Africans—they are Arabs.
  LORD SILKIN: I was not attempting to count. As a matter of fact, I was reading the book issued by the Colonial Office the other day. I was taking the figures from that, and I deliberately took a vague figure, because the Colonial Office themselves are apparently uncertain as to the exact population, and they give a number of different figures. Therefore, cautiously as I thought, I said "something approaching 200 million." I could hardly have been more vague. The fact remains that it is a very high figure, and the Europeans are hopelessly outnumbered. The only way in which it is possible to live together is by the removal of the colour bar in the truest possible sense.
  I think I am the twenty-fourth or twenty-fifth batsman on this wicket, and it is not possible for me to make any runs. I am not going to try; the proper thing for me to do, indeed, would be to declare at this point. I should like, however, to end on this note: that whilst we on this side of the House believe that the Government have been ill-advised in not consulting the Africans more than they have done, nevertheless we have now come to the point when this Bill will shortly be passed; and in due course the scheme will be submitted to the House. I would not associate myself with anyone

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  who says that in the last resort, having done everything possible to conciliate the Africans, having done everything possible to explain the meaning of federation and of the safeguards we introduced in the scheme, and having done all that is possible to meet them, if we find at the end of the day they are still opposed to it then we are not going to introduce federation. I do not think it is practical politics to count heads at this stage. All we can do is to make sure that our actions are understood, that we have done everything possible to meet legitimate fears, suspicions and oppositions. When that has been done, we have a responsibility, so long as we are the trustees of the African Territories: we have to act in accordance with what we believe to be right. If, at the end of the day, we believe federation to be right, then I think no Government can be blamed for introducing it.
  My difficulty is that I do not think that that stage has yet been reached. I hope, therefore, that—we are beyond the eleventh hour, but even at five to twelve it will be possible to do something to meet the Africans and to put over to them what we think. Perhaps it could be done by way of a Parliamentary delegation—though the noble Lord, Lord Altrincham, at any rate by his actions, seemed to express some horror at the thought of sending out a Parliamentary delegation. That may or may not be the best way of doing it. However, I think that in some way we ought to endeavour, even at this time, to meet those who are representative of the African people to try to put over to them what this scheme means and the various safeguards that are being introduced; and even, if possible, to provide them with further reasonable safeguards.
  I would therefore echo the hope expressed by several of my noble friends that, between the passing of this Bill and the introduction of the scheme, further efforts will be made to meet the Africans in an endeavour to secure their good will. If that can be done—there may be only once chance in a hundred, but I believe that it is worth taking—and if noble Lords opposite are successful in securing a certain measure of good will, they will have given this scheme of federation an infinitely greater chance of success than we believe it has at the present time.
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  Having said that, I echo what several of my noble friends have said: that we shall do nothing to prevent this federation from being a success—indeed, we shall do everything possible to make it a success.
  6.33 p.m.
  VISCOUNT SWINTON: My Lords, this has, I think we should all agree, been a valuable, a helpful and an encouraging debate, and, not least, in the speech which we have just heard from the noble Lord, Lord Silkin. As he said, it is a debate that has ranged wide. The scheme itself is wide, wide in its prospects, wide in what it can produce, wide because of the problems that federation raises, and wide because, as we believe—and certainly we all hope—in its effects, it may reach far beyond the borders of even the large country that bears Rhodes's name. The noble Lord said that we have not talked much about the Bill, and that is quite natural, because it is an Enabling Bill, to enable us to give effect to the federation scheme which we have debated already at such length on a previous occasion and again in the last two days. It has also been a realistic debate because it has been generally realised that the scheme which was negotiated and evolved over two years or more must be accepted or rejected; it cannot be changed.
  That has been recognised by everybody, with the exception, of course, of the noble Viscount, Lord Stansgate, who can put down as many Amendments as he likes; anybody can at any time, and I should be the last to wish to limit the rights of any Member of either House; but, in practice, as the Leader of the Opposition said, if you are a realist, you realise that the decision has, in fact, been taken, and that federation will come into operation. What has certainly been most welcome in the debate is that from all sides of the House in almost every speech—there have been really very few exceptions—has beer the sentiment that now it is up to all of us, here and in Africa, to work together to make federation a success.
  At the same time, a number of questions have been asked and suggestions made, and I think I should best serve the House by dealing with as many of these as I can in a reasonable space of time, and then by concluding with some more general observations which I think

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  transcend the whole matter and which make us feel sure, not only that federation is right—and I think the great majority of both sides feel that—but that federation is right now, at this moment. Apart from the question of further delay, to which I will come later and on which, if reluctantly, it seemed that the Leader of the Opposition accepted our decision, the noble and learned Earl, Lord Jowitt, raised two matters with which I ought to deal. In effect, he said that he appreciated the economic advantages of federation but wondered whether they could not be obtained by some other means of co-operation short of federation. I think there is an absolutely categorical answer to that, and the answer is, "No." That is not a dogmatic a priori answer. It is an answer based on the practical experience of a number of years when an attempt at loose co-operation was being attempted and when it signally failed. It was not anybody's fault that it failed. I think it went back even as far as our Government. It certainly went on all the time the noble and learned Earl was in office and it failed, not by any fault of the noble and learned Earl in not wanting to make it work, but because you cannot get what is necessary for co-operation short of federation.
  Let me give the reasons briefly. Only a properly constituted Federation will attract the capital which is required for the tremendous development work which is necessary. The Territories, as individuals, could not raise the capital which is needed. Again, individually, these Territories are relatively weak and ill-balanced. Northern Rhodesia, with its enormous wealth of copper, is dangerously dependent for 90 per cent. of its wealth and, I think, its living, upon copper; and Nyasaland is able at best to maintain a precarious balance of its Budget. Strangely enough, all the anxieties have been expressed on behalf of Nyasaland and yet, if any one of these Territories has everything to gain from federation, it is Nyasaland. Some people have said: "Why cannot you leave it out?" If Nyasaland were left out of this federation scheme—and it would pay both Rhodesias to leave it out; there are certainly many white people and, I dare-say, quite a number of black people, who would be only too glad to see the two
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  Rhodesias joined together, leaving Nyasaland on the side lines—what would happen? In all probability, in a short space of time, little Nyasaland would become a bankrupt backwater.
  Only federation and a properly constituted central Government with authority and power to take decisions and act upon them, can eradicate inter-territorial jealousies and frictions which have always been cropping up over the rival merits of different hydro-electric power schemes—where to place them: and over the disposal of coal—whether it is to go primarily to the industries of Southern Rhodesia or where it is most needed, and needed in the greatest quantities, up to the mines of Northern Rhodesia. Moreover, all the railway development needs federation. Only under federation can there be the proper development of the great agricultural potential of the three Territories. What is more(and this will be an appeal I am sure I can make to what is left of the Liberal Party) only under federation can full benefit be derived from free trade within the federal areas.
  The other point the noble and learned Earl made was one about the United Nations Organisation. Of course, that Organisation has no jurisdiction whatsoever in our domestic and Colonial affairs. I noted what he said with reference to the International Court. I should not venture to answer that on my own responsibility, but I have taken the highest legal advice open to me. The noble and learned Earl appears to have lost sight of the fact that the provisions of Article 73 of the Charter of the United Nations to which he referred are subject to paragraph 7 of Article 2. This paragraph provides that nothing in the Charter authorises the United Nations to intervene in matters which are essentially within the domestic jurisdiction of any State.
  I must say that I rather regret that the noble and learned Earl should have appeared to have given, or could be construed as giving, any support to the view that this is a matter in which either the United Nations or the International Court has any jurisdiction at all. I would add that I can assure the noble and learned Earl—indeed his Government must also have examined it meticulously, and no doubt he advised

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  them—that we have examined with the utmost care to see that the scheme was fully compatible with the Treaties and Agreements whereby Northern Rhodesia and Nyasaland in part came under the jurisdiction of Her Majesty. We have been advised, as no doubt were our predecessors, that the scheme does not contravene those Treaties or Agreements in any way. It was never suggested by anyone, at any stage in the two years of conference, that they did. No one has ever been able to produce an example of any way in which a Treaty is vitiated or modified. That being so, unless the noble and learned Earl thinks that the scheme is a breach (and I am sure he does not, because his Government would have made that very plain had they thought so) I regret a little that he should have mentioned it in a way which might lead some persons to suppose that there was a breach, and that if they could get somebody to take up their case they might be able to find some tribunal where possibly the point could be argued out.
  EARL JOWITT: Perhaps I might usefully state that I do not assert for one moment that there is a breach. The line of my argument was that so long as the objections raised by the Africans are merely fanciful you have a right to disregard them. The line of my argument was that the argument of the Africans here was not fanciful—that is all I was saying: that they honestly believe it. That is a very different thing from saying that I suggest or I assert, or, indeed, that I believe, that there is any breach here involved.
  VISCOUNT SWINTON: I am much obliged to the noble and learned Earl. But the arguments of the Africans are not wholly fanciful, in the sense that, in regard to their anxieties, they are not very real. Perhaps "fancied" would be a fairer word to use than "fanciful." That I accept. I will come to deal with that point. But what I cannot understand is that in order to fortify the argument, which I have not the least doubt that some people are inclined to believe—namely, that they are in danger or that their Protectorate rights are in danger, although there is no conceivable breach and there is every possible safeguard—it was necessary to bring into that statement, which is very fairly and properly made,
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  an allusion to a possible appeal to the International Court, which certainly has no jurisdiction whatever in the matter. I am glad that that has now been cleared up, because I think we agree that we all ought to try to help the Africans and each other to make this thing a success; and it would not be helping them at all if somebody, worst of all some ill-disposed person rather like an agent provocateur, were to mislead them into supposing that they could follow some legal by-path which would only land them in costs and in trouble to no useful purpose.
  Then the noble Earl, Lord Listowel, asked me how specially elected African members would be elected. I would refer him to paragraphs 23, 24 and 25, of the scheme. He will see there that they are to be elected for all time under regulations which are to be made by the Governors of the respective Territories. The noble Earl also asked me—and I am rather glad he did, because I think he or some other noble Lord referred to a statement in The Times in which for once The Times was misinformed—whether amendments to Territorial Constitutions required the assent or the Federal Government. The answer to that is emphatically no. The responsibility rests entirely with the United Kingdom Government in this country, though naturally they would invite the opinion of the Federal Government and hear what they had to say about it. That is only a natural, friendly and partnership kind of act.
  Then the noble Earl and, I think, the noble Lord, Lord Hemingford, asked which Secretary of State was concerned and why the scheme did not state which Secretary of State was meant. However far back you go, you will never find, where a Secretary of State is given power, that there is any reference to a particular Secretary of State. That custom has its origin back in the trigs of history when Secretaries of State first came into existence. They are not like the blessed Trinity; there are more than three of them. They are co-equal though not co-eternal, and they are each of them often in the position of acting the one for the other. Therefore, the reference is always to a Secretary of State. But in practice what would happen is that if the matter were a federal matter, the Secretary of State to whom the Bill would be referred would be the Secretary of

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  State for Commonwealth Relations. If the matter were a Territorial matter affecting the Territorial Legislatures of Northern Rhodesia or Nyasaland, reference would be to the Secretary of State for the Colonies. But of course the Secretaries of State will consult together. That is the way business works, certainly in our Government, and I hope in those of our predecessors and of our successors at a long long distance hence, if it ever comes about. If the Secretaries of State disagree there is, of course, the Cabinet to go to in order to resolve the difficulties. That is the way that, from the time Cabinet Government started, the collective and individual responsibility of Ministers has been dealt with, and I do not think it would be wise to change that sound, historic practice in a short enabling Bill.
  Then the right reverend Prelate, the Bishop of Chichester, in his very interesting speech, welcomed very warmly the university pronouncement. He asked mea number of detailed questions as to how it would be carried out. He will appreciate that I cannot give him a complete blueprint and plan of how the Federal Government and the Federal Assembly will work, before we have even authorised their Constitution. As a matter of fact, Sir Godfrey Huggins—who in all human probability will, please God, be the first Prime Minister under federation—and the University Board, who will no doubt continue their existence, have both gone a very long way in advance of federation becoming a fact to say what is their purpose and intention. It will, of course, be for the Government and the Board to work out the details. The essential principle of a multi-racial university is completely accepted. It has been agreed that the site must be large enough. In fact there is plenty of room on the Mount Pleasant site. It is not a built-up area, and if that be the final site chosen for the erection of a University there will be plenty of room on the outskirts for expansion.
  As to the other point which the right reverend Prelate raised—that with regard to autonomy—I am sure there will not he the least difficulty about that. Discussions are going on about it. It is, of course, inconsistent that this should come under a local Act of the Rhodesian Parliament; it will have to be dealt with
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  under federation by a Federal Act. I think it is accepted—certainly by the Board themselves—that it is an essential condition of their being in communion with universities all over the Commonwealth that the University should be an autonomous body. I do not think there will be the least difficulty about that.
  The noble Viscount, Lord Hall, in his interesting and helpful speech, put a whole catalogue of questions to me.
  VISCOUNT HALL: Three.
  VISCOUNT SWINTON: Yes, he administered three interrogatories—and fairly substantial ones they were. Their quality, if not their quantity, was high. The first thing he asked—I think I have it right—is why, if higher education is a Federal subject, primary and secondary African education does not come under Federal authority too, but remains a Territorial subject? The answer to that is quite simple. The primary and secondary education of Africans is a matter of exclusive African concern, and the whole principle upon which the last Government insisted when they were in office—and we agreed— is that those matters which are primarily and particularly of African concern should be reserved to the Territories, whereas matters which are of general concern should be on the Federal list. Higher education—university and technological education—which must be for the whole Federal area and which must be multi-racial, is a Federal subject.
  The noble Viscount's next question was I think: What was the basis on which seats were allocated to elected members of the three Territories? Was it financial or economic and so on? I cannot answer that, and for this reason. It is about the one thing in this scheme which was agreed at the start, and has never changed all through. I do not know of anyone ever having tried to sit down and write out exactly what were the different considerations which moved them in agreeing to this division. I imagine that, like sensible and practical people—your Lordships will understand that I am talking about what happened at the start—they got round a table and agreed that this was a reasonable division. That is the one thing which has been adhered to all through since the Labour Government's version, which has never been

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  challenged in all the time I have been concerned with it. So it stands.
  Then the noble Viscount asked about income tax allocation. If I followed him rightly, he drew attention to the fact that it had been slightly changed since the first Raisman Report was produced. We had the advantage of Sir Jeremy Raisman's services, both in the original inquiry and in the sub-committee which we set up during the sittings of the last Conference. All three Governments were, of course, represented at the Conference, and their recommendations as to the distribution of income tax were unanimous; and, naturally, as they were unanimous we accepted them. As the noble Viscount will see, there is provision in the scheme for are view from time to time, and the first review will take place within three years. I may say, with regard to Nyasaland—which we always come up against; and it is right that we should look after the smallest—that the representatives of that Territory fully agreed to this. Indeed, I am not surprised, because the best estimate that could be made—and this carries the Nyasaland estimate with it—is that under this allocation of revenue as between the Federation and the different Territories, Nyasaland will be something like £3 million a year better off. And that is not to be "sneezed at." in the case of a Territory of that size, and in a Budget of that size.
  VISCOUNT HALL: May I ask the noble Viscount on what basis it is assumed that 6 per cent. of the taxable income of these Territories for Federal purposes will provide for Nyasaland £3 million a year. It seems incredible.
  VISCOUNT SWINTON: The calculation is not quite so simple as that. You have to take account of all services for which the Federation assumes responsibility, and all debt charges. What happens at present, when each of these Territories is separate, is that each is responsible for its own debt, its amortisation, its interest payments and so on. Under federation, the Federation itself assumes the general debt, takes charge, broadly speaking, of future borrowing, and assumes responsibility for a number of highly expensive centralised services. That is taken on the liability side away from the Territories. Then, in order to pay for that (I have not the figures before me) whatever percentage goes to the Federation is for the
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  discharge of the liabilities and payment for the services assumed by the Federation. Certain Territorial expenditure remains with the Territory, and for that the Territory itself has to provide. On a calculation of what will be the financial position of Nyasaland, with the centre taking charge of a great many of its liabilities, and in view of the contribution it will get to what will still remain with it as a Territorial liability, it is estimated that Nyasaland will be £3 million a year better off. It is a calculation which was produced by Sir Jeremy Raisman and his colleagues. I put it forward for what it is worth; and I submit that you cannot have much better people to make such a calculation. Anyway, it is an estimate which, I gather, Nyasaland itself underwrote. I think I remember it coming up during a conference. If I should find that I have in any way misled the noble Viscount, we have another stage of this Bill and I will certainly take the opportunity to correct what I have said. But I think I shall be told that it is all right.
  The noble Viscount, finally, said that we ought to have given more explanation to the Africans, and we ought still to give them more. Honestly, we have tried to do our best. To hear some people talk—this does not apply to the noble Viscount at all, for he said, "I know you have tried"—it would seem that my right honourable friend the Colonial Secretary had acted like a deaf adder, stopping his ears and refusing to listen at all. But he has never done anything but listen. His ears are always open. Do not forget that these people were asked to come into consultation. Perhaps I may refer to the Report, which contains this statement:
  "During these discussions"—
  this was before I came on the scene—
  "they declined the Secretary of State's invitation to attend the Conference as delegates, although he gave them assurances that by attending they would not be committing themselves in any way. An invitation to attend the Conference as observers was also refused. The Southern Rhodesia delegation however included two Africans who attended the Conference and took an active part in the proceedings."
  That statement will be found in paragraph 10 of the Report, Command Paper 8753.
  LORD SILKIN: My Lords, may I clear my own mind on this matter? The Conference to which they were invited was a Conference to discuss the details of

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  federation. They were opposed to federation: therefore, it was not very helpful to be there to discuss the details of forming a Federation to which they totally objected.
  VISCOUNT SWINTON: That shows how hopeless this position is, in a sense. This was at quite an early stage in trying to plan a scheme of federation. They were asked to come in and join in the discussion, as the noble Lord's own Government asked them. The noble Lord has said, however, that it was no good their coming because they were not in favour of federation. What does that mean? It means that they had made up their minds, I am bound to say largely on some extremely false information sent out, not by the noble Lord's Party, or at any rate not by most of them, but by some ill-disposed people who hate the idea of federation and partnership and who completely bamboozled a number of these people and got them into the state of mind in which, even away back in these early Conferences, as the noble Lord says, it was no good to bring them into consultation, because they had already made up their minds that they would have nothing at all to do with federation. That shows how difficult it was, and that the decision has to be taken, I think, as we have taken it.
  The Minister of State went out to Central Africa and met a great many Africans. I do not want to put this as a controversial point, but only in view of what the noble Lord has said. Quite a way back those people who, for one reason or another, had made up their minds in advance against any idea of federation did not really listen, nor did they discuss the merits of this or that scheme; and they persuaded many to take the same attitude. Frankly, we have made some mistakes, but I am bound to say that the late Government made a great mistake in telling district officers, who are the people in whom these natives have confidence and whom they know in their daily lives, not to tell them the merits of federation, but only to ask their opinion. I daresay we have made mistakes, but I am sure that that was a fatal mistake. What we have to do now is to get on with this business so as to carry all the conviction we can. I am certain that the real conviction is the conviction of federation successfully in action.
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  I do not want to say too much about this aspect, but the right reverend Prelate the Lord Bishop of Chichester raised, quite reasonably, the question of safeguards and the African's anxiety about his land. I think it is now universally understood that land and native agriculture, and other subjects of special African interest, remain Territorial subjects. We must remember that the legislative list cannot be altered for ten years without the agreement of the three Territorial Legislatures. The right reverend Prelate was good enough to say, when I intervened yesterday, that he was completely satisfied on the matter of land, and that he was glad that that had been so clearly stated. I would add that the Federal list has been most carefully designed to embrace those subjects where all the population have a common interest and to exclude those subjects where the interests of black and white might be likely to clash. The safeguards (I am not going into them over again) have been very complete, as complete as we could make them.
  The noble Viscount, Lord Samuel, in a characteristically wise speech, said some wise things about safeguards. He admitted that this was different from the South African Constitution, where we parted with control. In this Bill we retain the Protectorate status, and political and Territorial advancement are also in the hands of the Territorial Governments under the ægis of the Colonial Office. The Colonial Office must feel flattered, because everybody now puts haloes round their heads. Everybody in this country puts haloes round their heads and some people outside want to get away from them: but they are, if I may say so, very good. These safeguards are all right on paper, but the noble Viscount said that if we always have to be applying them, then the scheme breaks down. There is a lot of truth in that, although the fact that the safeguards are there is a good guarantee that they will be observed and will not have to be used. One does not say that certain things are not to be done, because if that is done one will always have to be invoking the law. Provided that they are sensible laws, and that people know they are the laws and have a share in making them, then generally they tend to keep them.
  The value of an agreed plan, as this is, is that people will want to keep the

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  rules. The safeguards in the Bill are the strongest we can possibly have on paper. I believe they are. But if I believed this scheme turned for its worth, for its validity and for its functioning, upon safeguards, I should be against it altogether. If anybody believed so little in the scheme that he placed all his reliance on safeguards and none on federation, then he ought never to embark on federation at all. But I am certain that that was not the view of noble Lords opposite and of the Labour Government when they initiated this scheme and thought it was so vital to go on with it. And from the speeches of most noble Lords in this debate, that is not the view they hold to-day. The real safeguard is the spirit in which the scheme will work.
  We have seen that spirit over the University, the issue which the most reverend Primate said in our last debate would enable the whole scheme to go forward in good hope. That has been warmly welcomed by African leaders in Southern Rhodesia. I am going to quote one. This was not a private letter written to me, but a public statement which I read in a Rhodesian paper. It was a statement made by Mr. Sankange, the. General Secretary of the Southern Rhodesia African Congress, who said this:
  "It is now for the African people to demonstrate their worthiness to be partners in the establishment of this shrine of learning by donating to it every penny they can afford to give. Now we are able to breathe a sigh of relief at the knowledge that the University will be our University. This augurs well for the future race relations in Rhodesia."
  I attach as much importance to that statement by a leader of opinion as to some anonymous letters which we have had read to us. We know the enormous common interest that both races have, and the advantages which both Africans and Europeans can get under federation and cannot get in any other way.
  We know—and noble Lords on both sides of the House have paid tribute to it—the liberal spirit of the men who will lead this Federation. We know that many who were opposed to federation now accept it, and are determined to make it succeed. And in Southern Rhodesia that certainly is true of both Africans and Europeans. There is no other plan or way of life for a country which is African and European, where
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  both have an equal right, where both have their homes, and where both will go on living together generation after generation. Some continue to say, "This is right, but you still ought to delay. Wait and see a little longer." For the decision to go forward now, we, the Government, take full responsibility. We are convinced that to do otherwise would be to play into the hands of extremists on both sides: the men who want to make federation impossible; the men on both sides who want domination, whether it be black or white, and who hate the idea of partnership or co-operation. We should be giving them a power of veto; we should play straight into their hands.
  That, so long as we are trustees, we should regard as a dereliction of our duty and our trust. It would be a body blow to liberal opinion; it would be a setback to the spirit of practical co-operation: and it would lead immediately to an embitterment of race relations—in fact, it would be a victory for the extremists and the enemies of federation. That view is overwhelmingly endorsed by the men of the greatest experience, and the men upon whom the task will fall. Many have testfied to that, in this House and elsewhere, and I should like to mention one who cannot be here to-day, but who has perhaps as long an experience as anybody—that is., the noble Viscount, Lord Bledisloe. He asked me to tell your Lordships that he would have been here but for the fact that he is also the oldest past President of "the Royal," and he has to be at the Royal Show. He wrote to me to say that he was more than ever convinced of the rightness of the scheme, from the standpoint of native welfare, and of the unwisdom of any avoidable delay.
  We shall do all we can to carry conviction. The district officers will probably be the wisest people to do it. I consulted the Leaders of the Opposition to confirm that they would not take it amiss if I accepted to invitation to go to Southern Rhodesia in a week or two. I may not be here when the Order comes up: it will be in lie able hands of my noble friend Lord Salisbury, if I am not here. I will do what I can when I am in Central Africa. I shall see people, and talk to them. I have no doubt that I shall have an opportunity, not of making speeches—I do not want to make public speeches; that is rot the best way of

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  doing it—but of having quiet talks with various people. I understand that my noble friend has Rhodesians coming here to discuss constitutional advance in the month of September. I myself, as the House knows, have certain other plans in other parts of the Empire, to which I have been invited later in the year, so I cannot do this. We shall do all we can to carry conviction, I am sure of it—particularly in the state of opinion today, where there are suspicions which are so hard to eradicate because they have no foundation, and that is the hardest kind of suspicion to eradicate. The real effective proof and discounter alike of doubt and fear will be federation in being. That is why it is right to go on. My Lords, I am sure that it will be a great encouragement to many in Central Africa to know that they will go forward on this high venture with such a wide measure of good will, and with so firm a faith in its future.
  On Question, Bill read 2ª, and committed to a Committee of the Whole House.

  COASTAL FLOODING (ACREAGE PAYMENTS) SCHEME, 1953
  7.16 p.m.
  THE EARL OF ONSLOW: My Lords, on behalf of my noble friend Lord Carrington, I beg to move the Resolution standing in his name. This is a revised draft of the first scheme to be made under Part II of the Coastal Flooding (Emerfency Provisions) Act 1953. As your Lordships will remember, the Affirmative Resolution for the first draft was not moved because the Government gave further consideration to it. Certain doubts which were expressed in another place have now been clarified by this second draft. The scheme provides for the making of acreage payments for the rehabilitation of agricultural land and allotment gardens damaged by the sea floods last January. The Act provides for schemes of acreage payments over the period 1953–57; the present scheme relates only to 1953, and later schemes will be made in the light of the changing conditions of the land and progress in its rehabilitation.
  When the Bill was given a Second Reading on May 14, your Lordships generally welcomed the Government's proposals which this scheme will put into
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  effect, and I think I need do no more than move its adoption. I beg to move.
  Moved, That the Coastal Flooding (Acreage Payments) Scheme, 1953, reported from the Special Orders Committee on Wednesday last, be approved.—(The Earl of Onslow.)
  On Question, Motion agreed to.

  HARTLEPOOL CORPORATION ACT, 1925, MODIFICATION ORDER, 1953
  THE EARL OF BIRKENHEAD: My Lords, I beg to move that this Order be approved.
  Moved, That the Hartlepool Corporation Act, 1925, Modification Order, 1953, reported from the Special Orders Committee on Wednesday last be approved.—(The Earl of Birkenhead.)
  On Question, Motion agreed to.

  ROAD TRANSPORT LIGHTING (AMENDMENT) BILL
  7.18 p.m.
  Read 3ª (according to Order), and passed.

  NATIONAL INSURANCE BILL
  House in Committee (according to Order): Bill reported without amendment.
  SCHOOL CROSSING PATROLS BILL [H.L.]
  An Amendment reported (according to Order).
  BRADFORD CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL
    LAND DRAINAGE (SURREY COUNTY COUNCIL (RIVE DITCH IMPROVEMENT)) PROVISIONAL ORDER BILL
      WALSALL CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL
      Reported, without amendment, and recommitted to a Committee of the Whole House.

  SAINT OSWALD ESTATE BILL [H.L.]
  Returned from the Commons, agreed to.
  House adjourned at twenty minutes past seven o'clock.