Sitting of 11 June 1953

Preamble
The House met at Half past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  CLYDE NAVIGATION ORDER CONFIRMATION BILL
  Considered; to be read the Third time Tomorrow.
ORAL ANSWERS TO QUESTIONS
  EDUCATION

    School Meals
    Mr. Morleyasked the Minister of Education the extent of the variation in the number of children partaking of school meals since the rise in the price of such meals.
    The Minister of Education (Miss Florence Horsbrugh): I have no information on this point. I would refer the hon. Member to the reply which I gave on 21st May to the hon. Member for Leicester, North-West (Mr. Janner).
    Mr. Morley: Is the right hon. Lady aware that a daily newspaper which claims to have the largest circulation of any daily newspaper in the country recently stated that in urban areas there has been a reduction of 10 per cent. in the number of children taking these meals since the price was raised; and could she confirm or deny that statement?
    Miss Horsbrugh: I could do neither, because I have asked local authorities to get the number of children taking meals on a certain day in June and to let me have the returns at the beginning of July.
    Lieut.-Colonel Lipton: Is the right hon. Lady not aware that figures have already been published indicating that in the county of Berkshire the number of school meals has fallen by 25,000 in a month?
    Miss Horsbrugh: As I say, I do not know; I have no information, and I am waiting for local authorities to give it to me.
    Mr. Haymanasked the Minister of Education when quarterly returns from local authorities of school meals were discontinued.
    Miss Horsbrugh: Local education authorities were informed in September, 1952, that a return of school meals would in future be required only once a year relating to a day in October.
    Mr. Hayman: Seeing that these returns are made on a single day and now only once a year, will the Minister consider asking for quarterly returns again, because it is necessary for the House to keep in close touch with the figures, and the return is a simple one for each teacher?
    Miss Horsbrugh: No, I do not think that is necessary, and I am anxious, and I have been asked by the teachers of many schools, to reduce the number of forms which they have to fill in. When I arranged to have the return once yearly instead of quarterly, I also had the form for the return simplified. I think that it is better to have it once a year and then call for a special return on a special occasion, such as I am doing this year.

    Grammar Schools, North-West Kent
    Mr. Doddsasked the Minister of Education if she is aware of the need for the provision of grammar schools in Bexley and Erith so as to enable a reasonable number of pupils now in Dartford primary schools to be assured of secondary education in the borough in the next few years; and what action she proposes to take to deal with the problem.
    Miss Horsbrugh: The need to increase grammar school provision in North-West Kent as a whole has been apparent for some time. The Kent local education authority started work on the building of a new grammar school in Erith in October, 1952, and included in their 1953–54 building programme the first instalment of a new grammar school in Bexley. The Dartford and the Gravesend grammar schools for boys will each admit an additional 30 boys at the age of 11 next September.
    Mr. Dodds: Is the right hon. Lady aware that a much higher standard is required for boys and girls in the Dartford constituency than for boys and girls in constituencies in North-West Kent? Why should the boys and girls of Bromley and Beckenham, represented by her two right hon. Friends, get grammar school places with marks which would spell failure for boys and girls in the Dartford constituency?
    Miss Horsbrugh: The hon. Gentleman will realise that the provision we now have depends entirely upon the schools built or started by the last Government. We have started schools since then, and when these two schools in Erith and Bexley are finished they will provide 1,000 new places.
    Mr. Doddsasked the Minister of Education if she is aware of the concern arising from the fact that the number of places available for secondary education in schools in the Dartford borough compares unfavourably with places available in other parts of Kent; and what action is to be taken to correct this tendency, which will worsen if no special efforts are forthcoming.
    Miss Horsbrugh: I understand that there has been some local demand for more places in selective secondary schools for children from Dartford. The education authority propose to enlarge the Dartford secondary technical schools for boys and girls in their building programme for 1954–55.
    With regard to grammar schools, I would refer the hon. Member to the answer to his previous Question.

    School Clothing
    Mr. Doddsasked the Minister of Education if she is aware of the concern resulting from the developing practice in State schools of adopting unusual coloured and highly-priced uniforms and badges; and, in view of the need for economy in this direction, to draw the attention of schools to the introduction by the British Colour Council of a range of 16 shades which could be used for inexpensive school uniforms.
    Miss Horsbrugh: In leaving the provision of distinctive school clothing to the discretion of the responsible school authorities I have made it clear that I
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    expect them to exercise the strictest economy and to avoid any unnecessary expense, either to public funds or to parents. I have no evidence that this discretion is being misused.
    The answer to the second part of the Question is, "No, Sir."
    Mr. Dodds: Is there no one in the Ministry of Education who can advise school heads that bright colours necessitate pure wool being used instead of mixture wools? Is there not some ground for looking into this matter? Does the right hon. Lady not know that manufacturers and, particularly, parents would welcome a greater interest by the Minister of Education?
    Miss Horsbrugh: An administrative memorandum was sent to schools on 2nd January, 1952, but I left discretion to the school authorities as to the articles of distinctive clothing to be supplied; I urged that the strictest economy should be observed, and asked them to take the opportunity of reviewing the requirements for school uniforms so that unnecessary expenditure, both to public funds and to parents, should be eliminated.
    Mr. Dodds: That is not dealing seriously with the subject. The hard-pressed parents want more energy and advice given to some of the school heads In view of the unsatisfactory position, I beg to give notice that I shall raise the matter on the Adjournment.

    Land and Property, Eastry (Cost)
    Sir W. Smithersasked the Minister of Education the cost of the 64 acres of land known as Nonnington College, near Eastry, in Kent; the cost of the furnishing and equipment; the cost of repairs and improvements; the cost of the building known as Old Court House; how much of the cost falls on the taxpayers: how much on the ratepayers; and, in view, of the need for economy in national and local government expenditure, what steps she is taking to stop expenditure of this nature.
    Miss Horsbrugh: The costs are: purchase of Nonnington College £23,820; furnishing and equipment £18,400; later improvements £4,920; purchase and adaptation of the Old Court House £18,266. 40 per cent. of these costs falls on rates and 60 per cent. on taxes.
    Sir W. Smithers: Is the Minister aware that the alarming increase in rates and taxes must increase our cost of production and impede or destroy our ability to compete in the markets of the world? What is the good of having children and teachers in schools if they have nothing to eat? Will she try to stop achieving the impossible by trying to make Socialism work?
    Miss Horsbrugh: This college building and the Old Court House were bought in 1951, so I have no responsibility for that. But I can tell my hon. Friend that part of the site is 54·7 acres, not 64 acres, that part of the land has already been let for agricultural purposes and that the local education authority intend to let more land as soon as possible.
    Dr. King: Will the right hon. Lady say what this college is being used for?
    Miss Horsbrugh: It is one of seven colleges which train women teachers in physical training education.

    School Building Programme
    Mr. Swinglerasked the Minister of Education the total of school places created by new building since 1st April, 1945.
    Miss Horsbrugh: Between 1945 and 1st February, 1953, 898,380 new school places were provided.
    Mr. Swingler: May I first ask the Minister whether she is still confident of reaching the figure of 1,150,000 by the end of this year, and secondly, in view of her well-known satisfaction with the higher rate of the completion of new schools but of the report of the Ministry of the worsened state of affairs in the primary schools, has the time not come to put back the projects which she cut out of the school building programme last year?
    Miss Horsbrugh: I am still confident that we shall get and, I think, get more than the 1,150,000 places by the end of 1953.
    Mr. Swinglerasked the Minister of Education how many primary and secondary schools were under construction at the latest date for which figures are available; and how these figures compare with those of 12 months, and two years, ago.
    Miss Horsbrugh: On 31st March last there were 681 primary and 361 secondary schools under construction. Corresponding figures for 1952 were 846 and 278 respectively, and, for 1951, 934 and 280.
    Mr. Swingler: In view of these figures, which show a reduction in the number of schools under construction now, and the fact that the right hon. Lady's Department have now issued a report saying that the school building programme is not keeping pace with the rise in the school population and, therefore, under her administration the situation has worsened, will she reconsider the whole programme and, in spite of her optimism or complacency, as the case may be, add some more projects to the school building programme?
    Miss Horsbrugh: The hon. Gentleman will be glad to know that we are providing more school places each year. In the year ended 1st February, 1952, there were 159,000 new school places added. The following year, ending February, 1953, the number had gone up to 218,000 and for next year we hope that by February the number will have gone up to 250,000.
    Mr. Remnant: Can my right hon. Friend say how many of these schools are to replace derelict or unsuitable existing schools?
    Miss Horsbrugh: All these schools which are being built at present are for the increased population or for the removal of the population to new housing areas and new towns.
    Mr. Swinglerasked the Minister of Education if she will initiate a national inquiry to discover how many local education authorities are at present unable to admit all children to school at the age of five years and to enable her to revise the school building programme so as to overcome this difficulty in the future.
    Miss Horsbrugh: No, Sir, At this stag; of affairs it is local action that is needed, and in the few areas concerned I am satisfied that the local education authorities are doing their best to find places for the small number of children still awaiting admission to school.
    Mr. Swingler: Is the Minister really satisfied with keeping herself and the

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    House in complete ignorance of the situation concerning the primary schools while children are being refused admission and her Department and the local education authorities are not carrying out their statutory responsibility? How can she shape a proper school building programme without knowing where the real shortages are?
    Miss Horsbrugh: I reviewed the building programme on the information we received from the local education authorities as to the number of children for which schools will have to be provided and, as the hon. Gentleman knows, there will be the greatest pressure this year in the infant schools. At present, the children are going into school at five years, in some cases in the term after they become five and not the term before they become five.

    Admissions, Cornwall
    Mr. Haymanasked the Minister of Education at which schools in Cornwall admission is now being refused to children who have reached the age for compulsory school attendance.
    Miss Horsbrugh: I am informed that all children in Cornwall who reached the age of five before the beginning of the present term have been found places in school, though in two areas children were not able to be admitted to the school of their first choice.
    Mr. Hayman: Will the Minister make further inquiries as to what the position is this term?
    Miss Horsbrugh: Yes. I have given the hon. Gentleman the up-to-date figures.

    New Schools, Accrington
    Mr. H. Hyndasked the Minister of Education how many new schools it is estimated will be built in Accrington in the current financial year.
    Miss Horsbrugh: None, Sir.
    Mr. Hynd: Is not that answer very unsatisfactory in view of the fact that many children in Accrington have to travel considerable distances because there is no room in the schools in the neighbourhood, and that some of the schools are in a deplorable condition, particularly one about which I have been
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    in correspondence with the right hon. Lady's Department?
    Miss Horsbrugh: The local education authority have not asked for a new school to be included in their current building programme or in previous ones, but I am considering the authority's proposal to include a new secondary school in the reserve list for 1954–55.
    Mr. Hynd: Can the right hon. Lady hold out any hope as to when she feels there is likely to be any result, in view of her present economy campaign?
    Miss Horsbrugh: As we are building more schools than ever before there is great hope.

    Deaf and Blind Children
    Mr. Edward Evansasked the Minister of Education in how many schools for the deaf and the partially deaf, respectively, there are vacancies for pupils; in how many there are waiting lists; and what is the overall position in regard to new admissions.
    Miss Horsbrugh: I have no detailed information about vacancies or waiting lists at particular schools. I understand that most schools for the deaf and partially deaf have waiting lists, despite a steady increase in the number of places available.
    Mr. Evans: Is the Minister not aware that in some schools there is a very long list of empty places while in others there are long waiting lists? Will she examine this programme on an overall basis to see whether arrangements can be made between the various voluntary societies which run schools and the local authorities to see that there is a fair interchange so that no one shall be left without the necessary education?
    Miss Horsbrugh: I will certainly look into that.
    Mr. Edward Evansasked the Minister of Education in how many schools for the blind and partially seeing, respectively, there are vacancies for pupils; in how many schools there are waiting lists; and what is the overall position in regard to new admissions.
    Miss Horsbrugh: I have no detailed information about vacancies or waiting lists at particular schools. I understand

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    that there are vacancies at some schools for the blind, and that, in general, no serious delay occurs in the admission of children to schools for the blind or partially sighted.
    Mr. Evans: May I follow up my supplementary question to the previous Question? The same principle is involved. There are schools with vacancies and there are schools with long waiting lists. Will the Minister call for returns from these schools for the partially seeing and schools for the blind to see whether accommodation can be made between those with surplus places and those with a long waiting list?
    Miss Horsbrugh: Certainly, but I would remind the hon. Member that some of the blind children whom it is difficult to place suffer from other handicaps, in addition to their blindness, and there is the difficulty of trying to get the children into exactly the right type of school we want.

    Adult Education Service Committee (Membership)
    Mr. G. Longdenasked the Minister of Education the membership and terms of reference of the committee which is to review the administrative and financial aspects of the Adult Education Service.
    Miss Horsbrugh: I have invited the following to serve on the Committee, and they have accepted my invitation:
    Chairman

    Dr. Eric Ashby, Vice-Chancellor, Queen's University, Belfast.

    Members

    Mr. A. L. C. Bullock, M.A., Censor of St. Catherine's Society, Oxford.

    Professor W. L. Burn, Professor of Modern History, University of Durham.

    Mr. T. Mervyn Jones, M.A., LL.M., Chairman, Wales Gas Board, and a former Town Clerk of Newport.

    Sir Wilfrid Martineau, M.C., T.D., M.A., a former Chairman of the Birmingham Education Committee.

    Mr. C. M. Skinner, C.B.E., F.C.A., LL.D., a member of the Court of Governors of Manchester University.

    Mr. G. B. Thorneycroft, member of the General Council Trades Union Congress.

    The Committee will have the following terms of reference:
    "To review the present system by which the extra-mural departments of universities, the Workers' Educational Association and the
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    other responsible bodies provide local facilities for adult education, with special reference to the conditions under which these facilities are organised and are aided by grant from public funds: and to make recommendations."
    I should like to take this opportunity of expressing my gratitude to these gentlemen for being willing to help me in this way. They will have the assistance of a secretary from my Department.
    Mr. Grimond: Is a similar inquiry to be made in Scotland and, if so, who is to conduct it?
    Miss Horsbrugh: As far as I know there is no inquiry for Scotland. No doubt the hon. Member will address that question to the Secretary of State for Scotland.
    Mr. Pannell: Will the right hon. Lady tell the House whether she thinks there is any serving local government member on that body?
    Miss Horsbrugh: I have not invited serving members of local authorities, or members who are serving in any of the associations, to take part, but I think it will be seen from this list that we have people who have experience in local government.
    Mr. Pannell: If the right hon. Lady holds to the decision that she objects to people who are serving with various bodies, why has she appointed a serving member of the T.U.C. General Council?
    Miss Horsbrugh: I thought that was quite essential. He is not serving as a member of any body which has responsibility for education.

  COMMONWEALTH RELATIONS

    Emigration to Australia
    Brigadier Medlicottasked the Under-Secretary of State for Commonwealth Relations how many emigrants went from Britain to Australia during the years 1946 to 1952, inclusive; and how many British emigrants returned from Australia to Britain during the same years.
    The Under-Secretary of State for Commonwealth Relations (Mr. John Foster): In the period mentioned 272,916 migrants

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    of Commonwealth citizenship travelled direct by sea from the United Kingdom to Australia. The total number of immigrants into the United Kingdom from Australia for the same period is 47,585, but statistics of immigration into the United Kingdom do not distinguish between those who are emigrants from this country returning here and others.
    Brigadier Medlicott: In view of the importance of encouraging the migration of people between various parts of the Commonwealth, can the Minister say whether this subject received a prominent place on the agenda for the discussions between the Commonwealth Prime Ministers and whether a statement is likely to be made in the near future?
    Mr. Foster: I cannot say.
    Mr. A. Henderson: Have we got rid of the considerable backlog which existed during the immediate post-war years owing to the shortage of shipping?
    Mr. Foster: Yes, Sir.
    Mr. de Freitas: Will the hon. Gentleman take advantage of the visit of the Australian Ministers to this country to point out that there is a large and unfulfilled world-wide demand for emigrants from this country and that Australia will get her fair share only if conditions are made sufficiently attractive?
    Mr. Foster: I do not agree with the hon. Member.

    United Kingdom-Australia Social Services (Reciprocity)
    Major Anstruther-Grayasked the Under-Secretary of State for Commonwealth Relations whether he can now announce details of the reciprocal social service and insurance arrangements arrived at between Australia and the United Kingdom.
    Mr. J. Foster: As has already been announced, an agreement on social security between the Government of the United Kingdom and the Government of Australia was signed by my right hon. Friend the Prime Minister and the Prime Minister of Australia on Monday.
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    The agreement covers retirement pensions and widows' benefits, unemployment and sickness benefits, and family allowances on the United Kingdom side, and the corresponding benefits of the Australian Social Services scheme. It is hoped that the agreement will come into operation early next year. The full text will be published as a White Paper very shortly.
    Major Anstruther-Gray: In view of the great benefit which this scheme will confer upon both emigrants and immigrants, will my hon. and learned Friend take every step to see that his announcement receives full publicity?
    Mr. Foster: Yes. Sir.

  TRADE AND COMMERCE

    Cotton Textiles (Export to Argentina)
    Mr. Anthony Greenwoodasked the President of the Board of Trade to state, in terms both of quantity and value the amount of cotton textiles exported from this country to the Argentine in each year from 1946 onwards.
    The President of the Board of Trade (Mr. Peter Thorneycroft): Since there are many figures in the answer, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Greenwood: While I thank the right hon. Gentleman for that very helpful reply, may I ask whether he will not agree that the figures show that recently there has been a decline in these exports? Is he aware that there is a good deal of disappointment in Lancashire about the Government's failure to help industry in recent negotiations in the Argentine, and can he say whether the Government have any plans at all for arresting this decline in our exports to the Argentine?
    Mr. Thomeycroft: Perhaps the hon. Gentleman will study the figures, which show that there has been a decline since 1949.
    Following are the figures:

    UNITED KINGDOM EXPORTS TO ARGENTINE REPUBLIC

    1946

    1947

    1948

    1949

    Cotton yarns and manufactures (except apparel, embroidery and cordage) Cotton yarns

    £

    3,301

    14,206

    448,115

    762,892

    lb.

    7,495

    31,014

    663,147

    1,214,281

    Woven piece goods

    £

    388,919

    935,218

    1,528,756

    1,941,731

    Th. sq. yds.

    3,600

    6,305

    10,109

    10,769

    Finished thread for sewing, crocheting, etc.

    £

    785,255

    733,223

    966,808

    1,157,497

    lb.

    1,076,020

    817,425

    955,409

    1,215,891

    All other cotton manufac-tures. †

    £

    93,755

    183,980

    237,521

    147,604

    TOTAL†

    £

    1,271,230

    1,866,627

    3,181,200

    4,009,724

    1950

    1951

    1952

    1953*

    Cotton yarns and manufactures (except apparel, embroidery and cordage) Cotton yarns

    £

    320,882

    25,920

    270,582

    3,552

    lb.

    603,011

    30,833

    454,012

    3,612

    Woven piece goods

    £

    734,952

    185,851

    35,615

    13,578

    Th. sq. yds.

    3,639

    782

    114

    43

    Finished thread forsewing, crocheting, etc.

    £

    293,281

    152,868

    4,329

    —

    lb.

    304,629

    125,420

    2,018

    —

    All other cotton manufac-tures.†

    £

    33,255

    30,360

    5,860

    2,319

    TOTAL†

    £

    1,382,370

    394,999

    316,386

    19,449

    * First four months at an annual rate.

    †Quantity not available.

    Match Industry (Commission's Report)
    Mrs. Castleasked the President of the Board of Trade what action he proposes to take to implement the proposals in the Report of the Monopolies Commission, on matches and match-making machinery.
    Mr. P. Thorneycroft: I would refer the hon. Member to the answer given on 19th May to my hon. Friend, the Member for Shrewsbury (Mr. Langford-Holt).
    Mrs. Castle: Is it not a fact that the Board of Trade had this Report in their hands for nearly six months before publishing it and that another month has elapsed since publication? As the right hon. Gentleman is on record as having pledged himself to fight monopoly, can he explain why he is sitting on this Report and being so afraid to act?
    Mr. Thorneycroft: This is a large and complex subject and it took the Monopolies Commission something like three to four years to give full consideration to it. I see no reason why I should not take four weeks after publication.
    Mr. Awbery: Is the Minister aware that the cost of matches has risen from 1½d. a box to 2s. a dozen boxes and that the rise in cost is not justified, according to the Commission? Will he take early steps to protect the public from such exploitation?
    Mr. Thorneycroft: I think we have to consider the Report as a whole.
    Mr. Grimond: Does not the Minister's reply show again that the powers of the Commission at present are quite inadequate and that his own powers concerning monopolies also need strengthening?
    Mr. Thorneycroft: I do not think it affects the powers of the Commission. Their Report on this matter is very full and certainly deserves serious and close consideration before any announcement on policy is decided.

    Trade Directory
    Mr. Nabarroasked the President of the Board of Trade whether he is aware that the Federal Association of German Industry has recently issued a West German export directory printed in German, English, French and Spanish, listing the names of firms and all their products for promotion of West German export trade; and, in view of the heavy public expenditure incurred in recent years by the statistics of trade sections of his Department, and their possession of all relevant data, if he will take steps to initiate a comprehensive British industrial directory for use by Britain's customers and prospective customers oversea, and comparable in scope to the West German publication.
    Mr. P. Thorneycroft: No, Sir. There are already a number of trade directories published in this country; and I do not think it necessary, or appropriate to the functions of a Government Department, to take responsibility for initiating a new one.
    Mr. Nabarro: My right hon. Friend will observe from the Question that I merely asked him to initiate such a directory. Has he seen this extraordinarily comprehensive and useful document which will add to the West German prospects of securing exports for their country very considerably, possibly with detriment to many British engineering companies' prospects, noticeably in Latin-American countries?
    Mr. Thorneycroft: All I would say is that I do not propose to publish any such report myself. A number of directories of this kind are published by firms in this country, as my hon. Friend knows, and I think they serve a very useful purpose, but I do not think it is appropriate for the Government to publish them.
    Mr. Anthony Greenwood: In view of the right hon. Gentleman's refusal or inability to answer the last three Questions, I beg to give notice that I shall raise the conduct of his Department on the Adjournment at an early date.

    Oil Refinery, Warsash
    Dr. Bennettasked the President of the Board of Trade on what date the licence was issued for the Regent Oil Company or Caltex Company to construct a refinery at Warsash; for what maximum period this licence remains valid before plans are presented; and what progress is being made towards some final definite plan of development for this area.
    Mr. P. Thorneycroft: I assume that my hon. Friend refers to the Industrial Development Certificate which was issued on 25th June, 1951. This remained valid for 12 months. The company have not applied for another certificate, but I am informed that they have been proceeding with the purchase of land on the site.
    Dr. Bennett: Apart altogether from the pros and cons of this scheme, which I am satisfied can be ventilated adequately later, is my right hon. Friend aware of the uncertainty which has been created by the failure to go forward with this scheme to any extent even although the land has been provisionally acquired? Is he further aware that if this is to be put in cold storage indefinitely houses and schools cannot be built and a great deal of hardship will be inflicted locally?
    Mr. Thorneycroft: All the responsibility that I have is for the issue of an Industrial Development Certificate. I have issued such a certificate which has now lapsed because the scheme has not gone forward, but if any further application is made I shall be very happy to consider it.

    Anglo-American Film Agreement (Renewal)
    Lieut.-Colonel Liptonasked the President of the Board of Trade on what revised terms he will renew the agreement with the United States of America relating to the import of American films.
    Mr. P. Thomeycroft: The Anglo-American Film Agreement runs till 30th September of this year. The arrangements after that date will be the subject of discussion between the parties later this year. I cannot say in advance of those discussions what proposals may be made by either of the parties to the Agreement.
    Lieut.-Colonel Lipton: Not having had very good value from this very substantial dollar expenditure in the past, will

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    the right hon. Gentleman approach the forthcoming negotiations with the idea of not wasting dollars we have not got on films we can very well do without.
    Mr. Thorneycroft: The hon. and gallant Gentleman knows that the actual dollar outgoings were reduced from $25 million to $20 million in agreement with the Americans only recently.
    Lieut.-Colonel Lipton: It is still too much.

    Anglo-Spanish Discussions
    Mr. G. Jegerasked the President of the Board of Trade whether he will make a statement on the progress of the Anglo-Spanish talks on trade discrimination against Britain.
    Mr. P. Thorneycroft: The review of the current arrangements governing trade and payments between Spain and this country will be resumed next week, when a Spanish delegation is visiting London.
    Mr. Jeger: Is the President prepared to give us an interim report on the progress of these negotiations, and will he either confirm or deny the rumours that they are in a very unsatisfactory state?
    Mr. Thorneycroft: Their unsatisfactory state is a matter of opinion. I certainly should like to see the Spaniards issuing import licences more frequently for exports from this country. However, I do not think I had better pursue the matter in detail as these negotiations are about to start.
    Mr. Bottomley: Would the President of the Board of Trade insist on the Spanish Government giving equal facilities for British traders as are given for countries on the Continent?
    Mr. Thorneycroft: That is a factor which will be borne in mind in connection with these negotiations.
    Mr. Ernest Davies: In view of the very unsatisfactory state of our Spanish trade, as the President of the Board of Trade himself has implied, does it not confirm the futility of the lifting of the ban on the selling of military equipment to Spain?
    Mr. Thorneycroft: That does not enter into this Question.

    Foreign and British-caught Fish (Landing Restrictions)
    Mr. Osborneasked the President of the Board of Trade what restriction exists on the landing of foreign-caught fish in the United Kingdom; and in what countries there are restrictions on the import of British-caught fish.
    Mr. P. Thorneycroft: Fresh and frozen fish may be imported into the United Kingdom under open general licence without quantitative restriction if taken and landed by vessels of Western European and certain other foreign countries or if consigned from those countries; landings of foreign-caught fish, like those of British-caught fish, are however, subject to the restrictions imposed by the Sea Fishing Industry (Immature Sea Fish) Order, 1948.
    On the second part of the Question, I assume that my hon. Friend has in mind those Western European countries which are fairly easily accessible to our fishing fleets. Import arrangements in those countries vary considerably. Portugal and Switzerland admit imports of British-caught fish almost without restriction. Norway, France, Western Germany, Sweden, Belgium, the Netherlands, Denmark and the Irish Republic restrict imports in varying degrees.
    Mr. Osborne: In view of the difficulties with which the industry is faced at this time of the year, would the President look into the possibility of seeing whether our fishermen could get as fair a deal from other countries as we give to them?
    Mr. Thorneycroft: This Question asks me to state factually what the restrictions are. I would be very far from agreeing that we should insist on exact reciprocity in all forms of quota and licensing arrangements on each item. That would make our trading very difficult indeed.
    Mr. Osborne: I am not asking for exact reciprocity. I am asking that our trade should get as fair a deal in other countries as we give to their fishermen and to their catches here. That is all.
    Mr. Osborneasked the President of the Board of Trade what were the prewar quotas imposed on the landing of foreign-caught fish in the United Kingdom and, in view of the glut of British-caught fish at this time of the year, if he

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    will consider reimposing the pre-war quotas.
    Mr. P. Thorneycroft: The pre-war quotas for foreign landings of sea fish are set out in Part II of the Schedule to the Sea-Fishing Industry (Regulation of Landing) Order, 1933, a copy of which I am sending to my hon. Friend.
    As regards the second part of the Question, it would be contrary to our international obligations to introduce restrictions of this kind on foreign landings unless at the same time corresponding action were taken to regulate British landings.
    Mr. Osborne: As international agreements can be altered, have been altered and, where they are unjust, ought to be altered again, would the President bear in mind that many of the crews get their wages according to the value of the catch, and since there is a slump now and they are not getting good returns will he look at this again and see that our people get a fairer deal than they are getting today?
    Mr. Thorneycroft: My hon. Friend will realise that it would be a very major alteration in international arrangements if we were to start to use import quotas for protective purposes when they are designed to deal with balance of payments difficulties.
    Mr. G. Brown: If the use of import quotas for that purpose is improper for the reasons which the right hon. Gentleman has given, how much more improper is it for the Government to allow a complete ban, as operates at the moment?
    Mr. Thomeycroft: That raises an entirely different question. I am asked here solely about Government restrictions on the imports of fish.
    Mr. Hector Hughes: Co-relatively, are there not unjust restrictions on sales of British-caught fish in Continental countries, and is it not time that that was reviewed in favour of the British fish industry?
    Mr. Thorneycroft: Restrictions vary very considerably between country and country. If the hon. and learned Gentleman would like particulars of any special form of restrictions in any country perhaps he would put a Question down.

    SCIENCE GRADUATES (EMPLOYMENT)
    Mr. C. Hughesasked the Chancellor of the Exchequer what percentage of science graduates leaving universities and comparable establishments in 1952 entered the teaching profession, commerce and industry, and Government service, respectively; and what were the comparative figures in 1938.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): Of the internal graduates of universities and university colleges in pure science in 1952 whose occupations are known, 11·1 per cent. entered the teaching profession (including universities, schools and colleges), 24·4 per cent. industry and commerce and 10·6 per cent. Government service, at home or overseas, or nationalised industry. A further 15 per cent. went on to undertake teacher training courses.
    I regret that comparable figures are not available for 1938.
    Mr. Hughes: Is it not a fact that the number of science graduates now entering the teaching profession is deplorably low? Will the Minister consult the Minister of Education to see what can be done to improve the position?
    Mr. Boyd-Carpenter: My right hon. Friend is in constant touch with his right hon. Friend the Minister of Education. I agree with the hon. Gentleman that it is an important question, which has to be carefully watched.
    Mr. Chetwynd: Is not the real difficulty the disparity in salary between that for the graduates entering the teaching profession and that for those entering industry and commerce?
    Mr. Boyd-Carpenter: That opens up a number of very wide questions which it is not perhaps particularly convenient to deal with by Question and answer.

    COMMONWEALTH (ECONOMIC DEVELOPMENT)
    Mr. Beswickasked the Chancellor of the Exchequer what discussions he has had with representatives of other Commonwealth countries about further measures to be taken to restore the

    441
    economic stability and to quicken the economic development of the Commonwealth as a whole; and if he will make a statement.
    The Economic Secretary to the Treasury (Mr. R. Mandling): While the conference covered many and varied subjects my right hon. Friend had very useful discussions on economic matters, covering both the longer term and immediate future. The Prime Ministers endorsed the objectives agreed upon by the Economic Conference of last December. Meanwhile, the need for developing the resources of the Commonwealth countries and for removing restrictions on trade especially within the Commonwealth and the sterling area were particularly stressed, as is indicated in the communiqué approved by the conference.
    Mr. Beswick: As the Economic Secretary appreciates the enormous potential political influence of the Commonwealth, of which we had a glimpse in the last few weeks, is it not absolutely essential to back it up by solid progress in the economic field? Can he tell us whether we are to have a more detailed statement about the steps proposed to be taken?
    Mr. Maudling: I entirely endorse the hon. Member's view about the importance of the development of the resources of the Commonwealth, but I do not think that my right hon. Friend has anything more to add to the communiqué which has already been issued.
    Mr. Stokes: Can the Economic Secretary say whether it was pointed out to the Commonwealth Ministers, for example, to Australia, what an advantage it would be to build up in our favour sterling balances in Australia for the purpose of increasing capital equipment over there as compared with the absurdity of building up sterling balances in this country in time of war? Is not peacetime much more important than wartime?
    Mr. Maudling: All possible matters designed to stimulate trade between this country and Australia were discussed.
    Mr. Beresford Craddock: Can my hon. Friend say whether there were any further discussions about the restrictive
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    clauses in the General Agreement on Tariffs and Trade at the recent conference, and if so, with what results?
    Mr. Ellis Smith: Ask the Americans.
    Mr. Maudling: As I say, the discussions covered economic matters generally affecting the Commonwealth. I have nothing to add of a more detailed character on that point.
    Mr. Bottomley: Can the hon. Gentleman say whether the Strasbourg Plan, prepared by the Council of Europe, was considered by the Prime Ministers' Conference?
    Mr. Maudling: I cannot make a detailed statement on anything that was discussed, but certainly everything relating to the matters referred to in the communiqué was considered.

  NATIONAL FINANCE

    Whisky (Export Tax)
    Mr. Stokesasked the Chancellor of the Exchequer whether he will place an export tax on whisky, in view of the fact that barley has gone up from £4 10s. to £21 a ton since 1939, and the export price of whisky only from 3s. 9d. to 7s. 2d. a bottle, whereas a bottle of whisky now sells in the United States of America at $6.01 compared with $3.28 in 1939.
    Mr. Boyd-Carpenter: No, Sir.
    Mr. Stokes: Am I to understand that the Chancellor of the Exchequer has no comment whatever to make on the extraordinary position that the import cost of barley has gone up so much and the export cost of whisky is still so low? Has the hon. Gentleman even taken the trouble to examine the marginal profits made in America by the distributors of Scotch whisky? Has the matter been examined?
    Mr. Boyd-Carpenter: The Question asked not for comment but for an export tax. My right hon. Friend feels that this is the type of topic on which the judgment of the trade as to what the market will most conveniently bear is of great importance and relevance, and that the trade are at least as capable as anybody else of forming a proper view of what is a fair and sensible price, bearing in mind,

    443
    of course, that excessive exploitation of a temporary shortage often has a very bad effect indeed on long-term markets.
    Mr. Stokes: Is the Financial Secretary aware that I have listened to all that sort of "baloney" for a long time and that it is not an answer to the question? Is he further aware that this is by far the most important export to America and that every competent business man outside the whisky trade considers that we are a set of fools. Will he not do something about it?
    Mr. Boyd-Carpenter: I am sorry if the right hon. Gentleman has heard it before and that the manifest common sense of this answer has not conveyed a proper impression to him. I can assure the right hon. Gentleman that this matter has been looked at most carefully and that we have seen no reason whatever to take the measure he suggests or to override the considered judgment of people who know this business and have known it for many years.
    Mr. Emrys Hughes: Is the Minister aware that consumers of Scotch whisky will now know that he has added insult to injury, in so far as he is now trying to explain the fact that consumers of Scotch whisky who think the charge is too high are being asked to subsidise the American consumer?
    Mr. Boyd-Carpenter: I am casting no reflection on any consumers of that agreeable beverage.
    Mr. Stokes: Will the Financial Secretary ask the Chancellor to make quite sure that he really has examined the method of merchandising this commodity because, so far as I have examined it, it is in the hands of competitors in America and there is no sense in leaving our chief export in the hands of competitors on the other side?
    Mr. Boyd-Carpenter: As the right hon. Gentleman is aware, questions of the method of merchandising are for my right hon. Friend the President of the Board of Trade. The Question related to a separate matter of taxation.

    National Wage Bill
    Mr. Osborneasked the Chancellor of the Exchequer by how much the national wage bill increased in each year separately since 1945.
    Mr. Maudling: As the answer contains a table of figures I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Osborne: Without having those figures, may I ask the Economic Secretary whether he will continue to make it clear to the nation that increases in wages as well as increases in dividends, if they do not come out of increased productivity, must put up the cost of living in this country and make it difficult for us to sell abroad? Will he keep on saying that?
    Mr. Awbery: At the same time as he circulates those figures in the OFFICIAL REPORT, will the hon. Gentleman tell us the increase that has taken place in profits, dividends and interest during a similar period?
    Mr. Maudling: If that question is put down, I will do my best to give an answer.
    Mr. Harold Davies: Will the Minister inform the hon. Gentleman who asked the Question that there is something more than productivity. There is also the matter of distribution. Otherwise, the Government will get into the position of the man with a completely bald head and whiskers reaching to his feet—ample productivity, but a complete lack of distribution?
    Following are the figures:
    Estimates of the changes in the national wage bill from 1945 to 1951 are given in National Income and Expenditure of the United Kingdom, 1938–1946 (Cmd. 7099) and in National Income and Expenditure, 1946–1951. These changes, together with a provisional estimate of the change in 1952, are as follow:
    Increase in national wage bill from previous year:

    £ million

    1946

    …

    …

    …

    …

    240

    1947

    …

    …

    …

    …

    445

    1948

    …

    …

    …

    …

    460

    1949

    …

    …

    …

    …

    200

    1950

    …

    …

    …

    …

    240

    1951

    …

    …

    …

    …

    475

    1952

    …

    …

    …

    …

    390

    OFFICIAL-PAID ENVELOPES (MEMBERS)
    Mr. Woodasked the Financial Secretary to the Treasury whether buff official-paid envelopes may be used for

    445
    correspondence between Members of Parliament, nationalised industries and local authorities.
    Mr. Boyd-Carpenter: The statement made by the then Chancellor of the Exchequer on 6th November, 1945, related only to the use of these envelopes for letters sent by hon. Members to Government Departments. They have never been authorised for use for letters to local authorities. The present rule also excludes their use for letters to nationalised industries, but this aspect of the matter has been drawn to the attention of the Select Committee on Nationalised Industries.
    Mr. Wood: Will my hon. Friend say why letters are not allowed to be sent in those envelopes to nationalised industries and local authorities?
    Mr. Boyd-Carpenter: So far as the nationalised industries are concerned, as I said in my main answer, the matter has been drawn to the attention of the Select Committee which is dealing with the relation of this House to those industries. The report so far received has not dealt with that matter. So far as local authorities are concerned, it has never been the practice so to authorise them. This is clearly a matter on which the Government would have to pay considerable attention to the views of the House. So far as I am aware, no very strong opinion has been expressed so far in respect of local authorities, nor do I think was it done when the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) made what is the present ruling statement in 1945. If, however, there is any body of opinion that desires to express a view, I am sure that my right hon. Friend will be glad to consider it.
    Sir E. Keeling: Is my hon. Friend aware that his reply as regards nationalised industries is not in accordance with the practice, because nationalised industries receive and accept officially paid envelopes from hon. Members? Can he say whether they pay the postman 5d. on each, or whether they default?
    Mr. Boyd-Carpenter: That is a question which should be addressed to one of my right hon. Friends who is concerned with the specific nationalised industry.

  AGRICULTURE

    Somerset Agricultural Committee (Widow's Cottage)
    Mr. Anthony Greenwoodasked the Minister of Agriculture what steps he is taking to acquaint county agricultural committees with the limited extent of their powers, in view of the decision of the Somerset Agricultural Committee to issue to a master of foxhounds a certificate which would have deprived a widow of her cottage in order to house a hunt servant, and the strictures of the county court judge on the committee's abuse of its powers.
    The Minister of Agriculture (Sir Thomas Dugdale): The Somerset County Agricultural Executive Committee were asked by a landlord for certificates in respect of two of his workers for whom cottages were required. One worker was a tractor driver and the other a huntsman and part-time farm worker. The committee decided to grant one application only, for the tractor driver, and to refuse the other. When the certificate was sent to the landlord's solicitors this was not made sufficiently clear. I am asking the committee to ensure that in future the certificate shows clearly the class of worker concerned. I do not consider that any further action is necessary.
    Mr. Greenwood: Will the Minister also make it plain to other county committees that they must take similar steps?
    Sir T. Dugdale: Yes, but I do not think there is any chance of this recurring.

    Norwich Food Production Council (Pamphlets)
    Sir W. Smithersasked the Minister of Agriculture if he has studied two pamphlets, copies of which have been sent to him, issued by the Norwich and District Food Production Council, and especially the criticism of his policy on page 3; and if he will make a statement, in view of these pamphlets, as to what action he proposes to take.
    Sir T. Dugdale: I have read these pamphlets and I agree with their general thesis that the practice of food production in gardens and allotments is an economic and social asset of the highest value.

    447
    I cannot, however, accept the criticism that the Government are ignoring the domestic producer. The Government's policy is to work through local authorities and the voluntary organisations of domestic food producers. Financial and other assistance is being provided for these bodies, and the Government will continue to do everything in their power to help and encourage those who choose this healthy and most useful activity.
    Sir W. Smithers: Broadly, will the Minister give an undertaking that all bureaucratic interference with the farming industry shall cease forthwith?

    Maesylade Farm, Breconshire
    Mr. Watkinsasked the Minister of Agriculture whether he is aware of the possible loss of food production at Maesylade Farm, Breconshire, consequent upon the rejection of the renewed application of the only eligible farm worker for deferment upon this isolated hill farm; how much money has been, and is to be, spent on improvements on this farm under the Hill Farming Act; what is the acreage; how much is cultivated; and what stock is carried.
    Sir T. Dugdale: As regards the first part of the Question, I would refer the hon. Member to the answer given on 9th June by my right hon. and learned Friend the Minister of Labour and National Service. The cost of the Hill Farming Scheme is estimated at £1,554; the farm covers 118 acres, of which 26 are arable; at the time of the latest available report there were 30 cattle, 281 sheep 2 horses and 120 poultry.
    Mr. Watkins: The Minister has not stated how this farm is to be carried on if no worker is to be employed when the man is called up.
    Sir T. Dugdale: Two periods of deferment have already been granted for the worker concerned, but an application for further renewal has been considered three times by the Agricultural Advisory Panel, who each time recommended rejection. [HON. MEMBERS: "Why?"] They believe that the farm could be carried on.
    Mr. G. Brown: What steps have been taken to supply a replacement? Have the Ministry of Labour been able to help?
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    Is the Minister's committee helping or is he simply washing his hands of it?
    Sir T. Dugdale: The Ministry of Labour have not been asked to help. The Panel consider that if one of the sons of this farmer is called up, the farm will continue to be run by the rest of the family with no serious loss to production.
    Mr. Watkins: The people left on the farm are an old man aged 68 and his wife, who suffers from dropsy. How can they manage the farm?

    Rabbit Traps
    Mr. Woodasked the Minister of Agriculture whether he will make a further statement on the experiments on the working of the humane rabbit trap.
    Sir T. Dugdale: Five thousand "Imbra" humane rabbit traps were sent to county agricultural executive committees in March and April. The trap shows that it will catch and kill rabbits humanely. The manufacturers have made a further improvement to the design and supplies of the modified trap will be sent to county agricultural executive committees. I shall receive reports from them when full-scale trapping is in progress following the harvest.
    The Agricultural Departments have examined a number of other rabbit traps which are claimed to be humane. One of these, in particular, has shown possibilities on test in Scotland, but the tests are not yet complete.
    Mr. Wood: When does my right hon. and gallant Friend expect that a final decision on this trap and its efficiency will be reached?
    Sir T. Dugdale: I do not anticipate that it will be before the beginning of next year. Owing to technical difficulties, the traps were not available before the spring of this year, which was the end of the last trapping season. The new trapping season will not start until after the harvest, and then I want a full report from all over the country as to whether the trap is effective for its purpose. I shall expect to get it soon after Christmas.

    Farms, North Wales (Electricity)
    Mr. C. Hughesasked the Minister of Agriculture what percentage of the farms in each of the North Wales districts

    449
    of the Merseyside and North Wales electricity area are supplied with electricity.
    Sir T. Dugdale: I regret the information is not available. The sub-areas of the Merseyside and North Wales electricity area, of which North Wales forms part, are not confined to North Wales. I am informed by the area board that on 31st March last, 4,963 holdings in North Wales were connected out of a total of 25,248. This is nearly 20 per cent.
    Mr. Hughes: Does the Minister not agree that that percentage is very low and that it is difficult for him, in these circumstances, to expect food production to increase? Will he not consider increasing the capital grant for rural electrification?
    Sir T. Dugdale: I accept that the percentage in this area is lower than over England and Wales as a whole. I am in close contact with my right hon. Friend the Minister of Fuel and Power on this matter, and we are trying to find ways and means of increasing and speeding up the supply of electricity. It must be remembered, however, that before farms can be connected with electricity it is necessary that the backbone and ribs of the electrical distribution system should first be created.
    Mr. Noel-Baker: Can the Minister say how many connections were made last year or the year before?
    Sir T. Dugdale: Not without notice. Perhaps the right hon. Gentleman will put that question down.

    Marketing Schemes (Small Fanners)
    Mr. de Freitasasked the Minister of Agriculture whether he will introduce legislation so that in any future marketing scheme poll the views of the small farmers shall be adequately represented.
    Sir T. Dugdale: No, Sir. I see no reason to think that the present Acts fail to provide for adequate representation of the views of small farmers.
    Mr. de Freitas: Is the Minister aware that in the recent fruit poll the views of the majority of farmers failed merely because the minority comprised farmers with the larger area?
    Sir T. Dugdale: No, I do not accept that. Only about 11,000 out of 17,000 registered producers voted. Had the small producers voted for the scheme in large numbers it would probably have gone through.
    Mr. de Freitas: Would the Minister accept my supplementary if instead of "the majority of farmers" I said that the majority of those voting failed against a minority who voted because that minority had the larger area?
    Sir T. Dugdale: No, I cannot accept that. The present legislation on this point has been approved by all parties and I think it would be the greatest mistake to alter it. A two-thirds majority, in both numbers and acreage, is required in respect of any particular commodity. I believe that that is sufficient in the interests of all concerned.
    Mr. G. Brown: Was not the real trouble with the recent scheme that even had it gone through it would not have been a marketing scheme, so it did not attract anybody's attention?

  COMMONWEALTH PRIME MINISTERS' CONFERENCE
  Sir I. Fraserasked the Prime Minister whether he will make a statement on the recent meeting of Commonwealth Prime Ministers.
  Mr. Braineasked the Prime Minister whether he will make a statement concerning the recent meeting of Commonwealth Prime Ministers.
  Mr. Beswickasked the Prime Minister if he proposes to make a statement about the discussions he has had with other Commonwealth Prime Ministers.
  The Prime Minister (Sir Winston Churchill): I have nothing to add to the reply which I gave yesterday to the Question on this subject by the hon. and gallant Member for Brixton (Lieut-Colonel Lipton).
  Sir I. Fraser: Does my right hon. Friend think it would be fruitful to offer Parliament an opportunity of discussing the conference, not necessarily this week, but soon, particularly to discuss Commonwealth co-operation?
  The Prime Minister: That is a question which might be addressed to my right hon. Friend the Leader of the House when business is being discussed.
  Mr. Noel-Baker: Without wishing to press the Prime Minister to make a statement that he does not wish to make, may I ask him to note that we read with particular satisfaction the paragraph in the communiqué about the Middle East and that we earnestly hope that the outstanding questions with Egypt may be soon settled on the basis of the principles to which the Commonwealth Prime Ministers unanimously agreed?
  The Prime Minister: I am very glad to know of the satisfaction which the right hon. Gentleman feels at the statement which was made.
  Mr. Speaker: Mr. Hector Hughes.
  Mr. Braine: On a point of Order. Am I not entitled to ask a supplementary question, Mr. Speaker?
  Mr. Speaker: The hon. Member is not entitled to do so. In view of the answer given by the Prime Minister I did not think that further cross-examination would be a wise use of the time of the House.
  Mr. Braine: With great respect, Mr. Speaker, may I ask whether it is right and proper for you to express such a view before you have heard the supplementary question that I was going to ask?
  Mr. Speaker: It is perfectly right and proper.
  Mr. Stokes: Are we then to understand, Mr. Speaker, that in future, when a Minister does not want to give the House any information, he has merely to say that he has nothing more to add to what he has already said and then you close the proceedings.
  Mr. Speaker: That is not necessarily the case. In view of what was said today.
  452
  and in view of the Question which the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) is anxious to ask and in view of the hour, I thought that this was the wisest use of the time of the House.

  BERMUDA CONFERENCE
  Mr. Hector Hughesasked the Prime Minister if he will make a statement indicating the nature, scope and agenda of the forthcoming Bermuda Conference.
  The Prime Minister: I do not wish to make any further statement on this subject at the present time.
  Mr. Hughes: Does the Prime Minister not agree that the forthcoming conference may, for good or for ill, involve matters of the gravest import to the British Commonwealth of Nations, and, possibly, the world? That being so, will he not depart from his latest technique of evading answers to Questions and answer full and fairly?
  The Prime Minister: It would be a great pity to try to deal with this piecemeal in answers to Questions.
  Mr. Hughes: Surely the House might be informed.
  Lieut-Colonel Elliot: Is it not clear that if this Question had not been called, the time of the House might have been used to much greater advantage by my hon. Friend the Member for Billericay (Mr. Braine)?
  Mr. Speaker: The right hon. and gallant Member is now being wise after the event.
  Mr. Hughes: On a point of order. In view of the unsatisfactory and evasive nature of the reply of the Prime Minister, I hereby give notice that I shall raise the matter at the earliest opportunity on the Adjournment.

KENYA (SITUATION)
The following Question stood upon the Order Paper:
Mr. HECTOR HUGHES: TO ask the Secretary of State for the Colonies if he will make a statement on the present conditions in Kenya.
At the end of Questions—
The Secretary of State for the Colonies (Mr. Oliver Lyttelton): With your permission, Mr. Speaker, and that of the House, I will now reply to Question 67.
The situation in Kenya has greatly changed since I last reported to the House. The favourable features outweigh the unfavourable. The latest advices which I have received from the Governor show that the tendencies which I observed when I was there are still maintained. First, the flood of confessions which began a few weeks ago has continued. Increasing numbers of Kikuyu are coming down upon the side of the Government and are expressing their confidence in it.
Secondly, the flow of information from the Kikuyu to the police has greatly increased.
Thirdly, the Kikuyu Home Guard is building up rapidly and in some districts, notably in Nyeri, Fort Hall and Kiambu the necessary numbers have already volunteered. In these districts the Government of Kenya do not intend to ask for further recruits but rather to concentrate upon training.
The House will remember that Colonel Morecombe, lately in command of the Suffolks who had a long experience in Malaya, was appointed in the middle of May to the General Staff in Kenya with special responsibilities for the Home Guard.
Lastly, the Mau Mau movement has not spread—significantly—into other tribes, although some bad characters from Nairobi have been creating trouble on the fringes of the Meru and Embu country. In the Rift Valley Province the improvement in the situation is maintained and activities by the gangs are only on a small scale.
Such are the favourable features. The unfavourable are that the movement of between 50,000 and 60,000 Kikuyu from
454
farms back into the Reserves has swollen the size of the gangs in the fringes of the forests. This is not a disadvantage when they can be engaged by police and troops, but although they have not got many firearms their increased size does increase the danger both to the Home Guard and to the loyal population, until we can root them out. Again this emphasises the need for improving the training and equipment of the Home Guard to which I have referred. This is being carried out with great energy.
I wish to make clear the extent to which this is a struggle within the Kikuyu tribe itself between the loyal forces on the side of peace and order and the forces of murder, arson and savagery. This is shown by the fact that since the emergency began, 411 Africans have been killed by the Mau Mau, 17 Europeans and four Asians. This gives the lie on the one hand to those who claim that this is a struggle between black and white, and on the other to those who would have us believe that the Kikuyu tribe as a whole is ranged against the Government.
Many attacks have been made against the Kikuyu Home Guard. Nevertheless, they have resisted them with great steadfastness and frequent success, and I take this opportunity of paying the tribute due to brave men. Upon the strong request of the Asian community, conscription for Asians has been introduced.
I told the Press in Nairobi when I left that I regard the present as a phase of decision and the appointment of General Erskine to be in charge of the operations against the Mau Mau is to bring the emergency to an end as quickly as possible.
Turning to political events, the Kenya African Union has been proscribed. Many members of the Kenya African Union are, of course, loyal citizens, but it had been found in the course of the Kenyatta trial that K.A.U. was being used as a cover for the organisation of Mau Mau. As an illustration, two of the most wanted terrorists in Kenya, Dedan Kimathi and Stanley Mathenge are both K.A.U. members. Kimathi was secretary of the Rumuruti Thomson's Falls branch and Mathenge a member of Nyeri branch.
Mr. S. Silverman: On a point of order. Are not the matters with which the right hon. Gentleman is now dealing sub judice

455
in the Court of Appeal in Kenya? If they are, has he any right to refer to them in this highly tendentious way?
Mr. Speaker: I am not aware that the two men named here are the subject of judicial proceedings. Perhaps the Secretary of State will tell me?
Mr. Lyttelton: Not that I know of. [An HON. MEMBER: "You say they are guilty."] Neither of these men has been arrested.
Mr. Anthony Greenwood: Of what are they guilty?
Mr. Silverman: It is, of course, perfectly true that the persons mentioned by the right hon. Gentleman by name are not, as far as one knows, so far people against whom actual specific charges have been made. Nevertheless, the right hon. Gentleman mentioned them in connection with the Kenya African Union and with issues which were strenuously contested in the trial of Kenyatta and which are still under appeal in that case. Surely the doctrine we have always most strenuously kept to, that we shall not make politically prejudicial statements about matters which are at the moment under inquiry by the criminal courts, is binding as much on Ministers of the Crown as upon anyone else?
Mr. Speaker: I understand that Kenyatta's conviction is subject to appeal at the moment to the Supreme Court, but I do not think anything I have heard so far could possibly prejudice the proper hearing of the appeal of Kenyatta.
Mr. Brockway: Further to that point of order—[HON. MEMBERS: "Oh."]—I am sorry, but this is a very important principle. The Secretary of State for the Colonies has referred to individuals and to evidence which has been given in the Kenyatta trial. Kenyatta and his colleagues have appealed to the Supreme Court and their case is to be heard in the Supreme Court. Surely it is out of order in this House for statements to be made about evidence in that trial referring to two individuals before the case has gone to the Supreme Court?
Mr. Paget: Further to that point of order. The right hon. Gentleman said that the Kenyatta trial had shown—I think that is the word he used—that the
456
Kenya African Union was being used as a front by Mau Mau and that the Kenya African Union had been involved in the organisation of Mau Mau. There were certainly no two issues in the Kenyatta trial which were more strenuously contested than those two. I would therefore respectfully submit that to make, as statements of fact by a Minister of the Crown, contentions in regard to a case under appeal must prejudice that trial.
Mr. Lyttelton: In my submission the names of these two men I have mentioned are in connection with the proscription of K.A.U. and nothing in the proscription of K.A.U. is under any judicial inquiry at this moment.
Mr. Silverman: The right hon. Gentleman, in the course of what he was saying when I ventured to interrupt, referred specifically to what evidence in the Kenyatta trial had shown. The evidence in the Kenyatta trial to which he referred was strenuously disputed at the time and its validity must be one of the issues with which the Supreme Court is concerned, and quite clearly it is sub judice.
Mr. J. Griffiths: May I ask the Secretary of State if he will read the passage again? I happen to have a copy, through his courtesy, and it refers to the trial of Jomo Kenyatta. An appeal is pending, and therefore it is sub judice. The Secretary of State went on to name two persons. I think the relevant point is that it might be construed that the evidence in the Kenyatta trial, which is sub judice, is being connected, perhaps advertently or inadvertently, with the names of the two men who, I gather, are wanted and may come to trial. Does that constitute a reference to a pending trial which ought not to be made?
Mr. Speaker: I have given careful consideration to this point in the short time at my disposal, and the view I at present have is that it is undesirable to say anything about the man who is to have his appeal heard or anything that might prejudice his case. The way I have read the statement—I have just looked at it again—is that, with regard to the two men named by the right hon. Gentleman, I think the words used in the statement are too remote from the issue of the Kenyatta trial to prejudice it, and that I must rule.
Mr. H. Morrison: This is a point of some importance. May I put it to you, Sir, that the essential point is this? The man on trial is, as I understand it, the secretary of the Union referred to, and in the course of the proceedings to which the Secretary of State has referred it has been proved, the Secretary of State is arguing, through the experience of these two men that the Union has intimate connection with the Mau Mau movement.
I am not arguing whether that is right or wrong, but surely if the Secretary of State is to argue that case it is bound to prejudice the trial of the man who is appealing to the Supreme Court, because his argument is that it is already proved that the Union of which this man is the secretary is involved in close association, and indeed conspiracies, with Mau Mau. In those circumstances, I submit to you, Sir, and to the Secretary of State, that it is unwise to quote from evidence of proceedings in the court below, which is what the right hon. Gentleman is doing, when an appeal is pending to the Supreme Court. That is quite apart from the names of these two men.
Mr. Speaker: The words used by the right hon. Gentleman were, I think, to the effect that this Union was being used as a cover by some Mau Mau sympathisers, but he prefaced that by saying that there were many loyal Africans who were also members of the Union—I think he said so—and therefore I do not think that anything which the right hon. Gentleman has said so far would carry the necessary conclusion that membership of the Union was connected with any criminal conspiracy. I ask the right hon. Gentleman to bear these matters in mind and to be careful as to what he does say.
Mr. Morrison: If I may say so, I appreciate your point, Mr. Speaker, but that does not invalidate my point. I admit that the Secretary of State said that there were many loyal people in this organisation, but he did make implications about the organisation itself, which may be right or not. In fact he made allegations—they may be right or wrong —and the person who is going to appeal to the Supreme Court is apparently the chief officer of that organisation. [HON. MEMBERS: "Was."] Well, he was, and presumably he is being tried somewhat in
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that capacity—[HON. MEMBERS: "No."] —yes, somewhat, because surely it is alleged it is so, as it is argued that the organisation was being used for these purposes. I submit with great respect— [Interruption.] The Prime Minister is off the point as usual. If he wants to say anything he had better say it properly and not mumble. I submit that this is a specific reference to the proceedings in the court below which does affect the appeal of the man to the Supreme Court, and that the Secretary of State ought not to pursue that line of statement.
Mr. J. Griffiths: May I read to you, Mr. Speaker, the words used, and ask you whether these words are about the case which is sub judice or not? They are:
"it has been found in the course of the Ken-yatta trial that K.A.U. was being used as a cover for the organisation of Mau Mau."
Since there is an appeal pending in this case, would it be right to say at this stage that anything has been found out in the Kenyatta trial?
Mr. Bowles: If it is out of order to refer to a matter which is sub judice, surely it is more out of order to take action of proscription arising out of evidence given at that trial.
Mr. Speaker: The action of proscription is not a matter for me.
It seems to me, looking at the matter again, that the question which the court in Kenya will have to decide on appeal is whether this man Kenyatta was an organiser or furtherer of the schemes of Mau Mau; that is in question. The statement by the Colonial Secretary, so far as he has gone, says that some members of the African Union were being used as cover, or the Union was being used as cover by some members of the Mau Mau organisation or sympathisers. I still think that that would leave the court absolutely unprejudiced when it comes to—[Interruption.] Order. I must be heard. I still think that that would leave the court absolutely unprejudiced when it comes to decide whether the man Kenyatta, who is not mentioned in this statement except to identify the trial mentioned, is guilty or innocent.
Mr. Griffiths: May I, with respect, ask whether to use the words that something has been found in a trial upon which an

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appeal is pending are words that can be used without prejudice to further appeal?
Mr. Speaker: In answer to the right hon. Gentleman's question, I would say that if something had been quoted from the trial which affected Kenyatta, he would be perfectly right, but there were two other men mentioned.
Mr. S. Silverman: May I put this point? The principal question which the Supreme Court will have to decide in the appeal now pending is undoubtedly the question which you, Mr. Speaker, posed just now; namely, whether Kenyatta is guilty or not guilty of whatever charges have been brought against him. In considering that question, it is plain that the High Court will have to review the evidence given in the court below, and will have to form some opinion one way or the other as to the value and credibility of that evidence. The right hon. Gentleman said that some members of this Union were loyal but that the Union was used as a cover for the very conspiracy with which Kenyatta is charged; and in order to make that point he specifically relied, in so many words, upon evidence which had been given in the Kenyatta trial. In other words, he expressly prejudged the very question which alone could help the Supreme Court to decide whether the conviction is to be supported or not supported. With great respect, I submit that a clearer statement during a pending trial which ought not be made has never been the subject of submissions to you in this House.
Mr. Alport: Further to that point of order. Surely this point of order would have substance only if one of the charges to be considered by the Supreme Court was the association of Jomo Kenyatta with the Kenya African Union. My information is that in fact that has never been one of the charges, so surely the point of order has no substance at all.
Mr. Lyttelton: Before I go on with my statement, 1 will just mention that I am extremely careful about these matters. I submitted the words to my legal advisers, who said that in no case could they be regarded as referring to anything sub judice. Perhaps I had better begin again.
Many Members of the Kenya African Union are, of course, loyal citizens, but it had been found in the course of the
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Kenyatta trial that K.A.U. was being used as a cover for the organisation of Mau Mau.
Mr. Silverman: On a point of order. I have submitted this to you before, Mr. Speaker, and I submit it again. The last words which the right hon. Gentleman has just used are words which cannot be permitted in this House during the course of a criminal trial.
The Prime Minister: Further to that point of order. May I ask whether you have not already ruled on this specific question?
Mr. Bevan: On a point of order. It is extremely important, although perhaps hon. Members on the other side of the House do not seem to think so, that the people for whom we are responsible in Africa should feel that justice is being done to one of their number. That, surely, is the important consideration. As I understand the position, it might go out from the House today that language has been used by the right hon. Gentleman that might prejudice Kenyatta's appeal.
The Prime Minister: Mr. Speaker has ruled on that point of order.
Mr. Bevan: May I finish without the Prime Minister's interference? As far as one can gather from the statement of the Secretary of State for the Colonies, his decision to proscribe the organisation does not rest alone upon what he alleges was revealed at the trial. There is no reason why he could not expunge that part from his statement and rest whatever case he has for proscription on the other facts. Even if Mr. Speaker has ruled that it is not entirely out of order, it is sufficiently doubtful for the right hon. Gentleman to drop it. When is he going to stop being so flat-footed?
Mr. Brockway: Further to that point of order. I submit that the issue now before us is of tremendous importance to the confidence in this House of 60 million Africans in the British Colonies. The point I want to submit is that one of the charges against Kenyatta was that he had been chairman of the Kenya African Union and evidence was submitted that that organisation had been used as a cover for Mau Mau. The right hon. Gentleman, while the appeal is still pending, uses in this House the phrase

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that evidence had been found in the course of the trial that the Kenya African Union had been so used as a cover.
I submit to you, Mr. Speaker, that despite the high office which the right hon. Gentleman holds, you, as Mr. Speaker, responsible to the whole House and the traditions of the House, ought to rule that—[HON. MEMBERS: "Oh."] I am submitting it to you—only submitting. I submit that, bearing in mind the traditions of this House and his responsibility to this House, the right hon. Gentleman ought not to have used the phrase while this case is sub judice and that that position should be made clear to the House and to the population of Africa.
The Prime Minister: May I venture to repeat the question I have already asked, namely, is it not an abuse of the practice of the House to repeat again points of order on which a detailed Ruling has already been given by the Chair?
Mr. Speaker: Order. I think we ought to proceed. The position, as I see it, is that the statement says that it has been found in the course of the Kenyatta trial that the Union was being used as a cover for the organisation of Mau Mau. That is the statement. That is putting it at its worst.
Mr. J. Griffiths Mr. J. Griffiths rose—
Mr. Speaker: Order. Although I must say that I do not like any references to any trials in progress, that still leaves quite open the question whether Kenyatta was using the Union as a cover. This is a very large organisation. Some of them are loyal and some of them are not. I think that it would be better if in future in the rest of the statement all reference to Kenyatta and his trial were omitted.
Mr. Griffiths: I accept your Ruling, Mr. Speaker. May I ask you whether, since an appeal is pending, you will consider whether it is appropriate that no entry of this kind should go in the OFFICIAL REPORT?
Mr. Speaker: I do not think that I can exercise a censorship of that character.
Mr. Lyttelton: As an illustration, two of the most wanted terrorists in Kenya,
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Dedan Kimathi and Stanley Mathenge, are both K.A.U. members. Kimathi was secretary of the Rumuruti Thomson's Falls Branch and Mathenge a member of Nyeri Branch. There can be no doubt that the subversive Kikuyu Central Association, which was proscribed in 1939, infiltrated into the Kenya African Union shortly after its establishment, and by 1947 had dominated its members and corrupted its purposes.
Several Hon. Members rose—
Mr. Speaker: Hon. Members have had my Ruling on this matter. I hope that they will accept it.
Mr. Brockway: In view of your request to the right hon. Gentleman that he should not proceed to make this reference and as his reference was introduced by the phrase, "As an illustration," would you request the right hon. Gentleman to stop reading a statement which may prejudice the case in the Supreme Court?
Mr. Paget: Mr. Speaker, I do not know whether you followed the Kenyatta trial, but the issue in that trial was that the prosecution said that the African Union had been infiltrated by the old proscribed Kikuyu society and was in fact an unlawful organisation engaged upon an unlawful conspiracy. That was the whole issue. There was no question of Kenyatta admitting that he was president and concerned with the African Union. The issue was whether the activities of that Union were lawful or unlawful. The other point which was the whole issue in the trial is the point which the right hon. Gentleman has raised and, in spite of your warning, he went on and made it much worse than it was before.
Mr. S. Silverman: May I submit——
Mr. Alport Mr. Alport rose—
Mr. Speaker: Order. One at a time. Mr. Silverman.
Mr. Silverman: I desire to submit to you, Mr. Speaker, that the right hon. Gentleman's last two or three sentences were nothing less than a defiance of the Ruling we have had from the Chair. What he said, if I may repeat it for the purpose of my submission only, was that an organisation which had long ago been declared to be a subversive organisation had first of all infiltrated into the African

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Union and now dominated it. The question whether that is true or not was the chief issue at the trial of Kenyatta, and will be the chief contested matter in the appeal. I submit to you, with diffidence but nevertheless with conviction, that what the right hon. Gentleman is now doing is pursuing a course deliberately designed to interfere with the course of justice in this trial, and that you, Sir, ought to restrain him.
Mr. Alport: May I ask for your Ruling, Mr. Speaker, on whether the House has a right to hear from a Minister of the Crown the reason for taking action against a particular association, and if, in making that statement, a Minister is not entitled to give reasons, to the best of his ability, for this decision of Government policy?
Mr. Speaker: There is here a slight conflict. It is quite true that a Minister is entitled to give reasons; on the other hand, the House is always very jealous of anything being said in the House which might prejudice a fair trial. So far, I do not think anything has been said that will, and I think that if the right hon. Gentleman would begin again with the sentence beginning—
"More recently the detention of Odede,"
we shall be free from this difficulty.
Mr. Lyttelton: May I add that Kenyatta is not being tried for being a member of the Kenya African Union?
More recently the detention of Odede, who had become the President of the K.A.U., was necessary because he was implicated in trying to organise Mau Mau in the Nyanza Province.
It is not, of course, our wish to prevent the expression of legitimate political opinion by Africans. We must be sure, however, that ostensibly political bodies are not used as instruments for spreading disorder and terror by a small part of one tribe. The best course is, I think, to build on those local associations which have shown that they can be trusted to pursue the interests of their people by legitimate means. The Kenya Government will do all that it can to help along these lines.
I discussed the matter of public meetings with the Governor while I was in
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Kenya and we agreed upon a statement which he has now issued. Here it is:—
"In order to allay any misunderstanding that may exist, the Government wishes to make clear its attitude on holding of meetings by African members of the Legislative Council. The Government will welcome the calling of meetings by African members of the Legislative Council to address their constituents in support of law and order. The same applies to meetings addressed by other Africans who are staunch supporters of law and order. On account of security reasons, it will be necessary for those arranging meetings to obtain the consent of the District Commissioner and the Police."
I wish now to refer to the speeding up of the processes of justice. This will be done within the framework of British law by Emergency Assizes and by the creation of a number of supernumerary judges of the High Court. Accused prisoners will be brought directly before the High Court without any hearing before a Magistrates' Court.
Lastly, to turn for a moment to future measures for economic and social progress. The Government of Kenya have a number of schemes in an advanced state of preparation, and, upon my advice, they intend to announce them one by one when they are ready to be put into force. The time has passed for general assurances, and we must now show that we are ready to act.
Finally, a Deputy Governor has been appointed. He will be able to assist the Administration particularly in regard to reconstruction. He will also take some of the load off the shoulders of the Governor, who will thus have more time to tour the country. Where he has been able to do so, he has been received with acclamation. The response has been encouraging and has given evidence of the way in which he can lead, guide and inspire public opinion, particularly African. These visits have shown the population that he is with them, and they have shown that they are with him.
To sum up, the position of Kenya is still one of danger, but it is improving. The population is coming over to our side in large numbers—[Laughter]—I see no cause for amusement—the Home Guard is building up, the schemes for long-term reconstruction are well

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advanced. Mau Mau has not spread significantly, and the great mass of the population are loyal and in peace. Perhaps the hon. Member would like to laugh at that?
Mr. S. Silverman: On a point of order. The right hon. Gentleman goes out of his way in the course of a serious statement of this kind to make a totally unjustified attack on an hon. Member of the House. Ought he to pursue his campaign against the administration of justice so far as not to—
Mr. Speaker: I did not hear anything said.
Mr. Lyttelton: I said that a large number were loyal.
I shall report to the House from time to time on the progress made. While we must continue to watch the situation with anxiety, and must be prepared to face some setbacks, we can regard the outcome with complete confidence.
Mr. Hector Hughes: I am obliged to you, Mr. Speaker, for giving me the opportunity of asking a supplementary Question. Is the Minister aware that the people of these islands will be pleased with those small parts of the Minister's statement which assured us of peace being restored, but that the people will hear his statement with regret, because it makes no reference whatsoever—
Hon. Members: Order.
Mr. Hughes: The Prime Minister waves backwards and forwards. [Interruption.]
Mr. Speaker: Order. Mr. Harold Davies.
Mr. Harold Davies: On a point of order. Despite the high office which the Prime Minister holds, will you tell me, Mr. Speaker, whether you would allow any other hon. Member of this House to give the show that the Prime Minister has just given at a serious juncture of an African issue, when the democratic rights of the African people—
Mr. Speaker: Order. The Prime Minister.
The Prime Minister: May I ask you, Sir, for some information on a point of order? I have had an impression, which has been derived over a great many years
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and which does not seem to be shared in many parts of the House, and I have always understood that there was no objection to an hon. Member walking between an hon. Member discussing or debating with another hon. Member across the Floor. I always understood that that might frequently occur. What was out of order was walking between an hon. Member speaking on the ground floor or the first floor and your eye, Mr. Speaker, and that was the point. Therefore, these cries of "Order" to which I have listened seem to be based on what I believe is a complete misunderstanding of the rules of order.
Mr. Speaker: I was about to say the same thing. It is not out of order for an hon. Member to leave the House while another hon. Member is speaking. I have seen it frequently done—perhaps more frequently in the case of some hon. Members than others. What is out of order is to walk between the Chair and the hon. Member who has the Floor of the House, so there has been no breach of order by the Prime Minister in this case. Perhaps the House will now agree to settle down and allow the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) to ask his supplementary question.
Mr. Hector Hughes: I was asking the Secretary of State whether he realises that the House will have noted with horror the complete absence from his long statement of any reference to steps which the Government may be taking to remove the fundamental social and economic causes which have brought about these troubles, and whether he will supplement his statement by dealing with that matter.
Mr. Lyttelton: I am afraid that the hon. and learned Member must have been so interested in some other exchanges that he could not have listened to what I said, because I devoted a considerable part of my statement to the very thing to which he is referring, and I recommend him to read it in HANSARD tomorrow in a calmer moment.
Mr. J. Griffiths: I wish to ask the right hon. Gentleman a question which arises from the first part of his statement. I am sure that hon. Members on all sides of the House welcome the improvement in the situation in Kenya, and may I say

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that today the Minister sought, quite rightly, to indicate that this is not a struggle between black and white, but a struggle between loyal, decent people and this terrorist organisation, and that, as a matter of fact, the overwhelming number of the people who have been killed have been Africans. May I, therefore, in view of that—[Interruption.] On a point of order. May I call your attention, Mr. Speaker, to the fact that an hon. Member opposite has made a reference to the effect that I supported Mau Mau?
Brigadier Prior-Palmer: The right hon. Gentleman is completely mistaken. I was not referring to him in the very least. I pointed over there and said, "Why do not you support it?"
Mr. Speaker: I think that no matter to whatever quarter of the House the remark was made, it would be out of order to suggest that. It is just the same if addressed to a back bencher as if addressed to the right hon. Gentleman. I ask the House in this matter to recollect itself. We have spent a lot of time on this matter and we have had an interesting statement. It does not help the clarification of our business if we have all these interruptions. I hope the House will now proceed with its business.
Hon. Members: Withdraw.
Brigadier Prior-Palmer: If I have caused any offence, I will, of course, withdraw what I said. My remark was, "Why do not you support it?"
Mr. Griffiths: I return to my question. It is quite clear—and I have sought to emphasise this in debate—that the obvious thing to do is to build up on the basis of racial co-operation all the forces that are fighting against Mau Mau. The Secretary of State gave us a further indication that the Asian people have themselves asked to be included in the conscription order. In view of that, will not the right hon. Gentleman consult the Governor on the desirability of including an African and an Asian representative on the Emergency Council on which a European official is already represented?
With regard to the Kenya African Union, did the right hon. Gentleman consider the advisability or otherwise of taking this action at a time when these
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matters are still the very important background, if not the actual issue, of the trial which is now pending? May I further ask the right hon. Gentleman whether he proposes to lay before us more evidence than has been given today for proscribing this organisation of a national character of Africans in Kenya?
Finally, I want to ask the right hon. Gentleman a question about a statement published in "The Times" on 9th June by Mr. Windley, the Acting Chief Native Commissioner, who, speaking on behalf of the Government, said:
"We would not have wished to stop political associations with sincere aspirations for the legitimate development of African interests and progress, but the Kenya Government can never again allow such an association as the Kenya African Union."
Will the Secretary of State tell us the precise meaning of that statement? Is it a declaration by the Kenya Government that they will not allow any national organisation of Africans to be formed, and if so, is that proscription to be applied to other associations or other communities in Kenya, or is it to be purely a discrimination against the Africans?
Mr. Lyttelton: The right hon. Gentleman has asked three questions. The first was whether an African or an Asian was to be on the Emergency Council. I have discussed this matter very fully with both Africans and Asians and explained to them that the duties of the Emergency Council, at any rate before General Erskine arrived, were entirely of an operational character, and at the moment it is not intended to put either an African or an Asian upon it. But that organisation may well be altered as a result of Genera] Erskine's arrival.
The right hon. Gentleman's second question was with regard to the K.A.U. I have held my hand, and so have the Kenya Government, for a very long time in this matter, but the recent raid on the headquarters of the Mau Mau organisation in Nairobi—the so-called Central Council of Mau Mau—has disclosed beyond peradventure that the K.A.U. was inextricably interwoven with Mau Mau.
The last question asked by the right hon. Gentleman was about some words used by the Acting Member for Native Affairs. Upon that matter, I might recall to the right hon. Gentleman the words I

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used in the course of my statement to the effect that the Kenya Government will give all the help they can to the formation of a political body or bodies which are not representative of only one tribe or one section of opinion. I think that if the right hon. Gentleman looks at my words he will see that what I imagine the Acting Member for Native Affairs was referring to was a society of this particular nature. I would welcome the appearance of a body or bodies representing African political opinion, and that, I hope, will satisfy the right hon. Gentleman.
Mr. Alport: When my right hon. Friend publishes the additional evidence for which the right hon. Member for Llanelly (Mr. J. Griffiths) asks, will he also publish the evidence of the guidance and support which this organisation has received from supporters in this country and elsewhere outside Kenya?
Mr. Lyttelton: I must intervene to say that I have not given any pledge to publish any further evidence. The right hon. Gentleman pressed me to do so, and I gave some further information, but the question of publication of evidence about a society like this is another matter, because it might involve the safety of individuals and other matters of great importance besides.
Mr. Paget: I want to ask the right hon. Gentleman three questions. First, has he the slightest evidence of any guidance or support from this country? Secondly, what steps are to be taken to command and control the Home Guard? I am not for one moment saying that it has happened here, but I am sure the right hon. Gentleman has in mind the danger of any Home Guard or vigilante organisation becoming the interest of private adventurers. It has got to be kept very carefully under control. Will the right hon. Gentleman tell us what steps he has taken?
My third question is with regard to bringing people to trial before the High Court without any previous proceedings before magistrates. What steps is the right hon. Gentleman taking to provide that people who are charged shall be given copies of the evidence that will be given against them, and given a reasonable opportunity to prepare their defence in face of that evidence? A trial in which the accused has not had a
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previous chance of seeing and considering the evidence against him is a wholly unsatisfactory trial. What is the substitute for the magistrates' decision?
Mr. Lyttelton: The hon. and learned Gentleman asks me three questions. In answer to the first, I have made no statement with regard to guidance or direction from this country. I do not think that I am called upon to answer that question. I have not made any allegation of that kind and I prefer to leave it at that. The hon. and learned Gentleman must address his question elsewhere. I do not propose to refer to that matter at all.
Mr. I. O. Thomas: Deny it or repudiate it, then.
Mr. Lyttelton: I said I did not propose to refer to it. With regard to the Home Guard, the hon. and learned Gentleman is entirely on the right lines in saying that we must be very careful that such an organisation is not used as an instrument of private vendetta. That is a matter which is always in our minds. The Home Guard comes under the civil power and recently, besides Colonel Morecombe, 30 additional European leaders have been appointed. Most of the Home Guard are in a static role, not a dynamic one. I do not think I can do more than say that that particular aspect is very highly important and I agree that it must be watched with the greatest care; and that we shall do.
With regard to the High Court procedure, I should be very glad—it would carry me too far to go into the whole machinery now—to satisfy the hon. and learned Gentleman on the point which he has made. There is nothing unusual in accused persons being brought straight into the High Court. It is necessary to allow sufficient time for their defence, but there is nothing unusual in it. In fact, it is already on the Statute Book.
Mr. F. Harris: Does not my right hon. Friend agree that it will be only by giving the very maximum of support to the loyal Kikuyu and making them feel safe that this problem will eventually be overcome?
Mr. S. Silverman: Will not the right hon. Gentleman bear in mind that, whatever may be his own view and the view of his immediate advisers, there are very many people who do not share the view that the course of conduct pursued either

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by the right hon. Gentleman himself or the local Governor is winning the support of the local population, and that in the country there is considerable evidence that, whereas the overwhelming number of the population were on the side of the authorities and law and order, the result of what has happened is to lessen that support and not increase it? Will he bear in mind also that it is not only people who are politically opposed in other things who have this view, but that the view is widely shared in a great many political quarters, as is evident from the leading article in "The Times" today.
Mr. Lyttelton: I do not know why I should have to suffer a homily from the hon. Gentleman below the Gangway. His facts are entirely wrong. I have made a statement, giving them the lie direct, that an increasing number of Kikuyu are coming over and that the mass of the population are being won over. That is not a casual statement at all. It has been weighed by all the authorities in Kenya, and I stand by it. It is not usual to expect, in this Vale of Tears, universal approbation for what has to be done in a very awkward situation.
Later—
Mr. Brockway: I beg to ask leave to move the Adjournment of the House, in terms of which I have given you notice, Mr. Speaker, under Standing Order No. 9, for the purpose of discussing a definite matter of urgent public importance, namely,
The proscription of the Kenya African Union by the Governor of Kenya.
I do not propose to discuss the merits of the issue, but I want to submit reasons why this request should be acceded to.
The first point is that this is a matter of definite and urgent public importance. The Kenya African Union is the largest political organisation in Kenya of the Africans, indeed the only organisation, and its proscription in the present circumstances is a matter of public importance.
Mr. Speaker: The hon. Gentleman cannot argue the point now. If he will bring me his Motion, I will look at it.
Mr. Brockway: I was only advancing reasons why this is a definite matter of urgent public importance. Secondly, I submit to you that this is a new matter.
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It is not a link in a chain of events. It is a major event in itself and a new event. For that reason, the request for the Adjournment on this issue should be considered and acceded to.
Mr. Speaker: The hon. Member asks permission to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely, the proscription of the Kenya African Union by the Governor of Kenya. The hon. Member was kind enough to give me notice of this matter yesterday and I gave it very serious consideration. I find after that consideration that it is not within the Standing Order on the ground of urgency. There is no reason why the matter should not be debated in the near future just as well as today. I would not feel justified in applying the Standing Order so as to interrupt the Orders of the Day for that purpose.
Mr. Brockway: May I put this point to the right hon. Gentleman—[HON. MEMBERS: "No."]—Mr. Speaker has the rules of this House in his hands and not hon. Members on the opposite benches. The point I wanted to submit to you, Mr. Speaker, was that this is a new and urgent matter. Frequently from these benches questions have been put regarding the proscription of this organisation, and the answer has always been given from the Government Bench that it had not been proscribed. It is a new, urgent matter of public importance.
Mr. Speaker: I am not denying either its novelty or its importance, but what I am saying is that I do not feel that on grounds of urgency it entitles me to interrupt the Orders of the Day.
Mr. S. Silverman: On the question of urgency, Mr. Speaker, here is an organisation which is admitted to be the only organisation of one large section of the population. It is proscribed. Proscription is already in force and is now working, and it is something which, if the House expresses the view to the contrary, the Government would change forthwith. In those circumstances, may I ask why it is not an urgent matter?
Mr. Speaker: I did consider that, but it is not the sort of thing for which the rule was framed.

BUSINESS OF THE HOUSE
Mr. Attlee: Will the Leader of the House make a statement on the business for next week?
The Lord Privy Seal (Mr. Harry Crookshank): The business for next week will be as follows:
It is proposed that the House should not sit on MONDAY NEXT, 15TH JUNE, which is the day of the Naval Review. The necessary Motion will be moved before we enter upon business today. I hope it will be acceptable.
TUESDAY AND WEDNESDAY, 16TH AND 17TH JUNE.—We shall make further progress with the Finance Bill in Committee.
THURSDAY, 18TH JUNE.—We shall resume and hope to conclude the Committee stage of the Rhodesia and Nyasaland Federation Bill.
FRIDAY, 19TH JUNE.—Private Members' Motions.
During the week we hope that it will be possible to obtain the Draft Coastal Flooding (Acreage Payments) Scheme, the Compensation for Emergency Work Order and the schemes relating to ploughing grants.
Mr. Maude: Will it be possible to find time before the House rises for a discussion on the recently published accounts of the National Coal Board?
Mr. Crookshank: I could not say anything about that at this stage.
Mr. Robens: Has the right hon. Gentleman had an opportunity to consider whether or not we can have an early debate on the Council of Europe, about which he has already given a half promise?
Mr. Crookshank: This is one of the matters which are constantly in my mind. Whenever I see the right hon. Gentleman I think of it. I will leave it at that.
Mr. P. Morris: Has the right hon. Gentleman now received the Report of the Council of Wales, and will he make provision for it to be debated, as he has suggested?
Mr. Crookshank: I do not know that I have suggested anything of the sort. In point of fact, my right hon. and learned Friend the Minister for Welsh Affairs informs me that the Report is not due to be published for some time, I cannot possibly deal with questions of debating matters of a hypothetical nature.

ADJOURNMENT
Motion made, and Question proposed,
That this House, at its rising Tomorrow, do adjourn till Tuesday next.—[Mr. Crookshank.]
Mr. Simmons: I know that the House has been delayed for quite a time already and I promise not to be very long, but before we sacrifice a Parliamentary day we ought to know what is destined for the sacrificial altar. I raise this matter without any disrespect to the Spithead Naval Review or to the British and Soviet Navies. I am concerned about Command Paper 8842 entitled "The Ministry of Pensions Proposed Transfer of Functions" and the accompanying Transfer of Functions (Ministry of Pensions) Order, 1953. We were promised time for discussion. Is this now in jeopardy as a result of losing this Parliamentary day?
Can we be guaranteed a full day's discussion if we lose a Parliamentary day next Monday? Are our rights and privileges to be hidden behind the smoke emanating from the Spithead Review? Before we agree to the sacrifice of a Parliamentary day we have a right to ask for a definite pledge either from the Prime Minister, who has left the Chamber, or from the Leader of the House, who is still here, that either this proposed transfer will be entirely withdrawn or that a full Parliamentary day to discuss the Command Paper, and a free vote of the House, will be allowed.
I ask that this should not be treated as a frivolous matter. It is of supreme importance to millions of people in this country who are ex-Service men and their dependents. I am voicing the practically unanimous opinion of ex-Service men. The British Legion Conference unanimously expressed opposition to the White Paper and the body representing British limbless ex-Service men, of which I am also a member, expressed their opposition. I appeal to the Leader of the House, who never treats me with respect, to treat my fellow disabled ex-Service men with respect by giving the assurance that the loss of Monday will not in any way jeopardise a full day's discussion of Command 8842.
Sir I. Fraser: Since the ex-Service men do not want this thing to be done at all it is much to their advantage not to have a day at all to discuss it. May I ask
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the Leader of the House if it is not true that this merger cannot be carried through save by a Motion in this House? Therefore, if we do not want to carry it through we do not want a Motion, and so to miss a day is a great advantage.
Mr. L. M. Lever: I am sure that all would wish well to the Spithead Review to which we are all looking forward next Monday to commemorate a great occasion in our history, but I should like to reinforce the observations of my hon. Friend the Member for Brierley Hill (Mr. Simmons) in asking that special time should be given for the consideration of this Command Paper.
I know that I am expressing, as he does, the opinion of tens of thousands of ex-Service men and women in the different ex-Service organisations about the proposed merger; and I am sure that the Government would wish this matter to be fully debated before the merger is undertaken. I hope, therefore, that we shall have a reply that will assure us that we shall have an opportunity of expressing our opinion of such a monumental change.
Mr. Emrys Hughes: I do not see what justification the Leader of the House has for asking us to give up a day of his valuable time in order that hon. Members might go to the Naval Review. Every Thursday now for over a year the right hon. Gentleman has said that he has had no time to allocate to the House for important matters affecting the welfare of Her Majesty's subjects. I believe, for example, that the people of this country would be quite pleased if the House exercised a certain amount of self-denial and only allowed those hon. Members to go to the Naval Review who took any interest at all in the passing of the £400 million Navy Estimates.
I remember that when the Navy Estimates were discussed in the House only a dozen of us sat through the debate in order to pay out £400 million for what I believe to be obsolete naval craft. Now these obsolete naval craft, with the exception of some that I will not mention, are to be paraded at a time when we should be discussing the serious business of this House, such as the housing of Her Majesty's subjects in Scotland, the reconstruction of agriculture and the failure of Her Majesty's Government to deal with important legislative matters.

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I submit that the Leader of the House should think again seriously about this request. He should remember that some of us are prepared to stay here on Monday to deal faithfully and completely with all outstanding legislation, and with all Amendments that might come from another place. He can go away and take his Front Bench with him to Spithead or Dartmoor, or wherever it is, and leave those of us who are prepared to do the job to carry out all the necessary legislative functions.
I suggest that if the right hon. Gentleman refuses this request he will not be able to come along on another Thursday and hypocritically pretend that there is no time at the disposal of Her Majesty's Government. It is all an idle pretence to say that Monday is anything but a day out. In view of the serious financial position which we are to discuss I am quite sure that the Chancellor of the Exchequer, who is now on the Front Bench, is of the same opinion as I am and that we very profitably could be discussing the defects in the Finance Bill and all the other defects in the legislative programme of the present Government.
Dr. Stross: On a point of order. My hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes), in speaking of the Leader of the House, said that the right hon. Gentleman could not come to the House on another Thursday and "hypocritically pretend." I ask you, Mr. Speaker, whether that is a Parliamentary adverb or not, because I believe that it was decided the other night that when "hypocrite" was used as a noun the word should be withdrawn.
Mr. Speaker: It is not a Parliamentary expression and if the hon. Member for South Ayrshire (Mr. Emrys Hughes) means it at all seriously he should withdraw it at once.
Mr. Hughes: I would certainly not associate the Leader of the House with an expression of that kind and I withdraw it.
Mr. Crookshank: May I briefly point out to the hon. Member that the Motion which we are discussing was foreshadowed before we rose for Whitsun. It was then received with acclamation from every quarter of the House. [HON. MEMBERS: "No."] It has been agreed through the usual channels with hon. and right hon. Gentlemen opposite. If the hon. Member has any quarrel with its being on the Order Paper he must
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address his complaints to his own Front Bench and not to me. I do not know why the hon. Member for Brierley Hill (Mr. Simmons) thought that I had animosity against him. That is a complete misapprehension on his part. We have been in the House a great deal of time together, and I think that on many subjects we have thought alike. If the hon. Gentleman wants extra days I do not think it is a very good way of starting by attacking me in the way that he did.
The fact remains, on the point that he raised, that the transfer of the functions of the Ministry of Pensions has to come before the House anyhow, because the proposals require the assent of the House. I can assure the hon. Gentleman that it was never the intention to take them next Monday. Therefore, the situation is completely unchanged, whether or not we sit next Monday. As there is a great deal of other business to be done and as we have been somewhat delayed already, I hope that the House will accept the Motion.
Mr. Simmons: Does the right hon. Gentleman intend to indicate at 10 o'clock tonight when this Command Paper and the Order can be discussed?
Mr. Crookshank: I would not like to commit myself as to exactly when we can start on this debate or how much time there will be for it. May I leave it in this way, that the Government are seized of the importance of this Order and of the interest shown in it by a great number of all our constituents. I think the hon. Gentleman will find that, at any rate, in some degree he will be satisfied when the time comes. I am speaking a little far ahead because it does not, in fact, have to be passed until we rise for the Summer Recess.
Mr. Hector Hughes: Does not the right hon. Gentleman think it is unnecessary for Members of the Government to go to Spithead, having regard to the fact that they are generally so much at sea?
Mr. I. O. Thomas: Could the right hon. Gentleman say how many Members of the House have indicated their intention to travel to Spithead on Monday?
Mr. Crookshank: I have not the faintest idea, but I can assure him that the hon. Member for South Ayrshire (Mr. Emrys Hughes) is not going.
Question put, and agreed to.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress, 10th June].
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    Clause 10.—(CHARGE AND RATES OF INCOME TAX FOR 1953–54.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    4.43 p.m.
    Mr. Douglas Jay: I think it is as well that the Committee did not, in a fit of absence of mind last night, refrain from discussing Clause 10. Evidently we have to be on the lookout for googlies in this Committee as well as elsewhere. This is a very important Clause. It imposes the Income Tax and Surtax for the present year. It reduces the Income Tax standard rate from 9s. 6d. to 9s. in the £ and also, which may not perhaps be so evident, it leaves the Surtax where it previously was. The effect of that is to reduce the combined effect of both those taxes quite substantially at the higher levels. The famous 19s. 6d., which hon. Members opposite sometimes imply falls throughout quite a large part of the income range, although really it only falls on the very top slice, now disappears from our tax tables altogether. That in itself is an event of which we ought to take notice.
    Our complaint about this important Clause is not that a reduction in Income Tax as such has been made. Our complaint is that in making such a reduction the Chancellor has selected a very inequitable way of doing it. We should have preferred the reliefs to be given more heavily at th lower end of the scale and less heavily at the top. The Chancellor had £117 million to give in relief of Income Tax in the present year, and we think that a much larger part of that could have been given both with greater social justice and with better effects on incentive if it had been concentrated at the lower end of the scale. It is not in dispute between the two sides of the Committee that the larger reliefs per head fall to those with the higher incomes. We have been through all those figures and they are not in dispute between us.
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    4.45 p.m.
    I would remind the Committee that of the total reliefs, the amount going to those with £2,000 a year and upwards— that is £22 million in revenue forgone by the Chancellor—is the same as the total going to all those with £500 a year and down. That in itself illustrates how very heavily those with the higher incomes gain by this form of relief. Our belief is that the reliefs should have been given not by this sweeping and clumsy method of reducing the standard rate but by changes in the personal allowances which could have produced for the same amount of money quite a different effect.
    We have a number of Amendments on the Order Paper to this and other Clauses, which attempt to implement our views on that subject, and I hope that we shall have ample opportunity of discussing them. It seems this year that a large number of the most important issues have a way of being out of order, and I hope that we shall have better luck in the case of Income Tax.
    The real issue before us is whether these alternatives which we suggest should have been adopted or whether the change in the standard rate alone should have been made. I hope the Chancellor will consider very earnestly some of our suggestions on the allowances by way of supplementing what he has done. I do not think he has made any concessions on this Bill, and I hope that he may find it possible, at any rate, if not to go the whole way, to give us something of which we are asking.
    I imagine that the argument by which the Chancellor seeks to justify his policy is that though admittedly—I know he would not contest the figures—his method has not spread the reliefs equally between man and man, nevertheless that degree of inequity is justified on the ground of the effects on saving and on effort and enterprise by the additional incentive he has given. Therefore, I think that we should look for one moment at that general argument. Is the argument on grounds of incentive strong enough to justify the very unfair degree of reliefs? I do not think that we on this side of the Committee would deny that the present high level of direct tax has a considerable effect in reducing private saving and also to some extent in reducing saving by companies.

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    We have to look at this matter from the point of view of both saving on the one hand and work on the other. I think we can all admit that private savings are clearly much lower than they would be if we had not the present high levels of Income Tax and Surtax, but it seems to us that it is really not practicable to suggest that the way to restore the level of national savings is by sweeping reductions in Income Tax and Surtax. No doubt, if we were going back to the sort of income distribution before 1914 we might get higher private savings in that fashion. I doubt whether even hon Members opposite would be prepared to advocate that.
    If that is so, I think it inevitably follows that, at any rate, for some years in the future we shall have to look for quite a considerable part of our national savings to public savings, through the Insurance Fund and sometimes through a Budget surplus. I therefore do not think that that argument can be adduced as a reason for making sweeping and unfair reductions in direct taxation.
    There are also, of course, company savings. It is often argued by hon. Members opposite—and I give them this, that perhaps it is their strongest argument —that high Profits Tax and Income Tax diminish the amount of profits companies have to put to reserve and to use for actual investment and expansion of the business. The fact is that, on the figures, in I think no year since the war, have companies, as a result of tax payments, been left unable both to provide for depreciation and to pay reasonable dividends, and in most years to add a certain amount to general reserve as well.
    Mr. Gerald Nabarro (Kidderminster)Mr. Gerald Nabarro (Kidderminster) indicated dissent.
    Mr. Jay: The hon. Gentleman disagrees, and no doubt if he has the good fortune to catch your eye, Sir Charles, he will be able to develop his argument. According to the Economic Survey, in the last year there was something like £600 million available to companies after all those things had been provided for. Looking at some of the reports of the more important companies like Unilever's and Dunlop's which have come out since the Budget, it is fairly clear that in the past year the fall in world prices and the
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    reduction in the amount which had to be used for building up stocks has greatly relieved the position of a large number of private companies.
    In any case, in our view, in so far as it is necessary—and it clearly is—to ensure that British industry has funds both for fully maintaining its present plant and for modernising and expanding it, the best way of meeting this need is by way of the initial allowance, which we shall argue on later Amendments. The initial allowance has the great advantage that, since it is in the nature of a loan rather than a gift, it does not involve capital appreciation for private shareholders; indeed, it is only released by the Treasury if actual physical investment takes place. We therefore agree with the Chancellor's action in making the increase there. So much for savings.
    The rest of the argument the Chancellor might advance—and this is perhaps his main argument—is that the whole of this unequal distribution of reliefs was justified because of the stimulus it would give to individual productive effort, to actual work by the majority of the population. Now we are proposing Amendments affecting the earned income allowance, and I will not outline the whole of that argument now. I will say only this. When we are trying to estimate—I hope partially and objectively, because whatever we think it is an extremely important problem—the actual effect of reductions or increases in direct taxation on individual effort, I hope we shall have regard not so much to theory—because there have been ages of theoretical argument about this—as to the actual experience of recent years, which to my mind is worth a great deal more than all the theoretical arguments.
    The remarkable thing is that in both this country and the United States in the last five, six or seven years, when direct taxation has been at the highest levels ever known in a modern industrial community, the advances in production and in productivity have been more rapid than in any previous period. That is some evidence against the previous theory that such high levels of taxation would have a universally deadening effect. I do not press this too much, but it is interesting to note that during the past year, after we had the Chancellor's incentive Budget last year, there was a

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    check to the increase in production for the first time for a good many years. That in itself is at least evidence that we should look carefully and with some suspicion at any sweeping arguments on this issue.
    We should also remember that, whereas there are, no doubt, some people who calculate the effects of the tax and argue, "Well, if it is at this level it is just not worth while doing so much more work, whereas if it is at a lower level it is worth while," and to that extent it has that effect, there are others in the community who are concentrating their attention on meeting a certain level of family commitments, on sustaining a certain standard of living. There must be some people like that who, when they see the tax fall, argue to themselves, "Now I can take things a little easier. The Chancellor is not getting quite so much and I can meet my commitments without quite so much effort as before." I do not attempt to argue which of those tendencies preponderates, but obviously they are both there.
    In order not to pursue this part of the argument too far, I will reach this conclusion. I think that those considerations suggest that the answer is not simple. There is no sweeping evidence one way or the other, and I therefore draw this inference. I do not think the argument from incentive is sufficiently strong to over-weigh the objection to a system of tax reductions which, on grounds of equity and justice, is plainly undesirable. The issue is unproven. It does not make the Chancellor's case for having made these very big reductions at the top end of the scale and on unearned income as well as earned income.
    What I think it does establish—and it is for this reason that we have put down certain Amendments, particularly those relating to the earned income allowance —is that, if such changes can be made in Income Tax, giving relief to those with middle and lower incomes and having reasonably good effects from the point of view of the distribution of wealth in the community, and at the same time having desirable effects on incentive, then there is clearly a strong case for doing so. That is what we have sought to do in our later Amendments.
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    We have put down Amendments affecting the children's allowance and the earned income allowance itself. I want to say only one word about those now, because on one of them there are, I will not say grounds for doubt, but some doubt whether it is likely to be called in the course of our debate. For the reasons I have given, I think there is a strong case for carrying further the process which was begun under the Labour Governments after the war, and which was continued by the Chancellor a year ago, of exempting a large number of the smaller Income Tax payers from the tax altogether. In so far as direct taxation does have a depressing effect on work, the more people who are subject to that effect the greater it must be for the nation. Therefore, prima facie there is a strong case for exempting a large number of people. That, of course, means exempting the lowest group from the effect of tax altogether.
    I believe that quite a large number of people are debarred from advocating that by the quite common belief that we cannot take several million people out of the tax scale altogether without a very large loss of revenue. The remarkable fact is that, from the figures that is not true nearly to the extent that is generally believed.
    5.0 p.m.
    In the latest year for which figures are available, according to the Inland Revenue Report—1950–51—about 16 million people were paying Income Tax. A few weeks ago I asked the Chancellor what was the total revenue received from the 5 million people with the lowest incomes within that 16 million. The total Income Tax receipts in that year were something like £1,400 million, of which about half came from companies and something like half—about £700 million —from individuals. The remarkable answer which he gave, and which certainly surprised me, was that out of that £700 million the 5 million lowest income receivers—about one-third of the Income Tax payers—contributed only about £30 million. We could have exempted 5 million Income Tax payers altogether and lost only £30 million out of £1,400 million. That is a very strong argument for carrying on the process.
    The method of relief which the Chancellor has chosen this year has the curious

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    effect of reducing the tax almost all the way up the scale, and particularly at the higher levels, but exempting almost nobody. If that is incorrect, the Chancellor can say so. I do not understand, arithmetically, how it can be so, but I am assured that almost nobody is relieved of tax by this method of reducing the standard rate. The Chancellor will no doubt let me know whether that is correct.
    One proposal to implement this idea of exempting the smaller taxpayers without giving corresponding reliefs higher up the scale would be to introduce into the earned income allowance not merely a ceiling of £450 beyond which no relief was given but also a floor of £100 to ensure that all those at the bottom of the scale would get relief on at least £100. I do not want to elaborate that suggestion this afternoon. I can see some technical difficulties and objections, but I should like to bring the suggestion to the attention of the Chancellor and his advisers, some of whom I am sure will understand the suggestion fully as well as the Chancellor. It is a possible way of taking a large number of these small taxpayers out of the Tax altogether, and I believe that is the direction in which we ought to move.
    It would save a great deal of tax work and computation by the Inland Revenue officials, on the one hand, and by accountants, on the other, if we could take another four or five million people out of the tax. Of course, since those figures were given the Chancellor has exempted several million people by his 1952 Budget, but presumably it is still the case that if we took the lowest slice of three or four or five million people it would be possible to exempt them with rather similar effects in terms of revenue. If the Government would say what the effect would be up to date we should be very glad to hear it.
    For those reasons we believe it would have been better this year, both because of the desirable effects on the incentive to work, which we recognise but which we do not wish to over-rate, and because of the equally important argument of social justice, if the reliefs had been concentrated at the lower end of the scale and had been so devised as to increase the benefits coming from the earned income allowance. Perhaps the Government will look seriously at these suggestions and, as they have not yet done so,
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    at least present some concession in that sense to the Committee this afternoon.
    Mr. Cyril Osborne: The right hon. Member for Battersea, North (Mr. Jay) started by saying this was a very important Clause which marked the ending of the 19s. 6d. tax range altogether. I am delighted. 1 hope a lot more of the top ranges will go; I want ultimately to see many more ranges follow. Further, although the right hon. Gentleman mentioned incentive as a kind of afterthought, he did not give it the weight which economic factors demand for it.
    First of all, may I say, through the Financial Secretary, how grateful we are to the Chancellor for a small mercy. We are grateful for the 6d. off. I recognise that this is only a first step and I hope that year after year we shall have 6ds to come, because I believe that the high rates of Income Tax and Surtax themselves form the greatest single factor against an improvement in efficiency and productivity in this country.
    I hope that one day in the not too distant future—I realise it cannot all be done at once—we shall see Income Tax and Surtax together at not more than 10s. in the £, because with anything over that rate the law of diminishing returns operates. A man is then working less for himself than he is for the Chancellor. I remember in the days when Sir Stafford Cripps was Chancellor that we often heard, both amongst skilled workmen and amongst management, "Cripps will pay for this. This is Cripps's side of the expense." While men consider that the Chancellor of the Exchequer is a sleeping partner taking more than 50 per cent. of what they earn, we cannot expect them to do their best.
    I should like to remind the right hon. Member for Battersea, North of one point upon which he did not touch. When I was a boy a phrase which was always used was "the idle rich." The underlying assumption is that the people who are paying the 19s. 6d. rate are those who are getting the money without working. On 19th February I put a Question to my hon. Friend the Parliamentary Secretary on the subject and he gave an answer which startled and pleased me. I asked him, of the 28 per cent. of the distributable income of the nation which goes to the richest one-tenth of

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    the nation—which seems a large share— how much is earned and how much is unearned? I thought at least half would be unearned and that the phrase "idle rich" was not a figment of the imagination but was a reality.
    My hon. Friend replied that of the richest one-tenth in the country—that is, the people who pay the top reaches of tax—five-sixths of their income is earned and only one-sixth is unearned. From a productivity point of view that is a very important factor, for these men are thus in competitive trade earning five-sixths of their income; and it is their point of view that I want to put to the Committee.
    Mr. Frederick Mulley Mr. Frederick Mulley (Sheffield, Park) rose—
    Mr. Osborne: Perhaps the hon. Gentleman would let me develop my ideas. In the Budget debate, the right hon. Member for Leeds, South (Mr. Gaitskell) continually referred—and I expected to hear it from his colleague today—to the largesse which the Chancellor is distributing. He said it should have gone to one class and not to another class; he said it was being given to the privileged and not to those at the bottom end of the income scale. I think that is the wrong attitude to adopt altogether. The Chancellor is not giving away largesse. He is ceasing to rob and take from people a little less of the money which they have legitimately earned. He is not giving them anything at all. He is refraining from taking from them—and that is quite a different matter altogether. If those people who are earning that money refused to earn it, he would not have it to give to anybody. I think it is an important point of view both sides of the Committee should bear in mind.
    Arising from that there are two vital questions the Committee ought to face. The first is this. Do hon. Members opposite think the exceptionally able and gifted man. the man with exceptional ability and managerial capacity, should be taxed out of existence? Is it good for us that he, by high taxation, should be discouraged from doing his best? The second question is this. Will the ordinary wage-earner himself, in the long run, be better off if the men at the top are discouraged from doing their best by penal taxation? Would it be good to drive those men to be what "The Times"
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    referred to the other day as "half-doers" and "non-doers"?
    We have had during the last 10 years this high rate of taxation. We have had it so long we tend to forget that previously we had nothing like it at all. Even 9s. in the £ now is far too high. I would remind the Committee of how the tax has grown in recent years. During the First World War the standard rate of Income Tax was only 1s. 8d. in the £. In 1916 it went up to 5s. It was not until the end of that war that it was put up to 6s., and within six years of the end of that war it was reduced to 4s. in the £.
    Now, eight years after the end of the last war, we are asking whether it is wise, whether it is fair, whether it is the economically proper thing to do, to reduce it from 9s. 6d. to 9s. in the £. I suggest we have lost our sense of proportion. This 10s. in the £ that hon. Members opposite seem to love so dearly was not imposed until 1941, when Hitler forced upon us a siege economy. I am hoping that before long we shall see a great reduction in the standard rate.
    I give the right hon. Gentleman the Member for Battersea, North another reason why I think so. If, in addition to this high rate of taxation, we have, as we had in the last few years, the operation of inflation, the effect upon incomes in the higher groups is doubly severe, because what is left is cut by the amount of inflation suffered. Twenty years ago a man in business earning £10,000 a year paid roughly £3,000 in taxation, and he kept roughly £7,000 for himself. Today, the same man earning the same £10,000 pays roughly £7,000 in taxation and keeps for himself £3,000. In the last 20 years the value of money has fallen to a third of what is was, so that the purchasing power of the £3,000 with which he is left is reduced to that of £1,000, and his standard of living, the standard of living of the same man earning the same income and carrying the same responsibilities, is cut to a seventh.
    I put this to the right hon. Gentleman the Member for Battersea, North. Suppose inflation continues, and we have it on the scale the French have had it. Nobody, with taxation as it is at the present time, could live beyond the state of beggary. If we have inflation to the extent the Germans had it, and as I saw it, in 1923, obviously the whole system

    489
    will have to be reviewed. The position is like the operation of a pair of scissors. We have the cut being made by high taxation, and a cut by the other blade of inflation.
    Sooner or later both sides of the Committee will have to face the possibility that taxation plus inflation will lead to nothing but beggary, so small will be the net income in terms of purchasing power. That is why I say that I hope that this is only the first of many reductions in Income Tax that over the years we shall see, and that ultimately not more than half of income will be taken from people who earn it. I would remind the Committee that I am dealing with earned income.
    5.15 p.m.
    One other consideration I would give to the Committee from the Inland Revenue Accounts for 1951. The number given here of income within tax classification is not 16 million but 20,200,000.
    Mr. Jay: I think 16 million is the actual number of payers of Income Tax. It was.
    Mr. Osborne: The figure given here is 20,200,000 for 1950 to 1951. What is important is that of those 20,200,000 only 245,000 are Surtax payers. Of those 245,000 Surtax payers, that is, with incomes over £2,000 a year, 200,000 have incomes between £2,000 and £5,000 a year gross. I put it to hon. Members opposite that those with gross incomes of from £2,000 to £5,000 are largely those with managerial capacity, who run our industries, and they play a much more important part in the efficiency of our industries than is generally admitted. It is true that they have not got so many votes as the wage-earners, but their contribution is of the highest importance to our efficiency and to our economic survival, and it is largely due to their abilities that there are the profits from which the Chancellor gets his taxation money.
    This rate of taxation, even with this reduction of 6d., for which we are grateful, is still far too high. The principle of paying the rate for the job is often defended by hon. Members opposite. I think it is as important in economics as in anything else. We agree it is important in sport and in politics. A man successful in politics gets a reward. We
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    believe that on the benches opposite there is a struggle going on as to who should be their next Prime Minister. I am not sure whether the right hon. Gentleman the Member for Leeds, South will be successful or whether the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) will be successful. Hon. Members opposite, perhaps, know that; but there is a struggle going on about it, as everybody knows. The prize is the greatest and most glittering prize in this country. In politics the exceptionally able man receives an exceptional reward. It is the same in sport. Why should we not apply the same principle in business?
    The day after the Coronation "The Times" published a most remarkable article that I wish every hon. Member of the Committee would read and read again. It asked the question, "What After?" In effect it said, "Let us get down the bunting, let us get down the decorations, and let us look at the stark economic realities that lie behind them." It then said what is very much to the point we are at present considering:
    "The main reason why Britain has not yet prospered sufficiently to lift herself above the safety line is that the British people as a whole have not"—
    The Chairman: Order. We are getting a little beyond Clause 10.
    Mr. Osborne: I am most grateful for the indulgence you have shown me, Sir Charles. I am trying to show that the high rates of taxation are a great disincentive to earn and to extra effort.
    I am grateful for the 6d. which the Chancellor has given us, although I would rather it had been 1s. Hon. Members opposite say that he has no right to give it to us. With your permission, Sir Charles, I want to use the editorial in "The Times" to support me in saying that I should like Clause 10 plus. I trust that you regard that argument as in order.
    The Chairman: We have to consider Clause 10 as it is; neither plus nor minus.
    Mr. Osborne: I am sorry if I am out of order. "The Times" goes on to talk about the "non-doers" and the "half-doers" in our economic system. My contention is that there are a lot of non-doers and half-doers in every class of society because taxation is so high.
    The Chairman: If they are non-doers and half-doers I should be very surprised if they paid any Income Tax.
    Mr. Osborne: Hon. Members opposite argue that the non-doers get too great a share of the national income and therefore should have to pay. I must leave that point if I am out of order.
    Hon. Members opposite are opposed to this reduction of 6d. in the standard rate of Income Tax on the ground of egali-tarianism. They say it is not fair, and that we should be treated more or less alike. I want to know from them, when they come to state their case, what income they think we should set as a limit. How would they use taxation to enforce that? Why would they fix the limit they have in mind? How much extra would they allow for skill, extra effort, and the bearing of responsibility? Above all, why do not they practice that egalitarianism, of which we hear so much from them?
    Why, if they came back to power, would they pay the fortunate Front Bencher £5,000 and make the poor back bencher put up with £1,000 a year? Coupled with that, why in the name of egalitarianism should they demand an increase in their own salaries when there are other men in this House who are getting less than £6 a week and for whom they have never spoken? Their's is a moral appeal. Let us hear more about it from them. Let us hear what they would do themselves.
    I support this Clause. I am grateful to the Chancellor for the reduction of 6d. I hope he will give us another reduction, and if he does I shall support him again.
    Mr. John Strachey: I hope the Committee will not pass from this Clause without giving it adequate discussion, because I regard this as an important moment in our post-war history. For good or ill we are reversing the whole tendency of direct taxation as it has existed since the war. The engine of direct taxation, up till now, has been used for redistributory purposes. Hon. Members opposite think that is utterly and absolutely wrong. They object to it probably more than anything else in the world, and they have indicated that.
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    We, on the other hand, believe that this engine of direct taxation can and should be used deliberately and avowedly for purposes of redistribution. And at the present standard rate of Income Tax, Surtax, Death Duties, Profits Tax and the rest, there undoubtedly is redistribution. It is therefore a vitally important question of economic principle whether or not it is a good thing to reverse that process and to reduce the degree of redistribution which has been effected by direct taxation. For hon. Members opposite to assume that it is necessarily a good thing argues a certain primitiveness of economical outlook. No one doubts that it is a good thing for their pockets, but is it a good thing for the economy of the country?
    The hon. Member for Louth (Mr. Osborne) was seriously addressing himself to that question, although I utterly disagree with his view. Is it a good thing to use direct taxation quite simply to raise money for the expenses of the Government, or should it be used to redistribute income as between citizens? I think it was the Financial Secretary who said, in the Budget debate, that on the whole he took the view that the latter was not a good thing. He welcomed the idea of getting back towards a state of things when taxation was imposed simply as an unpleasant necessity to pay for the processes of Government, but was not used for purposes of redistribution.
    That is a traditional Conservative view, and one which is flatly contrary to the view of every single Member on this side of the Committee. We are therefore bound to oppose what is the first step back from the very appreciable amount of redistribution which was being effected by this means of direct taxation. It is worth noticing to what degree that redistribution was carried out, because it is sometimes exaggerated.
    The figures show fairly clearly that up till 1939 there was no net redistribution of income by taxation and other means. My right hon. Friend the Member for Battersea, North (Mr. Jay) summed up that position extremely well in his book "The Socialist Case." But I think it is equally true to say that since 1939— direct taxation is only one of the factors —there has been a certain degree of net redistribution of income through the

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    community as compared with the previous situation. It is an almost impossible task to estimate quite how much there has been. I personally do not think it is nearly as big as many people believe. And in that respect I do not think the achievements of the Government of which I was a Member were quite as big as many people think.
    Now, although not by an enormous amount, we are reducing the net effect of that effort at redistribution. Is that a good or bad thing? As my right hon. Friend the Member for Battersea, North said, the reasons which have been adduced by the Chancellor and other Government spokesmen in favour of that reduction fall, basically, under two heads. They wish to reduce the degree of redistribution which exists at present for the sake of two things—savings and incentives.
    We should examine those two things because, if their argument is substantiated, they are important. No one on this side will deny that for a moment. It was the classical theory of capitalism—one sees it in the works of every economist— that the way to get high savings was to have a high degree of inequality in the distribution of income. If one had the national income distributed very inequitably between persons, although it might be unjust, it did produce a very high level of savings, because some people had so much income that they had very little incentive to spend it all.
    I recall that famous passage in the late Lord Keynes's first major work "The Economic Consequences of the Peace," in which he describes the traditional workings of capitalism and likens the rich to bees who collect the economic resources of a community into their own hands, but not, he suggests, to spend themselves, but, in a large part at any rate, to save and invest, nominally for themselves, but actually for the benefit of the community.
    5.30 p.m.
    That was the way in which capitalism was supposed to work, and to some extent undoubtedly did work. And it is true that if that is the only way that we can get adequate savings in a community, then we must have a very high degree of inequality in the distribution of income. But I suggest that today that
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    is not so; that it has proved not to be the case that we have to have this extremely high—and it is extremely high, although not quite as high as it was— degree of inequality in order to get adequate savings.
    I suggest that the experience of the post-war years showed that there are now other ways, partly devised by Government and partly brought about by the changed shape of the organisation of industry, and in particular by the growth of corporations in industry, by which accumulation, saving can go on without anything like so high a degree of inequality in the distribution of income. The figures which my right hon. Friend the Member for Battersea, North has quoted are surely very striking in that regard—that last year, so far as one can tell, the actual amount of accumulation, not by individuals, but by corporations, company accumulation as he called it, was actually greater than that needed for the amount of actual investment in the sense of the creation of new capital assets, in the sense of physical investment, which those corporations wished to do—by a figure of some £600 million.
    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. Therefore, I think that hon. and right hon. Gentlemen opposite ought to address their minds—it would be very interesting to know what the Chancellor's mind was on this—to the issue that it is obsolete economic doctrine to take the view that we have to have an indefensible degree of inequality of income as the only way of producing a high enough rate of saving. Without going into elaborate economic theory, I suggest that it has been proved in practice that we can do it with a markedly less high degree of inequality than is supposed. That, it seems to us, is the issue in this matter of savings.
    Now I should like to look at the other side of the Government's case—that of incentive. I think that incentive comes under two heads. There is the question of the disincentive to further effort, which, it may be quite reasonably suggested, is given by high rates of taxation on an actual worker, either a manual worker, or

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    mental worker, such as the managerial worker—the actual degree of disincentive to his effort which a high rate of taxation on his wage or salary, his actual earnings, may give.
    I do not think that anyone on this side of the Committee would seek to deny that, of course, if we push our rates of taxation on those wages and salaries up beyond a certain point we do get a degree of disincentive—and a dangerous one. Therefore, as my right hon. Friend said, we are in favour of reducing, by increased allowances or any other suitable means, the rates of tax on such incomes. If we can make remissions at all, let us make them where they will provide further incentive to our wage earners or salary earners who may, quite arguably, at any rate, although it is not certain, suffer a disincentive if the rate goes above a certain figure.
    But if that is what the Government have in mind, then surely this present relief, which is on the very highest level of income, has the minimum effect upon incentive. Because the highest incomes are essentially property derived, or unearned incomes and, therefore, disincentive does not come in at all in taxing them.
    But there are other incentives which many people have in mind. They suggest that to push taxation of all kinds above a certain degree will act as a disincentive, not on the manual worker but on the entrepreneur when he is deciding whether or not to launch out into some new enterprise. That is an entirely different form of incentive, and it is a very important one indeed. That has to be considered. We have to ask surely today two questions in that respect. We have to ask who is the entrepreneur today; who takes the vital decisions as to whether new enterprises should be started or, more important today, whether existing enterprises should be enlarged?
    Of course, it is not any individual. The picture of an individual Victorian capitalist doing that is a very out-of-date one. Such figures do exist, but they are not the decisive factor. Our present day entrepreneurs, in that sense, are the boards of directors of the 12,000 public companies of this country. They are the people whose minds are made up as
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    to whether new enterprises should be started or existing enterprises should be enlarged. The real question of incentive in that sense is the question of the effect of taxation on their minds, on the minds of the boards of directors of the public companies of this country. They are, surely, the really decisive people in this respect.
    Therefore, we come to the second question, which one might put shortly as: What is it today which makes the entrepreneur want to "entreprenne"? The entrepreneur "entreprennes" when he considers it will benefit his corporation, the company or corporation or corporate body of any sort which he directs. He does not necessarily do it on a calculation of private gain to himself. He may or may not have large private gains to make in the matter. He is often concerned as a salary earner rather than as a shareholder. He will do it if he sees an opportunity to enlarge the scope of the activities of his company or concern and he will not do it if he does not.
    I would not say that taxation may not have some effect on that if pushed beyond a certain point. But I believe that it has a far less effect than it had on the old type of entrepreneur—the individual capitalist of the system of 50 or 100 years ago. I put it to the Committee that again, and not as a matter of theory, practice has shown that the real factor which determines, predominantly, the decision of the entrepreneur, the corporate entrepreneur, whether he should go ahead and enlarge or not, is not the level of taxation on him at all —the real thing that affects his mind is whether he sees a market for enlarging the output of his product.
    Mr. Ian Horobin: Not at a loss.
    Mr. Strachey: Not at a loss, of course. There is no reason why it should be at a loss. If the hon. Member would like to expand his interjection, we might understand it.
    Mr. Horobin: If every time a man makes a profit 19s. 6d. is taken out of it, and every time he makes a loss he has to pay the whole of it, the chances of making a net loss at the end of the year, even if one expands one's production of groundnuts or whatever it may be, are immensely increased.
    Mr. Strachey: I will not take up the hon. Member's personal quip, although I am tempted to do so, but it would be going a little wide of Clause 10. However, that is true. If it was a question of taxation above the rate of 100 per cent., clearly there would be no possibility of expanding the net receipts of the corporation. But it is not a question of that. I would call the attention of the hon. Member to the fact—this is what I want to emphasise to the Committee —that while taxation has been at these very high rates—taking them all together, they are very high rates—during the postwar years, markets also have been very high or wide or whatever the appropriate word may be. The prospect of selling an increased output has been far better than ever before. In actual practice, this has made the modern corporate entrepreneur "entreprenne" far more strongly than ever he did under the lower rates of taxation in the '30s with the much narrower markets. That is a fact, and it cannot be gainsaid.
    My submission is that the size of the market, the ability to sell an ever-increasing output, is not something unconnected with the system of high, direct, redistributory taxation. It is the other side of the whole system. It is because there has been, and is, this degree of redistribution of income, with its sustenance of the purchasing power of the population as a whole, that markets have been expanding. That is one of the most important reasons.
    Mr. Osborne: Is that true of America?
    Mr. Strachey: Certainly it is true of America. Does not the hon. Gentleman realise that re-distributory taxation in America, though not quite as high as it is here, is very high indeed, far higher than it used to be. Most American economists would agree with me about that. Certainly Mr. Galbraith, in his recent book, agrees very strongly that the fact that there has been in America a very high degree of redistribution has probably been the most important single factor in sustaining the American economy. The American boom has been sustained because of this wide distribution of purchasing power. Redistribution acts as a positive incentive, by its effect on their markets, on the men who take the actual decisions in modern industry.
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    Consequently we receive with the utmost regret, and must oppose, this step back from the degree of redistribution which this country had achieved.
    5.45 p.m.
    Mr. C. E. Mott-Radclyffe: If the right hon. Gentleman the Member for Dundee, West (Mr. Strachey) will forgive me for saying so, his experiences as an entrepreneur have been hardly more successful than his recent attempts to convert the word "entrepreneur" into a verb.
    We know the right hon. Gentleman the Member for Dundee, West and we know the right hon. Gentleman the Member for Battersea, North (Mr. Jay), and we are not in the least surprised to find that they both regarded it as a very retrograde and undesirable step that the top range of Surtax in Clause 10 should have been reduced from 19s. 6d. to 19s. I take a very different view. I believe it to be a very healthy step. I hope this is only the first step. I do not believe that this or any other country year in year out can expect those whose capacity is such that they can command high incomes to continue to exert their full effort while keeping only 6d. or 1s. of every £ which they earn. I believe that is contrary to human nature.
    The real difference between hon. Members opposite and my hon. Friends is that hon. Gentlemen opposite think that envy is the real generating motive by which we in this country can pay our way in the world. My hon. Friends and I do not believe that envy is the generating motive. I believe that ambition is a far more effective motive, although I absolutely agree that the urge, the push and the pull of ambition has to be kept under reasonable control.
    If some ingenious saboteur wanted to damage our country's economy to a very serious extent, it could be done quite easily without atom bombs or anything like that. He would only have to remove the best half dozen brains in each firm, starting with those concerned in export, and then go on to remove from the potential genius the incentive to persevere in the early stages of his career. If that were to be achieved, we should get no progress at all, and the wage earner would quickly feel the draught. I do not suggest that the very high rate of taxation

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    has gone as far as that, but it has gone quite far enough in that direction. One of the most serious effects of the incidence of too heavy taxation has been the trend to export brains instead of goods, and that is very dangerous indeed.
    Secondly, I am not at all certain whether one can draw an absolutely rigid dividing line—I know that hon. Gentlemen opposite will not agree with this— between what is commonly called earned income and unearned income. Unearned income is really investment from savings. I cannot think of any other way of describing it. Why is the urge to save so strong? It is because most men wish either to provide for their dependants, when they themselves die, or to enable them to end their days perhaps in a happier condition than that in which they began. I believe that to be a wholly healthy desire. If we make personal savings impossible, we replace the urge to save by the urge to spend, and that is a very unhealthy urge.
    Thirdly, there is one other difference between my hon. Friends and hon. Gentlemen opposite. Hon. Gentlemen opposite do not see taxation in its effect on the country's economy, in its effect in helping or hindering our capacity to solve the balance of payments problem. They regard taxation solely as a means for redistributing wealth. In their passionate quest for equality they forget that the most important part of "equality" is "quality." Anybody can level down and anybody can go along at the pace of the slowest horse, but that is not the problem which confronts our country now. We shall not get out of our economic difficulties by going along at the pace of the slowest horse in the race. Our problem is how to level up. It is quality that counts. Once the British nation stops exporting goods of quality or producing men whose managerial capacity is of high quality, we shall be in very serious trouble.
    That is why I support Clause 10. I welcome the reduction of 6d. in the Tax, and I only hope that it is the first of much larger doses to come in future Budgets moved by my right hon. Friend.
    Mr. Douglas Houghton: There is one thing I should like to say to begin with, and that is that hon. Gentlemen opposite are in error in saying that
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    there is any rate of tax at 19s. 6d. in the £. The effective rate of tax for a person getting as much as £100,000 a year was 18s. 10d. in the £ last year and will be 18s. 4d. this year. A person getting £50,000 a year had an effective rate of tax last year of 18s. l½d., and this year it will be 17s. 8d. I am not going to say that they are not very high rates of taxation. They are, but they are not 19s. 6d. in the £.
    Another thing we ought to get clear is that when the hon. Gentleman the Member for Louth (Mr. Osborne), in fervent terms and almost with a tremble in his voice, thanks the Chancellor of the Exchequer for relief to the extent of 6d. in the £ he knows that the tax relief amounts to a great deal more than 6d. to those taxpayers for whom he has been speaking in this debate. It is 6d. multiplied by thousands, because the total relief of taxation on scores of hundreds of pounds is not just the 6d. that the hon. Gentleman is grateful for it is 6d. multiplied by all the £s that these persons earn a year. That is the total relief from taxation, and if the hon. Member gets up to tell the Committee how much relief he will get out of the Budget I will sit down and listen with great interest.
    Mr. Osborne: Whatever I get I earn.
    Mr. Houghton: We have only the hon. Gentleman's word for that. I know that in the course of his speech he said that we on this side of the Commitee believe in the rate for the job. What rate for what job? That surely is part of the test of the principle of the rate for the job, and if the hon. Member likes to tell the Committee what rate he gets for his job I will sit down so that we may hear what it is.
    Mr. Osborne Mr. Osborne rose—
    Mr. Houghton: Is the hon. Gentleman going to respond to my invitation? If not it will be an irrelevant interruption. I will give way if he is going to answer my question as to how much tax relief he is going to get out of this Bill. If he likes to answer that I will give way, but if he wants to get up and waffle about, with great respect I shall not give way.
    Mr. Osborne: The hon. Gentleman should know what waffling is.
    Mr. Houghton: Probably there are more experts than the hon. Gentleman

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    and myself in the art of waffling, but at the present moment I am asking him a direct question and he is not giving me a straight answer. I will pass on, because I think we can assume that this 6d. relief for which the hon. Gentleman is thankful has to be multiplied many, many times to give the total tax relief that he will get from this Clause.
    The question that we on this side of the Committee ask ourselves is, is it necessary to give the hon. Gentleman a tax relief in order to keep his spirits and his production high, and to give him, as the Chancellor of the Exchequer expressed it, a boost? I ask the hon. Gentleman another question. Is this Clause giving him a boost? If so—and I assume it is —will he kindly tell the Committee what form this boost will take? Will he work harder? Will he work better and talk less, or is it just a state of mind he has been put into by the reductions given in this Clause?
    The right hon. Gentleman did not justify what he was doing in this Clause by reference to considerations of equity. He did not say that this was the fairest way of reducing taxation this year. He did not say that he believed this to be a more equitable way of distributing the tax reliefs to any other alternative course for Income Tax or any other tax. He did not say that he thought those who paid an effective rate of tax of 18s. 10d. in the £ were in real need of a reduction to 18s. 4d. in the £.
    The right hon. Gentleman—and I think we all listened to his Budget speech with the closest interest—seemed to put some kind of spiritual inspiration behind this tax relief. It was going to be a boost, and he was going to give Britain a break by reducing taxation by 6d. in the £. There is no doubt at all that the Press the next day seemed to capture the magic which he wanted to import into this proposal, because their headlines were, "Sixpence off." That was going to be a new incentive, a new driving force behind our enthusiasm and our will to recover. We have had quite a long time to consult and consider whether this boost, which the right hon. Gentleman has sought to give, is indeed going to be the boost that he wants. Could he have done it a better way?
    I think the party opposite are really in retreat from direct taxation. They have
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    never liked direct taxation, because it is the only fiscal weapon which can be made severely progressive. It is the only form of taxation which can really hurt the well-to-do. Other forms of taxation on things rather than on persons and on income can be severely regressive. They can hurt some people very much indeed, but they cannot really hurt the rich. That is why, whether it is indirect taxation on motor cars or on beer and tobacco or indirect taxation on other goods, their interest in indirect taxation is only as producers and not as consumers.
    I find it very hard to get this relationship between direct and indirect taxation in proper proportions in my own mind. I ask myself, what are the principles of taxation in this country? Just recently I was asked to do a few talks in the European Service of the B.B.C. on the principles of taxation in Britain. I tried to address myself to that problem, and I came to the conclusion that the principles of taxation in Britain are the principles of taxation everywhere, which were, as the Frenchman said, how to pluck the goose with as little squawking as possible. That seems to be the only principle in our system of taxation.
    How can the Chancellor get what he wants or achieve the purpose of his policy with the least political, social and industrial reaction? When the hon. Member for Louth was referring to the discouragement which is given to managers in this country by the present rate of taxation, I felt he exaggerated the position. I do not believe that management in industry is as dependent on the financial incentive as a great many people lower down.
    After all, they have interesting jobs. They are very often devoted to their work. They take work home and do it at weekends. Many of them are great trials to their wives and children, because father has his work to do and he is very interested in doing it. They have many amenities and facilities in their work. They can have motor cars on the firm and they can have people to drive them about. They can be sent on overseas missions, and directors can say to them, "Take the wife, and do not hurry back."
    6.0 p.m.
    All sorts of things make life very pleasant indeed for those in positions of managerial responsibility. A person who retired recently from the public service,

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    where he was a highly placed official, to go into industry was heard to remark that it was not because of the higher pay he received, because taxation cut most of that off, but because the amenities in an industrial job with managerial responsibility far outclassed anything that could be got in the public service where he had to walk or, at all events, was asked by the accounting officer, "Could you avail yourself of public transport?"
    I think that many of these managers do not require financial incentive to give them a boost, and the idea that they do is misplaced. On the other hand, there are many workers on repetitive production jobs who are frequently bored by their work and dislike it and who are looking a great deal more closely than those higher up at the cash rewards they get.
    A trade union secretary was saying to me yesterday that on a recent visit of Her Majesty to a factory she saw a young man doing a highly repetitive job. She asked, "What are you doing this for?" And he said, "Time rate and a quarter, Your Majesty. We are pressing our trade union to get time rate and a half." There is an example of what some people are working for. I have always said that in many ranges of wages the Chancellor of the Exchequer can give the best wage increases of all because he is the only person who can give the taxpayer wage increases by tax reliefs. The Chancellor has no doubt had them in mind in deciding that he would try to give the country a boost.
    What the Chancellor has done this time, however, is quite unselective. Last year he chose to increase the personal allowance for both married and single persons, he increased the allowance for children and he created a new Income Tax concession, that of giving earned income relief to the quite small incomes. He also increased the earned income relief generally and thereby took out of the field of taxation a considerable number of people.
    This year he has chosen to limit severely the reliefs that he has given to personal taxpayers. Later in our debate there will be occasion to consider some of the things which the Chancellor might have done to adjust the burden of taxation more fairly to the shoulders that
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    have to bear it. This year the Chancellor has made small improvements in the allowances for housekeepers and dependent relatives, but all the rest of his Income Tax reliefs have gone in the reduction in the rate of tax covering the whole field of taxpayers.
    When the Financial Secretary comes to reply, he may be able to tell us a little more of what is in the mind of Her Majesty's Government regarding their fiscal policy. A little while ago I read in the "Economist" a suggestion that there ought to be an election this autumn because the Conservative Party had never explained any policy which would take them beyond the autumn.
    The Temporary Chairman (Colonel Sir Leonard Ropner): The hon. Gentleman is getting a little beyond Clause 10.
    Mr. Houghton: Yes, Sir Leonard, I regret that and acknowledge it. I am coming quickly back to this Clause. I am asking the Financial Secretary if, when he replies, he will explain to us not only what is the taxation policy of the Government in regard to the level of direct taxation but also the relationship between direct and indirect taxation as the twin weapons of fiscal policy. Perhaps, unless he transgresses as I have done, to keep in order he may have to confine his remarks to direct taxation and the Income Tax particularly. Is it the intention of the Government to regard as the basis of their future policy the reduction of the level of direct taxation even though it is not possible for them to give reliefs in the field of indirect taxation? That is the question that I want the hon. Gentleman to answer, though I am still prepared to give way if the hon. Member for Louth—who is no doubt still contemplating whether he should answer my question—wishes to put himself absolutely square with the Committee.
    The boost which the right hon. Gentleman was hoping to give by this reduction in direct taxation seems to have exhausted itself even by now, at least so far as its effect on the general mass of the workers is concerned. There has been some critical reaction generally throughout the country—
    Mr. Osborne: Not in Sunderland.
    Mr. Houghton: Right hon. and hon. Gentlemen opposite must not fall into the

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    error of thinking that one swallow makes a summer. There are all sorts of factors which may lead to a particular result at a particular time. We, for our part, are quite prepared to see how the other birds take to wing as time goes on. There is no doubt—all of us have sensed it in our contacts with our constituents—that there was a feeling to begin with that more had been done to give taxation reliefs than in fact had been done, and now this very week most workers will be able to see for themselves just what these tax reliefs amount to.
    These few reflections may carry the mind of the Chancellor a little further in his difficult task, but it seems to us on these benches that, without hearing more of the principles upon which Her Majesty's Government are working in their fiscal and economic policy, we cannot judge this Clause, any more than the rest of the Bill, except on the basis of opportunism, expediency or even political prejudice.
    Unless there are some principles behind what the right hon. Gentleman is doing, he is just ad hoc, if I may say so without disrespect, addressing himself to each problem as it arises by the balance of considerations as they appear to him at that moment. The essential difference between those of us on this side of the Committee and right hon. and hon. Gentlemen opposite is that we work on principles whereas hon. Gentlemen opposite are much more flexible in their approach to political and economic and social morality.
    Mr. Nabarro: The hon. Member for Sowerby (Mr. Houghton) first gained a good deal of prominence through wireless programmes entitled "Can I help you?" I hope that during the course of those programmes he showed a little more consistency than he has shown this afternoon. Only yesterday we listened to a whole series of speeches pleading with my right hon. Friend the Chancellor of the Exchequer for a substantial reduction in the rates of Purchase Tax which is one form of indirect taxation. Today, the hon. Member is pleading for a reduction in direct taxation. I am not quite sure what the hon. Member's fiscal principles rest upon. They seem to me to rest upon a sort of omnibus reduction of every form of taxation, duty and levy at one
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    and the same time, and in one and the same Finance Bill.
    Two right hon. Members opposite spoke earlier in this debate on Income Tax. They both made extraordinary points in regard to company taxation and the effect of the reduction in the standard rate of Income Tax on the finances of companies. The case made by the right hon. Member for Dundee, West (Mr. Strachey) was evidently that the 12,000 public companies in the country, after providing for taxation, and after providing for reasonable sums for the servicing of their respective capitals and also reasonable sums for ploughing back into their businesses, had a sort of reserve of money which they did not quite know what to do with.
    Mr. Strachey Mr. Strachey indicated assent.
    Mr. Nabarro: The right hon. Gentleman now confirms that. Evidently he did not sit through our debates on the Committee stage of the Finance Bill last year. Had he taken the trouble to do so, he would have found that the case he was pleading today was in extraordinary contradistinction to the arguments of that economic triumvirate, the hon. Members for Gloucestershire, South (Mr. Crosland), Stechford (Mr. Roy Jenkins) and Edmonton (Mr. Albu). In speech after speech last year, when attacking the Excess Profits Levy, their whole case was that it mulcted corporate undertakings and companies of such a large sum of money that insufficient reserves were left for the development and expansion of their businesses.
    Mr. Roy Jenkins: The hon. Member is misrepresenting us. The whole burden of our case against the Excess Profits Levy last year was not so much that it took money away from corporate bodies, but that it did so in an unfair way and one calculated to penalise expending companies as against static and contracting companies.
    Mr. Nabarro: The hon. Member, who has considerable knowledge of these tax matters, must go away and read the speeches that were made last year. That was the only point which he and his hon. Friends were making. In a series of Amendments, the gravamen of their charge against my right hon. Friend was that companies were being mulcted at

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    such an excessive rate by the aggregation of direct taxation which they were called upon to pay, that insufficient sums were left for development. The right hon. Member for Battersea, North (Mr. Jay) supported that case last year and opposed it this afternoon. His inconsistency is even more vivid than that of his hon. Friend.
    Mr. Jay: The hon. Member is totally misrepresenting what we said. Obviously he cannot have been here last year and cannot have read the speeches. We did not object to the total level of taxation. We said that it was being levied in an unfair and inefficient way, calculated to penalise the progressive enterprise. Had we been saying what the hon. Member suggests, why should we have opposed the reduction in the Profits Tax, which went together with the increase in E.P.L.?
    Mr. Nabarro: The right hon. Gentleman cannot pursue the argument that I was not here. I spoke at least half a dozen times last year during the Committee stage on the Excess Profits Levy Clauses and repudiated many of the fallacious charges made by hon. Members opposite. However, let me return to Clause 10.
    A Finance Bill is generally a dull and uncongenial document. There are, however, magic words in the first two lines of Clause 10:
    "Income tax for the year 1953–54 shall be charged at the standard rate of nine shillings in the pound, …"
    It would have been even better had "only" been inserted before "nine shillings," for one of the worst things that the last Labour Government did was, in one and the same Finance Bill, to increase the standard rate of Income Tax from 9s. to 9s. 6d. and at the same time to withdraw the initial allowances. In my view, that was a primary cause of the falling off in production which we witnessed in the ensuing 12 months.
    6.15 p.m.
    In my view, the principal effect of the reduction of sixpence in the standard rate of Income Tax will be felt by industrial companies because of the marked impression that it will make on the sums
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    of money that are available to them for improving their equipment, and for expansion. It is true that the abolition of the Excess Profits Levy will help them also.
    The right hon. Member for Battersea, North makes the case that he would prefer to proceed by hiccoughs with the system of the initial allowances or a series of loans to companies—for that is all they are—and he says that he prefers that system to what he was pleased this afternoon to call a gift, by reducing the standard rate of Income Tax. I must say how greatly I oppose the right hon. Gentleman's point of view. It is not a gift to companies. It is a sum of money left in their reserves out of which, based on the evidence of the last two years, they are distributing only 20 per cent. in the general flow of dividends, and the remaining 80 per cent. is being used most largely for increasing their reserves, and then used principally for re-equipment.
    Of those three incentives that my right hon. Friend is able to offer to industry to improve its equipment and to enlarge production—namely, the reduction in the standard rate of Income Tax, the prospective abolition of the Excess Profits Levy and the restoration of the initial allowances—the most important single one is, undoubtedly, the reduction in the standard rate of Income Tax. Hon. Members opposite who plead that it is so unfair to reduce the standard rate of Income Tax because it helps those few individuals with very large personal incomes, and who neglect entirely the profound effect that it will have on business and capital re-equipment as a whole, are falling into a grave error.
    I speak with an intimate knowledge of what is going on in the Midlands. I know that since the provisions of this Budget were announced, there has been a great quickening in orders for every form of capital equipment, notably in the machine tool industry. It may be caused through re-introduction of the initial allowances. I hope it is not so, because initial allowances are only of very ephemeral and fleeting value. It is most largely, I believe, the impetus and the urge that has been given to industry generally by reduction of direct taxation and notably the prospective ending of the Excess Profits Levy; and in large degree

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    by what the "Economist," in its leading article immediately following the Budget speech, called—a significant expression, I thought—"the turn of the fiscal tide" and described as the first time in years that a Chancellor had imposed no new taxes and had generally encouraged productive industry by straight reductions in practically all the levies that they were called upon to pay. I believe that this is the most important Clause in the Bill, and it has my wholehearted support.
    Mr. Gordon Walker: The hon. Member for Kidderminster (Mr. Nabarro) used very significant words when he talked about the magic words in the Clause, because he and his right hon. Friend the Chancellor of the Exchequer, together with all other Members on their side of the Committee who have defended it, are really relying on magic. They defend the reduction of the Surtax on purely doctrinal grounds and advance no proof whatever to substantiate what they say will follow from the reduction in Surtax.
    The speech of the hon. Member for Kidderminster was typical of all the other speeches we have heard. He believes, without any evidence—he said himself that he had no evidence—that this reduction in Surtax is the bit of magic that will save the whole of our economy.
    Mr. Nabarro: The right hon. Member must not misrepresent me. I did not mention Surtax, but from the beginning to the end of my speech devoted practically all my remarks to the effect on industry of the reduction in corporate body taxation by bringing down the standard rate of Income Tax.
    Mr. Gordon Walker: If the hon. Member was wiser than some of his hon. Friends and did not mention it, it was in his mind all the time. I think I remember him referring particularly to the reduction of the Income Tax on the very rich. I think I heard him say that.
    Mr. Nabarro: I did not.
    Mr. Gordon Walker: I think he referred to the small number of the very rich who would get reductions. They certainly are Surtax payers. The real and simple issue is whether the reduction in the Surtax is put to the best use.
    Mr. Ralph Assheton: Would the right hon. Member allow me to remind him that there is no reduction in Surtax?
    Mr. Gordon Walker: The reduction in the amount of tax paid by Surtax payers —[HON. MEMBERS: "Income Tax."]—I amend it to the total amount of tax paid by Surtax payers. The issue is whether it is the best use of the available money in the national interest, and on that we have not heard any evidence at all. The doctrine is a very simple one. It is that incentive today depends entirely upon the reactions of the big men at the top of industry and the rich people in the country. The argument all the time is that incentive primarily depends upon them. In fact, it is shown today that incentive in the main, in a modern society, is a question of the reaction of the workers as a whole and of their general will to work and not primarily— although, of course, it is also a factor— as it was 50 years ago, the question of the reactions of the very rich and men at the top of industry.
    This has been proved by the test of experience; it is not a question of doctrine. What affects the will of the workers to work certainly affects our production as a nation, and that is the only test we can apply to find whether anything is an incentive or not. It is always forgotten that the workers also pay great attention to the prospects of their children. It is not only the effect on rich men and their children's prospects, but the effect on the workers and their children and on their general will to work.
    Above all, there is the effect on the workers' sense of social justice and social equality. The great objection to this proposal is that it does offend against the principle of social justice and equality. This money could have been used differently. It could have been used with much greater benefit to the general economic and social equality of people in this country. The test is simple: Why did productivity go up under the Labour Government? It was because the workers had the will to work for these reasons.
    If the present Government come forward with this sort of policy—urged upon them by their supporters—and, as money becomes available for tax reduction, as

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    we hope it will, use that money in this unjust way so that people with much money get very much more considerable reliefs from the State than people with lower income, it will be a great blow to the productivity of the country. It will be something done for purely doctrinal and selfish reasons and not at all in the national interest. On those grounds, I think we ought to resist this proposal for the unjust—at this stage of our affairs— reduction of tax on very high incomes instead of a better and more socially just use of money.
    The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): I agree with the rather unusual concurrence of testimony of the right hon. Member for Battersea, North (Mr. Jay) and my hon. Friend the Member for Kidderminster (Mr. Nabarro) that this is an important Clause. By reason, perhaps, of its importance it is one to which a great deal of discussion has already been given during Second Reading and during the Budget debates. I must therefore beware of the danger of falling into the twin Parliamentary offences of tediousness and repetition.
    The Clause itself, embodying as it does, the proposals of my right hon. Friend for Income Tax, was naturally discussed at fairly considerable length on Second Reading, and it is a little difficult to add very much to what was said in the course of that debate. It is also necessary to beware of the fact that the alternative method of allowances which the right hon. Member for Battersea, North advocated in general is likely to be discussed in detail on some of the Amendments to Clause 12, on which perhaps more conveniently will come such argument as there may be as to whether or not particular proposals have merits.
    I will seek, therefore—not, I hope, at undue length, because the Committee still have a great deal of business before them —to summarise the reasons we feel the proposal of my right hon. Friend to reduce the standard rate of Income Tax, coupled with the adjustments to allowances which are made in Clause 12, is this year a preferable method of dealing with the questions of direct taxation to that which the right hon. Member for Battersea,
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    North advocated, in what I hope I will not do him irreparable harm in his party by describing as a most persuasive speech.
    If we are to form a fair view of what my right hon. Friend is doing, it is essential to have in mind one or two of the salient facts and to consider, in the light of those facts, whether some of the criticisms—notably perhaps that which fell from the right hon. Member for Smethwick (Mr. Gordon Walker) as to selfishness and being contrary to the national interest and so on—are really justified by the proposals as they stand.
    It may interest hon. Members to look at the question in this way. The cost, in a full year, of the reduction of the standard rate is £73 million and the cost of reduction in the three reduced rates is £61 million. It is of interest that of the £73 million no less than £45 million goes to companies and only £28 million to individuals. As regards the reduced rate, of course the whole total of £61 million goes to individuals. Of the total benefit to individuals of £89 million, £61 million represents the reduction in the reduced rates. I think it is an important aspect of the matter that so large a proportion of the concession to individuals goes on the reduced rates—that is either to those on small incomes or to the bottom levels of those with higher incomes.
    One may look at it in another way. If we take the total relief to individuals, when account is also taken of the adjustments to allowances to which we shall come in Clause 12, the total effect is of a concession to individuals of £96 million of which no less than 60 per cent. goes to individuals with incomes of £1,000 a year or less. It is also worth recalling, although I do not want to labour the point, what was said on Second Reading —that a reduction in the Income Tax rates benefits every taxpayer. Counting wives who are working separately, it affects 16½ million taxpayers—this is the correct figure which was in dispute between the right hon. Member and one of my hon. Friends—and, when we consider their families and dependants, 30 million people.
    6.30 p.m.
    There is also the consideration, to which I referred on Second Reading, that the biggest reduction in the tax bill comes at the bottom of the scale. There are 7½ million people who pay Income Tax

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    only at the lowest reduced rate. That is reduced by this Clause from 3s. to 2s. 6d. It follows that those people see a reduction of one-sixth or 16¾ per cent. in their tax bill. The proportionate reduction of the tax bill, of course, diminishes as one rises up the income scale to about 2½ per cent. when one reaches the highest level. Therefore, although one can found arguments based on the absolute amounts involved, it is of some interest to recall that the proportionate effect on the individual's tax bill is so large at the bottom of the Income Tax scale.
    I now seek to deal with the arguments which I do not think that the right hon. Member for Battersea, North deployed today—his speech was most agreeable— but which were deployed at an earlier stage of our debates by some of his right hon. Friends, to the effect that the reduced standard rate gave most benefit, first to the rich; second, to those with unearned income as against earned income; and third, in the case of married people, to those without children. I think these were the three main criticisms which, certainly at earlier stages of the debate, were levelled against my right hon. Friend's decision to reduce the standard rate.
    A good deal of play was made and a good deal of fun was had by some right hon. Gentlemen in respect of the argument put by some of my hon. Friends that such a result must be the necessary and inevitable consequence of a decision to reduce the standard rate. One right hon. Gentleman said, "Why, in those circumstances, reduce the standard rate?" I should like to follow up that criticism a little further. Does it mean, if I may analyse the consequences more fully for a moment, if those consequences in fact arise, that in the view of the Opposition that is an argument for never, until the end of time, reducing the standard rate below 9s. 6d. or the total of Income Tax and Surtax on those branches of income which exceed £15,000 below 19s. 6d.? Is it their view that such levels of taxation must endure until the end of time?
    Is it really their contention—a most interesting proposition—that, for the reasons they have given, we must not at any stage, even though the national finances permit, reduce the level of taxation of this order, which—I will come to
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    the effects in a moment—is as high as we have ever had and a good deal higher than we have previously had in times of peace? That is the question posed by the arguments of the Opposition. It is a matter of some interest whether they really see irresistible objection to our ever tackling the question of the standard rate.
    It is surely one of the essentials of a system of progressive taxation that where the State is compelled to raise large sums of money for public purposes, and when it is necessary to increase the revenues of the State, the burden of the increased taxation shall fall mostly on the higher incomes. We all accept that in principle, although we may differ in the precise application. It is surely one of the essentials in such circumstances. That principle has been applied by successive Governments and is in operation at this moment.
    It is surely the corollary that once the need for taxation at that level ceases, in the view of those responsible, one is entitled, indeed, compelled, to consider whether a standard rate, progressively adjusted by the Surtax as this is, is justified. It is surely the essential corollary of imposing taxation in this sort of way, which I think we all accept, that when it becomes possible to review the Income Tax position one is really compelled, by the same principle, to make adjustments downwards on exactly the same principle.
    I will come to the argument of the right hon. Member for Dundee, West (Mr. Strachey) about the redistribution of income by taxation. Arguments of a philosophical nature based on the redistribution of income rather than the requirements of revenue can be advanced, whatever may be the level of taxation, but I should have thought that it would be generally accepted that levels of taxation such as those which we have been enduring, rising to very high proportions indeed in the higher levels of income, are only justifiable when the State has to raise that amount of revenue.
    I am not concerned to argue with the right hon. Gentleman that when we come to the lower levels the re-distributive element may not be a very interesting consideration to be borne in mind, but unless the right hon. Gentleman wishes to carry redistribution very close to the point of confiscation he is bound to admit

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    that taxation at the levels which we have been enduring is justifiable solely from the revenue aspect.
    The effect is—here I come to the later criticisms—that when we reduce taxation which stands at this level it naturally follows that the biggest absolute reduction in that particular instalment of reduction falls to those who are paying the most in taxation. It therefore follows— here I am dealing with the right hon. Gentleman's point of the difference between the relief to those with unearned incomes and those with earned incomes and between the married and the single —that the mitigation of the rigours of taxation given in respect of earned income, and given also, and very properly given, to married and family men, means that when the tax itself comes to be modified, if one makes a mathematical calculation the amount of the reduction at the moment can be shown to be higher for one set of categories than for another. But it is, of course, a complete misreading of that situation to suggest that we are conferring any disproportionate or unfair benefit on one category as opposed to another when all that we are doing is to reduce the general rate as distinct from the reliefs given for social reasons to certain classes of people.
    I turn to the question of incentive. The right hon. Member for Dundee, West did not seem to think that incentive mattered at the higher levels at all. He and several hon. Members talked as if the only incentive needed was for the directors of public companies. We are all aware of the great contribution to the well-being of this country not merely by public companies but by individuals— individual professional men in particular, to whom the right hon. Gentleman's arguments are not applicable at all. I do not think it has been fully appreciated on the benches opposite that earned income relief at present only runs up to a total earned income of £2,025. Therefore, the reduction in the standard rate for incomes over that figure falls equally on earned and unearned income.
    I hope that it is not to be suggested in these days that valuable public and national service cannot be properly remunerated at levels in excess of £2,025. Nor, I hope, is it to be suggested that the encouragement which comes from
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    being allowed to retain slightly more of one's own income for one's own purposes must necessarily be denied at the higher levels of income. It does not lie in the mouths of right hon. Gentlemen opposite to say that nobody ought to be earning salaries of that sort and that, therefore, they require no encouragement, because it will be within the recollection of the Committee that when right hon. Gentlemen opposite were in authority they appointed, quite rightly, to great public corporations which they created distinguished persons at salaries four or five times greater than that.
    Therefore, it is clear that right hon. Gentlemen opposite appreciate, as we appreciate, that in the kind of responsible positions to be found in a complex modern society it is peculiarly right and proper that people should be remunerated at those levels. If that is so, why should they be denied the encouragement which comes from a reduction of taxation? Why, indeed, should they be deprived of encouragement to the acceptance of greater responsibilities which go with greater remuneration? Those are the sort of considerations to be borne in mind, and I would once again urge the Committee to consider that the standard rate decrease, falling equally as it does on earned and unearned income has a full incentive effect so far as earned income is concerned.
    The Committee will recall that in the Parliamentary answer which I gave to my hon. Friend the Member for Louth (Mr. Osborne), and to which he referred, I pointed out the very high proportion of earned to unearned income which is to be found in the highest tenth of incomes of this country. But let me take the problem posed by the right hon. Member for Dundee, West. He, quite frankly, wishes to use taxation primarily as a redistributive factor. That is a matter which, as I have indicated, might be debated with regard to lower levels of taxation. But if he adopts that on this rate of taxation he is falling into the position that no one, however capable and competent or whatever responsibility the person accepts, is to be allowed to keep more than what is, by standards of gross income, a quite moderate net income.
    If the right hon. Gentleman takes that egalitarian point of view, it conforms with his public and published statements, and

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    I suggest that he is wholly consistent in so doing; but I do not think that his right hon. Friends on the Front Bench opposite would be consistent if they adopted that attitude, because it is wholly contrary to the line they have taken, for example, in connection with the salaries of persons given public appointments.
    The practical point we have to consider is whether this year we cannot achieve more from the broad national point of view by diminishing the standard rate rather than this year making alterations in allowances. The right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) referred to a magic effect. I suggest that there is something very real and tangible and obvious about a reduction in the standard rate which must have its effect upon individuals in stimulating them to extra effort that would not obtain in regard to an adjustment of allowances, which I am bound to say few of us in our personal affairs wholly understand. If one takes that factor and adds to it the incentive effect on the higher levels and the fact that the 6d. reduction in the Income Tax rates is the one tax change which benefits every taxpayer, it will be appreciated that there are sound and solid reasons why this year the adjustment should be made in that way.
    The hon. Member for Sowerby (Mr. Houghton), who is always very entertaining, said that a principle of British taxation was how we could pluck the goose without its squawking too much. But I suggest the hon. Member omitted one important part of the operation. Is it not also desirable to pluck the goose without stopping it laying the golden eggs? The danger of the hon. Gentleman's method, whether it be painless or not—and upon that I will not express an opinion—is that, particularly in the field of the professional man and the executive, there is undoubtedly some—we can debate and controvert each other on the amount, about which I am not concerned to argue— degree of discouragement in knowing that extra effort, or the acceptance of extra responsibility, brings a diminished share of the extra gross remuneration.
    6.45 p.m.
    Mr. Jay: Would the hon. Gentleman agree at this point that one important incentive to extra effort' throughout the community is the belief that the income
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    of the country is being far more fairly shared? May I ask him whether he has read the interesting sentence from the report of an American productivity team which looked into the British pressed metal industry and quoted, as one of the main factors making for higher productivity in British industry,
    "the feeling that, to a greater extent than ever before, whatever goods and services remain in the country are being more equitably divided among the whole population"?
    Mr. Boyd-Carpenter: I will go a considerable way with the right hon. Gentleman. I agree with him that a sound feeling that the country's affairs, financial and otherwise, are being administered with fairness, and, above all. administered with the first priority given to the general national interest, is a very important feature in productivity. I see no reason to quarrel with the right hon. Gentleman, or the American productivity team— rather strange allies in this context—on that issue. I would say to the right hon. Gentleman, and I think I can say it in the light of the public reaction to my right hon. Friend's proposals, that those proposals are fully within that category, and that is recognised as so by public opinion.
    I do not wish to indulge in the easy game of reference to by-elections or to Press quotations, but in his heart the right hon. Gentleman knows perfectly well, and so do his right hon. Friends, that the prestige and standing of this Government in the eyes of the people of this country is higher today than at the time of the General Election, and it is still rising. I believe a substantial contribution to that has been the very feeling to which the right hon. Gentleman has referred, that the Budget proposals of my right hon. Friend were a model of fairness. I am sorry that the right hon. Gentleman managed to distract me from what I hoped would be a dispassionate argument. I think he will agree that he tossed an adroit fly at me and if I gobbled it up I hope he will forgive me—I do not think I shall suffer from indigestion as a consequence.
    I ask the Committee to remember one other fact. I do not think that my right hon. Friend's proposals this year can be fairly considered unless they are regarded against the background, and as a follow-on, of what he did last year. What my

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    right hon. Friend did last year is, in substance, what the right hon. Gentleman is suggesting that we should do this year. He made adjustments in the earned income allowance, the personal allowances, the child allowance and so on. He made his main concessions by way of allowances and that is precisely what the right hon. Gentleman is asking him to do now.
    Therefore, when it is sought to make invidious comparisons between the effect of the change in taxation on one person and another, one must look at the matter against the background of what was done last year and judge it upon the total effect. It is quite misleading and artificial to take one year's proposals and look at them completely in vacuo. They are part and parcel of a taxation policy which, as was truly observed by one of my hon. Friends, may well be a turning point in the affairs of this country, and which gives substantial relief from the heavy burden of taxation bequeathed to us by the right hon. Gentleman and his Government.
    This reduction in the standard rate which this Clause effects is, as the right hon. Gentleman said, a major part of the Bill. We believe it is an essential part and I beg hon. Members, particularly the right hon. Member for Smethwick. to accept from me that though, of course. we can differ on the way reliefs should be made—that is a matter on which sincere opinions can easily differ—they are made in this way because my right hon. Friend and the rest of us sincerely believe it to be the way to effect relief in the burden of taxation in the interest of the nation as a whole. It is for that reason that the Clause will be accepted.
    Mr. Roy Jenkins: The Financial Secretary, despite his great force of argument, is rather less successful than some other spokesmen on the Treasury Bench in understanding the attitude of this side of the Committee to direct taxation. He persists in thinking that we agree with him in regarding post-war levels of taxation, both in the total amount of revenue they raise and in their distributive effects, as some temporary aberration which we should all like to see disappear if it were possible. He thinks that some period which he does not define—perhaps 1936—with some standard rate of tax which again he does
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    not define—perhaps 7s. 6d. and perhaps 5s. 6d.—is the sort of goal to which we should all like to return. It is true to say that most hon. Members would be extremely disturbed at the distributive effects which would follow from such a move backwards unless there were other counteracting factors.
    As the hon. Gentleman himself shows, the distributive effects of this Budget are rather worrying. He pointed, as though it were a piece of great strength in his case, to the fact that taking into account the allowances as well as the cuts in the standard rate and the reduced rates, 60 per cent. of the direct taxation concessions would go to those with incomes of under £1,000 a year. That statement alone may sound impressive, but one need only think about it and add to it the fact that the incomes of over £1,000 a year amount to 4 per cent. of the total incomes in the country to realise that what he is saying is that 40 per cent. of the direct taxation and allowance concessions go to 4 per cent. of those drawing incomes of that kind. That is not a very impressive argument for the fairness of the Budget.
    I turn to the extraordinary arguments of the hon. Member for Kidderminster (Mr. Nabarro). I thought that he was on much less sound ground than he sometimes is. He put before the Committee some extraordinary statements. He said that in his view the fall off in production in the last two years was largely due to a combination in the 1951 Budget of the withdrawal of initial allowances and the increase in the standard rate of Income Tax. As he knows, the withdrawal of initial allowances did not take effect until the spring of 1952. It is difficult to see how that could account for a lag in production which had already come into being some time before then.
    Mr. Nabarro: Perhaps I might explain to the hon. Gentleman that whereas the fiscal effect was not felt for 12 to 18 months after the withdrawal of the allowances, the psychological effect was felt at once. Companies did not place their forward orders for capital equipment which, with initial allowances, they would otherwise have placed.
    Mr. Jenkins: I will have something to say on the question of psychological effect in relation to the hon. Member's speech later on. I will deal with that point then.

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    The hon. Gentleman said that he thought there had been a substantial improvement in business tone since this Budget. He put that down to three causes. The first was the restoration of the initial allowances. We on this side of the Committee certainly agreed with the restoration of the initial allowances and would have liked to see them at a higher rate. There is no special merit which the Chancellor can claim there.
    The hon. Gentleman said that the other factor was the announcement of the end of the Excess Profits Levy. I find it difficult to follow his method of thought there, because a little earlier he was telling us, although with an imperfect memory of what took place, how last year he was foremost in resisting the arguments against the Excess Profits Levy which we put forward from this side of the Committee. He is now telling us that because of the removal of a tax which he defended so eloquently last year there has been a slight improvement in business tone.
    The third factor he put forward was the increase in the resources available to companies which there will be as a result of the cut in the standard rate and the improved investment possibilities which will develop. It is indisputable on the figures that over the range of companies as a whole during 1952 there were more funds available than companies were prepared to invest in the circumstances then existing. That being so, it is absolutely idle to say that the mere making of more funds available can in any direct way improve the amount of investment which is being carried on.
    The hon. Member might say that it is not only the direct mathematical effect but it is the psychological change which comes about from this new Budget which cuts taxation for the first time in years. We are getting into a very dangerous situation if we are putting ourselves into a position in which the volume of investment and the general level of business activity depends upon the psychological state of business men. We were able to have a situation for many years after the war in which we had what hon. Members opposite and business men generally regarded as crippling rates of taxation but in which we still had them anxious to invest.
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    But if we are now getting into a situation in which their psychological susceptibilities have to be stimulated by cuts in direct taxation before we can get an adequate level of investment and a reasonable business tone which will maintain a high level of production, I think we are entering on very dangerous waters. We may have to give a great number of cuts in direct taxation—more than we can possibly afford—in order to keep them going and in order to give continual psychological shots in the arm to business men who are getting rather nervous about the future and whose psychology we have constantly to watch. We should be entering on a very dangerous road indeed if we followed the hon. Member in believing that we should look to stimulating investment by giving cuts in direct taxation when they are called for by the business community.
    Mr. Harold Lever: I explained to the Committee yesterday the difficulties I feel in intervening during the Committee stage of the Finance Bill in debates which are largely monopolised by the experts. Perhaps unfortunately for the Committee my diffidence causes me to speak rather than to remain silent. I must venture once again on a continuation of my attack upon the experts, because I fear that the Committee stage will be devoted exclusively to the unlovely jargon of our talented economists unless somebody gets up and injects a little uncouth candour into the discussion. I do this not because I hold an immodest view about my talent, but because I hope that it might encourage someone far better endowed to intervene at a later stage.
    I ought to tell the Committee that I am further handicapped because, having listened to a portion of these debates, I realise that the great tides of modern economic thought have swept past me and I have been left in a backwater. I heard the debates on the Purchase Tax yesterday. It appears that there are some persons who imagine that there is something highly progressive in maintaining in peace-time the principle of a savage tax promoted deliberately during the war years to strangle our civilian economy. I find today that some people are chary and show no marked enthusiasm for the reduction of direct taxation. It appears

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    that it is reactionary to wish for any reduction in taxation direct or indirect.
    I honestly thought when I came into Parliament in 1945 that our direct and indirect taxation was so high that it would be tolerated by democratic people who were fighting for dear life only for the duration of the war. I thought that conscription, dependence upon foreign aid and all sorts of other unpleasant things would come to an end as soon after the peace as possible. It never occurred to me that we should have Purchase Tax and savage rates of direct taxation of all kinds championed on their merits as I heard Purchase Tax championed yesterday. I rather feel that there is a similar sentiment towards direct taxation today.
    7.0 p.m.
    The novelist Meredith said of his young ladies that their conception of freedom was that they learned to love their chains. It appears that some hon. Members have also achieved this perverse love of their fetters, and not only that but they clank these things defiantly above their heads and describe them as weapons of economic planning. I must confess I am puzzled, and it needs no argument from me to convince the Committee that I represent what appears to be an eccentric body of people, having regard to the prevalent doctrines of economic policy—the people of Cheetham in Manchester. They would also appear to be somewhat eccentric in that they do not subscribe to these doctrines of economic and financial masochism which I hear from all sides.
    Yesterday, I heard the Chancellor of the Exchequer, ably supported by the hon. Gentleman who has just left the Despatch Box, explaining how we must reduce the Purchase Tax in a gingerly manner, because if we took this great weight off industry and stopped strangling it. the effect would be so frightening and upsetting that something fearful would happen in the way of an economic collapse, and the general implication was that we must not do anything sudden to add to the pleasantness of life at any cost, but we must go very gingerly.
    I see that my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) is in his place. He evinced the same attitude as the Chancellor, and he
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    approached the question of taxation reduction in the same manner. He confessed to the Committee yesterday that he had been guilty of a grave error for a few unguarded moments, when he had been in favour of reducing the Purchase Tax on electric fires. Think of it; the hon. Gentleman, for an hour or two, favoured the reduction of the Purchase Tax on electric fires. Of course, as he rightly pointed out, he studied pamphlet 273 (D), or whatever it is, which proves that this is by no means the most efficient method of space heating, and he then came to the House with proper opinions and opposed any reduction of the tax.
    I think the same attitude seems to exist with many high-thinking economic experts who contribute almost exclusively to these debates, and it is for that reason that I have ventured to inject something of the uncouth attitude of my constituents, who are almost all of them Labour, and who sent me here. They have no desire whatever to be overtaxed either by excessive direct or indirect taxation merely to gratify the economic theorists who advise the Chancellor of the Exchequer of whichever party happens to be on that side of the House. I should feel a great deal happier if I thought that the taxation we are imposing was actually needed for running the country and not merely to gratify the economic theories of people sitting in back rooms somewhere.
    I am bound to say that I have witnessed in my short period of political life what I might call a triumph of the killjoy spirit. By now, if we smoke a second cigarette within the hour or take another glass of beer we all feel we are casting away the educational birthright of our children and probably pauperising our widows in the future, because they will suffer from our squandering our money on this wholly unpleasant and undesirable expenditure.
    Now, we have gone a little further, and I am bound to say that it has extended to the realm of earnings. This question is not so simple as some of my hon. Friends have made out. A bare four hours' train journey from the London School of Economics there exists something like 60,000 people in my constituency in Manchester, and they do not resent at all the fact that there should be different earnings by various people contributing to the Welfare State; they do

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    not begrudge these differential earnings. Indeed, they say that they should be maintained. The working people of this country have never objected to a high standard of living for those who make genuine contributions to their economy, amusement or administration.
    What they do resent is political and economic nepotism and the triumph of mediocrity in people getting themselves into cushy jobs for life and giving very little in return. [HON. MEMBERS: "Hear, hear."]. I am very glad that hon. Members opposite are coming to my support in opposing nepotism. That is the kind of thing which the working folk of my constituency resent. They do not resent at all the differential earnings, even of the highest grade, who earn very considerably more than they, because they recognise that such is likely to be the situation until an overwhelming majority of our countrymen have the same saintly approach so often heard in these debates.
    I think some people have been labouring under the misapprehension that our economy is rather like some of those festive balloons, which, if you pinch one part, automatically swell out in another. That is not quite the case, and the mere fact that we savage one industry or one individual by excessive taxation does not guarantee that there will be a corresponding benefit to any other industry or individual, and I think that ought to be borne in mind. The world does not tick over in quite the naive and simple and saintly way which some hon. Friends would seem to suppose.
    I shall conclude on this note. I am not criticising the great talent, though I am a little chary of the jargon, of the gentlemen who contribute so knowledgeably and freely, and almost in a monopoly, to the Committee stage of our debates on the Budget. I think they have great contributions to make, and I hope that they will not take offence at any remarks I make, for I have the greatest respect for their intelligence and judgment, which I recognise far exceed my own. I shall be happy if I bring even one or two of their toes down to earth. There are few spectacles more edifying than the man who has his head in the clouds if his feet are on the ground. The reverse posture, which is known as
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    standing on your head, is somewhat less reassuring, especially when adopted by gentlemen who may at some time have the management of our economic affairs, and it is for these reasons, though with considerable diffidence, that I have ventured to intervene once more in the affairs of this Committee.
    Question put, and agreed to.
    Clause ordered to stand part of the Bill.
    Clause 11 ordered to stand part of the Bill.

    Clause 12.—(CHANGES IN OLD AGE AND OTHER PERSONAL RELIEFS.)
    Mr. Houghton: I beg to move, in page 7, line 42, at the end, to insert:
    (2) To paragraph (b) of subsection (1) of section two hundred and ten of the said Act, as amended (which relates to personal reliefs), there shall be added the words:
    "Provided that if a claimant proves that he is the occupier of a house or part of a house occupied as a separate dwelling, the deduction from the amount of income tax with which he is chargeable shall be equal to tax at the standard rate on one hundred and fifty pounds."
    This Amendment enables me to fulfil a promise which I made to some of my constituents who are single women and householders. The Amendment proposes to give to the single person who is a householder a personal allowance of £150 instead of £120. The present personal allowance of single persons does not distinguish between those who have household responsibilities and those who have not. It takes no account of any difference in civic or domestic responsibilities, except as regards dependants. A single person who has a dependent relative may claim an allowance for that relative, in addition to the personal allowance of £120.
    If a single person has a child, then he or she may claim a child allowance in addition to the personal allowance of £120; but it has not so far been a feature of the system of personal allowances to distinguish between those who have household responsibilities and those who have not.
    There are many single women in my constituency, and throughout the country—and this is predominantly a problem affecting single women, though not exclusively so—who are householders. They

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    have come to me complaining that the Income Tax system takes no account of the fact that they are middle-aged or elderly, that they have been working all their lives, and that, having got a home together, or inherited their parents' home, they are trying to keep it on, and that they have a very different standard of domestic responsibility from the great bulk of single women, especially young single women who are living at home and who have the benefit of the shelter of their parents' house, and who, generally speaking, have greater freedom to spend their earnings than have women who are householders.
    I am bound to add that that this sense of unfairness felt by many women householders has been aggravated by the special preferential allowances given to married women who go out to work. The Income Tax allowance in the case of a married man presumes domestic responsibility and the responsibility of maintaining a wife, and that is reflected in his higher personal allowance. But at various stages, in order to encourage married women to go out to work, and to simplify some of the complexities of Income Tax administration, the married woman is now treated on the same basis as a single person regarding the taxation of her earnings. She has the same personal allowance and the same reduced rate relief, and the Pay-As-You-Earn deduction for a married woman worker is usually identical with that of a single woman worker.
    At the same time, notwithstanding the allowances given to the married woman, the husband enjoys all the reliefs which the Income Tax Act gives him in respect of his responsibilities as a married man, with the result that a man and wife who both work receive between them a personal allowance amounting to £330, £210 being the personal allowance of the husband because he is a married man, and £120 the personal allowance of the wife because she is working, which is the same rate of personal allowance as that given to a single person.
    7.15 p.m.
    If a brother and sister are sharing the responsibilities of a home and are both working, the total of their personal allowances is only £240 compared with the
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    £330 given to the married man and his wife who are both working. It is understandable, therefore, that the single woman worker who has the responsibility for maintaining a household entirely out of her own resources as distinct from the partial responsibility of the many other single workers, feels aggrieved that she is taxed as if she had no responsibilities of that kind at all.
    I believe that single women of middle age are in many ways badly treated in this country. For one thing, they rarely get the same rate of pay for the job as a man, though in many cases they have the responsibility to maintain single-handed their own home and to get the best they can out of life which, sometimes, is more lonely than we realise. In mobile services, such as the one which administers the whole of this complex Income Tax coding, the single woman is regarded as available for removal much more freely than a married man, and in many cases more freely than a single man.
    For all these reasons, I am this afternoon the champion of the single woman who is maintaining a home and who is, I think, entitled to some favourable discrimination in the matter of Income Tax reliefs. I am supported in moving this Amendment by the weighty opinion of the Trades Union Congress, an opinion to which the right hon. Gentleman the Chancellor rightly attaches great importance. In their evidence before the Royal Commission on the taxation of profits and income, the T.U.C. advocated an allowance of this kind in order to meet the circumstances I have described.
    Having briefly put the merits of the case, I propose to spend a moment or two in dealing with some of the possible objections that may be advanced, because I feel certain that the hon. Gentleman who will reply has in front of him a piece of paper at the end of which it will say, "It is presumed that this Amendment will be resisted." "It is presumed" is a piece of Civil Service jargon which always irritates me. Nobody in the Civil Service ever regrets anything—"It is regretted."
    What this really means is that the Board of Inland Revenue presumes that the Chancellor will have nothing to do with this nonsense about a personal

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    allowance for a single householder. But lest it be suggested that there are insuperable difficulties of administration, such as that of satisfying the Inland Revenue that the claimant is, in fact, a householder, I have used terms in my Amendment which I borrowed from various provisions in regard to the Rent Restrictions Acts, such as the phrase,
    "A part of a house kept as a separate dwelling."
    I suggest that there would be no difficulty in asking the claimant to produce valid evidence of being a householder, such as a rent book, a tenancy agreement, a lease, or, in certain cases, there might even be physical inspection. I remember the time when I first entered the Inland Revenue Department. At that time, we had an Inhabited House Duty and we had to inspect lock-up shops because in those days Inhabited House Duty applied to the whole of the premises unless the shop premises were locked up separately from the residential part. It was part of the duty of the inspector of taxes to go out and have a look at the lock-ups. Generally speaking they were not only ready to do so, but they liked to have an afternoon out and they enjoyed it.
    I do not see any reason why they should not carry out an inspection in the rare cases where it may be necessary to do so if a claim is in doubt. After all, many claims are put into the Inland Revenue Department, such as for wives, children, dependent relatives, which rest on the generally accepted doctrine that the British taxpayer is on the whole honest, and does not make false claims. I see no difficulty of administration here which is greater than the difficulties in many other directions.
    What else can be said against it? Probably one thing is that it seeks to introduce a new principle of discrimination for determining allowances between one taxpayer and another. Personal allowances are based upon personal dependance, such as of wives, children, relatives, and there are other reliefs of a non-domestic kind. There is no special relief for a married person who may be living in rather expensive furnished rooms as against the married person living in a rent-controlled unfurnished house. No differentiation is made between the taxpayer who has to pay through the nose
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    for a flat and the taxpayer who enjoys the benefit of a low rental on a long-established tenancy. Those are the difficulties which I need to overcome.
    The time has come when more refinements will have to be introduced into our system of allowances if we are to give a sense of equity in the administration of the tax which we have been discussing a few moments ago, and which bears very heavily on many people. I see no reason why consideration should not be given to a differential allowance on this basis.
    I therefore hope that the right hon. Gentleman will not dismiss this proposal out of hand. I shall understand if he says that it has such novel features, and raises so many questions which may need consideration in relation to other personal reliefs, that he would prefer to have the advice of the Royal Commission before committing himself to a step which might give rise to other difficulties. He can probably say with greater justification that this matter has been specifically put to the Royal Commission and he may expect them to deal with it.
    I think I have not been wasting the time of the Committee in opening a short discussion on this aspect of personal reliefs. It agitates the minds of many people who cannot understand why the Income Tax system is so unyielding and unadaptable to what they believe are their very special circumstances.
    Miss Elaine Burton: Some of my hon. Friends and myself had an Amendment down on similar lines last year, but were not fortunate enough to have it selected. We are very glad today of the chance of taking a little time to raise this matter.
    I have never belonged to the Civil Service and I did not know that it was a habit of theirs to say, "It is to be assumed that this Amendment will be resisted." I am much more hopeful than to say that it can be assumed. I am always hopeful about the Chancellor of the Exchequer, even though we may not get anywhere, and I am not going to assume that he will resist this Amendment. As my hon. Friend the Member for Sowerby (Mr. Houghton) has said, with his very considerable experience in these matters, such a concession should

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    not be impossible administratively. I am going to rely on his knowledge of that side, and leave it alone.
    I hope that whoever replies on this debate will not dismiss this plea out of hand. It is not something which has arisen as a bee in the bonnet of a very few people in this Committee. When in the House we raise the difficulties under which most employed women are labouring, and ask for tax concessions which they should have, it is often felt that this is just a few people being troublesome and continually raising these matters over and over again. On this particular point, however, there is a real bone of contention, as my hon. Friend the Member for Sowerby has said.
    In connection with the 1952 Budget proposals, the T.U.C. made representations to the Chancellor that some such differentiation as we suggest should be put forward for any unmarried person who is a householder. I should have thought that proposition perfectly fair and equitable. If the right hon. Gentleman turns down the proposal, I hope he will give us the grounds for so doing, apart from any ground of administration.
    We are asking that the unmarried householder, man or woman, should have the fact that they are householders recognised. I know I would be out of order if I dealt with the subject of equal pay and I do not propose to do so, but perhaps I may throw in a short reference to the matter as background to my argument. In the last discussion we had on that subject, hon. Members generally were agreed that many people with dependants were penalised by not getting the rate for the job. That applied particularly to women. The point I want to make with the Economic Secretary is that it always seems to be the case that the unmarried woman comes off very badly in this country, both for taxation and for salary. I hope that on this occasion the Government will feel able to give a little ground.
    I am convinced that nobody will get up and say that the unmarried person who keeps a house or part of a house and pays rent for it, pays any less because he is unmarried than he would if he were married. Therefore, they obviously should have a similar concession. It is not any cheaper for an unmarried person
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    to rent a house than for a married one. Our Amendment—and this is very important—distinguishes between the young person who stays at home when starting a job and the single person who has the responsibility of a house. We know that when a young man or a young woman sets out on a career they like to live at home in order to save money. It is inequitable that the older person who sets up a house for himself should not have some differentiation made between himself and that younger person.
    Our Amendment does not apply to any particular section of the community doing a particular job. Many women in the professional grades, many textile workers and others in commerce and industry, have represented this matter to me and have asked me to raise it here. They feel that the personal allowance for married couples, which totals £330 when both are working, compares badly with the £120 received by a single person, and that it is not a fair distinction. I hope that the Chancellor will be able to look into this matter.
    7.30 p.m.
    The Economic Secretary to the Treasury (Mr. R. Maudling): I always listen with very keen interest to anything that the hon. Member for Sowerby (Mr. Houghton) has to say on the subject of Income Tax allowances. I listened with even more interest on this occasion to his remarks, and the remarks of the hon. Lady the Member for Coventry, South (Miss Burton), because I must confess that from a reading of the Amendment alone it was not for me possible to understand the motive underlying this proposal.
    All that the Amendment does is to provide an additional rate of personal allowance for single people who are occupying separate dwellings, a house or flat. It is simply distinguishing between a person who lives in a house or flat and a person who lives in "digs." On reading the Amendment I did not realise that the problem exercising the hon. Member and the hon. Lady was the much wider problem of the comparative position of a single person and a married person under the whole of the existing system of allowances. I can well see that there may be good reason for saying that two people living together, for instance, a brother and sister sharing a house with both working, have allowances which are

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    smaller than the allowances given to a married couple when both are working. On the other hand, we often have the argument put forward that where a single man and woman are living together, one keeping house and the other going to work, they receive a greater allowance, which is sometimes described as a premium on immorality.
    All this agrees with what has been said about the complexity of this proposal and the importance of trying to look at these personal allowances as a whole. I am glad that the hon. Member for Sowerby mentioned that first and not me, because it is quite right that this is the kind of thing on which my right hon. Friend the Chancellor of the Exchequer would benefit from the advice of the Royal Commission. I am glad to hear that the matter has been put to them.
    I am afraid that it is not possible for us to do other than resist the Amendment, whatever the presumptions may be. Certainly I fear that my right hon. Friend cannot accept it, and I do not think that the effect of the Amendment is quite what the two hon. Members have in mind. First of all, to give an additional personal allowance to a single person living in a flat or house irrespective of means is rather in contrast with the arguments put forward on other aspects of Income Tax allowances in discussions in this Committee.
    Another point is that the Amendment distinguishes between the married couple occupying a house or flat and a single person occupying a separate house or flat. I cannot see why that distinction should be drawn. Nor can I see why a distinction should be drawn between two single people in identical circumstances because one lives in a flat and the other in "digs." I do not think that that is a justifiable distinction.
    I think that both hon. Members were thinking more in terms of households than dwellings and of circumstances where there was a widow or a spinster who had dependent relatives and therefore was maintaining a household. That is a very much wider problem than that of a person living in a separate dwelling, which is the specific point in this Amendment. I hope that both hon. Members realise that in resisting this Amendment we do so not because we
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    lack sympathy for the point of view which has been put forward but because we do not think that the Amendment would be wise or that the distinction which it would introduce into the tax system would be advisable. When the Royal Commission report on the whole question of personal allowances I am sure that they will take this matter into account as well, and their remarks on the subject will be available to all of us.
    Mr. Hugh Gaitskell: I am sure that the Committee agree that we are indebted to my hon. Friend the Member for Sowerby (Mr. Houghton) for raising this matter. No doubt the problem of Income Tax allowances is a very serious one, which we know the Royal Commission are considering. Perhaps one of the more difficult aspects of that problem is the position of single people who in fact have similar responsibilities to those of married people. That is the fundamental point with which my hon. Friends were concerned in this Amendment.
    All of us agree that the distinction between the single person and the married couple is a perfectly valid and natural one to draw when we think of single persons living with their parents, such as a relatively young girl or man, because clearly they have not the same degree of responsibility. Equally it is clear that a grown-up single person living on her own or his own and maintaining a household is to some extent put in a disadvantageous position compared with a married couple.
    My hon. Friend the Member for Sowerby stressed particularly the special allowance for married women who go to work. I must say for myself that I think it is very necessary that that allowance should be preserved in order to encourage married women to go to work. But it is also true in my experience that it gives rise to a good deal of resentment. The Economic Secretary to the Treasury has drawn attention to some of the difficulties of the Amendment as it stands, and I appreciate that no doubt it would be very difficult to administer the allowance on the basis of occupation of a separate dwelling. Nevertheless, I hope that the problem will be examined as one of the more urgent problems in the whole field of allowances, to see whether something can be done to

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    help these people who certainly feel that at the moment they are being discriminated against and who, I think, have some justification for complaint. But I do not think that it is a matter which my hon. Friends would wish to press very strongly at this stage. We have other Amendments on the Order Paper to consider and I hope that they will agree that we can accept the reasonably conciliatory reply of the Economic Secretary that the matter will be considered by the Royal Commission and that we shall have the opportunity of discussing their Report.
    Mr. Houghton: I thank the Economic Secretary for his statement, which was no better than I expected it would be. But he was as agreeable as he can be, and in the circumstances I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. Hugh Dalton: I beg to move, in page 7, line 42, at the end, to insert:
    (2) In subsections (1) and (2) of section two hundred and eleven of the said Act as amended (which relates to earned income relief), for the word "two-ninths" there shall be substituted the word "one-fourth," and in subsection (2) of section two hundred and ten as amended (which relates to the additional personal relief on a wife's earned income), for the word "seven-ninths" there shall be substituted the word "three-quarters," and in subsection (1) of section fifteen of the Finance Act, 1952 (which relates to relief for small incomes), for the reference to "two-ninths" there shall be substituted a reference to "one-fourth":
    Provided that there shall not by reason of this subsection be any increase in the amount of any tax for which any person would or might become liable if this subsection had not been passed.
    This Amendment relates to earned income reliefs, and I should like to recall to the Committee what has happened with regard to them. It has been the policy of both parties, and particularly of the Labour Party, to increase earned income reliefs from time to time. In other words, it has been the policy to emphasise the distinction between the sort of income that stops when one stops working and the sort of income that continues to flow in while one sleeps. This is an intelligible and fundamental distinction in simple economics which I hope my hon. Friend the Member for Cheetham (Mr. H. Lever), who has disappeared from the Chamber after making
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    his contribution, would have understood and regarded as sufficiently low-brow to command his assent. He will read it in HANSARD, perhaps.
    Mr. Mulley: I am rather alarmed by my right hon. Friend's glances in my direction.
    Mr. Dalton: I said Cheetham not Sheffield. Well, we do not want to "cheat 'em." This is a very simple distinction, which of course is familiar to all. I want to recall the position to the Chancellor. He has not accepted any Amendments yet, but I hope that I shall give grounds, by the moderation of the very simple suggestion which I make here, that will commend this Amendment to him.
    At the end of the war earned income relief stood at one-tenth. It was gradually increased. It was twice increased by me when I was Chancellor of the Exchequer—from one-tenth to one-eighth in 1946 and from one-eighth to one-sixth in 1947. It was increased by the late Sir Stafford Cripps from one-sixth to one-fifth in 1948. There it remained for a year or two. The present Chancellor, in order to show that we had a common purpose in this matter if in no other, increased it to two-ninths, a most awkward fraction which complicates everybody's calculations with regard to their private affairs. I am making the simple proposal today that we should lift it from two-ninths to one-fourth.
    The Chancellor, no doubt, will tell us what the cost of that would be. I cannot think it would be much. It is an advance of only one thirty-sixth; that is all. The Chancellor last year said, when he had very little to give away, that he would be very glad to increase it from one-fifth to one-quarter, but he could not afford it last year. Last year was a tight year, but this year, as he has often explained, the position has altered. I will not use the word "largesse," but he has been able to meet a number of claims much less reasonable than this, and I am sure that he will meet us when he replies. I am sure that he will tell us how much it will cost and that this will be a bagatelle which can easily be thrown into the large margin available this year.
    The general argument is surely very convincing if we are speaking in terms of incentives. The real incentive that is required is to encourage people to do

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    more work, and in so far as people are encouraged by reduced taxation to do more work—at least, that is the common opinion—this proposal would be most effective for this purpose. It is also a just proposal from the point of view of the incidence of the reliefs which the Chancellor himself presented in his Budget speech. It has been commented before that one of the curious and paradoxical consequences—and I am sure not a deliberately desired consequence—of reducing the standard rate is that as between earned income and unearned income, on a given level of income, a larger relief is given to the person whose income is not derived from any activity 'but is what we call investment income.
    I will give an illustration, and I will take it at the £2,000 level to which one hon. Member referred this afternoon as being a critical level on which it was important to give some further inducement to the managerial classes to work a little harder. Here at the £2,000 level for a married man with three children—I am quoting from the Chancellor's financial statement—the net result of the changes which the Chancellor is making is that the person who works for his £2,000 a year gets a relief from £440 down to £413, that is roughly a relief of £27 a year, whereas the person who does not work for his £2,000 and whose income is all derived from investment gets a relief from £651 to £613, that is to say £38 a year.
    If we take, on a lower level, £1,000 a year, which covers a much larger number of people, £13 7s. 6d. accrues to the £1,000 a year man by way of relief if his income is unearned, but only £7 15s. 5d. if he works all out for his money. I am sure the Chancellor did not mean to produce that kind of result, and it is by the expedient of an Amendment such as I am now proposing that this injustice and anomaly can be removed. It is proposed, in other words, that we should do a little bit more for the man whose income is earned while leaving the man whose income is unearned standing where the Chancellor has put him.
    I do not want to prolong my observations on this point because the matter is exceedingly simple. I will make one more reference to figures, and I hope that the Chancellor will be able to make this
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    very slight change in his proposals. With reference to what has been said about the proportion of earned income which would be affected by this proposal at various levels of income received, there is a ceiling on this, and I am only proposing in this Amendment to touch the ceiling very indirectly.
    We would leave the ceiling as it stands at £450, but we would put in the provision as is set out in the last paragraph of the Amendment that I am moving—a marginal safeguarding provision with which the Chancellor will be familiar:
    "Provided that there shall not by reason of this subsection be any increase in the amount of any tax for which any person would or might become liable if this subsection had not been passed."
    We put that in, in order to make sure that we shall not be putting ourselves out of order by proposing to increase the charge upon any person, which we should not be entitled to do.
    7.45 p.m.
    Subject to that marginal safeguard, £450 a year relief is the ceiling. We are not proposing at this stage to raise it. Therefore, in the higher levels of earned income we shall not be giving anything additional to those who are concerned, but on the lower levels from £2,000 a year downwards we would be doing just a little to redress the anomalies which I have been expounding. I myself have always hoped that with the passage of successive Finance Bills this is one of the features which would be increasingly emphasised and that we would more and more separate earned from unearned income in terms of taxability.
    Years ago when I occupied the position which the Chancellor holds I had a dim and distant dream that we might get earned income relief up to one-half. We have not got there yet, but there would be a certain natural justice in treating £2 earned as equivalent, for purposes of taxation, to £1 unearned. We are not there yet. But I am asking the Chancellor to move forward and to take this very small step by accepting this very desirable Amendment from the point of view of incentives to activity of all kinds.
    Sir Robert Boothby: I only want to offer a very few words on this subject which is one upon which I feel very strongly and have felt strongly for many years before the war.

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    I have always taken the view that there has never been a sufficient distinction between taxation on earned and unearned incomes above a certain basic level.
    I do not entirely agree with the right hon. Member for Bishop Auckland (Mr. Dalton), because I do not think that the present ceiling is adequate. I think it should be higher, and I think that the distinction between earned and unearned income should be drawn not only at the lower levels of income but at the higher levels—at levels from £2,000 upwards, and should expand right through the whole range of Surtax.
    I think that incentives—a word which is easily and largely used—to earn more money at every level are necessary in this country today. We are going to find out in the next few years that productivity is the most important thing of all in this country, and that applies to the managerial classes just as much to the workers and everybody else. My complaint against the Amendment is that it does not go far enough. I should like to see it go further, but it is a step in the right direction. I imagine that it would not cost more than £10 million at the outside.
    I think that the House has never really seized itself of the vital necessity of giving greater incentives to the people to make themselves that bit of additional income which makes the difference between working flat out and working at what I might describe as a moderate pace. I think it is not going too far to say that practically nobody can effect substantial savings in this country today out of earned income. That cannot go on indefinitely in a society which does not become 100 per cent. Communist.
    We must have increased private savings. The truth of the matter is that only the people who have capital today can increase it to a sufficient extent to effect any great addition to their savings, because—I will not say they can speculate, which is a term which is loosely used—they can use that capital to make wise investments; investments which appreciate and are tax free. That is the way in which private capital is augmented and savings increased today.
    Those people belong to the old class, who have either made the money themselves or whose fathers have made it for them. The new people who should be
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    coming up cannot save effectively out of earnings. In the long run I am absolutely certain that that is bad for the national economy. We must enable the new, up-and-coming, creative man to save money for his family and make his own life. Therefore, while hastily saying that nothing would in any circumstances induce me to vote against the Government, I would ask my right hon. Friend the Chancellor to give serious and sympathetic consideration to this very modest proposal of the right hon. Member for Bishop Auckland, which seems to me to err on the side not of going too far but of not going far enough.
    Mr. Mulley: I am very delighted to follow the hon. Member for East Aberdeen (Sir R. Boothby) after his recent elevation. I am sure it would be the wish of Members on both sides of the Committee that we should congratulate him and hope he takes a further part in our Finance Bill debates. I would say to him, however, that we shall be rather disappointed if, as a consequence of his rise in status in the party opposite, we find that he is now a devout, loyal and never rebellious Member. Despite his long and devoted service to the party opposite, we reflect that on occasion, and in a good cause, he has been on the side of justice and not merely on the side of the Whips. We hope that as time goes on, after the initial honeymoon with the Whips Department, we shall have him back again in his own form.
    I commend this Amendment to the Chancellor. As the hon. Member for East Aberdeen said, it is a modest Amendment, because there is a case for pressing further than the reduction from two-ninths to one-quarter in the incidence of taxation on earned income. I disagree with him, however, on the question of the ceiling. The most important means of increasing productivity is to give an incentive to people who are well within the £2,000 a year income group, which is the level of the present ceiling.
    I do not believe that there is any great case for giving a financial incentive of this sort to those with earned incomes of £5,000, £6,000 and upwards, about which the hon. Member for Louth (Mr. Osborne) spoke so eloquently. In the case of someone in that range of income it is not easy to say how much he earns and how much comes to him. People in his position

    541
    have responsibilities in their undertakings and, regardless of any consideration whether a little extra work will bring in £x or +1, they have to do their job.
    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 is too much, they have a poor sort of patriotism.
    I am sure the hon. Member for Louth —who is not here at the moment—who stressed the need for productivity and the serious consequences to our economy if we do not increase production, would agree that that lesson should be learned by people whose incomes are in the larger brackets and who are paying considerable amounts in tax. It is a bad thing if these people are holding back in the fight for our future because they think they are paying too much in the form of taxation.
    In the case of the people with small incomes, where it is a matter of actual measurement of effort against added income, this reduction in the incidence of taxation may be an inducement. We have to remember that for the lower paid wage earners it is mostly a question of physical effort and fatigue measured against the additional income obtained as a result of increased productivity. It is easy to say that a man in a factory can work harder on a payment by results method, and that he would get perhaps 10s. or £1 extra as a result of working 100 per cent. a day for the 5½ days a week on which he is employed, but he has also to consider that it is a bigger strain to work at absolute capacity all the time.
    An incentive such as is offered by this Amendment may have beneficial results. Apart from the purely incentive aspect I commend it—as my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) has done far more eloquently than I can—on the grounds of social justice and of making an even greater differential between earned and unearned incomes. On those grounds I hope the Chancellor will find himself able to accept it.
    Mr. J. Grimond: I want to add a few words in support of this Amendment. Like the hon. Member for Cheetham (Mr. H. Lever), I find it difficult to convince my constituents that high taxation is an enjoyable thing. I find a growing disposition among them to look forward to the day when they can obtain a little more of the money they earn to put into their own pockets. They want to retain the social services at a reasonably high level, but there is a general feeling that they should have a little more money which is really worth something in their own hands and which they can spend themselves.
    The hon. Member for Sheffield, Park (Mr. Mulley) said that he did not think there was such a great need for distinction between earned and unearned income in the higher ranges as there was in the lower. I do not dispute that there is need for a greater distinction in the lower ranges, but we should remember that the income which remains to a man in the higher ranges is not very great today. It is extremely difficult for anyone to retain more than £2,000 or £3,000 a year unless he works like an absolute black or is extremely lucky. It is true that many people would be very pleased to have such an income. Some would even be pleased to have the £1,000 a year which Members of Parliament receive.
    Mr. Houghton: But not, I suggest, to lead the sort of life we lead.
    Mr. Grimond: We should even find some people willing to lead the sort of life some of us lead. It depends upon the party to which one belongs.
    Mr. Houghton: Evidently.
    Mr. Grimond: If one is unwise enough to belong to one of the worst parties one is at fault. There are several professions —barristers and so on—whose members incur very considerable expenditure, who have to maintain a fairly high standard of life and have no pension to which they can look forward. I suggest that it is necessary for those people to save not only from their own point of view but, as the hon. Member for East Aberdeen (Sir R. Boothby) said, from the country's point of view. They should be able to put something by, and the differentiation should be carried up to a scale further than the £2,000 at which it now stands.

    543
    Earlier on the hon. Member for Stechford (Mr. Roy Jenkins) said there was a difference between the views of those who feel like him and the views of the party opposite. He said the party opposite would be very content to see taxation reduced and a standard rate of 5s., 6s. or 7s. introduced. That is an important point. My own feeling is that if we are to run this country by private enterprise—and hon. Members on both sides of the Committee are in general agreement that the majority of our wealth must be made by it—we have to reward that private enterprise. The person who works hard and is prepared to take a risk must be rewarded, for risk taking is very important. There must also be some private saving, more than there is today.
    8.0 p.m.
    This is required not only for the benefit of the people who make the savings but for the benefit of the people as a whole. Wage packets in this country more and more depend upon the work of everybody, including managers and those who are prepared to take risks. For the sake of the community as a whole it is important to reward hard work and enterprise. If the process is carried too far, I well understand that there comes a time when there is too great a differentiation between the wealth of which one man can dispose and the wealth of the poorer people in the country. Undoubtedly that happened in the past, and I should be sorry to see it happen again to any very great extent in the future.
    The way to avoid that is not by penalising earnings, for that is killing the goose that lays the golden eggs. To create a stable society of reasonable equality and at the same time to maintain the system of private enterprise which is based upon earnings, what we have to do is to look at such things as Death Duties. The inheritance of money leads to a much less justifiable differentiation between people. Therefore, it is important to look at the accumulation of unearned wealth.
    It is for that reason that I support the Amendment. It is time we gave consideration to the making of a greater differentiation between unearned and earned income. The welfare of the country ultimately depends upon our allowing a man to earn some wealth and
    544
    to retain some of what he earns and, within reasonable limits, to save it and invest it in this country or overseas.
    Mr. Gordon Walker: I am full of confidence that the Chancellor will agree with us in this matter. Not only has every hon. Member who has spoken favoured it, but the Chancellor in his 1952 Budget was also strongly in favour of this very proposal and regretted that only his inability to afford it at that time prevented his doing the very thing we are now giving him the opportunity to do.
    The Chancellor certainly cannot argue this time that he cannot afford the change. He has afforded far less desirable reliefs than this. Indeed, if he can make this concession, he will do a little to redress what I regard as the improper balance that he struck in his Budget. I shall be happy to see some improvement made in that respect. The Chancellor will also be doing something else of very great importance if he concedes this. He will be taking a step towards the objective that we all have, that our society should be one of earners and not one of dividend takers and rentiers.
    The Chancellor of the Exchequer (Mr. R. A. Butler): The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) said that this was a bagatelle and extremely simple, and the idea has been supported by hon. Members on both sides of the Committee. Therefore, I regret to have to rise to bring the Committee back to some sense of proportion about the cost that an Amendment such as this involves.
    As the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) said, the Amendment is on the lines of the reforms that I introduced in my Budget last year, and I made reference in one of my speeches to the desirability, if possible, of proceeding along that line. The Amendment proposes to increase the fractions for earned income relief, old-age relief, and small income relief. I must state at the outset that the calculations we have been able to make of the cost of the Amendment, if it were accepted, are in the neighbourhood of £51½ million. I am afraid it is quite out of the question to add that sum of money to the cost of the proposals already made in the Budget.

    545
    I agree that to give concessions in the field of earned income relief is a healthy thing, and I do not dissent at all from any expressions which have been made in that direction during the course of the debate. But I should like to remind the Committee that the earned income relief now stands at the highest figure at which it has ever stood, and that is largely due to the benign and beneficent activities of Her Majesty's present Administration.
    The Committee will no doubt recall that, after the earned income relief was introduced in its present form in 1920, the rate was increased under a variety of Administrations and was only reduced in the course of the war. However, I must be perfectly fair to the right hon. Gentleman opposite and say that in 1946 the rate was increased to one-eighth; the maximum allowance remained at £150, and this was thus reached at £1,200. In 1947 the rate was increased to one-sixth, with a maximum of £250. Thus, by a gradual process we have reached a stage at which last year the fraction was raised to two-ninths, the limit of income qualifying for relief being £2,025, and the maximum allowance being £450.
    Except for the war period, when we were all obliged, whatever our party views, to accept the alteration, there has been a regular growth since the Royal Commission of 1920 in this method of granting relief for earned income and bringing it forward in our general fiscal devices. The Committee should remember that last year, in particular, very considerable increases were given in this very sphere. Last year the single person's allowance was raised from £110 to £120 and the married man's allowance from £190 to £210, and, while we are not discussing it at the moment, the child allowance was increased from £70 to £85. The fact that we have now increased the maximum for earned income relief from £400 to £450 should be the subject of congratulation on all sides of the Committee.
    I notice that a further Amendment has recently been put on the Order Paper by right hon. Gentlemen opposite to raise the figure to £500, but I understand that we are debating that matter on this Amendment. The cost of raising the allowance to £500 would be about £4½ million. I mention that to show that I have carefully studied the Amendments put upon the Order Paper by right hon. Gentlemen
    546
    opposite. Thus, were we to accept the lines of reform suggested by right hon. and hon. Gentlemen opposite, the increased cost to the Exchequer would be about £56 million, this being £4½ million to raise the allowance to £500 and £51½ million to meet the proposals in this Amendment.
    It may be a source of surprise that the cost is so great. I am very glad to be able to take part in this debate, because I went through all this anguish of mind and thought before reaching the decisions which I did in my Budget. I considered the possibility of making an improvement in the earned income relief. One of the values of our debates on the Finance Bill is that they allow all these matters to come out into the open and to be understood by hon. Members and by the public. I decided eventually that I had to choose between the reduction in the standard rate of Income Tax and an increase in the earned income relief.
    I decided in favour of a reduction in the standard rate for the reasons that I have mentioned once or twice before. I found that to be the only way in which I could give a definite relief to industry and to the undistributed profits of industry this year. All my other proposals to help industry involve waiting until next year. For example, the initial allowances concession will not inure this year and the E.P.L. relief will not inure for a considerable time.
    Therefore, the only method I could find not only of helping the individual but also the managerial and working classes who wish an incentive was the old-fashioned method of reducing the standard rate, which would have warmed the heart of my Liberal predecessor, that most classical of all economists, Mr. Gladstone. I therefore resorted to this historic device, for which I have been badly knocked about in modern times by a good deal of class war argument, but it still remains the classical method that a normal Chancellor would adopt if he had some money to spare.
    In doing that I shall have put some £45 million in the way of the undistributed profits of industry by way of relief of tax, and have been able, by a reduction in the reduced rates by 6d., not 3d., to help those in the lower scales of the Income Tax. There has not been, I think,

    547
    sufficient acknowledgment given to the fact that by the 6d. reduction on the reduced rates as well as 6d. in the standard rate very considerable benefit was given to the less well off classes in the Budget—
    Miss Irene Ward: Not enough.
    Mr. Butler: —and that, I think, has indicated that I have tried to be fair not only to industry but also to the individual.
    There remains one argument which was touched on by the right hon. Gentleman, and that is that I have in the Budget proposals helped investment income more than I should, without giving sufficient regard to earned incomes. My answer to that is that, after taking into account the Budget proposals, the reduction brings down the standard rate of Income Tax upon investment incomes to a level Is. below the war-time peak. It brings down the effective top rate of tax on earned incomes below £2,025, upon which there has been so much controversy, by 2s. below the peak.
    Therefore, the proposals seen as a whole have resulted, with last year's proposals, in giving a proper and right preference to earned income over investment income. When we examine these things scientifically I think it can be seen that the proposals in the Budget have been as fair as they possibly could have been to industry and to individuals, and, by concentration on the reduced rate, have helped those classes which need help. They have preserved a proper balance in the tax as between earned and investment income, and, as far as the human brain can attempt to be fair, they have resulted in as fair a result as we could have achieved at the present time.
    A voice from behind me said just now that this was not enough. One of our great figures of history once said that patriotism was not enough, and I agree that I have not gone far enough to satisfy everybody, but I think I have gone as far as I legitimately can in view of the economic situation of the country. The hon. Member for Gloucestershire, South (Mr. Crosland), upon whose economic acumen I depend at times, said it was right to give a certain amount of relief to consumers by purchasing power. He said last night that I had to be careful
    548
    not to give too much. I note that he has now withdrawn from the struggle, and could not take part in this debate and support his right hon. Friends on the Front Bench. I look to his support in answering my hon. Friends who may not be too friendly on this matter.
    Mr. Gaitskell: I do not want to stop my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) from replying to that astonishing attack, but I hope he will allow me to get in a few remarks first. Before I come to the very disappointing reply we have had from the Chancellor—and it was very disappointing to hon. Members in all parts of the Committee—I should like to say a few words about two of the speeches we have heard. It was a pleasure to hear the hon. Member for East Aberdeenshire (Sir R. Boothby) once more, and I should like to add my personal congratulations to him. I do not think we need worry very much about his being won over. I think he will continue to attack the Government by his voice, at any rate, even if he does not come into our Lobby. He has never come into our Lobby.
    Sir R. Boothby: I did vote for the nationalisation of the Bank of England.
    8.15 p.m.
    Mr. Gaitskell: We should welcome the hon. Gentleman again as we did not so long ago if he were to come into our Lobby. I think that what he said was, as usual, very much to the point. He did not agree with the ceiling we put in this Amendment, but we have to have some regard to the cost of the concession, and the Chancellor has told us it is a quite substantial cost. However, I shall come back in a moment or two to the question of the ceiling and the position of the higher incomes.
    I should like to refer to the speech of the hon. Member for Orkney and Shetland (Mr. Grimond). I am bound to say that I did not know that any hon. Member set about the task of collecting votes in his constituency by trying to persuade the electors that high taxation was an enjoyable thing. I do offer him my most sincere congratulations on his succeeding in being returned here. I never knew anybody to suppose that to pay high taxes was an enjoyable thing, but, of course, the whole question is how we

    549
    otherwise finance Government expenditure, and what we are prepared to give up in the way of various forms of Government expenditure if we want our taxes reduced.
    There is the more subtle point, but my hon. Friend the Member for Cheetham (Mr. H. Lever) is not here, so, perhaps, I need not bother with it very much, about the inflationary or deflationary effect upon the Budget and the Budget surplus. One could put it in this way, by saying we have also to take into account whether, if we want reduced taxation, we also want inflation at the same time. None of us, of course, has ever suggested that high taxation is enjoyable, but we do think it necessary in the light of the general economic situation and in the light of the expenditure which the Government incur. We can argue about the exact level both in relation to total expenditure and in relation to the economic situation. We can argue, and do argue, and rightly, about the incidence of taxation and the distributional effect it has upon the real earned income of the different persons in the community, but it is not much use simply arguing that we can reduce taxation without any economic or distributional effects of any kind.
    There is one other thing I would say about the speech of the hon. Member for Orkney and Shetland. I very much agree with his broad approach to this problem, when he said that the point to attack was inherited wealth and large investment incomes. I think that that is a point of view which most of my hon. and right hon. Friends very much share. There is no doubt, I think, that if we had a state of society in which we did not have this very unfair distribution of property, as we know it now, a state of society in which we did not have these large unearned incomes, most of us would take the view more akin to his own, so far as high incomes are concerned, and should be more favourably disposed to higher earned incomes and not so favourably disposed to high unearned incomes. I hope the hon. Member may see his way, when we bring in Measures to deal with Death Duties and matters of that kind, to give us his warm support.
    I come now to the Chancellor's reply. All he said was that the £50 million this
    550
    Amendment would cost was much too high, that the earned income relief was now higher than it had ever been, and that it was really better to reduce the standard rate of tax than to increase the earned income relief.
    I should like first to fill in the right hon. Gentleman's gaps about the changes in the earned income relief. He missed out what to us were some very important years, the years in which the Labour Government increased the relief from one-tenth to one-fifth—in other words, doubled it, between the end of the war and 1951. All that the right hon. Gentleman has done since then is to make a miserable further concession amounting to one-ninth. He has a very long way to go if he is to compete with our record in this matter. I hope he realises that and that he will take seriously our advice.
    It is all very well to say that we now have the largest earned income relief, but, of course, our whole argument is that that is a most desirable development. As I have said—I agree entirely with the hon. Member for East Aberdeenshire—we believe that it is in our fiscal system a desirable thing to discriminate in favour of earned income and against unearned income. It is no argument that we have now got to a stage where the relief is larger than it ever has been.
    The fact is—and the Chancellor, for all the figures he produced at the end, cannot deny this—that his Budget has once again narrowed the gap which was beginning to exist in favour of earned income. As the right hon. Gentleman knows, the effect of the Budget all along the line has been to give a greater relief to unearned income than to earned income. We all know that that is the automatic result of the reduction in the standard rate, but that is, surely, one of the important arguments for not making the concessions in the way that the Chancellor has made them.
    I am surprised that despite all his hard thinking on this subject the right hon. Gentleman came to the conclusion that he did. After all, he is always talking to us about incentives. He has twice christened his own Budgets "Incentive Budgets." His party almost used the word "incentives" as a slogan, and yet when there is an opportunity of really

    551
    introducing additional incentives, he refuses to do so.
    I do not want at this stage to add to the very many speeches that have been made during the afternoon and evening about taxation and incentives. I agree with what my hon. Friend the Member for Sheffield, Park (Mr. Mulley) said. On the whole, the operation of taxes and incentives is much more effective at the lower income levels than at the rather higher levels. The reason for that, I think, is in the nature of the job. On the whole, the professional classes and people who are paid on a salaried basis are persons whose output does not, and cannot, vary to any great extent with the rate at which they are paid. It may or may not be a good thing to pay them more, but as compared with the ordinary piece-worker, for instance, there is a clear difference.
    The Financial Secretary to the Treasury is looking very disagreeably at me and I think I know what is in his mind. He is thinking of his own profession, the legal profession. I fully concede that in the case of lawyers they are paid by output, or, at any rate, by briefs. The hon. Gentleman may well say that that is an obvious illustration of the danger of taxation reducing output; but, then, the further question arises, when it comes to a question of lawyers, of whether it matters a great deal if the output is reduced.
    Mr. Boyd-Carpenter: The right hon. Gentleman should consult his right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross).
    Mr. Gaitskell: I was not making a party point. I was quite prepared to say that to any lawyer, including my hon. Friend the Member for Cheetham (Mr. H. Lever). That is, on the whole, one justification for maintaining the ceiling in the earned income relief which we propose in the Amendment. I must remind the hon. Member for East Aberdeenshire that although there is this ceiling, nevertheless the persons above the £2,000 a year level get the benefit, of course, of the concession on that amount of their income. It is only on the higher part of their income that it is withheld from them.
    The Chancellor made such an unsatisfactory reply on this important matter, and the Government's whole attitude on this is so much in conflict with what they continually proclaim, that we cannot allow the Amendment to go without recording our views. I am sorry we shall not have the support of the hon. Member for East Aberdeenshire, but perhaps he might at least abstain from voting to show how much he believes in what we say.
    Although this has been a friendly and amusing debate, it is an extremely important issue. We believe that the Budget should have been planned on a different basis so as to give this relief where it is not only more needed, but also is likely to have a far better effect for the benefit of the whole economy. For that reason, I ask my hon. Friends to support us in the Lobby.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 227; Noes, 243.

    Division No. 183.]

    AYES

    [8.25 p.m.

    Acland, Sir Richard

    Bowles, F. G.

    Crossland, C. A. R.

    Adams, Richard

    Braddock, Mrs. Elizabeth

    Crossman, R. H. S.

    Allen, Arthur (Bosworth)

    Brockway, A. F.

    Cullen, Mrs. A.

    Allen, Scholefield (Crewe)

    Brook, Dryden (Halifax)

    Daines, P.

    Anderson, Frank (Whitehaven)

    Broughton, Dr. A. D. D

    Dalton, Rt. Hon. H.

    Awbery, S. S.

    Brown, Rt. Hon. George (Belper)

    Darling, George (Hillsborough)

    Baoon, Miss Alice

    Brown, Thomas (Ince)

    Davies, Ernest (Enfield, E.)

    Baird, J

    Burke, W. A.

    Davies, Harold (Leek)

    Barnes, Rt. Hon. A. J.

    Burton, Miss F. E.

    Deer, G.

    Bartley, P.

    Butler, Herbert (Hackney, S)

    Delargy, H. J

    Bellenger, Rt. Hon F. J

    Callaghan, L. J.

    Dodds, N. N.

    Bence, C. R.

    Castle, Mrs. B. A.

    Donnelly, D. L

    Benn, Hon. Wedgwood

    Champion, A. J.

    Driberg, T. E. N.

    Beswick, F.

    Chapman, W. D.

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

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

    Chetwynd, G. R.

    Ede, Rt. Hon. J. C.

    Bing, G. H. C.

    Clunie, J.

    Edwards, John (Brighouse)

    Blenkinsop, A.

    Coldrick, W.

    Edwards, W. J. (Stepney)

    Blyton, W. R.

    Collick, P. H.

    Evans, Albert (Islington, S.W.)

    Boardman, H.

    Corbet, Mrs. Freda

    Evans, Edward (Lowestoft)

    Bottomley, Rt. Hon A. G

    Cove, W. G.

    Evans, Stanley (Wednesbury)

    Bowden, H. W.

    Craddock, George (Bradford, S.)

    Fernyhough, E.

    Fienburgh, W.

    Lewis, Arthur

    Shackleton, E. A. A.

    Finch, H. J.

    Lindgren, G. S.

    Shawcross, Rt. Hon. Sir Hartley

    Fletcher, Eric (Islington, E.)

    Lipton, Lt. Col. M.

    Shinwell, Rt. Hon. E.

    Follick, M.

    McGovern, J.

    Short, E. W.

    Foot, M. M.

    Mclnnes, J.

    Silverman, Julius (Erdington)

    Forman, J. C.

    McKay, John (Wallsend)

    Silverman, Sydney (Nelson)

    Fraser, Thomas (Hamilton)

    McLeavy, F.

    Simmons, C. J. (Brierley Hill)

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

    McNeil, Rt. Hon. H.

    Skeffington, Arthur

    Gibson, C. W.

    Mainwaring, W. H.

    Slater, Mrs. (Stoke, N.)

    Glanville, James

    Mallalieu, E. L. (Brigg)

    Slater, J. (Durham, Sedgefield)

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

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

    Smith, Ellis (Stoke, S.)

    Greenwood, Anthony (Rossendale)

    Mann, Mrs. Jean

    Smith, Norman (Nottingham, S.)

    Grey, C. F.

    Manuel, A. C.

    Sorensen, R. W

    Griffiths, Rt. Hon. James (Llanelly)

    Marquand, Rt. Hon. H. A.

    Soskice, Rt. Hon. Sir Frank

    Griffiths, William (Exchange)

    Mason, Roy

    Sparks, J. A.

    Grimond, J.

    Mellish, R. J.

    Steele, T.

    Hale, Leslie

    Messer, F.

    Strachey, Rt. Hon. J.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Mitchison, G. R.

    Stross, Dr. Barnett

    Hall, John T. (Gateshead, W.)

    Monslow, W.

    Summerskill, Rt. Hon. E.

    Hamilton, W. W.

    Moody, A. S.

    Swingler, S. T.

    Hannan, W.

    Morgan, Dr. H. B. W

    Sylvester, G. O.

    Hargreaves, A.

    Morley, R.

    Taylor, Bernard (Mansfield)

    Harrison, J. (Nottingham, E.)

    Morris, Percy (Swansea, W.)

    Taylor, John (West Lothian)

    Hastings, S.

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

    Taylor, Rt. Hon. Robert (Morpeth)

    Hayman, F. H.

    Mort, D. L.

    Thomas, David (Aberdare)

    Healey, Denis (Leeds, S.E.)

    Moyle, A.

    Thomas, Ivor Owen (Wrekin)

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

    Mulley, F. W.

    Thomson, George (Dundee, E.)

    Herbison, Miss M.

    Murray, J. D.

    Thornton, E.

    Hewitson, Capt. M.

    Nally, W.

    Tomney, F.

    Hobson, C. R.

    Neal, Harold (Bolsover)

    Turner-Samuels, M.

    Holman, P.

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

    Ungoed-Thomas, Sir Lynn

    Houghton, Douglas

    Oldfield, W. H.

    Viant, S. P.

    Hubbard, T. F.

    Oliver, G. H.

    Wallace, H. W.

    Hudson, James (Ealing, N.)

    Orbach, M.

    Watkins, T. E.

    Hughes, Cledwyn (Anglesey)

    Oswald, T.

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

    Hughes, Hector (Aberdeen, N.)

    Paget, R. T.

    Weitzman, D.

    Irvine, A. J. (Edge Hill)

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

    Wells, Percy (Faversham)

    Irving, W. J. (Wood Green)

    Paling, Will T. (Dewsbury)

    Wells, William (Walsall)

    Isaacs, Rt. Hon. G. A.

    Pannell, Charles

    West, D. G.

    Janner, B.

    Parker, J.

    Wheeldon, W. E.

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

    Paton, J.

    White, Mrs. Eirene (E. Flint)

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

    Pearson, A.

    White, Henry (Derbyshire, N.E.)

    Jenkins, R. H. (Stechford)

    Plummer, Sir Leslie

    Whiteley, Rt. Hon. W.

    Johnson, James (Rugby)

    Popplewell, E.

    Wilkins, W. A.

    Johnston, Douglas (Paisley)

    Porter, G.

    Willey, F. T.

    Jones, David (Hartlepool)

    Prootor, W. T.

    Williams, Rev. Llywelyn (Abertillery)

    Jones, Jack (Rotherham)

    Pryde, D. J.

    Williams, Ronald (Wigan)

    Jones, T. W. (Merioneth)

    Rankin, John

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

    Keenan, W.

    Reid, Thomas (Swindon)

    Williams, W. R. (Droylsden)

    Kenyon, C.

    Reid, William (Camlachie)

    Wilson, Rt. Hon. Harold (Huyton)

    Key, Rt. Hon. C. W.

    Rhodes, H.

    Yates, V. F.

    King, Dr. H. M.

    Robens, Rt. Hon. A.

    Younger, Rt. Hon. K.

    Kinley, J.

    Roberts, Albert (Normanton)

    Lee, Frederick (Newton)

    Robinson, Kenneth (St. Panoras, N.)

    TELLERS FOR THE AYES:

    Lee, Miss Jennie (Cannock)

    Rodgers, George (Kensington, N.)

    Mr. Holmes and Mr. Royle.

    Lever, Leslie (Ardwick)

    Ross, William

    NOES

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

    Braithwaite, Sir Albert (Harrow, W.)

    Crowder, Peter (Ruislip—Northwood)

    Alport, C. J. M.

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

    Darling, Sir William (Edinburgh, S.)

    Amory, Heathcoat (Tiverton)

    Brooke, Henry (Hampstead)

    Davidson, Viscountess

    Anstruther-Gray, Major W. J.

    Brooman-White, R. C.

    Deedes, W. F.

    Ashton, H. (Chelmsford)

    Browne, Jack (Govan)

    Digby, S. Wingfield

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

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

    Dodds-Parker, A. D.

    Astor, Hon. J. J.

    Bullard, D. G.

    Dormer, P. W.

    Baldock, Lt.-Cmdr. J. M.

    Bullus, Wing Commander E. E.

    Doughty, C. J. A.

    Baldwin, A. E.

    Burden, F. F. A.

    Drewe, C.

    Banks, Col. C.

    Butcher, Sir Herbert

    Duncan, Capt. J. A. L.

    Barber, Anthony

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

    Elliot, Rt. Hon. W. E.

    Barlow, Sir John

    Campbell, Sir David

    Fell, A.

    Baxter, A. B.

    Carr, Robert

    Finlay, Graeme

    Beach, Maj. Hicks

    Cary, Sir Robert

    Fisher, Nigel

    Beamish, Maj. Tufton

    Channon, H.

    Fleetwood-Heskelh, R. F.

    Bell, Philip (Bolton, E.)

    Clarke, Col. Ralph (East Grinstead)

    Fletcher-Cooke, C.

    Bennett, William (Woodside)

    Clarke, Brig. Terence (Portsmouth, W.)

    Ford, Mrs. Patricia

    Bevins, J. R. (Toxteth)

    Cole, Norman

    Fraser, Hon. Hugh (Stone)

    Birch, Nigel

    Conant, Maj. R. J. E.

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Bishop, F. P.

    Cooper, Sqn. Ldr. Albert

    Fyfe, Rt. Hon. Sir David Maxwell

    Black, C. W.

    Cooper-Key, E. M.

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

    Boothby, R. J. G.

    Craddock, Beresford (Spelthorne)

    Galbraith, T. G. D. (Hillhead)

    Bossom, A. C.

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

    Garner-Evans, E. H.

    Boyd-Carpenter, J. A

    Crosthwaite-Eyre, Col. O. E.

    George, Rt. Hon. Maj. G. Lloyd

    Boyle, Sir Edward

    Crouoh, R. F.

    Godber, J. B

    Braine, B. R.

    Crowder, Sir John (Finchley)

    Gomme-Duncan, Col. A.

    554

    555

    Gough, C. F. H.

    Macdonald, Sir Peter

    Russell, R. S.

    Graham, Sir Fergus

    Mackeson, Brig. H. R.

    Ryder, Capt. R. E. D.

    Grimston, Hon. John (St. Albans)

    McKibbin, A. J.

    Salter, Rt. Hon. Sir Arthur

    Grimston, Sir Robert (Westbury)

    Mackie, J. H. (Galloway)

    Savory, Prof. Sir Douglas

    Hall, John (Wycombe)

    Maclay, Rt. Hon. John

    Scott, R. Donald

    Hare, Hon. J. H.

    Maclean, Fitzrey

    Scott-Miller, Cmdr. R.

    Harris, Fredric (Croydon, N.)

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

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

    Harrison, Col. J. H. (Eye)

    Macmillan, Rt. Hon. Harold (Bromley)

    Smithers, Peter (Winchester)

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

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

    Smithers, Sir Waldron (Orpington)

    Harvey, Ian (Harrow, E.)

    Maitland, Patrick (Lanark)

    Smyth, Brig. J. G. (Norwood)

    Harvie-Watt, Sir George

    Manningham-Buller, Sir R. E.

    Snadden, W. McN.

    Hay, John

    Markham, Major S. F.

    Soames, Capt. C.

    Heath, Edward

    Marlowe, A. A. H.

    Spearman, A. C. M.

    Hill, Dr. Charles (Luton)

    Marples, A. E.

    Speir, R. M.

    Hill, Mrs. E. (Wythenshawe)

    Marshall, Douglas (Bodmin)

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

    Hinchingbrooke, Viscount

    Marshall, Sir Sidney (Sutton)

    Spens, Sir Patrick (Kensington, S.)

    Holland-Martin, C. J.

    Maude, Angus

    Stanley, Capt. Hon. Richard

    Hollis, M. C.

    Maudling, R.

    Stevens, G. P.

    Holmes, Sir Stanley (Harwich)

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

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

    Hope, Lord John

    Medlicott, Brig. F.

    Stewart, Henderson (Fife, E.)

    Hopkinson, Rt. Hon. Henry

    Mellor, Sir John

    Stoddart-Scolt, Col. M.

    Hornsby-Smith, Miss M. P.

    Molson, A. H. E.

    Storey, S.

    Horobin, I. M.

    Monokton, Rt. Hon. Sir Walter

    Strauss, Henry (Norwich, S.)

    Howard, Gerald (Cambridgeshire)

    Moore, Lt.-Col. Sir Thomas

    Studholme, H. G.

    Howard, Hon. Greville (St. Ives)

    Nabarro, G. D. N.

    Suteliffe, Sir Harold

    Hudson, Sir Austin (Lewisham, N.)

    Nicholls, Harmar

    Taylor, Charles (Eastbourne)

    Hulbert, Wing Cdr. N. J.

    Nicholson, Godfrey (Farnham)

    Taylor, William (Bradford, N.)

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Nield, Basil (Chester)

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

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

    Nugent, G. R. H.

    Thomas, Leslie (Canterbury)

    Hyde, Lt.-Col. H. M.

    Nutting, Anthony

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

    Hylton-Foster, H. B. H.

    Oakshott, H. D.

    Thorneycroft, Rt. Hn. Peter (Monmouth)

    Jenkins, Robert (Dulwich)

    Odey, G. W.

    Touche, Sir Gordon

    Jennings, R.

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

    Turner, H. F. L.

    Johnson, Eric (Blackley)

    Orr, Capt. L. P. S.

    Turton, R. H.

    Jones, A. (Hall Green)

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

    Tweedsmuir, Lady

    Joynson-Hicks, Hon. L. W.

    Osborne, C.

    Vane, W. M. F.

    Keeling, Sir Edward

    Partridge, E.

    Vaughan-Morgan, J. K.

    Kerr, H. W.

    Peake, Rt. Hon. O.

    Vosper, D. F.

    Lambert, Hon. G.

    Pete, Brig. C. H. M.

    Wakefield, Edward (Derbyshire, W.)

    Lambton, Viscount

    Pilkington, Capt. R. A.

    Walker-Smith, D. C.

    Lancaster, Col. C. G.

    Pitman, I. J.

    Ward, Hon. George (Worcester)

    Langford-Holt, J. A.

    Powell, J. Enoch

    Ward, Miss I. (Tynemouth)

    Law, Rt. Hon. R. K.

    Price, Henry (Lewisham, W.)

    Waterhouse, Capt. Rt. Hon. C.

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

    Prior-Palmer, Brig. O. L.

    Watkinson, H. A.

    Legh, Hon. Peter (Petersfield)

    Profumo, J. D.

    Webbe, Sir H. (London & Westminster)

    Lindsay, Martin

    Raikes, Sir Victor

    Wellwood, W.

    Linstead, H. N.

    Rayner, Brig. R.

    Williams, Rt. Hon. Charles (Torquay)

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

    Redmayne, M.

    Williams, Gerald (Tonbridge)

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Rees-Davies, W. R.

    Williams, Paul (Sunderland, S.)

    Lockwood, Lt.-Col. J. C.

    Remnant, Hon. P.

    Williams, R. Dudley (Exeter)

    Longden, Gilbert

    Renton, D. L. M.

    Wilson, Geoffrey (Truro)

    Low, A. R. W.

    Roberts, Peter (Heeley)

    Wood, Hon. R.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Robertson, Sir David

    York, C.

    Lucas, P. B. (Brentford)

    Robinson, Roland (Blackpool, S.)

    Lucas-Tooth, Sir Hugh

    Rodgers, John (Sevenoaks)

    TELLERS FOR THE NOES:

    McAdden, S. J.

    Roper, Sir Harold

    Mr. Kaberry and Mr. Wills.

    Mr. Jay: I beg to move, in page 7, line 42, at the end, to insert:
    (2) In sections two hundred and twelve and two hundred and thirteen of the said Act, as amended (which relate to the relief in respect of children) for the references to eighty-five pounds there shall be substituted references to one hundred pounds.
    This is an Amendment which seeks to raise the child allowance for Income Tax purposes from £85 to £100 in the case of each child. This is an Amendment which we shall seek to press strongly on the Government, and I am bound to say that of all the Amendments to this Bill which we have so far introduced this is the one to which I give the strongest possible support. I believe that there is a considerable inequality between the type of family in which there are a large number of dependants and perhaps only one
    556
    earner and the other type—this applies to all levels of income—in which there is one earner or two earners with no dependants.
    I hope that in this case the Chancellor may be able to meet us some part of the way. So far in our consideration of this Bill he has not made any concession. I do not know if he is trying to earn the reputation of being another "Iron Chancellor." I should like to suggest to him, in his own favourite words, that he should show himself a little more flexible; in this instance I think he might practice as well as preach a little flexibility. This is a case in which, if he cannot go the whole way and raise the allowance from £85 to £100, which I agree would cost a great deal of money, he might at least consider raising it, say, to £95 or at least to £90.

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    The basis of my argument is, I repeat, that there is a heavy inequality between the family with a large number of dependants and the family with none or few. To some extent all of us have failed to realise how great the difference is. I agree that it might be obvious, and hon. Members may say that I am merely stating the obvious, that if one divides one's income by four, five or six, one has a good deal less left than one would otherwise have had. But although we all understand that piece of arithmetic, we very seldom found our social policy on this simple truth, which is that what determines the standard of living is not the total income of the household but the income per head after tax. I do not think that that would be disputed between us but it is curious how seldom we think in those terms.
    To give one example, when I quoted a few figures in terms of income per head, in the course of the Second Reading debate on this Bill, the Chancellor was a little puzzled by the conception and though I had stated it quite dearly once, he got up and asked whether that was really what I meant. It was what I meant, and it is what I am reiterating this evening. The tax tables which appear in the Financial Statement year by year show clearly the income of the earner but nowhere translate that into terms of income per head in the household.
    I believe—and in saying this I show my impartiality in this matter, at least in a party sense—that we in the Labour Government of 1951 probably made a mistake in that we increased simultaneously the marriage allowance and the child allowance. At first sight it is always attractive to want to help the married man and to want to help the family with children; but, of course, if we do that we give a further bonus to one type of household which in these matters is probably better off than almost any other in the community; that is, the married couple without any dependants who are both earning. If instead we raise only the child allowance we concentrate the relief on the family where there are fewer earners. Therefore, looking back, I say frankly that it may have been a mistake to do what we did.
    But I think the Chancellor last year made a worse mistake when he not merely increased the married allowance,
    558
    but made a greater increase there than in the child allowance. The child allowance with which I am now concerned was raised during the period of the Labour Government from £50 to £70 and by the present Chancellor a year ago from £70 to £85. It may well be that the Financial Secretary will tell us that as the allowance has been raised in the past it cannot be raised again. Or that argument may be advanced by the learned Solicitor-General who is taking a fatherly interest —if that is the right word to use—in this Amendment. But I can say in advance that we shall not accept that argument. Our whole case is that there is still a very great inequality.
    I should perhaps at this stage declare a personal interest in this question of supporting a family with a certain number of children. I believe it is customary to declare one's interest, but to show my impartiality I will rest my argument entirely on arithmetic. It was, I remember, my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) who once said that Socialism works best when it is in harmony with the laws of arithmetic. That is indeed true of many other things besides Socialism. It is true of business, politics, sport and a number of other things, and therefore I will found my case on that type of argument.
    I wish to give a few examples of the difference in income per head in a family after tax has been paid as between a single man and a married man with a wife who is not working, because maybe she is looking after the children, and with three children; that is to say, a family of one individual and a family of five individuals. In these very simple calculations I have assumed that the income earned is in each case the same, and I have taken into account the family allowances which will be received. I hasten to add that the arithmetic is my own. I do not claim that is right to the last decimal place, but I hope that it is sufficiently correct for the purposes of the argument.
    I have taken three levels of income; £500, or £10 a week, £800 and £1,500. If we consider a single man, or for that matter a single woman, earning £500 a year, the income per head after tax has been paid is approximately £443 10s. If we take the case of a married man with a wife and three children earning a

    559
    similar amount, and if we add the family allowances, the income per head after tax is £108. That produces the result, not realised by some people, that a single person is rather more than four times better off, which is quite a remarkable differential. In spite of the family allowance and the existing child allowance the difference is as great as between an individual earning £500 a year and another earning more than four times as much.
    8.45 p.m.
    At the level of £800 a year a single person has about £651, after tax has been deducted, and a married man with three children has £161 per head of his family. I freely acknowledge that the ratio of rather more than four to one is the same throughout the scale so far as my calculations go. At the level of £1,500 a single person has £1,106 and the married man with three children has per head £270.
    We have debated incentives and other questions of that kind. The argument I now advance is one based entirely on equity and not on incentive, except so far as some people may think that there is a certain disincentive here from having children at all. The view may be taken that it is obvious that if people are so foolish as to have three, four or five children the income per head of their family will be only one-quarter or one-fifth of that of a single person. It may have been a half-truth throughout history that the more children people have the poorer they are.
    When I have advanced this argument previously, I have had anonymous letters, some of which have been abusive, saying that if people are so foolish as to breed children—that was the expression in one letter, that is their fault and they should jolly well pay. But that is not the view we should take in this Committee. While we have long discussions about industrial equipment, machinery, machine tools and so on, and the need for expanding and developing them in the interests of our future, it is also of some importance that we should produce the human beings who will work at and manage those machines.
    I do not suggest that we should go as far as the French have gone in this respect. In France there is in force a
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    remarkable system of family allowances by which at certain levels of income it is possible, by having a sufficiently large family, to be better off than if one had none at all. Obviously, the view is not taken by the French Parliament that it is undesirable to encourage an increase in the population. I do not suggest that we should go as far as they have gone or indeed that with our present financial arrangements we could afford to do so.
    I argue that there is a case for an increase in this allowance above the present figure of £85. It may be that if that were done something should be done at the same time to improve the position of those below the Income Tax level. Of course the arguments I have advanced have been to some extent the classical arguments for introducing and increasing the family allowance itself as a social service payment. But it would be out of order to advance that part of the argument now. However, I do not want anyone to think that because I am putting this point for the Income Tax payer I am leaving the others out of account.
    The ratio of more than four to one between the different types which prevails at all levels of income is greater than it ought to be. It appears to be one of the major defects of our Income Tax structure that it produces that remarkable difference. As this is not a case where the Chancellor is confronted with the dilemma of giving us what we want or nothing at all, it is possible for him to go some part of the way, and I hope that, although he is not to reply personally to the debate, he may be going to unbend just a little.
    Mr. Houghton: I wish to support the Amendment. A little while ago, the Chancellor said that what he did last year would have warmed the heart of Mr. Gladstone, though I think he probably forgot that the great thing about Mr. Gladstone and Income Tax was his promise in 1874 to abolish it if returned to power. However, Disraeli and the Tories came back into power, and the Income Tax remained.
    The Amendment which my right hon. Friend has moved would at least have warmed the heart of Mr. Lloyd George, because he was the first Chancellor to introduce the child allowance in modern Income Tax. In the famous, almost notorious, Budget of 1909, he introduced

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    a child allowance of tax on £10 for each dependent child under the age of 16, and the actual tax remission involved in that relief was 11s. One can understand that the House did not sit up all night in order to move that 10s. should become 12s., 15s. or even 20s. when the relief was as small as that.
    But that was not the first time that relief for children had been given in our income tax system, because, in Pitt's first taxing Act of 1798, there was relief for children; but, under that Act, which is commonly known as the Triple Assessment Act, there was a deduction of 10 per cent. for more than four children and less than eight, a deduction of 15 per cent. for eight or nine children, and one of 20 per cent. for 10 or more children. If there is any hon. Gentleman who likes to declare a personal interest in child allowances of this scale, I will gladly give way to him. But the extraordinary thing was that, although the relief provided for such large families, the claims made were said to reveal such unusually large families that the Chancellor of the Exchequer felt some doubt whether all these children existed, and he withdrew the child allowance in 1806 and it did not make its appearance again until the Bill of 1909. That is the history of child allowances up to 1909. Since then, it has been at various levels, and, in present circumstances, the Committee would agree that the expenses of families of young children running at such a high level would demand that every consideration must be given to them in our system of taxation.
    I should like once more to draw attention to the unjustifiable disparity between the tax burden of the married man whose wife stays at home and that of one whose wife goes out to work. Taking last year's figures as a basis, if a husband earns £6 per week and his wife £5 per week, the tax they paid between them was £15 15s. But if the man worked hard in order to earn an income of £11 a week with which to keep a wife and one child, he paid £26 in tax.
    If we take the case of a man who earned £500 a year and whose wife earned £300 a year, we find that their tax was £55, whereas if the husband alone worked and earned £800 with which to support a wife and one child, his tax was £85, £30 more. Even if he had two children, his tax was only £1 less than that of a married couple without children who together
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    earned the same amount of money as the man with a wife and two children to support.
    That is the sort of thing which naturally causes a sense of grievance. Mothers come to me and say," Is anyone going to say that I am not doing a job of work? Am I not making my contribution to society and to the future of the country? I and others like me are absolutely indispensable to the future of the nation. It is true that we are not able to go out and work in a factory, but if we are looking after two children that, surely, is doing enough."
    My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) has said that we must encourage married women to go out to work. I agree that we must do that, but we must also encourage some mothers to stay at home. I think it is possibly offering too big an attraction to married women to go out to work when the differences in the Income Tax paid are as great as I have illustrated.
    I do not know what this Amendment would cost, but I have looked at some figures, and, according to the tables in the last Report of the Commissioners of Inland Revenue, there appear to be 3 million people with one child, 2 million with two children, 750,000 with three children, and 400,000 with four or more children who come within the scope of taxable incomes.
    That gives a total of 8 million children altogether, but a lot of the parents are already exempted by existing allowances. For what it is worth, I estimate that, if my Amendment were adopted, it would cost no more than £10 million, and probably a lot less. No doubt the right hon. and learned Gentleman has a much more precise estimate than that.
    We have to admit, of course, that the Chancellor increased the child allowance last year, but we also have to remember that the previous Administration increased it in the previous year, so there appears to be common ground between both sides of the Committee that the child allowance is an important feature of our taxation reliefs, and that it should be progressively increased as far as is reasonably possible within the general structure of the Income Tax system.
    I doubt whether any hon. or right hon. Gentlemen opposite would get up and

    563
    say that this allowance is too much. In terms of tax, the maximum relief is £45 a year. No one is going to say that that is excessive in the case of a taxpayer who has the normal responsibilities of bringing up a family. Whether there should be a progressively increasing child allowance in order to meet the assumed rising cost of keeping children is another matter. That subject was discussed by the Royal Commission on Population, as hon. Members will remember.
    9.0 p.m.
    I am sure—and I am sorry to present the Solicitor-General with his reply so readily on this occasion since he used it very freely last year—that this year the Solicitor-General will say "After all, the Royal Commission Report is 12 months nearer than it was last year." We can expect to hear from him to that effect. Progressive child allowances may well be considered by the Royal Commission on Taxation, in relation to other matters, but the increase proposed in the Amendment will not necessarily be dealt with in their Report. The Chancellor, although the Royal Commission was in session, increased the child allowance from £70 to £85, so I feel sure that he will not plead the Royal Commission too seriously as a reason for not doing anything about this matter now.
    What he will plead is that the money we want for this Amendment has already gone, beyond recall. Most of it on Clause 10. There is a little bit to come on the Clause we are now discussing, but the moneybags were opened on Clause 10 and nothing is left for the harassed parents and the starving children. When Clause 10 opened the moneybags it let through in a full year £135 million of the Revenue. My proposal, comparatively speaking, is chicken feed. When one squanders one's substance in riotous living there is not even much chicken feed left. I do not suppose there is chicken feed to spare for this Amendment. We should like hon. Members opposite, as I understand they are keen upon getting an improvement in these allowances, to support us, because we are sure that the Amendment is justified.
    We are not inhibited in presenting this Amendment merely because the Chancellor has distributed tax reliefs in other
    564
    directions. The problem remains a comparatively serious one. Hon. Members will realise that there is no grievance so bitter as the comparative grievance, as I have found in 30 years of adjusting wage rates, allowances and benefits of one kind and another. The disparity to which I draw attention creates a feeling of discontent among men who are the only wage earners in the household and whose wives are fully occupied with domestic responsibility. I hope that on this occasion we shall get a sensible and sympathetic answer from the Solicitor-General.
    Mr. John McKay: I have listened with pleasure to the exposition of principles from both sides of the Committee by hon. Members who agree that we have a duty to perform in matters of taxation. One of the primary duties is to help the under-dog as far as possible. That has always been my principle, and when I have considered any particular Amendment dealing with taxation I have always tried to analyse it as far as possible to find out how the under-dog would be helped. Men who get to the top— and it does not matter what line they are in—always have a feeling that they got there by efficiency, personal ability and so forth. That is a very nice feeling, but I am afraid that on many occasions it is not true.
    When I study this Amendment I remember all the criticism that we on this side of the Committee have levelled against the Budget because of the fact that, while it was giving relief, it was giving it to the wrong people to our mind. It was giving it to people who are in a fairly comfortable position in life and was not helping the bottom dogs of society at all.
    I have examined this problem from the same point of view. My hon. Friend the Member for Sowerby (Mr. Houghton) said there are 8 million children in this country. If he examines the figures more closely, as I have done, he will find that there are 11 million. The Government attempted in the Budget to help the family man and we were all glad of that. This Amendment runs on the same lines. It is out to help the family man, but it has the same weakness as was evident in the general tenor of the Budget itself— it does not help the family man in very poor circumstances. Those men on the

    565
    lower rung of the ladder who have families are not paying any Income Tax at all. If the relief in respect of children is increased it does not help them one iota.
    I emphasise this point now, as I have tried to do in previous Budget debates. I hope that when the Labour movement get into power they will closely consider this problem of the family man and how to help him in his difficulties. There is no question that the means to help him will not be this means. It will be by increasing the family allowances.
    This Amendment, of course, would help those family men who pay Income Tax, and no doubt in many cases it would do good, but these proposals have the same weakness as the Budget provision to reduce Income Tax by 6d. in the £. Families that are in no need of help would receive the same benefit. In fact they would receive greater benefit, because the men with the higher incomes would receive benefit in respect of three children at the highest level of 9s. in the £. If the Amendment were implemented, a greater number of people would also receive relief at the rate of 5s. or 2s. 6d. in the £.
    I intervene in this debate once more to try to encourage my party when they get into power to get down to the question of providing family allowances to help men in the lower income groups of £7 or £6 or less per week. Specialists who are examining this problem today tell us that as a result of the rise in the cost of living it takes £7 7s. wage, plus family allowances, to keep a family of three children. This is a great problem and I hope that when my side of the Committee have the opportunity we shall bring in legislation to enable the very poor to receive benefit, as well as those in the higher income levels.
    Mr. Gordon Walker: Like my right hon. Friend the Member for Battersea, North (Mr. Jay), I can say from personal experience that it is most desirable to give extra benefits to families with young children. But apart from arguments of personal interest, there are very important arguments of principle, some of which have been mentioned, in favour of this Amendment. My hon. Friend the Member for Sowerby (Mr. Houghton) said that the disparity is now really too
    566
    great between a married couple without children and a couple with children. When two people in a family can earn they are very well off. It is because the wife has children that she cannot work and earn money to bring the family earnings to the comparable level.
    In addition, the family with a large number of children suffers particularly gravely from the rising cost of living, more than one would think from the cost of living figures, because the cost of living figures conceal a number of movements up and down. Food prices have gone up owing to the Government's policy, and other prices have come down largely owing to the fall in the cost of raw materials throughout the world. It is the rise in the cost of food, which is greater than one would think looking at the cost of living figures as a whole,, which bears so heavily upon a family with children. That is particularly true of families on the lower income levels.
    There are two arguments of public policy that can be adduced in favour of this Amendment. One is that it is a matter of public policy to widen the gap between those with family responsibilities and those without. That was a clear principle laid down by the Royal Commission on Population. The second point of public interest is that only if we adopt the policy embodied in this Amendment can we make a real stride towards putting into practice the principle of equal pay. There is no way of getting equal pay unless the State, by one means or another, gives special benefits to those who have family responsibilities. Only if we do that as an act of social policy can we treat men and women in industry in such a way that we completely disregard whatever their other family responsibilities may be at home.
    Although this Amendment will only be a small step towards that goal, it none the less is a step towards it, and as hon. Members opposite now give lip service to this principle of equal pay I hope that they will take this small step along the way that we shall have to cover before we can carry out in practice fully the principle of equal pay.
    The Solicitor-General (Sir Reginald Manningham-Buller): I was interested to observe the manner and the ingenuity with which the right hon. Member for

    567
    Smethwick (Mr. Gordon Walker) introduced the topic of equal pay into a debate on children's allowances.
    Mr. Gordon Walker: It was perfectly relevant.
    The Solicitor-General: I am not suggesting that it was irrelevant. I said I was interested to observe the manner and the ingenuity with which he introduced that subject.
    I shall seek to confine my remarks to the actual Amendment which the right hon. Member for Battersea, North (Mr. Jay) has moved. I listened with interest to his speech. I can disclose the same personal interest as he has in this matter. Both of us would be affected by this Amendment if it were carried. He did not carry forward his calculations to indicate what the difference was in the case of a family with four children, but I can work it out myself.
    The hon. Member for Sowerby (Mr. Houghton) went so far not only as to give an interesting review of the past history with regard to children's allowances but he also indicated the reply that he thought I would make. Let me disappoint him on one point. I do not intend on this occasion to rely upon the answer that I am awaiting the Royal Commission's Report, although I am sure that he and I both look forward to considering its contents as soon as possible.
    Last year the party opposite put forward an Amendment of a more limited character than this one, which was to increase to £100 the allowance for the first child ranking for the allowance. This is a more ambitious proposal—to give £100 to all children ranking for the allowance.
    9.15 p.m.
    As the right hon. Member for Battersea, North indicated, its cost would be considerable, and more than the estimate made by the hon. Member for Sowerby. According to the information with which I have been provided the cost would be in the region of £14 million. I have no doubt that all parents who pay Income Tax and who are fortunate enough to have young children regard this proposal sympathetically, but I have to say that it is not a change which is warranted at this time.
    568
    Last year there was a substantial increase in this allowance—from £70 to £85—and it is now higher than it has ever been. I am sure the hon. Member for Sowerby will agree with that. This proposal would make it higher still, and to make it now would be to put children's allowances out of line with the general scale of personal allowances. There has been a bigger increase in children's allowances than in any other war-time allowance. If we compare it with the pre-war position, I think that also holds good, except for one instance, in relation to dependants' allowances, where the increase has been proportionately greater.
    This allowance will now be £85 and, after all, the allowance for a single person is £120. The right hon. Member for Battersea, North contrasted a series of figures, to which I listened with interest. I have not endeavoured to check their mathematical accuracy, but I am sure the right hon. Gentleman would agree that even if there were no taxation on the income of a single person with £500 a year it would mean that the income per head of a married couple with three children would be appreciably less.
    Mr. Jay: But the hon. and learned Gentleman will agree that the point of my argument was that our taxation system had not made the situation very different from what it would be if there were no taxation. That is just my criticism.
    The Solicitor-General: Expressing my personal view, I doubt whether that is a matter which could be completely corrected by taxation, but that is a general point, as were so many of the points which were put with his usual eloquence by the hon. Member for Sowerby. We shall be interested to see what the Royal Commission have to say about this matter.
    For the reasons I have given the Government find themselves unable to accept this Amendment at this time. I know the arguments I have advanced will not meet with the approval or acceptance of the right hon. Gentleman because, in the course of moving this Amendment, he indicated quite clearly that he would not be very ready to accept the arguments I have advanced. Those are the arguments I have to advance, however, and I regard them as telling ones in relation to this

    569
    matter, and I hope that the right hon. Gentleman, on consideration, will withdraw his Amendment.
    Mr. Jay: Since the invitation is addressed to me, I am bound to say I am totally unconvinced by the hon. and learned Gentleman's arguments. Very strong arguments have been advanced from this side of the Committee on this very important matter, and we now learn that this important and far-ranging improvement could be made at a cost of not more than £14 million. I had conceived that the cost would be higher. In terms of the figures with which we have been dealing this afternoon, and indeed of the concessions the Chancellor has made in the Budget as a whole, that is not a very large figure.
    If the Government take that view, I should like to press the Solicitor-General a little further, and also the Chancellor, since he has now joined in. This is a case in which it is not necessary to go the whole way. I suggested one com-
    promise—raising the allowance not to £100 but to something intermediate between £85 and £100. Presumably if the whole concession would cost £14 million, some half-way house such as that would cost less than £14 million. [Interruption.] I am glad we are at one on that.
    Last year we proposed a more modest change by which the allowance would go to £100 for the first child. Will the Chancellor consider going at least as far as that? He will be at one with me in agreeing that it must cost less than £14 million. Since they have made no concessions yet on the whole of the Bill, I hope that the Solicitor-General and the Chancellor will go at least as far as that. If not, I shall certainly advise my hon. Friends to divide in support of the Amendment.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 215; Noes, 235.

    Division No. 184.]

    AYES

    [9.21 p.m.

    Acland, Sir Richard

    Davies, Ernest (Enfield, E.)

    Hubbard, T. F.

    Adams, Richard

    Davies, Harold (Leek)

    Hudson, James (Ealing, N.)

    Allen, Scholefield (Crewe)

    Delargy, H. J.

    Hughes, Cledwyn (Anglesey)

    Anderson, Frank (Whitehaven)

    Dodds, N. N.

    Hughes, Emrys (S. Ayrshire)

    Awbery, S. S.

    Donnelly, D. L.

    Hughes, Hector (Aberdeen, N.)

    Bacon, Miss Alice

    Driberg, T. E. N.

    Irvine, A. J. (Edge Hill)

    Baird, J.

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

    Irving, W. J. (Wood Green)

    Barnes, Rt. Hon. A. J.

    Ede, Rt. Hon. J. C.

    Isaacs, Rt. Hon. G. A.

    Bartley, P.

    Edwards, John (Brighouse)

    Janner, B.

    Ballanger, Rt. Hon. F. J.

    Edwards, W. J. (Stepney)

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

    Bence, C. R.

    Evans, Albert (Islington, S.W.)

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

    Benn, Hon. Wedgwood

    Evans, Edward (Lowestoft)

    Johnson, James (Rugby)

    Beswick, F.

    Evans, Stanley (Wednesbury)

    Jones David (Hartlepool)

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

    Fernyhough, E.

    Jones, Jack (Rotherham)

    Bing, G. H. C.

    Fienburgh, W.

    Jones, T. W. (Merioneth)

    Blackburn, F.

    Finch, H. J.

    Keenan, W.

    Blenkinsop, A.

    Fletcher, Eric (Islington, E.)

    Kenyon, C.

    Blylon, W. R.

    Follick, M.

    Key, Rt. Hon. C. W.

    Boardman, H.

    Foot, M. M.

    King, Dr. H. M.

    Bottomley, Rt. Hon. A. G.

    Forman, J. C.

    Kinley, J.

    Bowden, H. W.

    Fraser, Thomas (Hamilton)

    Lee, Frederick (Newton)

    Bowles, F. G.

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

    Lee, Miss Jennie (Cannock)

    Braddock, Mrs. Elizabeth

    Gibson, C. W.

    Lever, Leslie (Ardwick)

    Brockway, A. F.

    Glanville, James

    Lewis, Arthur

    Brook, Dryden (Halifax)

    Gordon Walker, Rt. Hon. P. C.

    Lindgren, G. S.

    Broughton, Dr. A. D. D.

    Greenwood, Anthony (Rossendale)

    Lipton, Lt.-Col. M.

    Brown, Rt. Hon. George (Belper)

    Grey, C. F.

    Mcinnes, J.

    Brown, Thomas (Ince)

    Griffiths, Rt. Hon. James (Lianelly)

    McKay, John (Wallsend)

    Burke, W. A.

    Griffiths, William (Exchange)

    McLeavy, F.

    Butler, Herbert (Hackney, S.)

    Hale, Leslie

    Mainwaring, W. H.

    Callaghan, L. J.

    Hall, Rt. Hon. Glenvil (Colne Valley)

    Mallalieu, E. L. (Brigg)

    Champion, A. J.

    Hall, John T. (Gateshead, W.)

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

    Chapman, W. D.

    Hamilton, W. W.

    Mann, Mrs. Jean

    Chetwynd, G. R.

    Hannan, W.

    Manuel, A. C.

    Coldrick, W.

    Hargreaves, A.

    Mason, Roy

    Collick, P. H.

    Harrison, J. (Nottingham, E.)

    Mellish, R. J.

    Corbet, Mrs. Freda

    Hastings, S.

    Messer, F.

    Cove, W. G.

    Hayman, F. H.

    Mitchison, G. R.

    Craddock, George (Bradford, S.)

    Healey, Denis (Leeds, S.E.)

    Monslow, W.

    Crosland, C A. R.

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

    Morgan, Dr. H. B. W.

    Crossman, R. H. S.

    Herbison, Miss M.

    Morley, R.

    Cullen, Mrs. A.

    Hewitson, Capt. M.

    Morris, Percy (Swansea, W.)

    Dames, P.

    Holman, P.

    Mort, D. L.

    Dalton, Rt. Hon. H.

    Holmes, Horace (Hemsworth)

    Moyle, A.

    Darling, George (Hillsborough)

    Houghton, Douglas

    Mulley, F. W

    Murray, J. D.

    Shawcross, Rt. Hon. Sir Hartley

    Tomney, F.

    Neal, Harold (Bolsover)

    Shinwell, Rt. Hon. E.

    Turner-Samuels, M.

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

    Short, E. W.

    Ungoed-Thomas, Sir Lynn

    Oldfield, W. H.

    Silverman, Julius (Erdington)

    Viant, S. P.

    Oliver, G. H.

    Silverman, Sydney (Nelson)

    Wallace, H. W.

    Orbach, M.

    Simmons, C. J. (Brierley Hill)

    Watkins, T. E.

    Oswald, T.

    Skeffington, Arthur

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

    Paget, R. T.

    Slater, Mrs. (Stoke, N.)

    Weitzman, D.

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

    Slater, J. (Durham, Sedgefield)

    Wells, Percy (Faversham)

    Paling, Will T. (Dewsbury)

    Smith, Ellis (Stoke, S.)

    Wells, William (Walsall)

    Pannell, Charles

    Smith, Norman (Nottingham, S)

    West, D. G

    Parker, J.

    Snow, J. W.

    Wheeldon, W. E

    Paton, J.

    Sorensen, R. W.

    White, Mrs. Eirene (E. Flint)

    Peart, T. F.

    Soskice, Ht. Hon. Sir Frank

    White, Henry (Derbyshire, N.E.)

    Popplewell, E

    Sparks, J. A

    Whiteley, Rt. Hon. W.

    Porter, G.

    Steele, T.

    Wilkins, W. A.

    Proctor, W. T.

    Strachey, Rt. Hon. J

    Willey, F. T

    Pryde, D. J.

    Stross, Dr. Barnett

    Williams, Rev. Llywelyn (Abertillery)

    Rankin, John

    Summerskill, Rt. Hon. E

    Williams, Ronald (Wigan)

    Reid, Thomas (Swindon)

    Swingler, S. T.

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

    Rhodes, H.

    Sylvester, G. O.

    Williams, W. R. (Droylsden)

    Robens, Rt. Hon. A.

    Taylor, Bernard (Mansfield)

    Wilson, Rt. Hon. Harold (Huyton)

    Roberts, Albert (Normanton)

    Taylor, John (West Lothian)

    Yates, V. F.

    Robinson, Kenneth (St. Pancras, N.)

    Taylor, Rt. Hon. Robert (Morpeth)

    Younger, Rt. Hon. K.

    Rogers, George (Kensington, N.)

    Thomas, David (Aberdare)

    Ross, William

    Thomas, Ivor Owen (Wrekin)

    TELLERS FOR THE AYES:

    Royle, C.

    Thomson, George (Dundee, E.)

    MR. Pearson and

    Shackleton, E A. A

    Thornton, E

    Mr. Arthur Allen.

    NOES

    Allan R. A. (Paddington, S.)

    Digby, S. Wingfield

    Jennings, R.

    Alport, C. J. M.

    Dodds-Parker, A. D

    Johnson, Eric (Blackley)

    Amory, Heathcoat (Tiverton)

    Donner, P. W.

    Jones, A. (Hall Green)

    Anstruther-Gray, Major W. J

    Doughty, C. J. A.

    Joynson-Hicks, Hon. L. W

    Ashton, H. (Chelmsford)

    Drewe, C.

    Keeling, Sir Edward

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

    Dugdale, Rt. Hon. Sir T. (Richmond)

    Kerr, H. W.

    Astor, Hon. J. J.

    Duncan, Capt. J. A. L.

    Lambert, Hon. G.

    Baldock, Lt.-Cmdr. J. M

    Elliot, Rt. Hon. W. E.

    Lambton, Viscount

    Baldwin, A. E.

    Fell, A.

    Lancaster, Col. C. G

    Banks, Col. C.

    Finlay, Graeme

    Law, Rt. Hon. R. K.

    Barber, Anthony

    Fisher, Nigel

    Legge-Bourke, Maj. E A. H

    Barlow, Sir John

    Fleetwood-Hesketh, R. F.

    Legh, Hon. Peter (Petersfield)

    Beach, Maj. Hicks

    Fletcher-Cooke, C.

    Linstead, H. N.

    Beamish, Maj. Tufton

    Ford, Mrs. Patricia

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

    Bell, Philip (Bolton, E.)

    Fraser, Hon. Hugh (Stone)

    Lloyd, Rt. Hon Selwyn (Wirral)

    Bennett, William (Woodside)

    Fraser, Sir Ian (Morecambe & Lonsdale)

    Lockwood, Lt.-Col. J. C

    Bevins, J. R. (Toxteth)

    Fyfe, Rt. Hon. Sir David Maxwell

    Longden, Gilbert

    Birch, Nigel

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

    Low, A. R. W.

    Bishop, F. P.

    Galbraith, T. G. D. (Hillhead)

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Black, C. W.

    Garner-Evans, E. H

    Lucas, P. B. (Brentford)

    Boothby, R. J. G

    George, Rt. Hon. Maj. G. Lloyd

    Lucas-Tooth, Sir Hugh

    Bossom, A. C.

    Gomme-Duncan, Col. A

    Macdonald, Sir Peter

    Boyd-Carpenter, J. A

    Gough, C. F. H.

    Mackeson, Brig. H. R

    Boyle, Sir Edward

    Graham, Sir Fergus

    McKibbin, A. J

    Braine, B. R.

    Grimond, J.

    Maclay, Rt. Hon. John

    Braithwaite, Sir Albert (Harrow,W.)

    Grimston, Hon. John (St. Albans)

    Maclean, Fitzroy

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

    Grimston, Sir Robert (Westbury)

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

    Brooke, Henry (Hampstead)

    Hall, John (Wycombe)

    Macmillan, Rt. Hon Harold (Bromley)

    Brooman-White, R. C

    Hare, Hon. J. H.

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

    Browne, Jack (Govan)

    Harris, Frederic (Croydon, N.)

    Maitland, Patrick (Lanark)

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

    Harrison, Col. J. H. (Eye)

    Manningham-Buller, Sir R. E

    Bullard, D. G.

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

    Markham, Major S. F.

    Bullus, Wing Commander E E

    Harvie-Watt, Sir George

    Marlowe, A. A. H.

    Burden, F. F. A

    Hay, John

    Marples, A. E.

    Butcher, Sir Herbert

    Heath, Edward

    Marshall, Douglas (Bodmin)

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

    Hill, Dr. Charles (Luton)

    Marshall, Sir Sidney (Sutton)

    Campbell, Sir David

    Hill, Mrs. E. (Wythenshawe)

    Maude, Angus

    Carr, Robert

    Hinchingbrooke, Viscount

    Maudling, R.

    Cary, Sir Robert

    Holland-Martin, C. J.

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

    Channon, H.

    Hollis, M. C.

    Medlicott, Brig. F

    Clarke, Col. Ralph (East Grinstead)

    Holmes, Sir Stanley (Harwich)

    Mellor, Sir John

    Cole, Norman

    Holt, A. F.

    Molson, A. H. E.

    Conant, Maj. R. J. E.

    Hope, Lord John

    Monckton, Rt. Hon. Sir Walter

    Cooper, Sqn. Ldr. Albert

    Hopkinson, Rt. Hon. Henry

    Moore, Lt.-Col. Sir Thomas

    Cooper-Key, E. M.

    Hornsby-Smith, Miss M. P

    Nabarro, G. D. N.

    Craddock, Beresford (Spelthorne)

    Horobin, I. M.

    Nicholls, Harmar

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

    Howard, Gerald (Cambridgeshire)

    Nicholson, Godfrey (Farnham)

    Crosthwaite-Eyre, Col. O. E.

    Howard, Hon. Greville (St. Ives)

    Nield, Basil (Chester)

    Crouch, R. F.

    Hudson, Sir Austin (Lewisham, N.)

    Nugent, G. R. H

    Crowder, Sir John (Finchley)

    Hulbert, Wing Cdr. N. J.

    Nutting, Anthony

    Crowder, Petre (Ruislip—Northwood)

    Hutchinson, Sir Geoffrey (Ilford, N.)

    Oakshott, H. D

    Darling, Sir William (Edinburgh, S.)

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

    Odey, G. W

    Davidson, Viscountess

    Hylton-Foster, H. B. H.

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

    Deedes, W. F.

    Jenkins, Robert (Dulwich)

    Ormsby-Gore, Hon. W. D

    572

    573

    Orr, Capt. L. P. S.

    Salter, Rt. Hon. Sir Arthur

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

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

    Savory, Prof. Sir Douglas

    Thorneycroft, Rt. Hn. Peter (Monmouth)

    Osborne, C.

    Scott, R. Donald

    Touche, Sir Gordon

    Partridge, E.

    Scott-Miller, Cmdr. R.

    Turner, H. F. L.

    Peake, Rt. Hon. O.

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

    Turton, R. H.

    Peto, Brig. C. H. M.

    Smithers, Peter (Winchester)

    Tweedsmuir, Lady

    Pilkington, Capt. R. A.

    Smithers, Sir Waldron (Orpington)

    Vane, W. M. F.

    Pitman, I. J.

    Smyth, Brig. J. G. (Norwood)

    Vaughan-Morgan, J. K.

    Powell, J. Enoch

    Snadden, W. McN.

    Vosper, D. F.

    Price, Henry (Lewisham, W.)

    Soames, Capt. C.

    Wakefield, Edward (Derbyshire, W.)

    Prior-Palmer, Brig. O. L.

    Spearman, A. C. M.

    Ward, Hon. George (Worcester)

    Profumo, J. D.

    Speir, R. M.

    Ward, Miss I. (Tynemouth)

    Ralkes, Sir Victor

    Spens, Sir Patrick (Kensington, S.)

    Waterhouse, Capt. Rt. Hon. C.

    Rayner, Brig. R.

    Stanley, Capt. Hon. Richard

    Watkinson, H. A.

    Retmayne, M.

    Stevens, G. P.

    Webbe, Sir H. (London & Westminster)

    Rees-Davies, W. R.

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

    Williams, Rt. Hon. Charles (Torquay)

    Remnant, Hon. P.

    Stewart, Henderson (Fife, E.)

    Williams, Gerald (Tonbridge)

    Renton, D. L. M.

    Stoddart-Scott, Col. M.

    Williams, Paul (Sunderland, S.)

    Roberts, Peter (Heeley)

    Storey, S.

    Williams, R. Dudley (Exeter)

    Robertson, Sir David

    Strauss, Henry (Norwich, S.)

    Wills, G.

    Robinson, Roland (Blackpool, S.)

    Suteliffe, Sir Harold

    Wilson, Geoffrey (Truro)

    Rodgers, John (Sevenoaks)

    Taylor, Charles (Eastbourne)

    Wood, Hon. R.

    Roper, Sir Harold

    Taylor, William (Bradford, N.)

    York, C.

    Russell, R. S.

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

    Ryder, Capt. R. E. D.

    Thomas, Leslie (Canterbury)

    TELLERS FOR THE NOES:

    Mr. Kaberry and Mr. Studholme.

    Resolution reported:
    That, for the purposes of any Act of the present Session to make new provision as respects the gross value for rating purposes of dwelling-houses and private garages and of
    598
    hereditaments partly used as private dwellings, it is expedient to authorise the payment out of moneys provided by Parliament of any increase which is attributable to the provisions of the said Act of the present Session—

    (a)in the sums payable out of moneys so provided under subsection (1) of section one hundred and forty-three of the Local Government Act, 1948;

    (b)in the Exchequer Equalisation Grants payable under Part I of the said Act of 1948.

    Resolution agreed to.

    Mr. Frederick Lee (Newton): I beg to move, in page 7, line 42, at the end, to insert:
    (2) In paragraph (b) of subsection (3) of section two hundred and twelve of the said Act (which relates to relief in respect of children undergoing training), as amended by subsection (4) of section fourteen of the Finance Act, 1952, for the reference to twenty-six pounds a year there shall be substituted a reference to eighty-five pounds a year.
    The issue contained in this Amendment is not new. In our discussions on last year's Finance Bill, my hon. and right hon. Friends put forward a similar Amendment. We object to the retention of the discrimination in the matter of child allowances as between parents whose children are receiving a university or college education and parents whose children are apprenticed to a trade or profession.
    Nothing that I or my hon. Friends say should give the impression that we wish to reduce the facilities available to parents whose children are undergoing university or college training. What we believe is that the allowances given to parents whose children are apprenticed should be brought up to the same level. In the former case an allowance is granted equal to the standard rate of tax on £85, while in the case of the apprenticeship the limit is £26. In the case of a parent whose child has won a bursary, no matter what its value may be, there is no victimisation in consequence. It is possible, therefore, to have an allowance on something like £300 to a parent in the one case, whilst a parent whose child is being apprenticed is limited to the £26.
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    Last year, our only answer from the Solicitor-General was that this involved a vital principle on which the Government could not be expected to make any decision until the Royal Commission had reported. My hon. Friend the Member for Sowerby (Mr. Houghton) was successful some minutes ago in forestalling the Solicitor-General by saying that he hoped the hon. and learned Gentleman would not produce that same argument again. I hold the same sentiments, and I hope to be able to show that this issue is far too serious, and the consequences of refusing the Amendment so imminent, for us to await the report of a Royal Commission in x years' time.
    Last year the Solicitor-General also sought refuge in telling us that the Labour Government had done nothing about it. [HON. MEMBERS: "Hear, hear."] I hear hon. Members opposite say, "Hear, hear." When the term of office of the present Government expires, if they can show anything like our record in the education of our people they should be quite satisfied with their achievement. During our period of office the school-leaving age was increased, the university population was vastly increased and everywhere inducements were given to our people to allow children to undertake a greater degree of education.
    The Deputy-Chairman (Mr. Hopkin Morris): I hope the hon. Member will keep to the Amendment.
    Mr. Lee: I am making this point because it was seriously adduced from the Front Bench against our argument last

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    year. It was brought forward by the Government, not by the back benchers. Since last year quite important issues bearing on this subject have arisen. The Chancellor has produced a Budget in which he has felt able to give Income Tax concessions which have benefited the higher income groups to a greater extent than others. Secondly, industrial production in Britain has fallen whilst that of our competitors has continued to rise. Thirdly, the numbers of persons entering non-manufacturing industries have risen sharply.
    I submit that the Chancellor cannot possibly argue that in a Budget in which he is able to give reliefs to the high income groups he cannot make this concession because of the cost. While industrial production is falling and many of our people are leaving industries which necessitate serving an apprenticeship, the right hon. Gentleman cannot afford to continue the discrimination to which we are making objection.
    This discrimination against the apprentice is now more pronounced because of a great change that has taken place in the methods of serving an apprenticeship. Hon. Members may know that it is only in comparatively recent years that the trade unions have been able to negotiate wages and conditions for apprentices, and since that time conditions for apprentices have materially improved. I believe that in the 1938 Act, when the £13 concession was first given—and which the right hon. Gentleman doubled last year—there was a failure to appreciate that the old pattern of apprenticeship was fast disappearing.
    In that pattern the employer was supposed to be conferring some sort of favour upon a young boy by teaching him the craft to which he had become apprenticed. Premiums were demanded, whereas today very few premiums are demanded in industry generally. It may be that in one or two of the professions, such as the legal profession, that situation still obtains, but in industry there is very little by way of premium demanded now. Instead of its being merely a question of the employer teaching a boy his craft and the boy not expecting to receive remuneration in consequence, the position now is that the
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    apprentice is looked upon not only as someone learning the craft, but as a producer in the industry.
    That is a revolutionary change which was not taken account of in the 1938 proposals—perhaps it could not be taken into account—and it is at the basis of the proposal we are discussing. Now an apprentice may go to school in his employers' time for one or two days a week and for the remainder of the week he practises his trade and is looked upon as a producer. Although it is difficult to give figures or percentages, it is certainly true to say that the majority of apprentices, at least in the engineering industry, are working on a payment-by-results system.
    Let us take a look at what all this means so far as the Chancellor is concerned. If a parent with two sons sends one to a university, or if the son is able to go there because he has won a bursary, the Chancellor exempts his father to the tune of about £300 so far as Income Tax is concerned. If the same father sends his second son to be an apprentice, say in an engineering job, and the boy, taking a great interest in his work, becomes a good producer and thereby increases the amount of his earnings, the right hon. Gentleman, who tells us about his desire for production, says, "If you dare to produce more than a given amount I will penalise your father as a consequence of you doing it."
    Colonel Cyril Banks: I am probably one of the few of those present who have been apprentices. I started as an apprentice when I was 13. I am sure that the hon. Gentleman does not wish to mislead the Committee, but I would say that those of us who have been through our apprenticeship realise that in the engineering trade the apprentice of the past paid a premium and learned his job; he was of no effective use to the management. Today the apprentice is doing a job in the workshop as a producer and does not cover the ground and become the craftsman that he did in the past.
    Mr. Lee: I should have thought that the hon. and gallant Gentleman's intervention paraphrased precisely everything that I have been saying, and I look for his support in the remainder of my speech.

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    I was making the point that there is a revolutionary change in what the apprentice is expected to do as compared with what the position was when the present legislation was devised. I should have thought that in the interests of the drive for production, at a time when production is falling, when not sufficient of our young people are going into the manufacturing industries which require apprentices, the right hon. Gentleman, who I know is so concerned, quite seriously and honestly, about these issues, should really look at this matter, because it penalises a parent who puts his boy to serve an apprenticeship in an industry if we are to say, when a boy responds to his training and becomes an efficient producer, that the parent must in consequence lose the child allowance which otherwise he might be able to obtain.
    Colonel Banks: I am sure that the hon. Gentleman does not wish to mislead the Committee, but to go back as far as 1914–18, we had, in the time of my apprenticeship, pupils from the main industries in the country serving their apprenticeship and at the same time being educated at our universities at the expense of the employers.
    The Deputy-Chairman: I suggest that the hon. and gallant Member should make his own speech.
    Mr. Lee: Perhaps the hon. and gallant Gentleman and I can have the argument out afterwards. If he is saying that the apprentice of today does not make as efficient a tradesman as in the past when he and I served our apprenticeship, I would reply that he and I would be rather smug to take that point of view. The whole process has changed, the method has changed and the apprentices today are earning far more than anything he and I managed to achieve even in our most virile days.
    It may well be that the Committee has heard me discuss ad nauseam the next point which I wish to raise. I hope that the Chancellor will again look at the point in respect of the numbers of scientists and technologists we are now producing. I asked him a question a few weeks ago about the ratio to our population of those who were taking science and technology. The answer he gave was that it was one in 2,600, which was an improvement on the previous year,
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    when the figure was one in 3,000. If we take the comparable figures of our chief competitors two years ago, we find that the United States figure was one in 400; that Switzerland was leaving us hopelessly behind; that Western Germany was progressing rapidly, and that the figures for the Soviet Union showed they were leaving us behind.
    9.45 p.m.
    If we look again at the number of scientists and technicians we are producing and who afterwards go into industry, we find the percentage amazingly low. This afternoon the Financial Secretary had a Question to answer from one of my hon. Friends, and he implied that far too many were going into industry. I hope he will not maintain that point of view. It will be a great tragedy if we do not increase the percentage of scientists going into industry. In the United States there is a closer affinity between science and production and as a consequence more scientists remain in industry.
    That being so, I think it essential, not only that we encourage parents to put their boys into industry where apprenticeships must be served, but that the boys should be encouraged to take steps to fit themselves for scientific posts. I believe this Amendment is fax too moderate to do all that needs to be done, but unless the right hon. Gentleman accepts it he will hinder apprentices from going into industry, and will curtail the flow of scientists and technicians into industry, especially into the engineering industry.
    In my opinion, we are now entering a most critical phase. We hope soon to see the end of the war in Korea. If with God's blessing that comes about we must remember that it will be followed by an intensive drive on the part of all the great engineering countries in the world to produce commodities on competitive terms. Already we have intensive competition from Western Germany and Japan. Only the highest possible degree of quality in production and the application of new ideas and scientific inventions can enable us to maintain our position as a great nation.
    That being so, it is anomalous that we should be asking tonight for this discrimination of the worst possible type to be swept away, and should be feeling that

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    the Government are not convinced of the necessity for so doing. I have tried to be objective and to show that this is a most vital issue which cannot possibly await reference to a Royal Commission. If only we can start now to give an added incentive, at a time when production is falling and people are going into the wrong jobs, we may be able to reverse that tendency and to inspire fresh enthusiasm among parents to allow their children to become really efficient craftsmen and technicians.
    In asking the Chancellor to accept this Amendment, I am, I believe, asking for something in which he takes the greatest interest. I cannot understand why he should find it impossible to accept this Amendment. I hope he will be convinced that by accepting our Amendment he will help to provide better technicians for the future.
    Mr. Ede: I should like to assure the Chancellor that we attach the utmost importance to this Amendment. We believe that it raises issues in importance far beyond those raised in the previous Amendments today. We are dealing here with one of the most difficult social and industrial problems that we have to face in this Island. We must face the fact that an Island like ours must depend for its place in the world on the success of its great industries and its mercantile marine. Without those aspects of our commercial and industrial life reaching the highest point of efficiency we cannot in the years that lie ahead hope to maintain anything like the standard that I am sure we all wish to see.
    I know from my happy associations with the Chancellor 10 years ago when, although the country was very unhappy, I think both he and I were very happy in the steps we were then taking to ensure that education should have a far wider concept than it has ever had before, that he realises the importance of giving to what we sometimes call technical education its real position as an education for those people whose stock-in-trade is not merely words.
    It is astonishing that in this great practical country we are apt to think that the man who is the master of words and figures is the really educated man, whereas the man who is skilled in the great applied arts and who maintains us and our standard of living is regarded
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    too often as having a somewhat inferior intellectual equipment. As one who has no practical abilities at all and who has to rely on his grand-nieces and people like that when he has got his motor-boat out to see that the mechanics of the thing run right, I say that I have great admiration for the man who when a piece of machinery goes wrong can at once diagnose what is wrong and put it right without putting everything else wrong.
    The man who, in our great factories and industrial establishments is the care and maintenance man, who has to apply that sort of mental process to all sorts of unexpected happenings in the course of the day is really a very important man in the industrial life of the country. We desire to see that men like that should get adequate recognition when they reach that stage. In the formative stages there should be every inducement to lads and girls so equipped to enter industry with the knowledge that, if they do the job for which, in the jargon that the right hon. Gentleman and I put into the Education Act, their abilities and aptitudes qualify them, they will be regarded as the good citizens that they are—no better and no worse than the people whose aptitudes and abilities follow different lines.
    It amazes me to hear of the wage that a boy or girl leaving school can get in a blind-alley occupation. Anyone who sits at petty sessions or quarter sessions knows that from time to time one gets in front of one lads of 16 or 17 years of age earning—or getting—£7 a week. When the learned counsel defends them his excuse is that they earn so much money that they have lost all sense of its value.
    I am not in favour of underpaying lads of 16 and 17, but what an inducement it is to a lad to go into a blind alley occupation when he can get that sort of money within a few months of entering it, as compared with the time he will have to wait to get anything like that figure if he tries to equip himself as one of the skilled workers, and, particularly, if he is that type of skilled worker, whom we need more and more, who is capable of and willing to accept 'responsibility in the undertaking that he is going to join.
    In my own great industrial constituency and elsewhere, I find that not merely is there criticism of the difficulty of getting

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    apprentices, but of the difficulty of persuading men who are well trained to accept responsibility for some of the positions, just above that of the ordinary skilled worker, which entail great responsibility, but, at the same time, are very essential and must be discharged by men with skilled knowledge. In this way, they can participate in the management of the industry, and, to some extent, form a bridge, which is very often needed, between the management and the practitioner in the workshops.
    These are social and industrial questions that are raised by this Amendment. We were told last year that we must wait for the Report of the Royal Commission. Royal Commissions have their uses, one of which, as I found when I sat on that side of the House, was to provide a ready answer for a Government in distress, but I am quite certain that the right hon. Gentleman does not wish to use this Royal Commission as an excuse for not doing practical things which are demanded both by the economy of the country and the justice of the case.
    This concession for which we ask would place the lad who is getting his position in the country by actual acquaintanceship with his future calling in its practical aspects on the same level in the family as the lad of the same age who is going through a theoretical training in the principles, it may be, even of the same occupation, but of whatever occupation has been selected for that youth in the future of the country, and I suggest that this is a thing that is well worth doing.
    In my own constituency, we have an old-established grammar school. One of its earliest pupils was the late Viscount Runciman, who was there in its very early days. Half the lads who leave that grammar school go into the shipyards and the electrical and marine engineering works of the district, and I think it is a good thing that a school which has its foundation as a grammar school should, in that way, be providing reasonably educated youths to go into the practical side of industry. The other half, of course, go into the professions or into the management side of industry.
    It is surely a most anomalous thing that when two boys are becoming youths, the one who is going into a professional
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    career should get the benefit of this allowance while the other, who is going, possibly, into a calling that will keep him in contact in after life with the other youth, is, during this period, placed in a different position.
    10.0 p.m.
    That seems to me to be an anomaly that cannot be defended and that is prejudicial to a really sound social unity in the country. I am quite sure that if there is one thing we need, it is to assure both management and workmen in all our great industries that they are part of a unity and not two separate sections of a community. I would welcome anything that tends to build up in industry the belief that management and workmen have a common object in getting the utmost efficiency out of the industry in which they are concerned.
    Last year we had the privilege of hearing some speeches from the other side of the Committee in support of this Amendment. The hon. and gallant Member for Angus, South (Captain Duncan) last year—and not for the first time—supported not merely the principle, but the details of this Amendment. I cannot help thinking that this would be probably a far greater incentive for the permanent improvement of our skilled industries than anything else that is at the moment in the Budget, for this would give to the industrial community the belief that the House recognises the importance of getting not merely highly skilled men, but men whose educational equipment would fit them for occupying positions of responsibility.
    The hon. and gallant Member for Pudsey (Colonel Banks) kept up a kind of running commentary on the speech of my hon. Friend. I am bound to say that, like my hon. Friend, I could not understand what there was between them. They were both, I understand, proud of the generation of apprentices of whom they were two outstanding examples. I hear in my own calling from my contemporaries the belief that the modern entrant into the teaching profession is not as good as we were. May I say that I do not believe it. I do not believe that the essential character of the youth of this nation has deteriorated during the 50 or 60 years that separates some of us from our apprenticeships.

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    As my hon. Friend said, we have to face up to the altered social conditions. My recollection of apprentices in the skilled industries in the days of my youth was of their going off with a broomstick at about 11 o'clock in the morning and returning a few minutes later with the broomstick on which were hanging a number of cans of beer which were to be distributed to the workmen. One does not see that today, and a very good job too. That recollection is a reminiscence that is part of the social case for the Amendment.
    I sincerely hope that the right hon. Gentleman, who I know from my own personal contact with him takes the very liveliest interest in this part of our educational and social system, will feel that this is a matter on which he need not wait for the Royal Commission to report. and that at this moment, when our great productive industries have to be re-equipped for the new tasks that lie immediately ahead, we should do this thing to attract to them the brains that they need. It would also ensure that parents who are willing to make the sacrifice which apprenticeship of their youths entails upon them may know that their public spirit does not go unrecognised by this Committee.
    Mr. Maudling: I entirely agree with the right hon. Gentleman as to the great importance of the subject of the Amendment. It is not a new subject. It has been discussed on several occasions before, and the points of view expressed by the mover of it and by the right hon. Gentleman have already been expressed from our benches as well. If we are criticised for not having accepted this Amendment last year, it is only fair to point out that similar Amendments were moved and were declined by the right hon. Gentleman's Government previously. This is therefore a matter in which both sides of the Committee have shown keenness, when out of office, while the other side did not take any action when in office.
    The Committee will be aware that the children's allowance was originally designed for dependent children, and that until 1938 there was no allowance for apprentices. Then an allowance was introduced for the apprenticed child, provided that he was unpaid or received a
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    very trivial sum indeed, amounting to 5s. a week or £13 a year. The distinction was maintained between the student child who was dependent and a child who had set out to earn his living in the world.
    Last year we raised the limit from £13 to £26 because the value of money had considerably changed since 1938. The distinction was still retained between the student child, who is normally dependent upon his parents, and a child who has gone out and made a start at earning his living. That is an argument that can be sustained, but I must say that I have never been very impressed by it. There is a great deal in what has been advanced to show that the validity of the argument has become considerably less since 1938. The mover of the Amendment looked at the matter from the point of view of industry, the need for technologists, and the changing character of the apprenticeship system, in the light of the very keen competition which our industries are having to face from the resurgence of German and Japanese industry.
    The right hon. Gentleman opposite looked at the matter from the slightly different angle of his interest in education, in which he has such great judgment and to which he has contributed so much. It was particularly interesting to hear what he said from his experience of the effect of the blind-alley occupations and the great attraction of them. Obviously all the arguments that have been laid before the Committee have very considerable substance to them.
    However, I must also put to the Com-mitte certain objections on the other side. We heard the usual thing about Royal Commissions, and that one should not shelter behind them. The Committee must recognise that there are great advantages in obtaining the advice of a body of this experience and knowledge and which is considering this particular problem. It would be a very good thing if the Chancellor were able to recast many of these complicated personal allowances all of which to some extent interlock with the advice of the Royal Commission; but that, of course, has not been possible because they have not yet reported.
    When one alters one of these personal allowances there are often considerable indirect consequences. In this case I should like to quote one practical difficulty that

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    would be involved in increasing the sum from £26 to £85. One would have circumstances where an apprentice earned £84 and his father received the allowance, but if the apprentice received £86 his father would lose the allowance. That particular difficulty obviously underlay an Amendment which was put down by the right hon. Gentleman and was not called.
    Therefore, if one raised the sum to £85 one would have pressure for a tapering, for some provision whereby if the apprentice earned £5 or £10 above the limit the parent would lose part and not the whole of the allowance. It would be very difficult in the case of apprentices. Whereas there are relatively few student children with an income of just over £85, there are tens of thousands of apprentice children, and if the tapering principle were introduced and had to be administered by the Revenue, the amount of assessment and re-assessment that would be required would involve the addition of several hundred Inland Revenue officers. That is a consequence which I think the Committee will agree my hon. Friend is perfectly justified in bearing in mind.
    But the arguments put forward in favour of this Amendment carry very great weight, and my right hon. Friend has authorised me to say that if the hon. Member for Newton (Mr. Lee) would be prepared to withdraw the Amendment my right hon. Friend, between now and the Report stage, will give very close consideration to the possibility of bringing forward a suggestion that would meet the hon. Member's point of view. I cannot give any definite undertaking, by reason both of the genuine practical difficulties and of avoiding, if possible, doing something in advance of the Royal Commission which might prejudice the full value of the Commission's report when it is received.
    I ask the hon. Member to withdraw the Amendment, therefore, on the understanding that between now and the Report stage my right hon. Friend will attempt in some way to meet the point which the hon. Member has advanced with such cogency this evening, subject, of course, to the practical difficulties which I have mentioned.
    Mr. James McInnes: The hon. Gentleman has conceded that in 1938 £13 were granted and that
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    last year an additional £13 brought the figure up to £26. But at the time that the £13 were granted the average pocket money was about 5s. a week, whereas in 1952 the average pocket money obviously was 12s. or 14s. a week. Thus the £26 brings one back to 1938. In the case of the youth who is undergoing full-time education, the hon. Gentleman is obviously overlooking the fact that by bursaries, endowments and other monetary considerations his income is considerably increased.
    Mr. Tom Brown: One feels delighted that at last we have extracted from the Government Front Bench a part concession, but I want to support the plea put forward and to show the importance of accepting this Amendment as it stands. I want to support my hon. Friend the Member for Newton (Mr. Lee) and my right hon. Friend the Member for South Shields (Mr. Ede). I put forward the view that this Amendment should be accepted not so much from the point of view of the engineering shop floor but from the point of view of the mining industry.
    It is well known to hon. and right hon. Members that within the last 30 or 40 years there has been an intense mechanisation of the mining industry and that 55 per cent. to 65 per cent. of the industry is now mechanised. We are anxious that a concession should be made to trainees which would attract boys and young men into the mining industry to fit themselves to do a job, not on the shop floor where the machine is made, but at the coal face where the machine breaks down.
    10.15 p.m.
    I was delighted to see the Parliamentary Secretary to the Ministry of Fuel and Power put in an appearance. Today we have difficulty in getting young men to come into that side of the industry simply because they are presented with a limited concession for Income Tax purposes. I think that the feelings and sympathies of the Chancellor are towards assisting young men to become technicians and technologists in industry, in which ever industry they may be employed.
    I want to reinforce the plea that has been made on this side of the Committee that the partial promise that we got from the Economic Secretary tonight will bear full fruit, and that between now and the

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    Report stage we shall have the concession fully conceded in order to sustain the Chancellor's claim that this is an incentive Budget. This would be an incentive to the trainees to come into the industry.
    Mr. Lee: I am grateful to the Economic Secretary for the spirit in which he has met our arguments. I would just point out that we shall put down this Amendment again on the Report stage. We hope that the Chancellor will manage to find some way of meeting us. Having made that plain, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. Houghton: I beg to move, in page 8, line 1, to leave out subsection (2), and to insert:
    (2)In sections two hundred and fourteen, two hundred and fifteen and two hundred and eighteen of the said Act (reliefs for housekeepers and others) for the references to fifty pounds there shall be substituted references to seventy-five pounds.
    (3)In section two hundred and sixteen of the said Act (reliefs to dependent relatives) for the references to fifty pounds, except the reference in subsection (4) (where it does not relate to the amount of the relief) there shall be substituted references to sixty pounds; and for the reference in subsection (1), as amended, to one hundred and thirty-five pounds (which refers to the income limit of the dependent relative) there shall be substituted a reference to one hundred and forty-five pounds.
    Although this looks like an Amendment of some size, the effective point in it is merely to propose to increase the housekeeper allowance from the £60, which is intended to be in the Bill, to £75. The reference to dependent relatives in the proposed subsection (3) is merely to disentangle the two allowances which are linked together in Clause 12 as it stands. The Chancellor is proposing to increase two allowances of a different kind identical in amount to two new equal amounts of £60. We propose to leave the dependent relative amount as the Chancellor leaves it in Clause 12, and we propose an increase only in the housekeeper allowance from £60 to £75.
    Last year we put forward a similar Amendment. The debate is reported in col. 139 of the OFFICIAL REPORT of 19th May, 1952. Last year we proposed to increase the housekeeper allowance to £75, but we had to jump from £50 to
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    £75. This year we have to jump from £60 to £75 because since last year the sympathy for the Amendment expressed in the reply of the Economic Secretary has been translated into a proposal to increase the allowance by £10. So the difference between us is narrowed. It is £10 less this year than it was last year. We are hoping that with a little persistence we might get there either now or next year.
    The question underlying this Amendment is, what is the fiscal value of a housekeeper? When we look back at what previous Chancellors of the Exchequer have made of this question we see that they have been much steadier in fixing the fiscal value of the housekeeper's allowance than they have been in fixing the fiscal value of a wife. The wife's allowance has fluctuated frequently over the last 30 years, whereas the housekeeper's allowance has remained fairly constant. Thirty-five years ago it was £45, which was half the allowance given for a wife. In 1924, it jumped to £60, but the wife's allowance remained the same, at £90.
    In 1931, the housekeeper's allowance dropped to £50, but the wife's allowance also dropped to £50. The housekeeper's allowance has remained at £50 from 1931-32 until this year, when the Chancellor of the Exchequer proposes to increase it to £60. The wife's allowance, which was £90 in 1924, dropped to £50, then went up to £70, then up to £80, then down to £70, then down to £60, then up to £70, then up to £80, and then up to £90.
    We propose that the housekeeper's allowance should be the same proportion of the wife's allowance as it was in 1941–42. If the Financial Secretary asks me why we have chosen the year 1941–42, the answer is that it is the only year when the housekeeper's allowance was five-sixths of the wife's allowance and, since our proposal to raise the housekeeper's allowance to £75 makes it five-sixths of the present wife's allowance, the year 1941–42 seems to be a very convenient one to quote at a precedent.
    What is the relationship, from an Income Tax point of view, between a housekeeper and a wife? There are some things one can do with a wife which one cannot do with a housekeeper. One cannot send a housekeeper out to work,

    589
    nor would she usually be willing to go if one could. No concession is given to a working housekeeper similar to that given to a working wife, because a taxpayer does not get a married man's allowance when he has a housekeeper, although the housekeeper would get no more personal allowances than a wife.
    Another feature about housekeepers is that they are very difficult to get and, since the Act requires a housekeeper to be resident before an allowance is granted— at least, that is the interpretation which the Commissioners of Inland Revenue place upon the Act, and there has been no successful challenge to it yet—the difficulty of getting resident housekeepers is greater still. There is no provision for a child-minder who comes in during the day to look after young children; there is no provision for a woman who may come in first thing in the morning to help to get a man off to work, tidy up and look after the house, spring clean it, make the beds and be ready for the man when he comes home for tea.
    There is no allowance for this service unless the woman—it cannot be a man; not even a woman can have a male housekeeper—is resident. Last year we drew attention to this question of residence, and we might have done so this year if another Amendment on the Order Paper had come before us. I am not raising the question of residence now, but I am stressing the fact that a resident housekeeper is more difficult to get than a non-resident one, and a resident housekeeper is therefore more expensive and has to be looked after with great consideration. She is not only paid money for her services, but she also wants reasonable time off and all the amenities of a modern household. She expects, in these days, to have a television set so that her spare time is as enjoyable as if she were in her own home.
    The Chancellor proposes this year to increase the allowance from £50 to £60, but we do not think he has gone far enough. Who will say that the amount for a housekeeper should be £30 less than the amount for a wife? That is not a matter with which the Royal Commission can deal; it is far too delicate a subject. It requires the long experience, the skill and moral courage of a Chancellor of the Exchequer, who is the only man who can solve a problem like this. The right hon.
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    Gentleman has already shown that he does not require the assistance and advice of the Royal Commission on this matter because he has made a proposal of his own in Clause 12 without waiting to hear what they have to say.
    I am sure the Committee will realise that the position of a widow or widower, especially where there are young children, is one which we must bear in mind in arranging these allowances. I am not suggesting differentiation between the housekeeper allowance in cases where there are children and the allowance in cases where there are no children. I know it can be argued, and is argued in some quarters, that a widower with no children to take care of is lucky to get a housekeeper allowance at all, because from some points of view his position is no different from that of a single man who chooses to have his own household and a housekeeper to run it.
    But where there are children who have lost their mother, and where the father is trying to keep the home going to give the children a proper and happy start in life; where he finds a suitable person—a relative if he can—to come into the house and act as foster mother, that is something we want to encourage instead of seeing, as we have seen, that sort of home broken up, with the father going into lodgings and the children officer of the local county authority having to take care of the children in the end.
    Since we have now reached a period of sympathetic consideration of our Amendments—I hesitate to suggest that we have moved into a period of concession, but we may be very near to it— this may be another of the matters which the Chancellor is prepared to reconsider before Report stage. I believe the cost of the proposed extension would be comparatively small. I have not the figure, although I notice that according to column 141 of the OFFICIAL REPORT of 19th May last year, the Economic Secretary to the Treasury told my hon. Friend the Member for Islington, East (Mr. E. Fletcher) that the cost of granting the concession would be less than my hon. Friend supposed. I do not know what estimate we put upon it but no doubt the Financial Secretary will have some idea of what this concession will cost. May I

    591
    appeal to him to give as sympathetic a response to this proposal as is possible in the circumstances?
    10.30 p.m.
    Mr. Mulley: At this rather late hour I do not wish to detain the Committee more than a few minutes, but I should like to endorse the plea of my hon. Friend the Member for Sowerby (Mr. Houghton) for this concession, and in particular to make some further reference to a problem with which I think all of us are familiar as Members of Parliament, the problem of the family left without a mother and the father facing the twin problem of keeping the family together as a unit and at the same time earning a living.
    I should like to make reference to one aspect of this matter, though no doubt I should be ruled out of order if I developed that aspect of the matter at any length, and that is the closing of nursery schools. The father was able to leave his young family in such schools while he was at work in the day-time, but when they close down he is faced with an added difficulty. In many cases this has led to the breaking up of the family and very often the children are sent to institutions, a consequence deplorable from the point of view of the family and also deplorable from the point of view of the Exchequer. Undoubtedly it is very undesirable for children to be taken out of their family environment, and also it is more costly to maintain them in institutions of this kind rather than as a family.
    This is an incentive Budget, and everything concerned with increasing production should receive favourable consideration. It would be an incentive to production if these fathers were helped in this difficult task. I hope it will be possible for the Financial Secretary to find it possible to accede to this reasonable request, and so assist them.
    Mr. Gaitskell: I should like briefly to support the Amendment. The Government, of course, are proposing to increase the housekeeper's allowance and to some extent to remedy the rather unfavourable position of the housekeeper compared with the wife. My hon. Friend the Member for Sowerby (Mr. Houghton) dealt in a most delicate manner with this rather difficult subject, and he also
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    explained the history of the allowance granted to the housekeeper and the wife, respectively. It is not very satisfactory to have these variations in the proportions which the housekeeper gets compared with the wife. Both political parties must accept some responsibility for that because there have been changes dealing with the wife's allowance without a corresponding change in respect of the housekeeper.
    The Government must have given some consideration to the problem when they were looking into the matter of the housekeeper allowance. It would certainly be interesting to know why they have decided to increase it only to £60 instead of to the £75 figure, which would certainly have brought it nearly to the proportion to which it was until the last two years. I do not think it could be argued that the allowance should be exactly the same for the housekeeper as for the wife. No one would object to a relatively small difference. I feel, however, it should be small, and we hope that the Government will be more forthcoming on this Amendment than they were on the last and concede what my hon. Friend so rightly asks for.
    Mr. Boyd-Carpenter: There is not very much between us on this issue. As has been pointed out, under this very Clause we are accepting the view that some increase in the housekeeper's allowance is justified in present circumstances. My right hon. Friend is proposing in this Clause to increase the allowance from the present £50 to £60, and what this Amendment seeks to do is to add a further £15 and raise it to £75.
    As the right hon. Gentleman indicated, my right hon. Friend gave very careful consideration to this matter when he was deciding what particular adjustments or variations in this allowance he should recommend to this Committee, and I can respond to the right hon. Gentleman's request for me to indicate why it is that we have at this stage thought that an increase of £10 from £50 to £60 is the proper increase.
    This matter is one—I almost hesitate to use the expression in view of the derisive laughter it will elicit—which is directly within the purview of the Royal Commission. I do not altogether share the feelings of the hon. Member for

    593
    Sowerby (Mr. Houghton) that this matter is so delicate—I think that by "delicate" he really meant "indelicate"; people do not use the expression "delicate" when they mean "indelicate"—that the Royal Commission would find themselves in any degree of embarrassment in considering it. The Royal Commission is manned by extremely experienced men of the world.
    Mr. Gaitskell: And women, too.
    Mr. Boyd-Carpenter: Yes; very experienced ladies and gentlemen.
    We felt that, despite that, in the circumstances of the time and in view of the fact that this allowance had not increased since before the war, a moderate increase was justified. We therefore proposed this increase of £10. To go further would, I think, tend to prejudice the relativity of these allowances, which, as the debate has shown, is a somewhat delicate matter, on which opinions can genuinely differ; and I think that before going further we ought to be in possession of the Royal Commission's recommendations. That, in response to the right hon. Gentleman, is the intellectual process by which we arrived at this figure.
    There is one other consideration, which is a somewhat material one. The hon. Member for Sowerby indicated that he thought the cost involved would be small. It depends, as the late Dr. Joad would say, on what one means by "small." The cost would be £1 million, and that is a substantial item. For those reasons, although I willingly agree that this is a matter upon which opinions can differ, I think that this is the right increase. I will fortify that, as those who have spoken before me have done, by comparisons.
    The single person allowance is now 20 per cent. above the pre-war level. The married allowance—the allowance for man and wife—will be 16⅔ above the pre-war level. With my right hon. Friend's proposed change, this allowance which we are discussing will be 20 per cent. above the pre-war level. Hon. Members will see that these allowances are, therefore, being kept very much in line. The real comparison is between pre-war and post-war. We are, therefore, taking the right step in making this moderate increase and then awaiting such indication as the Royal Commission
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    may be able to give us as to how the general relativity of this allowance for, perhaps, some years to come can be worked out.
    Amendment negatived.
    Mr. A. J. Irvine: I beg to move, in page 8, line 11, at the end, to insert:
    (3) In section two hundred and seventeen of the said Act (services of a daughter) for (he reference to twenty-five pounds there shall be substituted a reference to forty pounds.
    The effect of the Amendment would be to entitle a claimant, who is compelled by reason of old age or infirmity to depend upon the services of a daughter resident with and maintained by him or her, to relief on £40 instead of, as at present, on £25. As I understand it, this allowance dates from the Finance Act, 1920, and for 33 years it has remained at the figure of £25.
    It is notable that at that first stage in 1920 the relief allowed for the services of a daughter allowance was the same in amount as that allowed for a dependent relative. When the dependent relative allowance was increased to £50, the services of a daughter allowance remained at the same figure. Now the present Bill again increases the dependent relative allowance, and it provides also for an increase in the housekeeper allowance, but it leaves the services of a daughter allowance still unchanged, so that the daughter is indeed the Cinderella on this occasion, and one hopes that the Chancellor of the Exchequer will play the appropriate role.
    I expect that the Government and hon. Members in all parts of the House will recognise that a family in which a daughter looks after an old and infirm father deserves every consideration. The fact that my family consists of sons does not prevent me from contemplating such cases with admiration and respect. I suggest that the figure selected in 1920 is now, having regard to the change in money values, an inappropriate figure. Although I appreciate that the claimant of this allowance does not have to be a widow or widower I say that the allowance is akin to the housekeeper allowance. I look anxiously in these matters to the hon. Member for Sowerby (Mr. Houghton) for what I hope will be corroboration.

    595
    If I am right it would seem to me that an economic situation which is regarded as justifying an increase of the housekeeper allowance should justify an increase of the daughter's services allowance. This, in my submission, will apply in few cases, but they will be hard cases. We are asking, realistically, for only a small rise. The provision in the 1952 Act appears to me to be tightly and carefully drawn, because the claimant must be compelled to depend on a daughter, the daughter must reside with him and must be maintained. I therefore ask earnestly for sympathetic consideration of this Amendment.
    Mr. Gaitskell: I should like to support this Amendment, and I hope it has a better response than the last one. We must all agree that it is a very anomalous situation that this allowance should have remained unchanged for 30 years when the other allowances have been increased to such a remarkable extent. I hope that on this occasion the Financial Secretary will not fall back on the advice of his hon. Friends on how much a daughter is worth.
    Mr. Boyd-Carpenter: We have given careful consideration to this matter both before and since the hon. Member for Edge Hill (Mr. Irvine) put down his Amendment. There are certain aspects of this allowance with which I do not think I will trouble the Committee at this hour, which make it perhaps not wholly comparable to some which we have been discussing. My right hon. Friend has been considering nevertheless whether, in the light of the adjustments made in the other allowances as well as the trend in the value of money since this allowance was fixed the time is not now ripe for an increase. As to the amount of the increase, I am bound to say that we have concluded that the figure on which the hon. Member for Edge Hill has alighted is the right figure. We have looked at the drafting and I and my advisers have been unable to find any fault in it. In the circumstances, I suggest that we might accept the Amendment.
    Amendment agreed to.
    Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
    Mr. Gaitskell: I do not wish to start a long disquisition on Income Tax, but I want to make sure, before we part with this Clause, what the intentions of the Chancellor of the Exchequer are. If, as I hope is the case, it is intended that we should adjourn after Clause 12, I think we might agree to dispense with a serious discussion. If, on the other hand, the right hon. Gentleman wants to go through the night I would prefer to discuss this Clause before we go to Clause 13 or 14.
    10.45 p.m.
    Mr. R. A. Butler: This veiled indication has at least touched a chord in my heart. I would suggest that we should not go further than Clause 12 tonight. We shall have covered Income Tax in general tonight, and I think that that is sufficient for one day. We shall be taking the Committee stage again next week, and no doubt we shall have our preliminary debates on the initial allowances. After that, I think it will be necessary to make some pretty definite progress.
    We have a good deal of work still before us on the new Clauses, quite apart from the remainder of the Bill. There are many issues that will interest hon. Members in the new Clauses. The sooner we can get to the new Clauses and make progress with them the happier we shall be. We have a very congested Parliamentary programme, and naturally we want to make as much progress as we can. I should like to thank hon. Members for the spirit in which they have so far tackled the business before us. So far as I am concerned, we have made good progress today.
    Mr. Gaitskell: I should certainly like to respond to the Chancellor in the same spirit. I am sure he will agree that there has not been any kind of obstruction on this side of the Committee, but that we have had sensible debates in a sensible manner. I can quite understand that, as Chancellor, he wants to proceed as rapidly as possible. I can see, looking ahead, that we shall need a considerable amount of time to discuss Clause 14. On this side of the Committee we attach a very great deal of importance to the question of the initial allowances. After that, it may be possible perhaps to proceed rather more rapidly. I hope the Committee will agree that it is far better to have proper debates on important

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    matters and to proceed more rapidly with minor issues, than to spread our debates too thinly over the whole Bill.
    Clause, as amended, ordered to stand part of the Bill.
    To report Progress, and ask leave to sit again.—[Mr. R. A. Butler.] Committee report Progress; to sit again Tomorrow.

  ADJOURNMENT
  Resolved, "That this House do now adjourn."—[Sir Cedric Drewe.]
  Adjourned accordingly at Eleven Minutes to Eleven o'Clock.

EDUCATION
  Cardiff
  Cardiff
  Agricultural Exemptions
  Agricultural Exemptions
  Special Schools, Sheffield
  Special Schools, Sheffield
TRADE AND COMMERCE
  International Fair, San Paulo
  International Fair, San Paulo
  Welsh Trade Returns
  Welsh Trade Returns
  New Factory, Huyton Estate
  New Factory, Huyton Estate
  Eastern Europe and China
  Eastern Europe and China
  Film Finance Corporation
  Film Finance Corporation
NATIONAL FINANCE
  Hides (Dollar Purchases)
  Hides (Dollar Purchases)
  Educational Expenditure
  Educational Expenditure
  UNITED STATES CAMP (U.K. CLERICAL OFFICER)
  UNITED STATES CAMP (U.K. CLERICAL OFFICER)
AGRICULTURE
  Land, Glamorgan (Use)
  Land, Glamorgan (Use)
  Marketing Schemes
  Marketing Schemes
  Squirrel Destruction (Pamphlet)
  Squirrel Destruction (Pamphlet)
  Harvest Camps, Lincolnshire
  Harvest Camps, Lincolnshire
  Gypsum Supplies, Lindsey
  Gypsum Supplies, Lindsey
  SEA DEFENCE WORKS, ESSEX
  SEA DEFENCE WORKS, ESSEX
  EAST COAST (FLOOD WARNINGS)
  EAST COAST (FLOOD WARNINGS)
HOME DEPARTMENT
  U.K. Immigrants
  U.K. Immigrants
  Civil Defence Industrial Bulletin
  Civil Defence Industrial Bulletin
  Home Accidents
  Home Accidents
  Fire Service (Continental Tours)
  Fire Service (Continental Tours)
  ENGINEERING WORKERS, ACCRINGTON (UNEMPLOYMENT)
  ENGINEERING WORKERS, ACCRINGTON (UNEMPLOYMENT)
MINISTRY OF HEALTH
  Religious Worship (Hospitals)
  Religious Worship (Hospitals)
  Hospital Management Committees
  Hospital Management Committees
  Chlorophyll Products
  Chlorophyll Products
  Part-time Consultants
  Part-time Consultants
BRITISH ARMY
  Ex-Regular Soldiers (House Purchase)
  Ex-Regular Soldiers (House Purchase)
  Stanford Training Area
  Stanford Training Area
  FERTILISERS
  FERTILISERS
  LONDON TRANSPORT COMMITTEE OF INQUIRY
  LONDON TRANSPORT COMMITTEE OF INQUIRY

Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Earl of Portsmouth—Took the Oath.

LONDON COUNTY COUNCIL (MONEY) BILL
Read 3a, and passed.

HOSPITAL OF ST. MARY MAGDA- LEN (COLCHESTER) CHARITY SCHEME CONFIRMATION BILL
3.5 p.m.
Order of the Day for the Second Reading read.
LORD HAWKE: My Lords, this Charity originated in the reign of Henry I, to provide for the leprous and infirm; it was confiscated by the Crown at the time of Edward VI but revived in the reign of James I of England. The Master of the Charity, which consisted of five almshouses in the City of Colchester, is the rector of one of the parishes there. It has been found increasingly difficult in modern times to find any incumbent prepared to take on that living, where his stipend has to provide for the upkeep of these almshouse as well as his own living. The inmates of the almhouses are, of course, poor persons, but they provide their own board: they have old age pensions or some slight private means, or they can go to the National Assistance Board. The Master is responsible for maintaining the buildings and for certain small statutory obligations to the inmates. In order to make it possible to find incumbents who will accept this living, it has now been decided that there must be a separation of the almshouses and the living. Therefore, a split has been made whereby a certain proportion of the money will go towards the stipend of the incumbent of the ecclesiastical parish of St. Mary Magdalen, and the balance will be available for maintaining these almshouses. I may say that, in preparation for the split, the Church has put the buildings in a state of thoroughly good repair,
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and the money remaining over for the support of this Charity will be something over £200 a year, which the Charity Commissioners think adequate for the purpose.
To summarise, the result of this Bill will be that it will make available a proper standard of incumbent for the Parish of St. Mary Magdalen; the financial status of the inmates of the almshouses will remain as before; and the historical link whereby the incumbent looked after their spiritual welfare will not be broken. For those reasons, I commend the Bill to your Lordships' House.
EARL JOWITT: My Lords, before the noble Lord sits down, can he make this plain? Has the incumbent of this living any other source of income, such as glebe land, endowments, or anything of that sort?
LORD HAWKE: I understand not. The total emoluments were in the neighbourhood of £500 a year, of which, under the new split, approximately £300 goes to the Church side, and £200-odd goes to the almshouse side. I do not want to take up time in moving. There is a considerable field for curiosity over these matters, and in my reply I shall be only too pleased to try to answer any questions. I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Hawke.)
3.12 p.m.
LORD SHEPHERD: My Lords, we take a particular interest in this Bill because its genesis occurred during our term of office. Naturally, the present Government, through the ordinary channels, are responsible for what appears in the Bill, but, notwithstanding the fact that we have not been able to continue with the Bill, we are prepared to give it our support. There are, however, one or two questions of human detail which I should like to put to the noble Lord, and the answers to which, I believe, will enable your Lordships to reach a conclusion more satisfactory to yourselves than might otherwise be the case. The total amount of money held by the trust was in the neighbourhood of £18,000. Of that amount of money £11,000 or a little over is to be transferred to the Ecclesiastical Commissioners and the remainder, amounting to £8,000,

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is to go to the Charity Commissioners. The first question, therefore, is whether the division is a fair one, and whether the sum that is left is ample for the purpose of fulfilling the foundation of the Charity.
The noble Lord has indicated that the income expected to be derived from that share which remains with the Charity will be about £200 a year. As there are five inmates of the almshouses, that is approximately a clear income of£40 a year each. As I understand the noble Lord, however, it is not the intention that the whole of that money shall be devoted to payments to the people in the almshouses; other charges will fall upon that income, and it is upon that that I am now asking him for further information. In the Bill itself it is provided that the cost of repairs, insurances, administration and management expenses shall be met out of that income, but it is also proposed that out of that income of £200 a year, £50 a year shall be earmarked in order to provide a fund out of which major repairs can be carried out at intervals as required. It will therefore be seen that a considerable portion of that £200 is already earmarked. I should like to know what payments have Actually been made to the alms people during the past few years, and whether it is proposed to continue payments at the same rate.
I should also like to know, if possible, something about the ages of these people. If they are over sixty-five or seventy years of age, presumably they will be entitled to an old age pension. But if they are younger than that—and they seem to be persons of mixed ages—then these pensions will not be due to them. My other question, therefore, is this: Are there any other funds from other sources which can be added to those made available by this trust? Finally, will the noble Lord explain to us what the original purposes of the Charity were—that is to say, whether full support was given originally to these people, or only partial support?
3.17 p.m.
EARL JOWITT: My Lords, before the noble Lord, Lord Hawke, replies, I should like to supplement the remarks of my noble friend. I believe that consideration of this scheme was started during my time in office, although I have no definite recollection of it. Traditionally, however, this House has been very careful in
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matters of this sort, and ought not to shirk its responsibility by saying that other people are looking into it. I am sure the noble Lord will agree. I should like to know what the stipend available to this clergyman is. All of us who have tried to fill livings know that one of the tragic things to-day is that we have to endeavour to get people for such very little money that they can hardly keep body and soul together in decency. Of course, it is quite impossible to expect to get a good man unless you give him some reasonable sort of emolument. I quite understand that aspect of the matter.
On the other hand, this seems to me to be a case extraordinarily like the celebrated case—I have not looked up my reference—of the Reverend Septimus Harding and. I think, Mr. John Bold. It is almost precisely parallel. I am referring, of course, to the story of The Warden by Anthony Trollope. In this case a sum of money is, most unfortunately, not definitely allocated, but is to be expended between, on the one hand, a clergyman and, on the other, five old pensioners. I fully understand the desirability of splitting up that fund so that so much of it shall be available for the one and so much for the other. To avoid misunderstandings, misapprehensions and trouble in the future, I think it is probably wise that we should split it up.
Then I think arises the question: How ought it to be split up? As I follow it, it is not being split on what is called a "fifty-fifty" basis; it is being split up so that the clergyman has the larger proportion of the sum available and the five inmates the smaller proportion. I am far from saying that that is wrong: looking at all the circumstances, it may be entirely right. But feel that this House ought to know, if not now then at a later stage of the Bill, exactly what are the circumstances which justify a division which, I think, is roughly (the noble Lord will correct me, if I am wrong) four-sevenths to the clergyman and three-sevenths to the five pensioners between them. I do not want it to be thought that I am suggesting that that is inequitable, or that there is the slightest impropriety in it. All I am saying is that if we as a House authorise such a Bill as this, we ought to have all the facts quite plainly set before us, so that we can be

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completely satisfied. The responsibility is our own and nobody else's, and we ought to be satisfied that justice is being done. I have no doubt that if we are given the full facts by the noble Lord—he has probably gone into them, and I do not think for a moment that he would have supported this Bill unless he had himself been satisfied—we shall be satisfied. But there remains a good deal that we do not know, and, as I say, we ought to be given full information so that we can be quite satisfied that what we are doing is fair and reasonable.
3.21 p.m.
LORD HAWKE: My Lords, I am glad to see that the procedure I suggested has found favour, that I should leave it to my reply to furnish any details which noble Lords might desire. I will first deal with the question of the split, raised by the noble and learned Earl, Lord Jowitt. He is quite right: this scheme did come up in his time; and it is the Lord Chancellor who has to find the incumbent for this living. It was because he found considerable difficulty in doing so that he set in train the proceedings that led up to this scheme. The Charity is bound only to provide the lodging for these five single, industrious persons: no age limit is specified, and there is no stipulation as to sex. I understand that in fact they are ladies, and I assume that they are elderly; but I have not made specific inquiries about their ages. Perhaps before the next stage, if the noble and learned Earl wishes me to do so, I will ascertain this. But, as I say, the trust is historically bound only to provide for these good persons 1s. per week each, plus an allowance of faggots—which nowadays is translated into terms of coal—so that there is not a very large call upon the funds. The Charity Commissioners are satisfied that the amount left to their side, which, incidentally, is approximately £220 a year, of which the first £50 is earmarked for the special repairs fund, will be sufficient to fulfil all the obligations which the trust enjoins upon them.
LORD SHEPHERD: The noble Lord said that the trustees are bound legally only to pay 1s. a week, plus a number of faggots. Can he tell us what they have actually been paying to the pensioners?
LORD HAWKE: I have always assumed that they have paid what they were bound to pay, as laid down in the trust deed.
EARL JOWITT: And nothing more.
LORD HAWKE: Moreover, of course, they have had to keep these almshouses in repair; that has been the heaviest charge. As I have said, that responsibility has been looked after by having the buildings brought fully up to date, and by earmarking for repairs this £50 a year. Having regard to that, the Commissioners are satisfied that the balance available is fully sufficient to cover their obligations in the matter. As to the stipend, on the other side, as the noble Earl knows, there are various methods by which stipends in the Church of England are to-day made up to something like a living wage. I believe that in the majority of dioceses £550 a year is the figure aimed at. I have not the least doubt that this stipend will have to be made up to that level by the Church Commissioners or the parish in due course before an incumbent is appointed.
As regards the original Charter of the Charity, this ordained that the foundation should consist of a Master and five poor persons, single or unmarried, and that the Master should have the cure of the souls of the parishioners; that these should be chosen by the Master, placed in the hospital for life, and paid 52s. a year; and that the Lord Chancellor should be the Visitor of the hospital and appoint the Master. That, I believe, answers Lord Shepherd's point. I think I have dealt with all the questions except that of the ages. I must confess that I have made no precise inquiries about the ages of the ladies: perhaps that can be ascertained before the next stage.
LORD SHEPHERD: May I ask the noble Lord a question before he finally sits down? Referring again to the amount of 1s. a week each that must legally be paid, will the noble Lord be good enough to cause an inquiry to be made as to what has been actually paid during the past few years to these people? I rather suspect that it is slightly more than 1s. per week.
LORD HAWKE: I will certainly do that.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

HOSPITAL OF THE BLESSED TRINITY (GUILDFORD) CHARITY SCHEME CONFIRMATION BILL
3.28 p.m.
Order of the Day for the Second Reading read.
LORD HAWKE: My Lords, this is another scheme, put forward for slightly different reasons. In 1629, George Abbot, Archbishop of Canterbury, established the Hospital of the Blessed Trinity in Guildford. It was originally intended for between fourteen and twenty men and women—though now, for one reason or another, the numbers have expanded to twenty-two. The old Charter lays down that the Master shall be a single man of fifty years of age, born or having lived twenty years in Guildford. Under the new scheme, the qualification of being a single man is removed, and that is one of the prime reasons for the Bill, for it has been found much easier to provide a Master if he could be a married man.
At the same time, opportunity is being taken for a general tidying up of some of the other ancient provisions. The Governors, for instance, have been increased in number from nine to fourteen. They consisted formerly of the Mayor, three rectors, the Master of the Grammar School, four members of the Guildford Corporation, who were to be the two senior aldermen, provided that they belonged to the Church of England, and the two senior councillors, also if they were of the Church of England. In practice it was sometimes found difficult to decide who fulfilled that qualification, so the new Governors are the Mayor, three rectors, the Master of the Grammar School, four men or women appointed by the Guildford Corporation—not necessarily of themselves—and five co-opted members. It is intended in the first instance that of these five co-opted members, four shall be the existing representatives of the Guildford Corporation. The choosing of the alms persons was originally clone alternately by the Mayor of Guildford and by the Master; now it is to be done by the Board of Governors. The new scheme generally brings the whole provisions up to date, and makes it possible for the Governors to provide attendants in case of illness or permanent infirmity, which of course is a great improvement. That is a brief sketch of the objects of this scheme. If
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there is any further information that noble Lords require, I will endeavour to answer any points that may be raised when I exercised my right of reply. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Hawke.)
LORD SHEPHERD: My Lords, we support the Second Reading of this Bill. As there is, apparently, to be no transfer of funds and no question of reduction or discontinuance of a small payment, we do not feel it necessary to continue the discussion upon this Bill.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

ACCOMMODATION AGENCIES BILL
3.32 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Viscount Simon.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL OF DROGHEDA in the Chair]
Clause 1:
Illegal commissions and advertisements
1.—(1) Subject to the provisions of this section, any person who, during the continuance in force of this Act,—

(b) demands or accepts payment of any sum of money in consideration of supplying, or undertaking to supply, to any person addresses or other particulars of houses to let; or

shall be guilty of an offence.
(3) A person being a solicitor shall not be guilty of an offence under this section by reason of his demanding or accepting payment of any remuneration in respect of business done by him as such.
LORD SILKIN LORD SILKIN moved, in subsection (1) (b), after "let" to insert:
"unless in respect of each such house he has been authorised in writing by the owner or his agent to effect a letting,"
The noble Lord said: I beg to move the first Amendment standing in my name. On the occasion of the Second Reading, everyone who spoke felt that this was a

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very worthy Bill and that there was no quarrel with its principle, but I did indicate in my speech that it was necessary to give it somewhat close examination because it created a number of new offences. Whenever Parliament creates a new offence it is a matter which should receive the most careful consideration, particularly when the Bill is promoted by a private Member. The evil which this Bill is directed against is that certain persons have set themselves up as estate agents and have fraudulently obtained money from persons who are desirous of obtaining a house to let. They have done this either by making a charge for registration or by making a charge for a list of properties available for letting. In both cases, the essence of the thing was that the agent had not genuine accommodation to let or was not authorised by the owner of the house to effect the letting.
I will not trouble the Committee by quoting from the speech of the noble and learned Viscount in opening this matter, but throughout that speech he implied—indeed, he went further than merely to imply; he actually stated—that persons were obtaining money by fraudulent means, and he gave us some indication of the extent of the evil. For instance, he told us that something like £100,000 had been obtained by fraudulent methods, that there had been seven prosecutions and that there were to-day some sixteen agencies still operating out of an original number of forty in Greater London. I imagine that this particular evil is largely concentrated in London. It is not a major matter but, as we are all agreed, it is a cruel fraud on people of small means who are seeking accommodation and who are not able to afford even the small charge which is usually made for registration.
I have examined Clause 1 in the light of that background to see whether the evil that we want to remedy is met, and whether the proposals go beyond what is necessary for effecting the remedy. I am of opinion that in certain respects we are going considerably beyond what is necessary in order to remedy this evil, and it is for that reason that I have put down this Amendment. Under Clause 1 (1) (b), it is an offence to demand or accept
"payment of any sum of money in consideration of supplying, or undertaking to supply, to any person addresses or other particulars of houses to let."
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That, in itself, does not seem to me to be an evil thing to do at all. Why should not a person make a charge for supplying names and addresses of properties that are to let? The evil arises if, as the noble and learned Viscount pointed out on the Second Reading, the person who supplies the list has no authority to supply it; he has not been authorised by the owner of the property to effect the letting or, in some cases, the properties may not even exist or may not be available for letting. In other words, a demand is made for payment for something which the agent is not in a position to give. I have drawn my Amendment so as to limit it to cases where a demand for payment is made in respect of properties which it is not in the power of the agent to let. I provide that, in effect, it shall not be an offence if the agent has been authorised in writing by the owner or his agent to effect the letting.
In those cases, I see no reason why an agent should not make a charge for providing a list of bona fide lettings which the owner has authorised. I know it is not the normal course of procedure. In the ordinary way, you go to an agent and he gives you a list of properties, if he has them in good faith, and if you are seeking to rent a house you do not pay the agent any fee; it is the owner of the property who pays the fee or the commission to the agent. But that is not the invariable procedure. It often happens that the owner of a property will say: "I am prepared to effect this letting but I am not prepared to pay the commission. The prospective tenant must pay the commission." That is a perfectly lawful thing to do and there is no reason why that sort of arrangement should not be allowed to continue as lawful in the future.
My Amendment provides that, where an agent supplies in good faith a list of premises, in regard to which he has been properly authorised by the owners to effect a letting, and makes a charge for providing that list, it shall not be deemed an offence. That does not cut against the principle of the Bill at all. It will still be an offence to charge for providing a list where the agent has no authority to effect a letting, and will still be an offence under Clause 1 (1) (a) to demand or accept payment of a registration fee,

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merely for registering. In those circumstances, I hope that we shall not deliberately make this Bill wider than is necessary and that we shall not make it an offence for people to conduct their businesses in a way which is perfectly lawful and perfectly honourable, and in a way which is quite commonly carried out at the present time. For these reasons I beg to move the Amendment.
Amendment moved—
Page 1, line 14, after ("let") insert the said words.—(Lord Silkin.)
3.41 p.m.
VISCOUNT SIMON: I have considered the Amendment which the noble Lord, Lord Silkin, has put down. I have discussed it with my advisers and with those who are promoting this Bill, and I have come to the conclusion that I must ask the Committee not to accept this Amendment. The noble Lord has, of course, stated quite accurately the provision: in the Bill and the normal practice of reputable house agents. He is proposing to add these words at the end of paragraph (b). What does paragraph (b) do? It seeks to make it illegal to demand or accept money from a would-be tenant for supplying addresses or particulars of houses or flats to let. The noble Lord quite correctly said that the accepted practice of reputable house agents is to look to the lessor, to the owner, for their remuneration. His Amendment refers to the owner, and speaks of the owner as having authorised the agent in writing (which cannot be very common) to effect a letting. I cannot see that there is any reason at all for proposing this exemption.
Let us take the case of the owner of a whole block of flats—500 of them. What is assumed by this Amendment is that the owner of these 500 flats should, in writing, authorise his agent to effect a letting, to find a tenant. But is that any reason in the world why the agent should say to the would-be tenant who is eagerly seeking a flat, "I have on my books a lot of flats which would suit you and I am authorised to find a tenant, but I will not give you the list unless you pay me something"? That seems to be a very unusual and, I should have thought, a most discreditable claim. The agent looks to the owner to remunerate him; he does not look to the man who applies for a flat and demand payment from him
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before he will give him the list. Yet that is the situation which is contemplated in this Amendment.
The accepted practice among reputable house agents—I emphasise the word "reputable"—is to look to the owner for remuneration, and there is nothing in this Bill which in the least interferes with that. The Bill merely says that it will become an offence for an agent, whether or not authorised by the owner to look for possible tenants, to say to the applicant. "I have a long list of flats which I think will suit you; pay me or else I will no give you the list." That is the justification for resisting this Amendment. I may point out that paragraph (b) in the Bill has been considered by very responsible bodies of house agents, and they approve of the paragraph as it stands. They do not ask that this exception should be inserted, and I cannot see any ground why it should be inserted. If t is inserted it will go far to destroy the effect of this part of the Bill.
Consider this practical difficulty. The owner of some flats may very well put the letting of them in the hands of more than one agent—I should think in many cases anybody who has a house which he wants to let does put the letting of the house in the hands of more than one agent. Is every one of these agents to be entitled to demand payment from a person who is seeking a house, before ho gives particulars of the house? The effect of the Amendment would be to permit these dishonourable exactions, which are due to nothing except the shortage of accommodation and the great desire of many people to find somewhere to live, to be demanded over and over again. When the poor person for whom the noble Lord very properly expressed sympathy seeks the accommodation which he needs, the effect of the Amendment would be to impose upon him the risk of being required to pay to the agent, over and over again, what lie demands for supplying the addresses and particulars of flats, not one of which may be in the least suitable for his requirements. In many cases the flat will already have been let by another aunt, though the other agents employed may riot know it.
I am sorry, but I cannot think that if this Amendment is understood and its effect appreciated, the Committee will be prepared to make this change in the Bill,

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which, as it stands, is accepted by all reputable house agents as a very proper provision, and one which they heartily welcome. For those reasons I regret that I cannot indicate any willingness to accept the Amendment, and I hope that the Committee will refuse to do so. As the noble Lord has said, this Bill is the effort of a private Member in another place, but it is a Bill which has been surveyed and considered by the Government Department principally concerned, and the Committee may hear from the Government Front Bench whether this Amendment of the noble Lord appeals to them. If it does not, then I hope the Committee will without hesitation reject it.
LORD MANCROFT: This, of course, is a private Member's Bill, and the Committee will very properly look to the sponsor, my noble and learned friend Lord Simon, for ultimate advice as to what decision should be taken. In view of the fact that upon the Second Reading I intimated that Her Majesty's Government were in favour of the proposals contained in it, however, I feel that your Lordships would wish me now to indicate what views, if any, Her Majesty's Government hold upon this particular Amendment. I will not weary your Lordships by repeating any of the arguments which the noble and learned Viscount, Lord Simon, so cogently advanced. I will content myself by saying that, in the opinion of my right honourable friend, the inclusion of this Amendment standing in the name of the noble Lord, Lord Silkin, would not improve the Bill.
LORD SILKIN: I do not propose to press this Amendment, but the noble and learned Viscount did not really deal with the question as to why this charging of a fee should be made an offence. I did not pretend that it was the normal course for an agent to charge a fee for providing lists of addresses. I did indicate that we ought to be extremely careful before we increased the number of offences, and the noble and learned Viscount has spoken as strongly as anyone in this Committee on that very subject. Merely to do something which is unusual is not an offence, and I see nothing particularly reprehensible in making it a condition of going to the
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trouble of supplying addresses—genuine addresses—of places that are available for letting, that a person should be paid for it. I think the noble and learned Viscount was a little fanciful in imagining that a large number of agents will have large numbers of properties available for letting and that the unfortunate would-be tenant will go round paying all these agents for exactly the same addresses. If that were the case, I do not think there would be very much need for the Bill at all. It is because of the shortage of accommodation that the need for the Bill arises. Having regard to the views of Her Majesty's Government on this Amendment, however, I do not propose to press it, and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
3.53 p.m.
LORD SILKIN LORD SILKIN moved to omit subsection (3). The noble Lord said: I beg to move the second Amendment which stands in my name. It refers to the provision in Clause 1 of the Bill which exempts a solicitor from the penalties that can be imposed on ordinary people. Subsection (3) of Clause 1 provides that:
"A person being a solicitor shall not be guilty of an offence under this section by reason of his demanding or accepting payment of any remuneration in respect of business done by him as such."
I take that to mean that if a solicitor does any of the things set out in paragraphs (a), (b) and (c) of subsection (1) he is not guilty of an offence under this Bill. On the occasion of the Second Reading, I asked why there was this special exemption for a solicitor. Why exempt a solicitor who demands or accepts payment of any sum of money in consideration of supplying or undertaking to supply addresses of property to let even if (I say this in view of the decision on the last Amendment) they are not genuine addresses, or he has not been instructed? Why should he be exempted? And if a solicitor is to be exempted, why not other people? Indeed, this Bill applies to any person with the exception of a solicitor. The purpose of moving this Amendment is to find out why this particular profession—of which, I must admit, I am a member—should be favoured in this way. I know that this provision was not in the Bill originally, and I believe that some representation

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was made by Scottish solicitors for a provision of this kind. As I understand it, no representation was made by English solicitors. I do not think they are particularly interested in being exempted. But beyond the fact that representations ware made by Scottish solicitors. I no not understand why solicitors should be so favoured under this Bill. I should be very glad to have an explanation from the noble and learned Viscount. I beg to move.
Amendment moved—
Page 2, leave out lines 5 to 8 inclusive.—(Lord Silkin.)
VISCOUNT SIMON: The noble Lord has raised this question, if I may be allowed to say so, very reasonably, and he has put to the Committee the considerations which moved him in proposing to leave out subsection (3) of Clause 1. As he says, subsection (3) was not in the Bill when it received a Second Reading in another place. It was inserted in Standing Committee there, and the reason for its insertion was that which the noble Lord has just indicated. The Law Society of Scotland—I do not know whether one can regard it as the counterpart of the organisation which we know as the Law Society here—asked for the subsection to be inserted in the Bill because they feared that otherwise the Bill might interfere with one of the legitimate professional activities of Scottish solicitors. Apparently, in Scotland, at any rate, solicitors do act to secure the tenancy of a house. It is a difference between Scottish practice and English practice, I dare say; but that is the fact, and the members of the Law Society of Scotland were, therefore, anxious to secure that what in their country is a quite legitimate professional occupation should not be brought into question by the language of this Bill.
The noble Lord, very naturally (I am disposed to admit. that asked it myself when I saw the subsection) asked the question: If you make this provision for solicitors why should you not equally make provision for other professional sons—barristers perhaps—who might be concerned in letting the property of owners who employ them? The answer is that the members of those other professions do not regard it as any part of their professional business to secure tenancies for houses. It is conceivable, I suppose,
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that such a situation might arise with an English solicitor, a man acting, perhaps, for executors wishing to find a tenant for a house with which they had to deal, who might, in the course of dealing with the testator's property, find and put forward someone who wanted to take the house. But that is a very doubtful instance, I should think. The House of Commons came to the conclusion that it was right to put in subsection (3) really to quieten people's anxieties. I myself do not believe that makes any real difference whether the words remain in or are taken out. I think the effect is probably the same, because the Scottish solicitors who are engaged in this letting business do not demand or accept payment of a sum of money from an individual who comes to them and asks for a list of property to let. But that is the justification. Therefore, it is not difficult to see why subsection (3) is put in. The Law Society in Scotland asked that the position of members of the profession in Scotland should be made quite clear, and I suppose that we should be willing to give them that assurance in the Bill.
I think it is a sufficient answer to the noble Lord, who has put his point very reasonably (for, as I say, I shared his query when I first saw it), to say that this is simply a protective clause to calm the possible anxieties of respectable and. eminent gentlemen who feel that the question might be raised as to whether what is part of their ordinary practice was an offence under the Bill. It is not intended that it should be an offence: they do not have to do what is mentioned in subsection (1). However, it is right that Parliament should include in the Bill a subsection which removes anxieties, even though I confess that I think they are rather fanciful. In the circumstances, I could not suggest that the House should accept this Amendment.
LORD MANCROFT: I regret to say that I am unable to whip up any tumultous excitement this way or that about this Amendment. Looking at it generally, the advice I would give your Lordships is that the Bill will probably be better without Lord Silkin's Amendment.
LORD SILKIN: The noble and learned Viscount is not enthusiastically in favour of the retention of this provision, and the noble Lord, Lord Mancroft, gave no reason at all why it should be retained.

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I am afraid that I remain unconvinced. I feel that the Bill would be better without subsection (3). As the Bill stands, it appears that no one may commit the offences under subsection (1) except solicitors. I am sure that that is not the intention, but that is how it strikes me, on reading it. I suggest that the noble and learned Viscount should think about this again: there is still a Report stage and Third Reading. Possibly he will have second thoughts and agree that the Bill would be better without subsection (3). I will not press the matter, nor will I ask him to give any undertaking; but if he cannot remove this provision I hope that between now and the next stage he may think of better reasons for retaining it than we have just heard. I beg leave to withdraw the Amendment.
VISCOUNT SIMON: I am quite willing to respond to that appeal. It is not an unreasonable request to make. Certainly one does not want to pass a Bill which could be understood to mean that these are offences which no one must commit except solicitors. I recall the passage in The Water Babies, where one of the rules which the madman in that admirable book used to observe was that not more than three Westminster boys should be shot in any one day lest black game should become scarce. And of course we wish to make the same rules for solicitors as for anybody else. Whilst I will certainly look at this point again with my honourable friend who is responsible for the Bill in another place, I do not think it is likely that it will be found possible to omit subsection (3). I expect that what has been said here to-day will produce another message from Scotland, and perhaps from the Scottish Office, which will inform us that they think it important to keep this provision in the Bill.
Amendment, by leave, withdrawn.
On Question, Whether Clause 1 shall stand part of the Bill?
EARL JOWITT: May I take this opportunity of mentioning one other matter to the noble and learned Viscount? I do not want an answer now, but I wish to give him an opportunity of considering it. It occurs to me that subsection (1) (c) is a little too wide. In paragraph (c) we are not dealing with any sum of money but with the issuing of an
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advertisement of a house being to let without the authority of the owner of the house. Obviously, we do not want to catch within the ambit of this clause highly respectable firms. It sometimes happens that eminent firms send round to their clients a list of houses they offer to let. It may be, perhaps owing to a mistake, or because one of the houses has been disposed of, that one of the houses is no longer available. I myself have had these lists, and I expect many noble Lords have had them, and I have on occasion found, when inquiring about a particular house, that there has been a mistake and that it is not, in fact, available. Obviously, we do not want that to come within the ambit of a criminal offence, as I am sure the noble and learned Viscount will agree; and although no judge would treat it as such, it is desirable that we should make the position clear in the Bill. I wonder whether the noble and learned Viscount would consider whether some such words as "without reasonable excuse" would not be an improvement to that paragraph. Such words would avoid a result which he will agree would be the last result he would want to achieve, and which would be quite ridiculous. If it were a mere clerical error, then an eminently respectable firm might find themselves unwittingly committing a criminal offence. I should be glad if the noble Viscount will look at this to see whether he can devise some form of words—I have not one in mind—if he thinks there is anything in my point, to meet it.
VISCOUNT SIMON: I am obliged to the noble and learned Earl. I see his point. None of us wants to land an eminently respectable firm in an accusation of crime when there is an explanation that there has just been a mistake. I will certainly look at this matter, and perhaps I might have an opportunity of asking the noble Earl what he thinks. His suggestion is that when we come to paragraph (c) we might consider inserting, perhaps in the beginning of the paragraph the words, "without reasonable excuse, "or some words of that kind. It is a legitimate point. I am greatly obliged to the noble Earl. I will have it looked at.
Clause 1 agreed to.
Remaining clause agreed to.
Bill reported without amendment.
House resumed.

KENYA
4.10 p.m.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE COLONIES (THE EARL OF MUNSTER): My Lords, may I interrupt the proceedings for a few moments in order to give the House a reply which the Colonial Secretary is making in another place to a Question which has been asked of him this afternoon in relation to Kenya. I should make it clear that when I use the word "I" in the course of the statement it is, of course, the Secretary of State speaking. The statement is as follows:
"The situation in Kenya has greatly changed since I last reported to the House. The favourable features outweigh the unfavourable. The latest advices which I have received from the Governor show that the tendencies which I observed when I was there are still maintained. First, the flood of confessions which began a few weeks ago has continued. Increasing numbers of Kikuyu are coming down upon the side of the Government and are expressing their confidence in it. Secondly, the flow of information from the Kikuyu to the police has greatly increased.
"Thirdly, the Kikuyu Home Guard is building up rapidly and in some districts, notably in Nyeri, Fort Hall and Kiambu, the necessary numbers have already volunteered. In these districts the Government of Kenya do not Intend to ask for further recruits but rather to concentrate upon training. The House will remember that Colonel Morecambe, lately in command of he Suffolks, who had a long experience in Malaya, was appointed on May 14 to the General Staff in Kenya with special responsibilities for the Home Guard. Lastly, the Mau Mau movement has not spread—significantly—into other tribes although some bad characters from Nairobi have been creating trouble on the fringes of the Meru and Embu country. In the Rift Valley Province the improvement in the situation is maintained and activities by the gangs are only on a small scale.
"Such are the favourable features. The unfavourable are that the movement of between 50,000 and 60,000 Kikuyu from farms hack into the
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Reserves has swollen the size of the gangs in the fringes of the forests. This is not a disadvantage where they can be engaged by police and troops, but although they have not got many firearms their increased size does increase the danger both to the Home Guard and to the loyal population, until we can root them out. Again, this emphasises the need for improving the training and equipment of the Home Guard to which I have referred. This is being carried out with great energy.
"I wish to make clear the extent to which this is a struggle within the Kikuyu tribe itself between the loyal forces on the side of peace and order and the forces of murder, arson and savagery. This is shown by the fact that since the Emergency began, 411 Africans have been. killed by the Mau Mau, seventeen Europeans and four Asians. This gives the lie on the one hand to those who claim that this is a struggle between black and white, and on the other to those who would have us believe that the Kikuyu tribe as a whole is ranged against the Government.
"Many attacks have been made against the Kikuyu Home Guard. Nevertheless they lave resisted there with great steadfastness and frequent success, and I take this opportunity of paying the tribute due to brave men. Upon the strong request of the Asian Community, conscription for Asians has been introduced. I told the Press in Nairobi when I left that I regard the present as a phase of decision and the appointment of General Erskine to be in charge of the operations against the Mau Mau is to bring the Emergency to an end as quickly as possible.
"Turning to political events, the Kenya African Union has been proscribed. Many members of the Kenya African Union are, of course, loyal citizens but it had been found in the course of the Kenyatta trial that the Kenya African Union was being used as a cover for the organisation of Mau Mau. As an illustration, two of the most wanted terrorists in Kenya, Dedan Kimathi and Stanley Mathenge are both Kenya African Union members. Kimathi was Secretary of the Rumuruti Thomson's Falls Branch and Mathenge a member of Nyeri Branch.

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There can be no doubt that the subversive Kikuyu Central Association, which was proscribed in 1939, infiltrated into the Kenya African Union shortly after its establishment, and by 1947 had dominated its members and corrupted its purposes. More recently the detention of Odede, who had become the President of the Kenya African Union, was necessary because he was implicated in trying to organise Mau Mau in the Nyanza Province.
"It is not, of course, our wish to prevent the expression of legitimate political opinion by Africans. We must be sure, however, that ostensibly political bodies are not used as instruments for spreading disorder and terror by a small part of one tribe. The best course is, I think, to build on those local associations which have shown that they can be trusted to pursue the interests of their people by legitimate means. The Kenya Government will do all that it can to help along these lines.
"I discussed the matter of public meetings with the Governor while I was in Kenya and we agreed upon a statement which he has now issued. Here it is:—
'In order to allay any misunderstanding that may exist, the Government wishes to make clear its attitude on holding of meetings by African members of the Legislative Council. The Government will welcome the calling of meetings by African members of the Legislative Council to address their constituents in support of law and order.
'The same applies to meetings addressed by other Africans who are staunch supporters of law and order. On account of security reasons, it will be necessary for those arranging meetings to obtain the consent of the District Commissioner and the police.'
"I wish now to refer to the speeding up of the processes of justice. This will be done within the framework of British law by emergency assizes and by the creation of a number of supernumary judges of the High Court. Accused prisoners will be brought directly before the High Court without any hearing before a magistrates' court.
"Lastly, to turn for a moment to future measures for economic and social progress. The Government have a number of schemes in an advanced
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state of preparation and, upon my advice, they intend to announce them one by one when they are ready to be put into force. The time has passed for general assurances and we must show that we are now ready to act.
"Finally, a Deputy Governor has been appointed. He will be able to assist the Administration particularly in regard to reconstruction. He will also take some of the load off the shoulders of the Governor, who will thus have more time to tour the country. Where he has been able to do so he has been received with acclamation. The response has been encouraging and has given evidence of the way in which he can lead, guide and inspire public opinion, particularly African. These visits have shown the population that he is with them, and they have shown that they are with him.
"To sum up, the position in Kenya is still one of danger, but it is improving. The population is coming over to our side in large numbers, the Home Guard is building up, the schemes for long-term reconstruction are well advanced. Mau Mau has not spread significantly. The great mass of the population are loyal and in peace. I shall report to the House from time to time on the progress made. While we must continue to watch the situation with anxiety, and must be prepared to face some setbacks, we can regard the outcome with complete confidence."
4.19 p.m.
THE EARL OF LISTOWEL: My Lords, I am sure we are all grateful to the noble Earl, Lord Munster, for his full and reassuring statement about the position in Kenya. We shall need time to consider this statement before we can decide whether we wish to ask the Government for an opportunity to debate the matter before the Summer Recess. I should like to offer two comments about matters in the statement, which would certainly figure in any debate that might take place. We welcome the intensification of the anti-Mau Mau campaign, and particularly the reorganisation of the police and military under a unified command. At the same time, I must express certain doubt—it is no more than a doubt—about the desirability or efficacy of proscribing the Kenya African Union, which is

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the largest organisation for the expression on the part of Africans of constitutional opposition to the Government policy.
The other matter which we consider of great importance and which was scarcely mentioned in the noble Earl's statement is the question of promoting measures of social reform and reconstruction simultaneously with the repression of Mau Mau in order to remove the causes of this subversive movement.
4.20 p.m.
VISCOUNT STANSGATE: My Lords, we are very grateful to the Leader of the House for having this statement made, and to the noble Earl for making it. I welcome it, because it makes it unnecessary to put questions on the Paper which might appear to be, or be represented as being, an effort to impede the Government's chosen policy. At the same time, there are one or two questions which I should like to ask the noble Earl concerning his statement. The first is, did anything come of Mr. Blundell's suggestion that the land of delinquent Kikuyus should be confiscated? That was made about two months ago and, I understand, was being considered. The second question I should like to ask is, what has been decided about the use of aircraft against offenders? The first time that was mentioned a Government statement was put out to say—I have the words here, but I think this is right—that it was a rumour spread by the Mau Mau. The next time the upper reaches of the mountains were proscribed, and it was announced that they might be bombed. The third time they were bombed. General Erskine has now given a Press interview in which he said that he is considering carefully the use of aircraft against these people. I believe the public would wish to have clear information on that point. The third question I should like to ask the noble Earl is on the point mentioned by my noble friend Lord Listowel—namely, are the Government satisfied that this dreadful business can be brought to an end without an understanding of the African outlook and how will they get an understanding of the African outlook if they proscribe what is recognised to be its main organisation?
4.22 p.m.
THE EARL OF MUNSTER: My Lords, may I reply to the questions addressed to me by the noble Earl, Lord Listowel, and
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the noble Viscount, Lord Stansgate. In the first place, let me, in my own words, repeat the remarks which came in the statement about social reforms. They will be introduced, and your Lordships will no doubt have ample knowledge of them through the medium of the Press as they come into operation. I should not like to be pressed to-day to state which social reform will be undertaken in the first place. I would, however, remind the noble Earl that it was only a short time ago that Her Majesty's Government: agreed to grant a further sum of £500,000 for the general development of the country. To turn to the noble Earl's second question, about the proscribing of the Kenya African Union, I have no doubt myself that this organisation has harboured many of those responsible for the present outrages, troubles and terrors in Kenya. On that point I would give the Colonial Secretary my strong and full support.
Now I pass to the three questions which were asked by the noble Viscount, Lord Stansgate. At the moment I have no information which I cart give him of Mr. Blundell's suggestion, but I will certainly communicate with the noble Viscount privately. Ai regards the question on the use of aircraft for bombing, I may say that no aircraft can be used for bombing Mau Mau in any part of the territory without the full authority of the Director of Operations. In each case where bombing has been carried out—and I think the cases are very few—the Director of Operations has first given his personal authority and approval. I would only say this, in conclusion, to the noble Viscount, on the question of proscribing the Kenya African Union. I fully agree with him that it is vital that all African people should have some organisation of a political nature to which they can turn. Those organisations may be good but when they delve into subversive activities and encourage all the horrors and atrocities with which we are familiar to-day, I wholeheartedly support my right honourable friend.
VISCOUNT STANSGATE: My Lords, I am grateful for the courteous way in which the noble Earl has answered my questions, but I am not satisfied on his reply as to the use of aircraft. It is not sufficient to say that the General has to give permission for the aircraft to be used.

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The question is whether you are attacking offenders—people who are guilty or presumed to be guilty. If you are flying over a forest, do you see your target? Do you know who is beneath you? When you have dropped your bombs, do you know who is killed or wounded? Is there any means of succouring the wounded, some of whom may be guiltless? The use of aircraft against native people in forests is not only morally wrong but extremely questionable from a practical point of view.
THE EARL OF MUNSTER: My Lords, I have little further to say except that I should have thought that the use of aircraft certainly saved a great deal of human life. It is far easier and cheaper from the point of view of expenditure of human life, and I have no doubt whatever that the aircraft have been used for bombing villages in those districts, and no other, where it is known that Mau Mau attackers definitely exist.
4.26 p.m.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, I am in general agreement with the policy which has been undertaken to repress this outrageous state of affairs in Kenya. But on the other hand, one is anxious about certain points such as those raised by my noble friend Lord Stansgate, because surely the decision does not lie solely with the Director of Operations. It is not clear to me whether it is a decision of the local Director of Operations or whether it is a direct decision at headquarters here—a decision of the Director of Operations in London. I am told that it is a local decision. Then surely the general authority must be purely a Cabinet responsibility. The use of aircarft in this way is so much a moral question that I suppose we are to assume from the noble Earl's statement that it is a definite and deliberate decision taken by the Government. I agree that it may save human life in some cases, but it is the kind of thing that many of us have opposed in the past—indiscriminate bombing without consideration for the victims. That raises great moral issues in the minds of the people.
There is one other point I wish to raise before the noble Earl replies, if he wishes to, and it is this. It is a point I should like the Leader of the House to answer,
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because he is famous for his careful consideration of such points. Those of us who have been in authority in this kind of situation in the past are a little concerned at the growth of the practice of commanding officers giving Press interviews on the Mau Mau before departing. It is a practice which is growing. I prefer the kind of statement made by the Secretary of State to both Houses of Parliament to-day, which gives an idea of the general proposals to be followed and the general policy to be practised. Much as I admire the personal qualities and military experience of that outstanding officer General Erskine, I should welcome it if he would give no interviews before he flies over to Kenya.
THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY): My Lords, may I say one word on this general question of bombing? I fully appreciate the preoccupations of noble Lords opposite, and I think we should all be opposed to what might be called indiscriminate bombing. With all deference to the noble Viscount, Lord Alexander, I do not think that that description could fairly be applied to the operations to which reference has been made. I think it was made perfectly clear in the statement made by the noble Earl, Lord Munster, that bombing was done only as a military operation under the express direction of the Director of Operations in wooded areas where—I understood this to be the position—the Mau Mau were known to be operating. If you are going to draw too meticulous a line you will never be able to use bombing at all. As the noble Viscount, Lord Alexander, knows perfectly well, there were cases in the war where we had to do it. We did not enjoy doing it, but it had to be done, and I think that in the long run it did save life. This is a military operation—it is no good regarding it as anything else. I agree that there must be careful supervision and that the bombing must not be in any sense indiscriminate; but I should not be prepared—and neither, I am sure, would the noble Viscount, if he were on this side—to say that in no circumstances should bombing be used.
VISCOUNT STANSGATE: My Lords, I should be glad if the noble and learned Lord, the Lord Chancellor, or some other legal authority could answer this ques-

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tion. The noble Earl, Lord Munster, in the statement he made, referred to the Kenyatta trial. Jomo Kenyatta was the President of the Kenya African Union. The noble Lord gave it as an opinion that the Kenya African Union was illegal. Now the appeal of Kenyatta against his preliminary conviction has still to be heard. I ask the Lord Chancellor or some other legal authority to say whether the statement made with regard to the Kenya African Union, of which Jomo Kenyatta was President, does not grossly affect the appeal which Kenyatta is presently to bring forward.
THE LORD CHANCELLOR (LORD SIMONDS): If the noble Viscount makes an appeal to me I will answer it categorically in the negative. I would much rather there were no further discussion in case something is said which might, in fact, prejudice the case.
VISCOUNT STANSGATE: It is obvious that nothing said on this side could affect the justice of this case when it is heard: the judge would not permit it. But the statement has been made by a member of Her Majesty's Government that the Kenya African Union, of which Jomo Kenyatta is President, was, in fact, a seditious organisation, and I should have thought that that would clearly prejudice the possibility of a fair trial of Kenyatta.
THE LORD CHANCELLOR: I do not agree in any way with what the noble Viscount has said and I am not prepared to be led into further discussion upon the matter.

NAVY AND MARINES (WILLS) BILL
4.32 p.m.
Order of the Day for the Second Reading read.
LORD TEYNHAM: My Lords, in moving the Second Reading of this Bill I should like to point out that its purpose is to remove an anomaly relating to the wills of sailors and marines. Many of your Lordships are aware that during the late war, and, in fact, during the previous war, and during the period of emergency which still exists to-day, a member of the Armed Forces was able to write his will on a piece of paper without any witnesses, or to make a will orally, provided that
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there were two witnesses to say it was done, and could thereby will away the whole of his assets. This has been found to be a very necessary provision for men in the Armed Forces and, of course, enables them to make a will quickly. On the other hand, when the present emergency ends, while naval ratings and marines will be allowed, under the present law, to leave their civilian property in the way I have mentioned, the curious thing is that they will not be able to leave any naval assets, such as prize money, bounties, arrears of pay and so on, in that manner. This short Bill will have the effect of repealing previous legislation on this matter, and will enable the present emergency provisions to be replaced by permanent legislation. It will bring sailors and marines into line with other members of the Armed Forces; in fact the naval assets of a seaman or marine will be treated in the same way as the other assets of any other serving soldier, sailor or airman.
Your Lordships may ask why sailors have not in the past been treated in the same manner as members of the other Armed Forces. I think the reason is that in years gone by the sailor would come ashore and perhaps quickly will away his naval assets when in undesirable company. It is now considered, and rightly so, that sailors are well able to look after their own interests, and that there is no reason why they should be treated differently from any other members of the Armed Forces. I would add that this Bill passed through all its stages in another place without amendment and is, I understand, welcomed by the Admiralty. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Teynham.)
VISCOUNT HALL: My Lords, the noble Lord, Lord Toynham, has fully explained the purpose of this Bill. It is a very useful Bill, which will remove present anomalies and avoid others that might arise in the future. We will facilitate the passage of this Bill by not taking up any more of your Lordships' time.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

BIRTHS AND DEATHS REGISTRATION BILL [H.L.]
4.37 p.m.
Order of the Day for the consideration of Commons Amendments read.
THE LORD CHANCELLOR (LORD SIMONDS): My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.
COMMONS AMENDMENTS
[The references are to Bill No. 45 as first printed for the House of Commons.]
Clause 38, page 20, line 7, leave out subsection (2), and insert—
("(2) Any sum paid to the Secretary of State in pursuance of section twenty-seven of the Justices of the Peace Act, 1949, in respect of a fine recovered under this Act shall be deemed to be Exchequer moneys within the meaning of that section and shall be paid by the Secretary of State into the Exchequer.")
Clause 44, page 23, line 21, leave out ("first day of July") and insert ("thirtieth day of September").
First Schedule, page 24, line 24, leave out from ("and") to end of line 29, and insert ("any sum paid to the Secretary of State in pursuance of section twenty-seven of the Justices of the Peace Act, 1949, in respect of a fine recovered under this paragraph shall be deemed to be Exchequer moneys within the meaning of that section and shall be paid by the Secretary of State into the Exchequer.")
THE LORD CHANCELLOR: My Lords, this is an unusual case. You are asked to consider certain Commons Amendments to a Consolidation Bill, and our researches have not led us to discover any case where a similar situation has arisen. Your Lordships will, however, be grateful to hear that there is no conflict between the two Houses. These Amendments are Government Amendments which have been made as a result of a discovery that in a complex and difficult measure certain matters have been overlooked. The discovery was made by the Home Office and the Registrar-General after the matter had passed through the searching test of the Joint Committee, under the eagle eye of my noble friend Lord Llewellin.
Subject to anything that your Lordships may say, I do not think it is necessary for me to go into the Amendments in detail, and if it is convenient to your Lordships I will take them all
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together, merely explaining that the first Amendment, and the third Amendment are really in the nature of drafting Amendments to give effect to a situation which had not been fully examined in Joint Committee. The second Amendment, which substitutes September 30 for July 1 as the date for the coming into operation of the Bill, is necessitated by the fact that it is desired to bring into force on the same date as the Registration Service Bill another Consolidation Bill the Report stage of which I shall be moving later this afternoon. I do not wish to shirk any explanations which any of your Lordships may desire, but perhaps you will think it sufficient if I put these Amendments. I beg to move, that this House do agree with the Commons in their Amendments.
Moved, That this House do agree with the Commons in the said Amendments.—(The Lord Chancellor.)
LORD LLEWELLIN: My Lords, I should like to say one thing, as I had the honour to preside over this Joint Committee. This is a point which was discovered after the Committee had sat. From the Lord Chancellor's final remarks it is obviously a great advantage that these two measures should come into force on the same day.
THE LORD CHANCELLOR: I am obliged to my noble friend. The House is very greatly indebted to him for his many services.
On Question, Motion agreed to.

ROAD TRANSPORT LIGHTING (REAR LIGHTS) BILL
4.39 p.m.
Order of the Day for the Third Reading read.
LORD LLEWELLIN: My Lords, I have already made a number of speeches on this Bill, on the Second Reading, and on the Committee and Report stages. I could, if you wished, make very much the same kind of speech again, but I suspect that noble Lords want to get on with other business. I will therefore content myself with moving formally that the Bill be now read a Third time.
Moved, that the Bill be now read 3a.—(Lord Llewellin.)
On Question. Bill read 3a, with the Amendments, and passed, and returned to the Commons.

REGISTRATION SERVICE BILL [H.L.]
Amendments reported (according to Order).

THE NATIONAL FILM FINANCE CORPORATION
4.40 p.m.
LORD ARCHIBALD LORD ARCHIBALD rose to call attention to the report of the National Film Finance Corporation; and to move for Papers. The noble Lord said: My Lords, I am not sure that I should not start by apologising to the House for inflicting a Motion on your Lordships at so late a time on a Thursday afternoon; but perhaps more appropriate would be a protest through, or to, the normal channels for so arranging our Business that the Motion comes at such a time on a Thursday afternoon. The Motion that stands in my name is not by its nature a Party Motion and it is brought forward in no Party spirit. That does not mean, of course, that it is an entirely non-contentious matter, and no doubt in the course of the debate we shall hear quite sharply contending views. When I first spoke about the film industry some three years ago in your Lordships' House, I could claim to speak from first-hand knowledge of the industry, having left it only a few days previously, after some thirty or forty years' experience in it. Having now been out of the industry for three years, I cannot speak of it with the same intimacy as I could then, but what I have lost in detailed knowledge I may perhaps have compensated for by greater objectivity. In any case, one does not lose interest in an industry in a few years after having spent a lifetime in it.
In considering the Report of the National Film Finance Corporation, we must, I submit, take into account the general economic condition of the whole cinema business. Film production and its problems cannot be considered in complete isolation. Like practically every industry, the cinema industry is divided into the usual three sections: the producers or manufacturers, the distributors or wholesalers, and the exhibitors or retailers. The two big combines, Associated British Pictures and the Odeon-Gaumont, are probably operating in all three sections, while some other concerns, like British Lion, are operating as manu-
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facturers and wholesalers. To a certain extent, the three sections of the industry have common interests, but that is not to say that the interests are identical. I want to emphasise that point, because in this House and elsewhere, from time to time, the industry is told that it should get together and evolve a common policy, or that it should get together and settle its own affairs. That very often means that the point on which the industry is told that it should settle the problem for itself is one in which the interests of the different sections of the industry may be completely arid unalterably opposed; and a common policy therefore, may be almost out of the question. By comparison with other industries which this House has discussed from time to time—recent examples, of course, being the steel industry and the transport industry—the cinema industry is not a very big one. Yet it is by no means a negligible one. Its three branches employ more than 100,000 people, and the capital invested in it is said to be more than £250 million. It provides entertainment for more people than any other branch of the-entertainment industry and probably for more than all the other branches of the entertainment industry put together. That, so to speak, is the background or the industry.
Turning to the Report itself, let me say straight away that I have no substantial criticism to make, either of the Report for the year of the National Film Finance Corporation or of the work of that Corporation. I think the Corporation have done a good job, and have again presented an interesting Report. Opinion in the industry is not, I gather, entirely unanimous about the Corporation and the details of their work. The Corporation have their critics, as is to be expected. I am not going to join the ranks of the critics. The points on which I might criticise the Corporation's work are of a: detailed and technical nature, and I am ready to admit that they are no more, than the normal differences of opinion on technical matters in which the Corporation may well be perfectly right. This year's Report is particularly interesting, in my opinion, because of the light that it sheds on all the problems of the industry, and particularly on the general economic position of the industry to which I first made reference.
Looking at the Report, we find that during the year the Corporation have provided finance for about fifty feature films. This compares with sixty-five films financed in the previous year, and thirty-six in 1950–51. It is interesting to compare these figures with the number of feature films registered over the same period for the British quota. The comparison obviously cannot be an exact one, because some of the films which have been financed in any given year will not be registered for quota until the following year. But for the past three years, the numbers of feature films registered for quota have been:1950–51, 76; 1951–52, 64; and 1952–53, 80. It should be made clear that although these are films of 6,500 feet or over, they are not by any means all first-feature films, as that term is generally understood. Neither, of course, are all the films financed by the Corporation first-feature films: it is anyone's guess how many of those are registered as first features, or how many of those financed are first features. Therefore, the comparison becomes almost an impossible one.
All that one can say, I think, is that there is no evidence, either from the number of registrations or from the number of films financed, of any marked or substantial improvement in the volume of British feature film production over these past years, despite the fact that we have had the Finance Corporation operating now for four years, and the British Film Production Fund—better known as the Eady Fund, to which I will refer subsequently—operating for two years. That, I think, must be a disturbing and disappoining thing to anyone who wants to see an expanding British film production industry. The reasons for it are, I think, to be found set out, or, if not set out, at least implied, in the Report of the Corporation for the last year. Before I turn back to the Report, may I say that further evidence that the film production industry has not progressed substantially, if at all, in the year under review is to be found in its employment figures. For the last three years, employment in the film production industry has been around the 4,000 mark (I was pulled up last year for a slight discrepancy on the exact figures of employment. I therefore content myself by saying "around the 4,000
904
mark"), and the past year has not shown any improvement worth talking about.
Before I go on to discuss that part of the Report which deals with the condition of the industry I should like to refer for a moment to Section III, on page 2, dealing with the British Lion Film Corporation Limited. It deals with the loan of £3 million to that company and, as was brought out clearly in the debate a year ago, that loan was not made on the responsibility of the Film Finance Corporation; it was made, in effect, before the Corporation came into existence, and what I am going to say, therefore, is not a criticism of the Film Finance Corporation. The Report states:
"Any permanent repayment of the working capital loan could therefore only come from a curtailment of production."
But one might add, "or by the provision of new working capital from some other source." If, as the Report says, profits are non-existent, or at least very low, then obviously they can neither provide the new capital nor attract it. If we accept that, then we have to say what ought to be done.
I agree with the Corporation that the curtailment of production is most undesirable. We have had good films from the British Lion Corporation, and I think no one wishes to see the production of their films stopped. But in that case, the £3 million loan becomes a permanent or semi-permanent loan, and I suggest that it might be wise for the Government to consider the conversion of that loan into some form of equity, with representation on the board of directors. Consideration might also be given to the position of the British Lion Studio Company, which paid a dividend of 15 per cent. on its ordinary shares last September on account of the year to March 31, 1952. I am not arguing that the dividend was excessive, particularly in view of the fact that dividends had been passed, I think, for the two previous years. But when the subsidiary studio company pays a dividend whilst the parent film production company is unable to repay its loan, then I think an unfortunate impression is created; and the conversion of this £3 million loan into equity, or part equity and part debenture capital, with representation on the parent company board, might help to dispel that rather bad impression.
I turn to Section IV of the Report, the accounts, on which I have only two brief points to make. First, I should like to express my personal satisfaction that the Film Finance Corporation have been able to take the place of Mr. Stephen Court auld in the financing of Ealing Productions. It would have been a great pity if the steady flow of production from Ealing, containing, as it has done for many years, such a high proportion of fine films, had been brought to an end through lack of finance. I am glad, therefore, that the Corporation have stepped in. My second point is a very small and technical one and concerns completion guarantees. I have on a previous occasion given the House the arguments, and I will not repeat them again to-day. I will content myself with saying that I would ask the Corporation to reconsider the matter and whether they should not give completion guarantees, thereby saving producers a considerable amount of money.
I want now to pass on to Section III, Costs and Revenues, a section in which we really get to grips with the problems within the industry. The new Table, Appendix E, which I welcome, is most illuminating. If we take it along with paragraph 33, and make the adjustment referred to in that paragraph, it seems to show profits on films financed by the Corporation for the years to March, 1951, and March, 1952. amounting to £187,000 and £80,000 respectively. In each of these years something like £5 million was invested in the production of films, and considered as returns on a £5 million investment, profits of £187,000 in one year and £80,000 in the next year can hardly be regarded as entirely satisfactory, though they do, I agree, represent a welcome improvement, particularly on the losses shown in the two previous years, of £967,000 and £758,000. But paragraphs 37 to 41 deliver a chill warning against even the mild optimism that these meagre profits might have engendered. There is what the Corporation describe as a "marked deterioration" between 1951 and 1952, and the indications are that that marked deterioration will continue. Only fifteen out of the thirty-four films financed by the Corporation in 1952 are likely to be profitable, even with the help of the Eady Fund. The losses on the other nineteen films are expected to
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exceed the profits on the fifteen, and as a result, only 99 per cent. of the aggregate cost of the thirty-four films is expected to be recovered. This again is a very grave and disappointing situation, which one must examine in a search for some explanation.
Paragraphs 39 and 40 of the Report give some indication of the reasons but, with your Lordships' permission, I should like to look at the reasons rather more exhaustively than is possible in the Report. Our main concern in dealing with the Report of the Film Finance Corporation must obviously be with production; but as I said at the beginning, we cannot look at production in isolation: we have to look at it in relation to the other sections of the industry, and I think it would be useful to look first at what has been happening to the exhibiting or retailing side of the cinema industry. Over the past five years, taxable cinema admissions have fallen from 1,480 million per annum to 1,180 million, a drop of just over 20 per cent. in five years; and the fall is still continuing. In the same period, exhibitors' costs have risen substantially. Wages alone are said to have risen by £3½ million a year, and in the main these rising costs are, for various reasons which I will not go into, beyond the ability of exhibitors to control. During that five years there have been changes hi the incidence of entertainment tax, and there has been the introduction of the Eady Plan or the British Film Production Fund levy.
It is therefore quite impossible to make a straight comparison of net cinema receipts over these years. But it is possible and, I think, interesting and important to see what has happened since the introduction of the Lady Plan in 1951. In round figures, the changes in entertainment tax and admission prices provided for in the 1951 and1952 Budgets were expected to give the exhibitors about £5,500,000 extra in net takings in a full year. The Exhibitors' Association calculates, in fact, that the net increase is no more than about £1,500,000, or a shortfall of about £4,000,000, with the result that many of their members are arguing that instead of the British Film Production Fund levy, the Lady Fund levy, being something paid by the public, it is in fact becoming an additional tax on the exhibitor.
The exhibitors have asked for entertainment tax concessions estimated to cost the Exchequer about £3,700,000. So far, they have been refused. I believe that the Finance Bill is not yet at a stage where one can say that the refusal is absolute and final, but, in so far as they have been refused, I would say that they have a just grievance. In fact, I would go farther and Say that I think the exhibitors have been much too modest in their request. The concession for which they have asked would do no more than put them in a position to meet their increased costs. But with attendances falling, and falling steadily, something more than that is required. I think that cinema admission prices have to come down. The fall in attendances is accompanied by a tendency for patronage to transfer from the dearer to the cheaper seats, which I think is indicative, and something is needed to attract bigger audiences. I can think of nothing more likely to achieve that than to reduce prices of admission.
So in addition to a tax concession of some £3,700,000 to put exhibitors on their feet, I think there should be a further and substantial tax reduction, provided it is made clear and laid down that it is to be passed on to the public in the form of reduced prices of admission. I do not know what the figure would have to be. I imagine that to have any substantial attractive effect on the prices of admission, it would have to be in the range of £5 million to £7 million. If the whole of that was devoted to reducing prices of the more popular-priced seats, I think that would be all to the good. The higher priced seats would then probably have to be reduced in price in order to keep in step with them. I do not think that that would represent a net loss to the Exchequer. The Chancellor is now dealing with a business which has reached the phase where the law of diminishing returns applies. I think he would probably find that the actual tax loss would be less than the calculated adjustment. The increase in attendance which I think would be effected would compensate in some measure for the change in the amount of tax per seat.
But I am not arguing the case for entertainment tax reduction solely for the benefit of the exhibitor, though in justice I think he is entitled to a reduction; I
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am much more concerned with what will happen to British film production if no such concession is made. There will be a series of consequences. There will be increased resistance by exhibitors to the payment of the Eady Fund Levy. That, I think, is a bad but inevitable result of worsening conditions on the exhibiting side of the industry. We must remember that the levy is paid on the number of attendances, and if these continue to drop, as they have dropped steadily over the past live years, then the amount in the Eady Fund—which is not by any means too large now—will be further reduced.
Furthermore, the exhibitor has so many costs that he cannot control that he is bound to try to cut the amount he pays in film hire. I agree that American films constitute 70 per cent. of our programmes. Therefore, a cut in film hire by the exhibitors would affect principally the American films. But it would affect also British films. The trend towards cutting film rentals is already there. It is indicated in the Film Finance Corporation's Report and elsewhere. As conditions grow worse, that tendency will naturally grow. We are going to get an increased resistance to the payment of the levy, and we are going to get a drop in British film rental. I believe that unless there is some amelioration of conditions cinemas will begin to close down. They will tend to be at first the smaller cinemas in the more sparsely populated areas. But it will not stop there—particularly with the increasing competition of television. I am told that hundreds of the smaller cinemas in the United States have closed as the result of television competition affecting their attendances. My argument is not that the cinema should be given some special help in order to meet the competition of television but simply that its handicap should be somewhat reduced. Closed cinemas will not pay contributions to the levy, or film hire for British films. Nor, may I add, will they pay any entertainment tax to the Exchequer.
Now I wish to go on from the exhibiting side to the intermediate side, the side of the distributor or wholesaler, in connection with which, for the first time, we have some very useful figures. Appendix E on page 44 of the Report provides these figures. It is shown that in the year to March, 1950, distribution

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fees in the United Kingdom amounted to £604,000, which represents a distribution fee of about 20 per cent. of gross film revenue in the United Kingdom. If, however, you go on from there to Appendix F and take into account the distributors' share of losses, which amounts to £286,000, then the distribution percentage is reduced to about 11 per cent. which is perhaps not unreasonable—it might even be rather on the low side. In the past, the distributor's defence of a distribution fee as high as 20 per cent. of gross revenues has been that he gave guarantees to the producers and that he made substantial losses in meeting some of those guarantees. Therefore he had to have a high overall revenue out of which to meet these guarantee losses.
Keeping that in mind, let us look now at the figures given for the two following years. On the films begun in the year to March, 1951, distributors had a share of the profits (and no losses to meet) in so far as films financed by the Corporation are concerned, amounting to £68,000 to add to the distribution revenue, bringing it up to about 22½ per cent. In the following year their loss was only about £23,000, which brought their commission down by the negligible amount of ·2 per cent. What accounts for the difference?—the operation of the Eady Plan. The number of films making losses on their guarantees has gone down and the amount of losses on those still making losses has become very much less; so that the justification for the high distribution fee would appear to have gone, at any rate so long as the Eady Fund remains in operation. It is likely, almost certain, that distribution costs, like those of most other businesses, have gone up. Therefore I am not making any dogmatic suggestions about what a proper distribution fee should be but, on the evidence shown in the Report, I think there is a strong case for the reconsideration of distribution fees with a view to the fee being reduced and the producers' share of the revenue being increased. Incidentally, speaking as one with long experience of the industry, I think the time is ripe, even overdue, for the industry to review the whole machinery and system of distribution to see where economies can be effected.
I come now to the third and, in my view, the most important part of the
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industry—production. The Government's announcement in March last that the Eady Plan would continue for at least three years after 1954 and that, if the trade failed to agree, there would be a statutory scheme, was most welcome, even if somewhat belated. How much better would it have been if the noble Earl, Lord Selkirk, had been able to make that announcement when. I made a plea for it in our debate a year ago. However, this is a case of "better late than never." There is no doubt that the British producer cannot continue without the help of this Fund. I would go further and say that British production cannot continue in a satisfactory condition if the Fund fails below £3 million. When it was inaugurated it was expected that it would yield roughly £3,400,000 in a full year—that is, in the second phase of the Fund. In its first full year it yielded just under £3 million, and I am told that this year it looks like yielding no more than £2,700,000. This is not entirely satisfactory. But what is important is that it will fall further, to a point at which it will be inadequate for its purpose, unless this fall in cinema attendances can be arrested. I have already given my argument as to how I think that matter may be dealt with.
Before going on to my next main point, may I interpolate a small item with regard to the Eady Fund? Even though it is handled as a voluntary fund, it was inaugurated by the Government, and therefore it is a fund for which the Government have some responsibility. I think there is a slight danger of what I may call "Eady quickies" developing in the industry. We are all familiar with that old evil of cinema legislation, the "quota quickies." I do not want to elaborate the point too much, but "Eady quickies" might be regarded as films which have a quick and perhaps ephemeral attraction—films of the type of No Orchids for Miss Blandish, if I may take an illustration. These are not films of the kind which the Government or anybody on these Benches or the sponsors of the Fund want to see. We want the Eady Fund to promote the making of worthwhile British films, not of what I would call cheap, catchpenny films, turned out as soon as producers see something which would make a quick success, in the hope of getting their share of the

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Eady Fund. That is not what we had in mind.
I think the Government should interest themselves in the administration and disbursement of the Eady Fund and consider whether there is not some sort of test that can be applied. Please do not misunderstand me: I am not suggesting a committee to determine quality, because I know that that is quite impracticable, but I am sure there are tests that can be found. For example, in the main a worthwhile British film would earn money overseas, whereas the catchpenny film, designed just to skim the cream quickly off the domestic market, will have no overseas value at all. It may be that overseas earnings should be brought into account to give a weighted figure for the disbursement of the Eady Fund. I mention that in passing as something on which an eye might be kept for future use.
I return to the Report. What is abundantly clear from it is that, even with the help of the Eady Fund, British film production has not reached such a stage of prosperity as to attract private finance on anything like an adequate scale, if at all. In the debate a year ago I expressed the hope that the Film Finance Corporation might soon become unnecessary and that the British producer would be able to get along with only the two props of the quota and the Eady Fund. I present myself in a white sheet of repentance and say I was hopelessly optimistic on that point. It is now clear that, with an expectation of recovering only 99 per cent. of the aggregate production costs, there is no hope of attracting the private financier, so that the continuation of the Film Finance Corporation is essential. If its lending stops in March, 1954, as the existing Act lays down, there is no doubt that after that date a large proportion of British production will come to a standstill. The Odeon and Associated British combines may continue with their own financing, but most independent producers, and, so far as I can judge, all really worthwhile independent producers, would be quite unable to find the finance which they need, and particularly that 30 per cent. of end money which to-day they get from the Film Finance Corporation. Therefore, I urge upon the Government—and
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this is the most important point that I can possibly make to-day and so, in a sense, my justification for initiating the debate and taking up the time of the House—that at an early date they should introduce a measure to extend the active life of the Corporation for a further five years. Paragraphs 42 to 47 of the Report put the position clearly and. I think, unanswerably. I hope that the Government will agree with the case set out there and accept what is to me the inevitable conclusion, that the Corporation should continue for a further period.
Briefly, the position as I see it can be summed up under three points. Cinema attendances are falling, while the costs of operation are increasing. Unless some stimulus can be given by lower admission prices, this downward trend will continue, and the smaller cinemas will close. The revenue of British films will suffer, both by reduced film rentals and by reduction in the Film Production Fund. The stimulus of lower admission prices can come only from a reduction in entertainment tax. Perhaps I should say at this stage, so that I shall not be misunderstood, that I accept that a high level of entertainment tax is inevitable, because 70 per cent. of our screen time is devoted to American films, which causes a heavy dollar expenditure, and entertainment tax helps to keep that dollar drain in check. Therefore, I accept that entertainment tax must continue at a high level; but my point is that it is too high and could be reduced with advantage. My second point is that the industry should help itself by a reduction in distribution costs, so that a higher proportion of box office revenue may go to the producer. My third point is that the continuance of the National Film Finance Corporation for a further period of years is essential if British production is to continue on anything like an adequate basis. The report which is before us suggests, to me at any rate, that the present Corporation is well fitted to be asked to continue with its task. My earnest plea to the Government is that they should extend the life of the Corporation for an additional five years. I beg to move for Papers.
5.22 p.m.
LORD MANCROFT: My Lords, I think it may be for the convenience of the House if I intervene at this stage, because I have some observations to make concerning the Government's

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future policy and intentions towards this industry which may be of assistance to noble Lords who are to follow me in this debate; and then, if I can have the permission of the House, I would seek to speak again and answer any other points that may have arisen and which I have not covered in my opening remarks. I should like to begin by thanking the noble Lord, Lord Archibald, who speaks with such authority on this matter, for having raised it, and for the lucid and helpful way in which he has put his points before us. I must say straight away that with a great deal of what he has said I am in complete agreement. I remember, of course, that he raised this matter at about this time last year. I remembered it, as soon as I saw this Motion on the Order Paper, with slight misgivings, because I also remembered that I, from a back Bench, had taken part in that debate, and I was anxious lest I should find myself this afternoon standing at this Despatch Box scratching with the toe of perplexity upon the heel of embarrassment, having given vent to some views which were in direct conflict with those which I propose to give vent to this afternoon. I am happy to find, however, that that is not the case.
In last year's debate it was noticeable how frequently the word "crisis" was used by speakers; indeed, any listener to the debate would almost have come to the conclusion that the words "crisis" and "British film industry" were synonymous—an unfortunate impression, but one from which one could hardly escape. Now, a year later, we again debate the fortunes of that industry, and I think it is profitable to look at the year's work to see whether there has been any movement forward from that state of crisis. Here I think I part company a little with the noble Lord who has just spoken. I am slightly more optimistic than he is. I admit readily that the progress, such as has been made, is neither spectacular nor wholly satisfactory; but I think clearly that in the course of the last year the British film industry has made some progress forward from the depression of the last few years, and shows signs of maintaining that progress. The great problem is to maintain that progress and to maintain confidence in the industry.
To take some of the figures which the noble Lord gave us and analyse them a
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little more closely, I feel that we can draw comfort from the fact that this year, of the major films registered—the 6,500-footers to which the noble Lord referred—the number is 85 as opposed to 63 in the previous year. That, I feel, is ground for some comfort. And I think we can take some comfort and pride in the fact that in the course of the last year these films have included upon the British screen such examples of British film craft as The Cruel Sea, The Planter's Wife, Sound Barrier, The Beggar's Opera, The Story of Gilbert and Sullivan and Moulin Rouge. I take those films only because they happen to be six films which I myself have seen, and they would seem to me to be creditable examples of British film craft of which we should be proud. There has also been a marked improvement in the quality and the quantity of the shorter films which have been shown. We have recently had two examples quite in a class by themselves—namely, the two Coronation films, which I am certain will bring great prestige to the industry.
We can also take some comfort from the current production plans. Of major films awaiting distribution at the end of last year, the figures were far higher than in the previous years. Looking forward, nearly one-third—about 29 per cent.—of total studio space has been booked for twelve months ahead, compared with a figure of 4 per cent. in 1951, 4 per cent. In 1950, and 10 per cent. in 1949. That shows a substantial improvement. Allowances must, of course, be made in these figures for a fall in the stage area available. I do not want to over-exaggerate the progress, but I think it shows a healthier situation, amore stable outlook for employment, and generally a condition which we have not been able to enjoy in the film industry for some years past. Producers have maintained their efforts to reduce the cost of production, in the face of difficulties of wages, salaries, laboratory charges and other technical charges. I do not suggest for a moment that there is not room for still more economy. I do not say for a moment that I disagree with the noble Lord, Lord Archibald, when he says that there should be some review of the cost of distribution. There is certainly room for improvement in nearly all the branches which I have mentioned.

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One important point, above others, which emerged from the noble Lord's speech was this question of the future of the Corporation. The noble Lord asked me point blank whether the Government had made up their mind what was to be the future of the Corporation. Your Lordships will remember that under the Cinematograph Film Production (Special Loans) Act, 1949, the National Film Finance Corporation have power to make loans during the five years which end on March 8, 1954. The Government propose in due course to introduce amending legislation to enable the Corporation to make loans for a further three years after that date. That decision has been taken in full consultation with the Corporation, and it is a decision which I hope will find a welcome not only in your Lordships' House but in the industry as a whole. The industry, of course, is faced, as the noble Lord, Lord Archibald, suggested, with a two-fold problem. There have been sudden developments of new techniques in the industry (the wide screen, three-dimensional films, and so on), and there has been the influence of television growing markedly stronger each day, an influence which I am certain will have gathered even more strength from the rôle which television has played in the last memorable weeks. Therefore, the prospects for the industry to become self-supporting, although perhaps a little better than in previous years, are by no means guaranteed, as the noble Lord himself has clearly suggested. The prospects of private capital being made available to the industry are far from bright. Therefore, I believe that the decision which the Government have taken, to continue the life of the Corporation for another three years, is clearly a right decision and that if the powers of the Corporation were allowed to lapse disaster would come upon the film industry.
To turn to the Report itself for a moment, I should like to begin by paying tribute to Mr. Stop ford and to Mr. Lawrie and their colleagues for the able work that they have done, and particularly to Sir Michael Balcon, their adviser, who has been a great help to them. I should like to pay tribute to them not only for their own work but for the efficiency of their Report. I do not think I have ever seen a more helpful or illuminating
916
Report than this Fourth Report of the Corporation. One fact which emerges, if you look very carefully into it, is that this particular body is much more stringent and economical in its own domestic policy than many other public or similar bodies, to whom it might well be a good example. There is a small deficit against a small profit last year. Roughly the same number of films have received assistance. British Film Makers, Limited, and the Elstree Group have terminated their agreement with the Corporation, and are now working without financial assistance. I should like particularly to draw attention to Group 3. That is the Group which specifically helps young writers, directors and technicians, and assists the rather more unusual type of film. They have had a good deal of success in the course of last year, and I think most of us will be looking forward with interest to see what they make of the Everest film in which they are at present engaged.
The other two main subjects of the Report, apart from the future of the Corporation, are, of course, the British Lion Film Loan and the Eady Fund. The £3 million loan to British Lion Film Corporation is not a matter to be treated lightly. This is what the Report says:
"No repayment has in fact been made, nor has it been possible for a programme of repayment to be prepared."
In another part of the Report we see these words:
"In the Corporation's view, the problem of the British Lion Loan cannot be considered apart from the general question of Government policy for the industry after the expiry of the Corporation's lending powers in 1954."
The Corporation have been discussing with British Lion the necessary steps that must be taken to protect this very considerable sum of public money which has been advanced. The National Film Finance Corporation hold the view—and Her Majesty's Government consider that view to be the correct one—that the best way is to strengthen the structure and organisation of British Lion, rather than try to enforce any immediate repayment which undoubtedly, I should have thought, would cause a very serious disturbance—a disturbance which would not be to the interest or well-being of the industry as a whole or, indeed, to the well-being of the taxpayer. In view of the statement I have just made of Government policy, I hope that the Corporation may now be able to go ahead

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with appropriate measures to deal with this very difficult but very important problem.
The question of entertainments tax, naturally, was raised by the noble Lord, Lord Archibald. I think his views are now fairly well known. The pros and cons of this vexed matter have been discussed at considerable length, not only with reference to the film industry but with reference to every other kindred industry. Of course, entertainments tax with regard to the film industry has a particular interest and a particular difficulty all its own. I hope the noble Lord will not think that I am trying to avoid the issue, or evade the question he has put to me, but, since we are faced with the Committee stage of the Finance Bill in another place at this moment, and in view of the fact that one of his right honourable friends has put down an Amendment on this very subject, I feel that it would be unwise, and probably for me a little awkward, if we were to discuss the matter any further to-day. I will say merely that I will make it my business to see that the views which the noble Lord has put forward are brought fully to the attention of my right honourable friend the Chancellor of the Exchequer, if they are not already, as I suspect they are, well known to him.
I will now turn for a moment to the British Film Production Fund, the Eady Fund. Here I quite agree with the noble Lord that we have at all costs to avoid what he neatly called "Eady quickies." I entirely agree that the fewer films like No Orchids for Miss Blandish that we have upon our screens, the better. Indeed, I remember that one of the first "quota quickies" I ever saw, which caused a certain amount of trouble at the time, was called Archibald, Certainly Not! Here I entirely agree with the noble Lord. The Report welcomes the Government's desire to continue the Eady Levy for the three years after August, 1954. I wish to say only this about the Levy: it has caused some heartburning within the industry, and it has caused some slight arguments. It may be that, in due course, some form of statutory scheme will be required to put this matter on an even footing. I sincerely hope that it will be possible to get this matter straightened out within the industry itself. I know that there are uncertainties about the fairness of how the burden falls and
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uncertainties as to the actual amount of money available to them. With good will and with common sense it may be possible to reach an agreement, and legislation will not be necessary. That, at least, is the Government's hope.
After the particular statement that I have made concerning the future of the Corporation, perhaps it might not be a bad idea to conclude with a few words of stocktaking and a few sights into the future. We have to face the fact, I am afraid—the noble Lord has faced it perfectly squarely, and so must I—that there is a decline in the cinema-going public m this country, and a decline which shows no signs of halting. Admissions in 1952 were 4 per cent. below those of 1951 and 6 per cent. below those of 1950. One reason stands out a mile, and that is the competitive attraction of television This is causing, I know, much difficulty and heartburning throughout the industry. I do not think I ought to go into it in any great detail, because we may be discussing television in another aspect, perhaps in the not too distant future, It has had exactly the same effect on Hollywood, and Hollywood, in their attempt to meet the opposition of television, have taken measures which in their turn are reflected in the British film industry, of which the wide screen and 3-D films are only two obvious ones.
Because of this difficulty, this rivalry, and this competition, I feel that the intention of the Government to lengthen the Corporation's life is particularly important at this moment. But this does not alter the fact that the industry must itself do everything in its power to increase its efficiency, to avoid wasteful and extravagant expenditure, and to reduce the restrictive practices which have so often marred the history of the industry in the past. Above all, it seems to me that the industry has to do one thing: it has to produce films that people want to go and see. We can stand here and talk about Eady Funds, quotas, financial support and British Lion assistance, but an industry which has to be continually looking round for outside help, and has to face a future where artificial aid is normal rather than exceptional, is not an industry that can fill its admirers with everlasting hope and enthusiasm. The real backbone of the industry's success must be its ability to produce films which you

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and I will put down hard cash willingly to go and see. The fact is that the standard of entertainment is rising rapidly in so many fields that people are becoming "choosey," and will no longer go to the cinema merely to go to the cinema. They will go to see a good film—the queues outside any cinema showing any of the films which I enumerated earlier in my remarks are surely proof of that—but they will not go to see a bad film. The number of casual cinema-goers is clearly decreasing, and that seems to me the danger light, of which the industry must be aware—as indeed it is: one is preaching to the converted, one hopes.
The industry must realise that it is a good film, above all, which will attract the cinema-goer; and as the noble Lord, Lord Archibald, so rightly said, it is for the Government to remove from the industry any handicaps in the way of producing those good films. That is what the Government's policy is. The Goverment want to get into the film industry as little as possible. They want to stand back and let those who can make good films make them; and they want to do everything in their power, as I say, to remove the unfair and unnecessary handicaps standing in the way of the film industry. But no Government intervention can be a substitute for good, economical, entertaining and well-produced films. The Government can only provide the basic conditions which will enable the industry to exercise its skill and creative ability, and its ingenuity too, to take this industry from a state of crisis to a state of stability. That is all the Government can do. My hope is that what I have said this afternoon suggests that the Government are doing their level best to fulfil what they see to be their real duty.
5.42 p.m.
LORD ST. JUST: My Lords, we are all greatly indebted to the noble Lord who initiated this debate, and we congratulate the Government on their decision to extend the life of the Film Finance Corporation. I am convinced that this will come as a very welcome gesture to everybody connected with the film industry, and especially the independent companies that are now cropping up in larger numbers. I think it was a bold and brave decision on the Government's part, because the Report of the Film Finance
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Corporation has not been too rosy, to say the least of it; but this decision will help the industry—and the independent companies—to reorganise and get themselves working in the best possible way. I agree with what the noble Lord, Lord Archibald, said. After all, we are all, on both sides of the House, at one in desiring to see the film industry working in the best possible way.
I do not want to go into too great detail on the financial side, but I wish to make a few suggestions which may help concerning the difficulties in which the industry finds itself at the present time. The last time I ventured to speak to your Lordships I mentioned the matter of script-writers, and I propose to say a few further words on this subject. I am convinced, the more I talk with directors and producers, that one of the main difficulties is this question of getting really good script-writers. At the present time, a script-writer produces, perhaps, one script in every eighteen months which is accepted. Script-writers therefore tend to get out of training and, like other people, if they are not kept continually at their work they get out of the way of it; and that is how the difficulties come about. I believe that if in some way it could be made possible to form a pool—it would entail some expenditure, but I do not think it would be very much—whereby a certain number of these young scriptwriters could get down to their work and be paid on a regular basis, it would in the long run pay dividends from the point of view of the industry as a whole.
The noble Lord, Lord Mancroft, mentioned the question of British Lion and the troubles they have got into. I know that one of the leading directors in that organisation has run into great difficulty over this matter of finding good scripts—in fact, he has not produced a film for eighteen months for that reason. I think, from what both Lord Archibald and Lord Mancroft said, that this is a matter which is causing considerable worry to the film industry. Over three-dimensional films I think the problem is not worrying us so much in this country, but Hollywood is getting into a panic about it. In this country we are keeping our heads. I thought that what Mr. Anthony Asquith said when he was speaking to the union was very sensible: it was to the effect that at the moment we should keep calm

921
and cool, and see how things progress. I feel that one other great barrier is the question of the vast extravagance which has taken place in the making of some films in the past. This, I believe, is at last dying out. I think that the producers, directors, and staffs on the sets are now doing their best to keep costs as low as possible. Some of these directors, men with high standards—and, perhaps, with a temperament, which I suppose one must expect of those who produce good films—are troubled about the allocation of money from day to day. But taking it as a whole, they are doing what they can to bring the whole situation into proper alignment.
I would for a moment go back to the question of script-writers. It may be of interest to your Lordships to know that in both France and Italy they have schools of script-writers where young directors and young producers get together and work as one. I think one can say that, certainly since the war, the films that have come out of Italy and France have been very remarkable. Certainly the Italian industry has made a remarkable recovery since the war, and I believe that: in many ways this is due to script-writers having had the right training. In France it is possible for a man who wishes to go into that side of the industry to go to the Sorbonne for a couple of years and work with men from the other sides of the industry.
The question of making films of the right type for people to see is a very complex one. The film public is extremely large, and it is difficult for producers and directors alike to sum up accurately the type of film that is wanted by the cinema-going public. In my view, some very remarkable films have come out of the British studios in the last three or four years, and, with luck, there are some very remarkable ones to come in the next few months. But it is a wide field, and tastes of every kind have to be taken into consideration. Nevertheless, I am certain that they offer as high a standard as possible. Occasionally we see the film industry run into trouble on this point, but on the whole I think that it is doing its best. I agree with Lord Archibald when he says that if it were possible to reduce the prices of seats in the cinemas it would help enormously. The Eady Plan seems to be working fairly
922
well; there is good co-operation between producers and exhibitors. Certain companies, and especially the independent companies, who are in a precarious position financially, are seriously thinking that they will have to go to the Board of Trade in the near future asking for legislation to be introduced to make certain that all this money comes back to the right quarters.
5.50 p.m.
LORD LUCAS OF CHILWORTH: My Lords, in winding tip this debate for Her Majesty's Opposition, I feel that we are once again in deep debt to my noble friend, Lord Archibald, who has given us a factual survey of the British cinematograph industry at a most opportune time. Speaking from a life's experience of the industry, he has given us a fine background against which we can all form our own conclusions. I am grateful also to the noble Lord, Lord Mancroft, for intervening when he did and making the Government announcement, to which I shall refer later. I have no acquaintance with his friend Miss Blandish, and the lady's reputation is such that I certainly would not give her any orchids, but, if I could produce a little "quickie," it would certainly be A Bouquet to Lord Mancroft, for the excellent way in which he, as the Government spokesman, has dealt with this subject. He said some useful things.
May I first deal with the Report of the Film Finance Corporation, which, in common with my noble friend and the noble Lords, Lord Mancroft and Lord St. Just, I think is an admirable document. I join with them also in paying a compliment to the work of the Film Finance Corporation. In my view, they have done an extraordinarily good job of work. The value of this Report, however, is not so much in its description of the work which they have done as in the fact that it brings before us, in stark reality, the totally uneconomic position of the British cinema industry to-day. I have a great interest in the Film Finance Corporation as I was responsible, when I was on the other side of your Lordships' House, for piloting through the Bill that set it up.
The Report and the Accounts for this year state quite clearly that the Film Finance Corporation has lost an aggregate of £1,500,000 since its

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inception. That is money well spent, considering the fact that if it had not come to the aid of the industry four years ago I do not think the Exchequer would have netted over that period somewhere in the region of £100 millions in entertainment tax. As a business man, if I could spend £1,500,000 in order to get back £35 millions a year for four years, I should think it was a pretty good business deal. But the disturbing part of their Report is where they say, quite frankly—I paraphrase their exact language—that if their activities come to an end in March, 1954, the financial state of the British film industry upon its production side will be just about where it was when they started their operations four years previously. I am not going to spend much time in holding an inquest into the past, except to say that we have had one disappointment in the activities of the film industry over this last year, and that has been the failure of the new scheme of groups which was tried out. Two of the groups have disappeared. The third group, as the noble Lord said—that which encourages the younger producer—is the only one left, and I intend to make a suggestion later on as to the reason for this. I will not do so at the present moment.
I think mistakes have been made by the Film Finance Corporation; slight errors of judgment have been made in the placing of finance in some of these films. Perhaps one of the tragedies revealed by this Report is the finance that was put into the film The Magic Box. I agree that the Film Finance Corporation put a substantial amount of money into that film from not altogether commercial reasons—let us be fair to them. But that film well illustrates one thing that is fundamentally wrong with the British film industry. I went to see the film when it was being produced, and I cannot imagine how anyone in the film industry upon the artistic side, or who is financially interested in that industry, could ever have thought it would be anything else but the biggest failure on record—and that is what it proved to be. I know that if I could have backed winners every time in my business career I should have been very clever. I do not expect anyone always to be on the right
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side in this speculative industry. But too much money has been put into too many bad films. As my noble friend, Lord Archibald, pointed out, in spite of all the optimism of the noble Lord, Lord Mancroft, there is one thing you cannot wish away in this Report, and that is that on all the films financed by the Film Finance Corporation, they will recover only 99 per cent. of the production costs. You cannot get away from that.
But I am not so much interested in the past, because I think the time has arrived when Her Majesty's Government must have a policy for this industry. I thought the noble Lord, Lord Mancroft, did admirably in his speech until he started looking at the peroration in his brief. That peroration had a somewhat familiar ring in my ears. You cannot just wash your hands of this industry. You cannot say: "The industry must put its own house in order" and do nothing else. We have said that for four years. I said it more often than the noble Lord has said it. But experience has proved that it is not possible; and if we want in the future to use the film as the greatest means of propaganda —which it is—for the British way of life, then the Government must take an interest in it. You cannot just say that the industry must put its own house in order at a time such as this and allow the Exchequer to take £36 millions a year out of it.
I am going to say quite bluntly to the noble Lord that one of the reasons for the crisis, if you like to use the term, in the film industry to-day is the fact that it costs the general public too much to go to the pictures. One must realise that fact, when one compares the cost of television entertainment with the cost of some of the seats in the picture houses in London or the suburbs. It is now beyond the purse of the average individual, to a greater extent than it was some years ago. Do not forget that £35 millions a year have been taken out of the industry in entertainment tax. I have always held the view up to now that a reduction in the entertainment tax would not help the British film industry. My Lords, I am changing my mind. I believe, to use a technical term, that we have got over "top dead centre"—in other words, it is now a case of diminishing returns. We must find

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some way of bringing down the prices of seats in the cinema. I think the noble Lord's right honourable friend the Chancellor of the Exchequer has got to take a business gamble; he has got to try to make up on a wider spread, with a smaller incidence of taxation. I think that if he reduced taxation and the price of seats came down, the gross return would about equalise itself and the industry would gain immeasurably.
But, in any case, I beg the noble Lord to realise that we cannot to-day look upon the cinema in this country as a purely commercial entertainment. It is a portrayal, a factor of propaganda effort, of the British way of life, and its value, I think, is incalculable. The noble Lord quite rightly mentioned the Coronation Film. I went to see the film A Queen is Crowned. It was the greatest piece of "selling" of this country that I have ever seen in my life. I admit that its star was the greatest star that ever appeared in the cinema firmament. I beg the noble Lord, however, to look upon the cinema as something slightly different from commercial entertainment. His right honourable friend has done it with the live theatre. The cinema is now a greater projection of the British way of life than ever it has been, and I hope that the noble Lord will bring this point home to the Government.
The next thing this Report points nut to us—and this is another point that the Government must take into consideration in the formulation of a policy—is that the film industry or the cinematograph industry will not in any useful foreseeable future time attract finance from orthodox sources. I do not want to bring the skeletons out of the cupboard and tell your Lordships how much the losses in the film industry have cost the banks and the insurance companies of this country. But we have got to find a method of finding finance for worth-while films other than from the traditional financing institutions, and the "angels" have flown. That is why I welcome the statement which the noble Lord has made, that the National Film Finance Corporation are to be given another three years of life after March, 1954.
I hope he will not think that I am looking a gift horse in the mouth when I say that of course that is only another pallia-
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tive. We have gone on like this since 1945. We formed the Film Finance Corporation as a temporary expedient; then we had to think of the Eady Plan. I stood at this Despatch Box and begged that the Eady Plan should be made statutory—but no, it could not be done. Now, as has been admitted by the Government, it will have to be. From the word "go" when I introduced into your Lordships' House on behalf of the Labour Government the Bill to set up the Film Finance: Corporation, I said that in my opinion that Corporation might well have to play a permanent part in the life and make-up of the British film industry. I believe that it will, and the time has now arrived to make it a permanent institution. If we look at the situation in stark reality, we see that already 70 per cent. of the screen time of this country is occupied by American films; and if we withheld the £6 million that is available through the coffers of the Film Finance Corporation for British production, the British cinematograph industry would revert to something like a distributive agency for American films.
The noble Lord, Lord Mancroft, mentioned British Lion. I think he said that we had to find a way of safeguarding the £3 million loan. I am going to make a suggestion to him. In my view, the Film Finance Corporation should take the equity in British Lion, because it will never get its money back in any other way. The only way in which it stands a chance of getting that money back, or of getting some return on that money, will be for the Film Finance Corporation to take the equity in the £3 million and to appoint directors to the board of British Lion. As my noble friend pointed out, of the things that the Government should look into, because it is not peculiar to British Lion, is the circumstance where a property-owning subsidiary can pay a dividend of 15 per cent. and the production end of the same company cannot even repay its loan. I am not at all certain that the set-up in other production units in the British film industry does not need similar examination. It has been said that fools make films for wise men to exhibit. I am not at all certain that in some cases wise men do not acquire properties and rent them for fools to produce. I think that is a side that should be examined. My noble friend

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Lord Archibald is quite right in saying that distribution costs too much. He is also quite right, I think, in saying that the expense of production is still too high, in spite of the fact that it has gone down enormously. In my examination of film production costs I have never thought that directors and producers have been underpaid for what they do.
My Lords, the Eady Levy has got to go on; but it is really a comic way of financing an industry, especially an industry like the film industry. As the noble Lord, Lord Archibald, said, the Eady Levy is only an extra tax on the industry. The administration of the Eady Levy will have to be radically altered. I am going to be bold enough to suggest that, after the Film Finance Corporation has taken over the equity in British Lion, it had better takeover the administration of the Eady Levy, because some better yardstick for payment than there is at the present time will have to be found and the money channelled into projects more worthy of support. I would point out—with some reserve, because at this juncture the noble Lord probably knows more about this than I do—that the Report says, quite frankly, that a great deal of the money from the Eady Fund goes into the pockets of the American companies. Although they are admittedly of British production a great deal of the money goes into the making of these 6,500-footers, of which the noble Lord said we produced eighty last year. But length or quantity is no guarantee of quality or of box office success, and one of the troubles to-day is that the British film industry is not producing enough good films. As Lord Archibald has pointed out, there are first feature films and films of first feature length; and there is a world of difference between the two. I suppose I should be right in saying that about sixty films of first feature length were produced last year. About twenty of them should never have seen the light of day. Now the production of a film, good or bad, costs money, and when it loses money the industry suffers.
The film industry is facing a most difficult time. It has to face the growing competition of television; it has increasingly high costs to meet. I think statistics would show—the noble Lord has
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mentioned them—that attendances are falling, while income is being kept up only on the precarious basis of the increased cost of the seats, and sometimes, we are told, by the sale of ice cream. I believe the revenue will fall. I do not think we can look for any alleviation of these difficulties as a result of the new technical developments. In my view a lot of nonsense is being talked about the wide screen and the three-dimensional film, with all its ancillaries and derivatives and all the refinements of it. I am told on good authority that the cost of converting a cinema, from the smallest to the largest, to carry these new developments is anything from £300 to £8,000. I am also told that Hollywood has 300 million dollars worth of flat films on its shelves which have somehow to be liquidated and turned into cash. These new refinements will never be a commercial proposition in this country until they can be standardised right through the exhibition side of the industry, because at the present time for every 3-D film that is made a flat film—an identicalcopy—has also to be made, so that it can be shown on the ordinary screens.
In my view, the future of the film industry can be said to rest on similar factors to those which govern the success of all commercial enterprises. When you are seeking to make money by entertaining the public in cinemas, there is no effective substitute for a policy of offering high entertainment value in your films and charging low prices for seats. Some of the recent British films are undoubtedly good. I am told that a film which the noble Lord mentioned, The Cruel Sea, has been an outstanding success. But some of the trumpery colour films that have cost three times as much have not even paid for the colour used in them. With all these considerations before him, I ask the noble Lord not to be too optimistic. He started off by saying that he was more optimistic than my noble friend Lord Archibald.
LORD MANCROFT: That was not saying very much, was it?
LORD LUCAS OF CHILWORTH: Optimism is the mistress of noble Lords who speak from the Despatch Box on behalf of the Government, but they are

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very fickle lovers. I would ask the noble Lord to look at this matter in the light of the bald facts which appear in this Report, which I think is an admirable Report in all respects. It tells us exactly what the position is. I hope that the contributions which have been made to this debate to-day will be helpful to the Government, and will enable them in the next few years—I think perhaps they may look forward to a breathing space of three years—to formulate a policy which will bring tighter control of finance, and save the taxpayers' money and see that it is used in the best possible channels.
6.15 p.m.
LORD MANCROFT: My Lords, I wonder whether I might ask permission of the House to speak again, in order to answer one or two points which were not covered in my opening remarks? I should like to begin by thanking the two noble Lords who have just spoken for the welcome they have given to the Government statement of policy with regard to the National Film Finance Corporation. I should like also to disillusion the noble Lord, Lord Lucas, and to say that he has no ground for accusing me of over-optimism. I was only one degree more optimistic—or should I say less pessimistic?—than the noble Lord, Lord Archibald; and, as I have already remarked, that is not saying much. I find some ground for comfort in that the situation this year is not quite so bad as it was last year, but I agree with the noble Lord that the situation of the film industry is one that gives cause for very considerable alarm. Let there be no mistake about that.
Another point I should like to take up is this. Lord Lucas asked me a question about Her Majesty's Government taking over the equities of British Lion and eventually taking over the administration of the Eady Levy. That point will be looked into by others more capable of doing so than myself. I doubt whether they will look into it with any more enthusiasm than when I first heard the noble Lord give vent to his opinions. It seems to me, on first reflection, that to do as the noble Lord suggests would be putting the Government into the business in a very big way, in rivalry with people already in the
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business. It seems to me that this would be a little crack, the beginning of the opening of the door towards a nationalised industry.
LORD LUCAS OF CHILWORTH: Will the noble Lord forgive me for interrupting? The Government are in this already. They are in it now up to their necks, to the tune of £3 million.
LORD MANCROFT: I agree that they are in it to the tune of the £3 million for which they are responsible to the taxpayer. But the noble Lord really would want to give them much more than equities.
LORD LUCAS OF CHILWORTH: Later perhaps.
LORD MANCROFT: If you give the Government equities, you give them much more control than they have. I can see what the noble Lord is getting at. Naturally, I am reluctant to see the Government getting mixed up in this, at present, private industry. I see what the noble Lord is getting at, but I do not like the way he is getting at it. I am sorry that he did not seem to be impressed with my peroration, which I am horrified to confess I wrote myself. If, as we are all agreed—I certainly agree—the British Government have got to stay financially beside the industry, then the industry must understand that it has got in its turn to play its part. It has got to put its own house in order. I hesitate to use the term "feather-bedding," for I remember the terrible repercussions that occurred after its use elsewhere. We do not want there to be any ground for an accusation to be levelled against the industry at some future time to the effect that it sat back arid did not play its part merely because the Government's money, the taxpayers' money, was behind it. There must never be grounds for levelling that accusation against the industry. I will have the whole of this question looked at, but at the moment I am not myself extremely enthusiastic about the idea.
If I may, I should next like to answer what the noble Lord, Lord St. Just, said about script-writers. What he says certainly seems to me to make sense, but the matter is not one, I should have thought, for the Government to interfere

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in at all. It is a matter for the industry itself to put in order. When the noble Lord says that it is very difficult for the producer to guess exactly what the public taste will be, to gauge how the public enthusiasm, fickle as it may be, may change in the matter of films, I agree entirely. But surely it was well said that if you bring out a better mousetrap the world will beat a path to your door. If you cannot gauge the public's desire for these films—which after all is an important part of your business—then I suggest you had better clear out of the business altogether and stop losing the taxpayers' money. If a boot maker cannot make footwear which appeals to the wearers of footwear, or if a mousetrap maker cannot make mousetraps which really do catch mice, then he goes bankrupt. I cannot really see why the taxpayer should be asked to finance inefficiency. We are being asked, and rightly so, to assist in financing a national and vitally important industry which, through no fault of its own—this is a point which both noble Lords have emphasised—cannot at the moment be financially self-supporting. But in turn we are entitled to ask that the industry itself should give as much efficiency and skill as it possibly can. I will take up no more of the time of the House, except to thank both noble Lords for the cordial reception they have given to the Government's proposals, which I hope will produce the beneficial results that they have been good enough to suggest may come.
6.20 p.m.
LORD ARCHIBALD: My Lords, I have been struggling with the temptation to reply in detail to the various points that have been made in the course of the debate. I am sure your Lordships will be glad to know that I have found strength to resist the temptation, for I feel that if I were to cover the various points it might disturb the cordial atmosphere of the debate, in which everyone has been aiming at the same result, the well-being of the industry. Therefore, I think I should content myself with thanking noble Lords who have taken part in making this a most interesting debate. However, I should be completely failing in my duty if I did not express my great satisfaction at the policy announcement made by the noble Lord, Lord Mancroft. I am particularly encouraged because a year ago I made a plea for the continuation of the Eady Plan, and some months later the Eady Plan was extended for another three years. To-day, I have made a plea for the extension of the life of the Film Finance Corporation, and without having to wait months I get an immediate response. My third plea was for a substantial reduction in entertainments tax, and as the Finance Bill has not yet finished in another place I must remain, as the noble Lord described me, slightly optimistic. I express my great appreciation. I think the Government have made a very wise decision. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at twenty-three minutes past six o'clock.