Sitting of 16 July 1957

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  B P TRADING BILL [Lords]
  As amended, considered; Amendments made to the Bill; Bill to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  COLONIAL TERRITORIES

    Colonial Development Corporation
    Mr. Brockwayasked the Secretary of State for the Colonies if he will make a statement regarding proposals to increase the borrowing powers of the Colonial Development Corporation.
    The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): The Government share the Corporation's view that it will need additional capital in order that it may embark on further projects in Colonial Territories. The amount is still under discussion.
    Mr. Brockway: While I welcome that assurance, is it possible to put an end to this uncertainty before long, because the limit of £100 million is already committed, and schemes amounting to another £38 million are now being discussed, and because of the general recognition which that affords of the value of the work done by the Corporation?
    Mr. Lennox-Boyd: It is not true to suggest that the Corporation is now prevented by shortage of capital from embarking on further projects. It has £56 million outstanding, and the total effective commitments are about £84 million. I fully understand that the Corporation will need further funds soon, and we are discussing the matter with it. As I have said, an announcement will be made after we have had the discussions.
    Mr. Marquandasked the Secretary of State for the Colonies when he intends to introduce the necessary legislation to permit the Colonial Development Corporation to continue to operate existing schemes in Colonial countries which achieve independence and to provide further capital for such schemes.
    Mr. Lennox-Boyd: Legislation is not required for this purpose. The Corporation can do these things under the Overseas Resources Development Acts as they stand at present.
    Mr. Marquand: May I ask the right hon. Gentleman whether, before making his statement of 1st July, he consulted the Corporation, and if he has not done so, will he do so at an early date?
    Mr. Lennox-Boyd: I and my fellow Ministers, as well as officers of my Department, are in constant touch with the Corporation on this and everything else.
    Mr. Marquandasked the Secretary of State for the Colonies whether the authority of a United Kingdom Minister will be required to enable the Colonial Development Corporation to undertake the management of development projects within the territory of another independent Commonwealth Government.
    Mr. Lennox-Boyd: This question is at present being considered in connection with the legislation which will be required to enable the Colonial Development Corporation to carry out this new function.
    Mr. Marquand: Has the right hon. Gentleman had any assurance from any of the Prime Ministers or other representatives of independent Commonwealth countries who were here recently that such countries will be willing to use the services of the Corporation if the Corporation is debarred, as apparently it will be, from making any financial contribution when it undertakes a scheme of this kind?
    Mr. Lennox-Boyd: I know that all Dominions would be very interested in suggestions of this kind, though every particular case would, of course, have to be examined on its merits.
    Mr. Marquand: In preparing the legislation, will the right hon. Gentleman consider the suggestion that when undertaking a management agency it would

    917
    not be unreasonable for the Corporation itself to have some share of the finances of the scheme?
    Mr. Lennox-Boyd: No, Sir. The basis of this association was that it would be without commitment of Corporation funds, but, subject to that, I will take notice of anything that the Corporation may say.

    Apprenticeship Schemes
    Mr. Wilfred Palingasked the Secretary of State for the Colonies what provision is made by the Governments of Northern Rhodesia, Nyasaland, Tanganyika, Uganda and Kenya, for apprenticeship schemes in the mining and building industries and in agriculture, respectively.
    The Under-Secretary of State for the Colonies (Mr. John Profumo): I am communicating with the Governments concerned, and will write to the hon. Member when the information is available.
    Mr. Paling: Will the hon. Gentleman ensure that opportunity is given to the Africans, who are very discontented with the present state of affairs, to be really trained and to earn decent wages, like anyone else in their own territory?
    Mr. Profumo: The extension of the present ordinance to Africans is at present being considered by a special committee set up by the Northern Rhodesian Government.

    Minimum Wage Rates
    Mr. Swinglerasked the Secretary of State for the Colonies in which Colonial and trust territories the minimum wage rates are assessed on a family budget of three persons; and in which territories they are fixed on the subsistence level of one adult male worker.
    Mr. Profumo: Family responsibilities are no doubt taken into account when statutory minimum wages are fixed but, so far as I am aware, statutory wage fixing bodies, as in this country, are not bound by specific criteria, except in Kenya. The same is true of wage rates determined by collective bargaining.
    Mr. Swingler: The hon. Gentleman says that they are no doubt taken into account, but would he make a survey to get detailed information in order to find out exactly to what extent they are taken into account? Is it not a fact that in these
    918
    Colonial Territories family responsibilities are assessed in fixing minimum wage rates? To what extent are any other responsibilities—for example, provision of family allowances—taken into account to enable the families to be kept together?
    Mr. Profumo: I think that that raises a very much wider question. I will be glad to answer the hon. Gentleman on that, but 1 would be glad if he would put such questions on the Order Paper.

    Northern Rhodesia and Nyasaland (Soil Erosion)
    Sir L. Plummerasked the Secretary of State for the Colonies what steps are being taken by the Governments of Northern Rhodesia and Nyasaland to deal with the problem of soil erosion in the African reserves.
    Mr. Lennox-Boyd: I am consulting both the Governors so as to provide up-to-date information and, as the reply is likely to be both lengthy and detailed. I will write to the hon. Member.
    Sir L. Plummer: Is the Colonial Secretary aware that many Africans oppose schemes for preventing soil erosion for reasons of superstition and because they are inately conservative and do not like changes? Will he, therefore, take steps to strengthen the staff of the agricultural advisory service to help the Africans towards enlightenment and education?
    Mr. Lennox-Boyd: I am quite aware that one of the better qualities of the African is inate conservatism, but I am always ready from time to time to see how this can be brought in touch with modern life.

  HONG KONG

    Cloth Exports
    Mr. Fletcher-Cookeasked the Secretary of State for the Colonies if he will discuss with the Government of Hong Kong how imports of Hong Kong cloth into the United Kingdom can be limited, in view of the refusal of the Hong Kong Cotton Spinners' Association to agree to any voluntary arrangements for limitation.
    Mr. Lennox-Boyd: It would be contrary to Her Majesty's Government's policy to impose restrictions on Hong Kong's exports to this country.
    Mr. Fletcher-Cooke: Will not my right hon. Friend agree that it is a thousand pities that when the merchants and trade interests in India and Pakistan are anxious and willing to agree to a scheme of voluntary limitation if the merchants and producers in Hong Kong so agree, my right hon. Friend feels, the Hong Kong merchants and producers having refused, that he cannot even use his good offices to ascertain whether they will agree to some tripartite scheme of voluntary limitation?
    Mr. Lennox-Boyd: I could not accept the inferences in my hon. Friend's question. Hong Kong is a Colony for whose welfare we are responsible. It has concentrated on manufactures largely because of the strategic controls that we imposed upon it, and it would have been in a difficult position if we had not allowed it to develop manufactures in this way. It has no independent membership of G.A.T.T. and it looks to Her Majesty's Government to protect it, as would any part of the United Kingdom.
    Mr. Thornton: While I appreciate that the right hon. Gentleman's over-riding interest is the welfare of the colonial peoples, is he not aware that the United Kingdom cotton textile industry is having to pay a disproportionate price for the industrial development in Hong Kong? Is he satisfied that Hong Kong may not make the same mistake as Japan did in concentrating too much on an export industry, the trade of which, according to the trends over the last forty years, has continued to decline in the world? May it not be that Hong Kong will meet the same fate as Japan did?
    Mr. Lennox-Boyd: We ought to look at this matter in perspective. Hong Kong production is a minute fraction of United Kingdom production, and the consequence of interfering with the free entry of British Colonies into the United Kingdom market in the interests of a single industry in the United Kingdom would be widespread and would have to be weighed most carefully before any Government took action.

  WEST INDIES

    Antigua (Apprenticeship Training)
    Mr. Malcolm MacPhersonasked the Secretary of State for the Colonies how
    920
    many boys applied to the Industrial Training Committee of Antigua for apprenticeship training during the twelve months ending at the latest convenient date; for how many such training has been arranged; and what opportunities of learning a trade are planned for the others.
    Mr. Profumo: During the year ended the 31st January, 1957, the Industrial Training Committee received 169 applications for apprenticeship training. The number of applicants selected for training was 42, of whom five have so far been apprenticed. The Committee is trying to find places for the others, but opportunities are limited.
    Mr. MacPherson: Is there not a remarkable gap between the number of applications and the number who have been placed? Is not five a very small proportion out of a population in the community of 50,000? Can the hon. Gentleman say what avenues are being tried to expand this service?
    Mr. Profumo: As I said, the trouble is that the opportunities are limited, but the Industrial Development Board has recently brought into operation an edible oil factory, a cotton ginnery and a small arrowroot factory, and a cornmeal factory will shortly be constructed.

    Federal Capital (Site)
    Mr. Reevesasked the Secretary of State for the Colonies if Her Majesty's Government have yet approached the Government of the United States of America with the request of the Standing Federation Committee of Trinidad that their base should be surrendered to them, in terms to be arranged, for the site of the new federal capital.
    Mr. Profumo: Yes. As a result of the approach, discussions between representatives of Her Majesty's Government and the Government of the United States of America have opened today. Delegates from the Standing Federation Committee are taking part.
    Mr. Reeves: Will the Minister press the American Government in order that they may see the great advantages of an airfield near Port of Spain, since other

    921
    airports have nowhere near the same advantages?
    Mr. Profumo: That is one of the matters which will certainly be very much in mind.

    Trade
    Mr. Reevesasked the Secretary of State for the Colonies if the British West Indies Trade Commission in London will be invited to attend the meeting of the signatories of the General Agreement on Tariffs and Trade; and what are the views of the Economic Committee which met in Port of Spain, Trinidad, in May, on the effects of the European Free Trade Area on the products of the West Indies.
    Mr. Profumo: My right hon. Friend will be consulting Colonial Governments, nearer the time, regarding the necessity or otherwise for attaching colonial advisers to the United Kingdom delegation to the session of the G.A.T.T. which is to consider the Treaty of Rome there is no objection in principle to such attachment.
    The proceedings of the Regional Economic Committee are confidential. The views of the Committee are now under consideration by the West Indian Governments.

    Financial Assistance
    Mr. Reevesasked the Secretary of State for the Colonies what proposals have been made by Her Majesty's Government for financial assistance to the West Indian Federation during the first ten years of federation in addition to the present commitments of the Colonial Development Corporation and the Colonial Development and Welfare Corporation in order to increase urgent economic development.
    Mr. Profumo: The assistance which Her Majesty's Government have undertaken to provide to the Federal Government is described in Cmd. 9733. Consideration of a case for any further assistance must await a detailed and realistic assessment of the most pressing needs of the area and a co-ordinated regional economic plan. I am aware that the Standing Federation Committee has the importance of such planning much in mind and no doubt it will be one of the first preoccupations of the Federal Gov-
    922
    ernment. My right hon. Friend is considering how best this Department can give the Federal Government any help it may require in the drawing up of such a plan and in the assessment of regional needs.
    Mr. Reeves: Does the Minister realise that the success of this great experiment will depend largely upon the help which the West Indies receive, particularly during the early years, and that if the sum can be made as large as humanly possible there is more chance of the Federation succeeding?
    Mr. Profumo: Yes, Sir, but before considering whether anything further can be done there must be a detailed economic planning assessment.

    Grand Bahama Port Authority
    Mr. Frank Allaunasked the Secretary of State for the Colonies the minimum wage rates and the wage rates for skilled workers which will be paid to employees of the firms engaged in the development of the port of Grand Bahama, under the terms of the agreement with the port authority.
    Mr. Profumo: Actual rates are not prescribed but the Grand Bahama Port Authority Area has undertaken to pay Bahamian workers, both skilled and unskilled, wages or salaries comparable with those obtaining in similar works elsewhere in the Colony. Firms licensed by the Authority to operate in the port area are required to give a similar undertaking.
    Mr. Allaun: Will the Minister consider recommending that the scandalously low minimum rate be raised and further that the minimum rates throughout the Caribbean be standardised, otherwise the islands paying better wages will be deprived of capital which will flow of necessity to the Bahamas where wages are notoriously lower?
    Mr. Profumo: I think that is a much wider question than the one on the Order Paper. In the case we are discussing the minimum wages laid down by ordinance are often exceeded, so that the arrangements made by the Government and the Authority are really more favourable than they would otherwise be.

    Dominica and Trinidad (Venereal Diseases)
    Mr. D. Jonesasked the Secretary of State for the Colonies what provision exists on the Island of Dominica for health teaching about venereal disease.
    Mr. Profumo: Health teaching about venereal diseases is undertaken within the ambit of a yaws eradication project, on which W.H.O. and U.N.I.C.E.F. are assisting. This has been in operation for some years, and a start is being made under it to control venereal diseases.
    Mr. D. Jonesasked the Secretary of State for the Colonies if he will give the latest available figures for the incidence of venereal diseases and yaws in Dominica and Trinidad, respectively.
    Mr. Profumo: The 1955 incidences per thousand of population for venereal diseases and yaws respectively were about 5·5 and 17 in Dominica and 9 and 0·6 in Trinidad.
    Mr. Jones: The hon. Gentleman will be aware that there are more than two and a half times as many persons in Dominica to each doctor as there are in any other British territory. How far does that contribute to an incidence of these diseases in Dominica much higher than is to be found in any other territory, and how far does the fact that the housing conditions of the majority of the people in Dominica are worse than are to be found in any other territory under the British Crown contribute to this result also? Is it not the fact that overcrowding and shocking housing are responsible for these health conditions?
    Mr. Profumo: I should not wish to accept any of that contention. However, it happens that an important Minister from Dominica is here at the present time, and either my right hon. Friend or I will consult him on this matter.

  MAURITIUS

    Indian Children (School Examinations)
    Mrs. Butlerasked the Secretary of State for the Colonies what proportion of the total number of Indian children at school in Mauritius failed the 6th
    924
    standard examination during the years 1954–57, respectively.
    Mr. Profumo: The information is not available since the lists of candidates give no indication of their religion or racial origin.
    Mrs. Butler: Is the hon. Member aware that a considerable number of Indian children fail this examination because of the great difficulty they have in mastering the French language? Will he encourage the carrying out of the recommendations of successive Royal Commissions and the Ward Report that they should have their basic instruction in their mother tongue, with English as their second language, and that French should no longer be compulsory in this examination?
    Mr. Profumo: I have recently been to Mauritius and I was not made aware of this difficulty in any way. I do not believe there is any reason to think that the Indo-Mauritians are suffering more than other children. There is a large proportion of failures, but the Government hope that that is only a phase in the development of education.

  NORTHERN RHODESIA

    Local Government (African Representation)
    Mr. Brockwayasked the Secretary of State for the Colonies if the Government of Northern Rhodesia have accepted the recommendations of the Brown Committee on African representation on local government authorities.
    Mr. Swinglerasked the Secretary of State for the Colonies what proposals have been made by the Government of Northern Rhodesia to introduce African representation on municipal councils.
    Mr. Lennox-Boyd: The Brown Committee on African Representation in Local Government in Urban Areas recommended that special arrangements be made for greater participation by Africans in the administration of the African housing areas but did not recommend direct representation in the local authorities. The report of the Committee is to be debated in the Northern Rhodesia Legislative Council during the present meeting.
    Mr. Brockway: Would the right hon. Gentleman bear in mind the fact that there are no African representatives at all in these local authorities and that he has recently given me replies about the population which show twenty-seven Africans to one European, eight to one European and five to one European. If the demands of the Africans for a place in their country are to be met, would he not at least encourage African representation in these local authorities?
    Mr. Lennox-Boyd: I am all for increasing the chances of Africans playing a proper part in their own affairs. I will lay this Report in the Library of the House. I hope the hon. Member will hear in mind, however, that the present position is that African housing areas within local authority areas are not rate-able and that Africans are therefore not ratepayers in the housing areas. This is a factor which ought to be borne in mind. If, after further reading the Report—
    Mr. Brockway: I have read it.
    Mr. Lennox-Boyd: —the hon. Member wants to question me further, I shall be glad to answer him.
    Mr. Swingler: Would not the right hon. Gentleman reconsider this matter very carefully? Is it not basic to our ideas of government in these territories that we should govern with the consent of the majority? Is it not clear that the Africans here are in all cases in the majority? Will not the Secretary of State say that it is his policy that as soon as possible the majority should be represented on the governing body?
    Mr. Lennox-Boyd: Most certainly. I made that quite clear when I was in Northern Rhodesia. I ask hon. Members to ponder the Report carefully. It puts the picture as a whole.

    Africans (Skilled Occupations)
    Mr. Stonehouseasked the Secretary of State for the Colonies what action the Government of Northern Rhodesia intend to take to remove discrimination against Africans who are not allowed to undertake skilled occupations in Northern Rhodesia.
    Mr. Lennox-Boyd: Except for restrictions arising from the agreements which have been made by certain trade unions
    926
    and employers, notably in the copper mining industry, there is no limitation on the opportunities for skilled African workers to follow their trades in Northern Rhodesia. Relaxation of some of the restrictions on the Copperbelt has been achieved by collective bargaining between the European and African Unions and the companies concerned. The Government welcome this advance, and would certainly welcome further advance, but agree with the view of the Forster Board of Inquiry in 1955 that the solution of this problem rests upon the parties engaged in the industry.
    Mr. Stonehouse: Is the right hon. Gentleman aware that, although there is no legal discrimination, there are great social and other discriminations which are preventing Africans from following skilled occupations which, a few miles away in the Belgian Congo, they could undertake? Will he look further at this matter to see whether steps cannot be taken to improve the Africans' chances?
    Mr. Lennox-Boyd: I am not one of those who need educating in this matter. I am sure that the hon. Gentleman will use all his influence with those people who are still in a position to make it difficult, but I think that there has been remarkable progress, and I must emphasise that in a question of this kind, where everyone has right, of a kind, on his side, it is necessary to proceed by agreement.

    Riot Damage Ordinance, 1957
    Mr. Stonehouseasked the Secretary of State for the Colonies if he will advise the Governor of Northern Rhodesia to amend the Riot Damage Ordinance of 1957 to allow for a means of appeal against the imposition of a levy under Section 8 and that such an appeal shall be to a judicial body.
    Mr. Lennox-Boyd: No, Sir.
    Mr. Stonehouse: Does not the Colonial Secretary agree that it can create a most unfortunate impression when a fine can be imposed on a political body without any appeal being allowed, and will he look further into this?
    Mr. Lennox-Boyd: I think that if the hon. Member will re-read the history of this country, he will come to the conclusion that in a comparable stage of

    927
    political development this situation existed here. Levy, or compensation, is essentially an act of the Executive, and I cannot see on what principle it would be possible to make a levy of this kind subject to a judicial court.

    Civil Service (Salaries)
    Mr. Stonehouseasked the Secretary of State for the Colonies what is the approximate average salary paid to Africans and Europeans, respectively, in the territorial Civil Service in Northern Rhodesia; and what provision is being made to train Africans for higher positions.
    Mr. Profumo: I have consulted the Governor, and when I have his reply I will circulate the information in the OFFICIAL REPORT.
    Mr. Stonehouse: Is the Under-Secretary aware that according to figures published three months ago, the average salary paid to a European in the Civil Service is £1,000 a year, and the average paid to an African only £113 a year? Will he have a look at this matter to see what further opportunities Africans can have to advance into the higher grades?
    Mr. Profumo: The hon. Gentleman is now proceeding to answer his own Question. I prefer to wait for the official figures from the Governor, and then we may be able to go into the matter a little further.

    Building Industry (Wages)
    Mr. Wilfred Palingasked the Secretary of State for the Colonies the minimum wage payable to Africans in the building industry in Northern Rhodesia; and the number of Africans receiving minimum wages, the number receiving skilled labourers' wages, and the number of European skilled labourers receiving similar wages.
    Mr. Profumo: I am asking the Governor for this information and, when I receive his reply, will circulate it in the OFFICIAL REPORT.

    Peter Hubumba
    Mr. Brockwayasked the Secretary of State for the Colonies why Peter Hubumba, Deputy Provincial President of the African National Congress of the
    928
    Southern Province of Northern Rhodesia, was suspended by telegram on 23rd April, 1957, from membership of the Plateau Tonga Native Authority in the Mazabuka district of Northern Rhodesia; and if he has now been reinstated.
    Mr. Lennox-Boyd: I am consulting the Governor and when I have his reply I will write to the hon. Member.
    Mr. Brockway: Will the right hon. Gentleman do something more than that? Is he aware that this gentleman has served eleven years a a councillor, that he was suspended just by telegram, that a meeting was then called to disband the African Congress, and that the meeting of the Native Authority refused to do so? Will the right hon. Gentleman see that this gentleman, as a leader of the African Congress, is reinstated on that authority?
    Mr. Lennox-Boyd: The Governor's remarks may provide an interesting comment on the hon. Gentleman's premature observations.

    Maize and Wheat Production
    Mr. Sydney Irvingasked the Secretary of State for the Colonies what steps are being taken by the Government of Northern Rhodesia either to stabilise the production of maize or to secure other outlets for the rapidly increasing quantities being produced particularly by Africans.
    Mr. Profumo: I am consulting the Governor and will circulate the information, when it is received, in the OFFICIAL REPORT.
    Mr. Irving: If the hon. Gentleman is consulting the Governor, would he bear in mind also that, if he does not do something and the Governor does not do something very shortly about the overproduction of maize in this territory, there will be a great deal of distress among African farmers, and will he ensure, if he cannot get other outlets, that there are other forms of production which could be usefully employed in the country?
    Mr. Profumo: It would, I think, be wise to await the information from the Governor.
    Mr. Sydney Irvingasked the Secretary of State for the Colonies what encouragement is being given by the

    929
    Government of Northern Rhodesia to the dry land production of wheat; and what proportion of the total wheat consumption of Northern Rhodesia is imported.
    Mr. Profumo: I am consulting the Governor and will circulate the information, when it is received, in the OFFICIAL REPORT.
    Mr. Irving: The House will be distressed at the hon. Gentleman's lack of information. Will he bear in mind, until such time as he gets the information, that there is imported into this territory a considerable quantity of wheat, and, having regard to the subject of the previous Question, namely, the overproduction of maize, would this not be an avenue for the constructive reorientation of crop policy in the territory which would help African and European alike?
    Mr. Profumo: I think that I ought just to explain to the hon. Gentleman that about 90 per cent. of our Questions usually require consultation with Governors. These Questions came to me only last Friday and I know that the hon. Gentleman, as would any other hon. Member, would wish the information given to be accurate. But it does take time.

    African Education
    Mr. J. Johnsonasked the Secretary of State for the Colonies the amount of the trimming of the African education estimates of Northern Rhodesia because of the fall of the copper revenues.
    Mr. Lennox-Boyd: When my hon. Friend in his reply on 4th July mentioned a "trimming" of the estimates, he was referring to the Northern Rhodesia estimates generally. The position is that instead of an expansion of more than 20 per cent. over all Government Departments, which would have maintained the rate of development and which had been hoped for, the 1957–58 budget, just introduced, provides for an increase over the previous year at rather more than 9 per cent. for recurrent expenditure on African education and rather less than 9 per cent. overall.
    Mr. Johnson: I thank the right hon. Gentleman for that helpful answer, but would he agree that any economy at all would be disastrous? Would he agree that much more money needs to be spent,
    930
    because there is only one boys' secondary school in that Colony with its 2 million Africans and there is not yet one girls' secondary school with a school certificate course?
    Mr. Lennox-Boyd: I am very conscious of this, but, clearly, the price of copper is a factor. I think that the fact that the average increase in expenditure is less than 9 per cent. but in the case of African education it is more than 9 per cent. is an earnest of the intentions of the Government of Northern Rhodesia in this regard.

  MALTA

    Talks
    Mr. Teelingasked the Secretary of State for the Colonies the present position of the negotiations with Malta; when he will make a statement on the employment situation there; and what is the latest offer made by Her Majesty's Government to the Maltese Government.
    Mr. Lennox-Boyd: I am hoping to have talks in a day or two with the Prime Minister, who is over here for medical consultation.
    Mr. Teeling: Will my right hon. Friend bear in mind that we have only a little more than a fortnight before the Recess and that after that we shall be away for about three months? Will he bear in mind that many of us will feel that perhaps we are being treated a little casually if we are not told something before the House rises?
    Mr. Lennox-Boyd: We are dealing with very big issues which cannot always be settled to correspond with Parliamentary sittings, but I hope that my hon. Friend agrees that even in Recess I still know what he feels.
    Mr. E. L. Mallalieu: Is the right hon. Gentleman aware that this proposal to integrate Malta and the United Kingdom has struck the imagination of decent-minded people not only in the Commonwealth but all over the world and that there is a feeling abroad that he and his right hon. Friends are dragging their feet in this matter?
    Mr. Lennox-Boyd: That is quite untrue. My views remain unchanged, but I would not accuse those who disagree with me of indecency.

  KENYA

    Land Consolidation Schemes
    Mr. Pargiterasked the Secretary of State for the Colonies what provision is being made by the Government of Kenya for the Ahoi younger sons and others, who were able to farm their own land under tribal custom before the land consolidation schemes deprived them of this right, to buy or lease land in other parts of Kenya.
    Mr. Profumo: No person who is farming his own land under tribal custom is being deprived of his land rights. On the contrary such rights are being ascertained and confirmed by a formal process. Ahoi and others who have no land of their own will now be able to buy and lease land by a simple and cheap procedure which will provide a certainty and security hitherto unknown to customary law. They will also have the opportunities described in my reply to the hon. Member for Eton and Slough (Mr. Brockway on 8th March. The land needs of younger sons present a problem only where there is a shortage of land. They will be more easily met by these new processes, which make it easier to acquire or lease land.
    Mr. Pargiter: Am I to understand from that reply that adequate land is available for the whole of the Ahoi younger sons and others, provided, of course, that they are able to buy or lease it? Will the facilities be such that they can readily acquire the land or will there be created a landless class of peasants who are forced to enter other occupations?
    Mr. Profumo: I think that if the hon. Member reads my reply, which is carefully worded, he will understand the situation. If he has any particular question which he would like to ask after that, I will do my best to answer it.
    Mr. Baldwin: Is my hon. Friend aware that the tribal system and the breaking up of land leads to fragmentation and soil erosion and that, if something is not done to stop it, much of the land in Kenya will be as productive as the Sahara Desert? Is he aware that land consolidation is doing a grand job in these tribal areas and that, although there was
    932
    resistance at the start, the people are now welcoming the scheme which is operating?
    Mr. Profumo: That is so.

    Detainees (Rehabilitation)
    Mr. Pargiterasked the Secretary of State for the Colonies on what conditions a hard case detainee in Kenya is permitted to qualify for rehabilitation; and on whose authority and on what evidence such decisions are taken.
    Mr. Lennox-Boyd: Rehabilitation is open to all detainees, but the "hard case" or intractable detainees are so called because of their persistent refusal to have anything to do with it. Nevertheless, it is the Kenya Government's policy to offer detainees of this class further opportunities of speeding their release by moving them to camps where there are large numbers of co-operating detainees. In most cases so far, this has resulted in the non-co-operators beginning to work their passage to release through the process of rehabilitation.
    Mr. Pargiter: Is the right hon. Gentleman aware that according to The Times this morning, the Governor of Kenya has indicated that there still remain 23,000 of these cases, and that we are now coming, in his words, to the "more difficult characters", and that it is impossible to say whether our present system of release and rehabilitation will continue to be suitable? Will he keep the House informed of any changes in the system, and of such other measures as may be deemed to be desirable in order to deal with these more difficult cases?
    Mr. Lennox-Boyd: Indeed, I will take the House into partnership on every possible occasion. Although it is true that 23,000 are still in detention, it is also true that 45,000 who were in detention have been released.
    Mr. Stonehouse: Can the Colonial Secretary give an assurance that when a detainee appeals for release, he may be present throughout the proceedings of the advisory board hearing his case?
    Mr. Lennox-Boyd: Well, Sir, there are some difficulties there; but I will discuss the matter with the Governor, who is now in London.

    African Political Meetings (Restriction)
    Sir L. Plummerasked the Secretary of State for the Colonies what reply has been given by the Government of Kenya and by the United Kingdom Government to the request of the Nairobi District African Congress that restrictions on African political meetings should be cancelled.
    Mr. Lennox-Boyd: This request has not yet been sent to me officially through the Governor, and I am unaware of the terms of any reply which may have been sent by the Kenya Government. But control of these meetings is essential to the maintenance of public order, and the Kenya Government have my full support for their present policy.
    Sir L. Plummer: Is the Colonial Secretary aware that the restrictions amount virtually to a total ban on open-air meetings, and, in view of the necessity of listening to the political aspirations of the Africans, will he make representations to see whether the restrictions, if not abolished, can at least be further reduced?
    Mr. Lennox-Boyd: No, Sir, but I am very ready that the Governor should have a talk with the hon. Gentleman, and with any other hon. Members about this matter. It is not true that this restriction leads to a complete ban. For specific meetings in rural areas where no halls can be used, permission is given, if the authorities are satisfied that the local situation and the facilities for keeping public order are satisfactory. But I am not prepared to disregard the advice of those people on whom the blame would lie if disorder occurred.
    Mr. J. Johnson: Can the Minister confirm that Mr. Tom Mboya and the elected members of the Legislative Council met the Governor on this very subject as far back as 10th June? Can he tell the House what answer was given to them on that occasion?
    Mr. Lennox-Boyd: Yes. They were told what I have told the House—that, on certain conditions, open-air meetings in rural areas can be allowed. But those conditions must be fulfilled, and nobody can claim exemption from that obligation.

    Gathigiriri Works Camp (Disciplinary Inquiry)
    Mrs. Castleasked the Secretary of State for the Colonies (1) how many convictions there have been for assault on prisoners at Gathigiriri Works Camp, Kenya; how many prisoners have died as a consequence of ill-treatment; what members of the staff were involved in these convictions; and what was the sentence in each case;
    (2) on whose authority orders were given by Jasiel Njau Kariuki, a rehabilitation assistant at Gathigiriri Works Camp, Kenya, for a detainee to be beaten and hung up by his wrists from a beam.
    Mr. Pagetasked the Secretary of State for the Colonies (1) whether he will make a statement with regard to the death of Macheri Githuma, a detainee in Kenya;
    (2) what action he proposes to take upon the judicial comment made by Mr. Justice Pelly Murphy in Kenya that he suspected that orders given by an African rehabilitation assistant for Macheri Githuma to be beaten and hung by his wrists from a beam were ordered and carried out with the tacit approval of his superior officer;
    (3) whether he will place in the Library a transcript of the trial of five persons in Kenya resulting from the death of Macheri Githuma.
    Mr. Lennox-Boyd: Macheri Githuma was one of fifty intractable detainees sent to Gathigiriri Camp for rehabilitation. Soon after arrival each man was placed separately in a hut with a small group of detainees under rehabilitation. Jasiel Njau Kariuki, an African rehabilitation assistant, led the men in his hut in an assault on Githuma, as a result of which he collapsed. He was taken outside the hut but died soon after.
    The Attorney-General directed prosecution of Njau and five detainees for murder. Medical evidence at the trial showed that death could not be proved to have been due to the assault. Proceedings against one detainee were stopped; the other defendants were later acquitted of murder but convicted of assault causing actual bodily harm. Njau was sentenced to twelve months' imprisonment with hard labour and the

    935
    remainder to three months. I will consider the question of placing a copy of the proceedings in the Library.
    The Attorney-General decided that there was no evidence to support a criminal charge against the camp commandant and rehabilitation officer. The Governor ordered that their conduct should be the subject of a disciplinary inquiry, which is now taking place under the chairmanship of the Solicitor-General. I can, therefore, make no statement about their alleged part in this incident at present.
    I am not in possession of details of any other convictions for assault at this camp, nor am I aware of other deaths of detainees there. I am consulting the Governor and will circulate any relevant information in the OFFICIAL REPORT.
    As a result of this incident the Governor personally visited the camp in February and ordered measures for closer supervision designed to prevent any recurrence of incidents of this nature.
    Mrs. Castle: Is not the Colonial Secretary aware that it is very unsatisfactory to have five Questions lumped together in this way, thus restricting the possibility of really elucidating the innumerable details which arise?
    Will the right hon. Gentleman give two assurances? First, will he let us have a full report of the disciplinary inquiry so that we can be sure there is not in this case the same sort of evasion of responsibility as took place in the case of Kamau Kuchina? Is he also aware that the defending counsel of two of the detainees at the trial of Njau Kariuki made the statement that:
    "We have evidence that there were other convictions in the camp for similar assaults and I am informed they numbered no less than 27."
    In view of the gravity of this statement, will the Colonial Secretary let the House have either a denial of this fact when he has authenticated the statement, or the full details of the twenty-seven convictions which throw a grave light on this question of the rehabilitation service?
    Mr. Lennox-Boyd: I would suggest that it hardly helps in this case if the hon. Lady unjustly accuses me of evasion in a previous one. I am ready to consider laying any relevant papers before the House. When I last did so with regard
    936
    to her other charges, the charges almost immediately dried up. The only correspondence in my office is from people who confessed themselves disillusioned at having listened to the hon. Lady, and naturally I am only too ready to follow the previous precedent.
    I cannot agree with what the hon. Lady has said. If she cares to give me those details or come and see the Governor of Kenya, who is now in London, and give him personally the details, I shall be only too anxious, as is the Governor of Kenya, that nothing should be covered up.
    Mr. Paget: Is the right hon. Gentleman aware that I believe that a wonderful job has been done by a great many people in connection with this rehabilitation project, but that nonetheless one is frightfully concerned when these horrible cases occur and even more concerned when the sentences appear to be so inadequate? Secondly, is the right hon. Gentleman aware that there seems to be a certain delusion in Kenya that the offence of murder involves only killing whereas in fact it also involves acceleration of death? When a man is thrashed and hung up by his wrists and dies, it is a little odd to hold that he would not have died rather later if he had not been treated in that way.
    Mr. Lennox-Boyd: I am always prepared to listen to what the hon. and learned Gentleman has to say. He has had personal experience of what armed conflict means and he knows some of the difficulties under which the security forces have been operating in Kenya. In this case I think that if he reads my answer and my assurance, he will realise that I am only too anxious that all the facts should be known. I am ready to join him as well in any talks with the Governor, if the Governor is, as I do not doubt he would be, ready to discuss this case which I understand quite naturally has caused some anxiety to hon. Members on both sides of the House, and not least to those who have chosen to pursue the matter with me by correspondence and not necessarily in this way.
    May I also ask hon. Members to view this matter in the light of the vast problem in Kenya and of the 45,000 people who have been released in order, one hopes, to start again a new and good life in Kenya?

    Constitution (Talks)
    Mrs. Castleasked the Secretary of State for the Colonies what official discussions are planned with Sir Evelyn Baring, the Governor of Kenya, regarding the constitutional deadlock in that territory.
    Mr. Lennox-Boyd: As is usual about this time of year, the Governor is paying a brief visit to give me an up-to-date account of the situation in Kenya.
    Mrs. Castle: Will the Colonial Secretary use this opportunity of discussions with the Governor to press upon him the desirability of immediate increased representation being given to Africans in the Legislative Council, in order to create an atmosphere of confidence which will enable multi-racialism to proceed in that Colony?
    Mr. Lennox-Boyd: Quite naturally, I shall take advantage of the Governor's presence here to consider with him what negotiations and discussions on these matters are possible within the confines of the undertakings given by my predecessor, by which, naturally, I am completely bound.
    Mr. J. Johnson: Is the right hon. Gentleman aware that Tom Mboya is flying here at this moment, that two Cabinet Ministers are in the same plane, and that two other Ministers from Kenya are already in this country? Will he, therefore, consult these men in high positions in Kenya with a view to agreement being reached as early as possible on a constitutional conference long before 1960?
    Mr. Lennox-Boyd: As the hon. Gentleman knows, I have never shown any reluctance to see visitors from any Colonial Territory. He referred to Mr. Tom Mboya as being in a high position in Kenya. I am anxious that he should be in a position of responsibility in Kenya, but so far he has refused. I think that responsibility is more important than height, despite my own.

  CYPRUS

    Turkish-Cypriot Town Councillors (Resignation)
    Major Wallasked the Secretary of State for the Colonies how many Turkish-Cypriot town councillors have recently
    938
    resigned their office; and what reason they gave for their resignation.
    Mr. Lennox-Boyd: Twenty-one. A message to the Governor gave as the reason, that the rights of Turks are not effectively protected in municipal councils and are left at the will of the majority, which exploits its position to achieve its own political aspirations.
    Major Wall: Can my right hon. Friend say whether these resignations have occurred in one particular area, or throughout the island?
    Mr. Lennox-Boyd: They have occurred, I think, wherever Greek Cypriots are in a majority. They cover three-quarters of all the Turkish municipal councillors and, as far as I know, the only ones remaining are the seven Turkish members at Lefka, where they are in a majority on that council. That is my present information.

    Trade Unionists (Detention)
    Mrs. L. Jegerasked the Secretary of State for the Colonies how many officials and members of the Cyprus Workers' Federation, which is affiliated to the International Federation of Free Trade Unions, are still in detention without trial in Cyprus.
    Mr. Lennox-Boyd: I am asking Cyprus for this information and will furnish the figure as soon as I have the reply.

    Situation
    Mrs. L. Jegerasked the Secretary of State for the Colonies if he will now make a further statement on the future of Cyprus.
    Mr. Lennox-Boyd: No, Sir. I have no further statement to make today.
    Mrs. Jeger: In view of the completely disappointing speeches from the Front Bench yesterday, can the right hon. Gentleman at least give the House an undertaking that there will be some statement on Cyprus before the House rises, and that he will not wait until Parliament has dispersed before making an announcement on any plans for the future of the island?
    Mr. Lennox-Boyd: The hon. Lady knows more about yesterday's disappointments than I do.
    Major Wall: Will my right hon. Friend undertake to give the maximum publicity to the important statement made from the Opposition Front Bench yesterday that, in the event of a Socialist Government controlling this country, there would not be Enosis until after a long perod of probation?
    Mr. Lennox-Boyd: Yes, Sir. It is already being widely pondered.

  SEYCHELLES

    Financial and Fiscal System (Commissioner)
    Mr. Swinglerasked the Secretary of State for the Colonies on what date a Commissioner was appointed to examine the financial and fiscal system of the Seychelles; whom he has appointed; and what terms of reference have been laid down.
    Mr. Profumo: I am glad to say that Sir Rex Surridge accepted this appointment on 11th July. His terms of reference will be
    "to advise on financial administration and financial and fiscal policy and to carry out a revision of structure, salaries and conditions of service of the Civil Service".
    Mr. Swingler: While I welcome this appointment and wish well to the Commissioner who has been appointed, may I ask if the Under-Secretary is aware that those of us on this side of the House who have been concerned about the Seychelles in the past are not satisfied that this is adequate; and that we still feel that an independent commission of inquiry into the whole governmental and administrative system of the Seychelles is necessary to prevent further maladministration?
    Mr. Profumo: As I have told the hon. Gentleman before, I do not accept his allegations. I really think that we ought to take one step at a time. Let us wait for the Commissioner's Report, and then, no doubt, the hon. Gentleman will find the chance to vent his feelings once again.

  GIBRALTAR

    Port Development Plan
    Mr. G. Jegerasked the Secretary of State for the Colonies whether he will make a statement on port development plans for Gibraltar.
    Mr. Profumo: Further progress has been made on the oil bunkering side, as the oil company concerned has stated that it is now in a position to join in the scheme. The Governor came to London recently for further talks about the port development plan, and we hope that all the arrangements will very shortly be completed.
    Mr. Jeger: Will the hon. Gentleman make all facts public in Gibraltar itself where there is a considerable amount of anxiety about future development? Will he realise that people in Gibraltar are exercising extreme patience under conditions of siege economics?
    Mr. Profumo: I think that the question of making all the facts available is for the Governor, but I am going to Gibraltar myself in the not-too-distant future and I shall have a look at the matter.

  NYASALAND

    African Workers
    Sir L. Plummerasked the Secretary of State for the Colonies the number of Africans in Nyasaland who have been recruited annually for the years 1955–57 to work in Northern Rhodesia, Southern Rhodesia and the Union of South Africa, respectively.
    Mr. Lennox-Boyd: I am asking the Governor to provide the details requested, and I will circulate them in the OFFICIAL REPORT.
    Sir L. Plummer: If the figures show that there is a continuance of the matriarchal state in Nyasaland because of the absence of a large proportion of the male population, will the right hon. Gentleman consider how to get the men gainfully employed in Nyasaland itself?
    Mr. Lennox-Boyd: I think it will be found on examination that the matriarchal system is even older in the Union of South Africa.
    Sir L. Plummer: Does the right hon. Gentleman say that because a thing is older it is necessarily better?
    Mr. Lennox-Boyd: I should hesitate to say that control by women was necessarily wrong, particularly after yesterday.

    Workers (Rations)
    Mr. Pargiterasked the Secretary of State for the Colonies the calorific content of the food ration valued at 4d. a day allotted to agricultural labourers in Nyasaland; and the number of industrial firms who provide a free midday meal without a deduction from pay.
    Mr. Profumo: I am asking the Governor for this information and will circulate it in the OFFICIAL REPORT in due course.
    Mr. Pargiter: Does not the Minister think that it should be part of his responsibility to see that the real value of the food which can be obtained for this very low amount is adequate for nourishment, and ought not all these factors to be in the possession of the Colonial Secretary's Department?
    Mr. Profumo: I am anxious to give the hon. Gentleman accurate and up-to-date figures.
    Dr. Summerskill: Will the Minister when circulating the figures also circulate the morbidity and mortality rate?
    Mr. Profumo: If that is not too complicated.

  SINGAPORE

    Strikes
    Mr. Awberyasked the Secretary of State for the Colonies what steps are being taken by the Government of Singapore to investigate the causes of the recent industrial unrest; how many strikes have taken place during the past six months; and if he will make a statement.
    Mr. Lennox-Boyd: I am consulting the Governor and will write to the hon. Member.
    Mr. Awbery: Is the right hon. Gentleman aware of the spate of strikes that have taken place in Singapore? Is it possible that the conciliation machinery is not so well known as it might be, and will he take steps to make it known to the workers in this Colony?
    Mr. Lennox-Boyd: I think that the explanation of the hon. Gentleman is an unlikely one. Nonetheless, I prefer to wait for the Governor's comments.

    Port Commission (Membership)
    Mr. Awberyasked the Secretary of State for the Colonies what steps have been taken to prepare a scheme of registration and decasualisation of the port workers of Singapore as a means of removing the present industrial unrest.
    Mr. Lennox-Boyd: The Singapore Government have recently appointed a Port Commission, one of whose terms of reference will be to examine and report on the desirability of establishing a separate Dock Labour Authority to be responsible for the supply of labour for the waterfront and to advise on the organisation and functions of any such body.
    Mr. Awbery: Cannot the Minister draw the attention of the Commission to the position in this country, because a great deal of the trouble is the casual character of the labour? If he wants to remove the cause of the trouble at the docks in Singapore, could not there be introduced a system of decasualisation of labour, similar to that which we have in this country?
    Mr. Lennox-Boyd: I will circulate the names of the Commission. After reading them I do not think that the hon. Gentleman will feel that it is necessary for me to draw their attention to any such matter.
    Following are the names of the Members of the Commission.
    Chairman:
    Sir Eric Millbourn—Honorary adviser on ports to the Ministry of Transport and Civil Aviation.
    Members:

    Mr. Francis H. Cave, lately General Manager of Mersey Docks and Harbour Board.

    Sir Ian Parkin—formerly General Manager of the National Dock Labour Board.

    Mr. Colin C. Black, formerly a Director of Messrs. Furness Withy & Co. Ltd.

    Mr. W. H. McNeill, a director of the Straits Steamship Co. Ltd.

    Mr. Y. C. Chang, Secretary of the Singapore Chinese Shipping Association.

    Mr. S. Jagarathan, President of the Singapore Trades Union Congress.

    Mr. Kenneth A. Seth, Legal Adviser to the Commission.

  TELEPHONE COMMUNICATIONS (INTERCEPTION)
  Mr. Liptonasked the Prime Minister when he expects to receive the report of the three Privy Councillors on the subject of telephone tapping.
  The Prime Minister (Mr. Harold Macmillan): I cannot yet say when the Committee will report.
  Mr. Lipton: I thank the right hon. Gentleman for that disappointing reply. If we are to discuss telephone tapping before we rise for the summer Recess, ought not the Report to be in the hands of hon. Members not later than the end of next week? Is it desirable that this odious thing should be allowed to fester for another three months until the House reassembles?
  The Prime Minister: The Committee, which has, I think, the general confidence of the House and the country, is operating with great rapidity. It was appointed on 29th June, it had its first meeting on 3rd July, it has had seven formal meetings as well as a number of informal meetings, and I think that we should be grateful to the Committee for the work that it is doing.

  EUROPEAN FREE TRADE AREA
  Mr. Osborneasked the Prime Minister if, in the light of decisions reached at the Conference of Prime Ministers, he will give an unqualified assurance to British agriculture that the protection and safeguards it now enjoys will in no wise be whittled away under the European Free Trade proposals; and if he will make a statement.
  The Prime Minister: The view of Her Majesty's Government has throughout been that the provisions of a Free Trade Area in Europe could not extend to agricultural products. This was clearly stated in our proposals to the Organisation for European Economic Co-operation which were published as Command Paper No. 72.
  Mr. Osborne: While first thanking my right hon. Friend on behalf of the farmers of this country for that assurance, may I ask him whether his assurance will be brought to the attention of those European Ministers who suggested that the European Free Trade Area cannot succeed unless agriculture were included?
  The Prime Minister: Our position has always been clear from the date of our declaration. Our position on this is, of
  944
  course, well known to our European friends and I do not think that there has been any variation from it since the very beginning.
  Mr. Gaitskell: Is it not the case that the French Foreign Minister recently declared that a Free Trade Area excluding agriculture would be impossible from the point of view of France? Has the Prime Minister or the Government received any official intimation that this is the view of the French Government and can the Prime Minister say what discussions are going on on this matter?
  The Prime Minister: I have received no intimation as to the official view of the French Government. Negotiations are taking place at the official level and, I hope, will be transferred to the Ministerial level at the appropriate time.
  Mr. E. L. Mallalieuasked the Prime Minister why he does not suggest that the countries of the Commonwealth should join the proposed Free Trade Area in the same way as is proposed for the French overseas territories.
  The Prime Minister: The Treaty of Rome establishing the European Economic Community provides for the association with the Community of the overseas territories of the countries concerned. As regards the proposed Free Trade Area, these questions have been discussed with representatives of Colonial Governments and the general view seems to be in favour of excluding Colonial Territories. Any question of the association of independent Commonwealth countries with the Free Trade Area would, of course, be a matter for them.
  Mr. Mallalieu: Would not the right hon. Gentleman agree that, if we stand outside this movement towards European integration in economic affairs, our industries are bound to suffer, and that, if our industries suffer, agriculture must suffer also, as well as Commonwealth producers who are accustomed to trade with us? Is it not, therefore, incumbent upon the right hon. Gentleman and his Government, in view of the statement by the French Foreign Minister referred to just now by my right hon. Friend the Leader of the Opposition, to make some suggestion to overcome the difficulty of overseas territories?
  The Prime Minister: No, Sir. I think that the hon. Gentleman is confusing positions which are sometimes taken at the beginning of a negotiation with what one hopes may be the ultimate result.

  MINISTERS (ADMINISTRATION AND POLICY)
  Mr. Shinwellasked the Prime Minister whether he will instruct members of the Cabinet and other Ministers in charge of Departments to consult with hon. Members of all parties on appropriate occasions on subjects of important national interest involving policy and administration.
  The Prime Minister: Administration and the formulation of policy are the responsibility of the Government. In discharging this responsibility it is the duty of Ministers to take account of public opinion throughout the country on important matters affecting the national interest, and I am confident that they will continue to do so.
  Mr. Shinwell: Is the right hon. Gentleman not aware that, occasionally, Ministers encounter difficulties, while, at the same time, hon. Members have spells of inactivity, and would it not be desirable for there to be contacts on such occasions? Is the Prime Minister not aware that there reside great quality, talent and knowledge among hon. Members, and would it not be desirable occasionally to have consultations on important subjects, for example on the subjects of defence, foreign policy and the like?
  The Prime Minister: I should have thought that the right hon. Gentleman, with his long experience in the House, would know that contacts between Ministers and hon. Members are very close, and always have been, unofficially as well as officially. There are many occasions for debate and discussion and Question and Answer. I should not have thought that the spells of inactivity of private Members to which he refers were quite so prolonged as he seems to suggest.
  Mr. Nicholson: Has my right hon. Friend noticed the remarkable self-denial of the right hon. Member for Easington (Mr. Shinwell), in that he speaks of hon. Members and not right hon. Members?
  Mr. Shinwell: Would not the right hon. Gentleman agree that my characteristic modesty, which has been noted by the hon. Member for Farnham (Mr. Nicholson), deserved more consideration?

  LOCAL AUTHORITIES (CAPITAL EXPENDITURE)
  Dame Irene Wardasked the Prime Minister if he will consider the setting up of machinery to ensure that local authorities with a good financial record for controlling expenditure and sound management of raising finance for capital expenditure shall be permitted to increase their standards of buildings and housing accommodation without interference from Departments which have also to sanction capital expenditure by less prudent local authorities, thus ensuring that incentives are offered to those authorities which spend wisely and economically.
  The Prime Minister: The capital investment of local authorities is such an important element in our economy that some central control cannot be dispensed with. Proved competence and prudence naturally influence Ministers in considering applications for loan sanction; but it may well be necessary in the national interest to ask the most prudent of authorities to defer a capital project for the time being.
  Dame Irene Ward: I thank my right hon. Friend for that Answer, but is it not a fact that Government Departments do suggest to local authorities putting in plans that they might prune the plans to the minimum standard, and would it not be a good idea that local authorities which have got a sound record of finance and are not profligate in their expenditure should have the opportunity of demonstrating to those residing within their boundaries that sound administration enables local authorities to raise standards? Is not it a bad thing always to have people brought down to a minimum, when the whole idea of the country is to improve quality and give incentives for good, sound administration?
  The Prime Minister: I find it rather difficult to take the discussion further upon these highly generalised terms. If there is some particular instance which my hon. Friend has in mind, I shall, of

  947
  course, try to look into it. I understand that we are to have two days of discussion upon the whole subject of the relations between central Government and local government, and perhaps that would be a good occasion on which these principles might be ventilated,

  SECET SERVICE (ANNUAL EXPENDITURE)
  Mr. Emrys Hughesasked the Prime Minister if, in view of the greatly increased cost of the Secret Service in recent years, he will remit to the committee now considering telephone tapping the duty of inquiring into how far the £5 millions annual expenditure on the Secret Service is justified.
  The Prime Minister: No, Sir.
  Mr. Hughes: Is the Prime Minister not aware that that Answer is worthy of the Secret Service itself? Does he realise that an enormous number of telephones can be tapped for £5 million a year? Further, is the right hon. Gentleman aware that the Secret Service bill has gone up by £2 million a year under the present Government, and does he not think that others besides the Prime Minister, such as the Privy Councillors, could very well see if some economies could be effected here?
  The Prime Minister: I do not grudge the hon. Gentleman his prepared impromptus, which we always enjoy; but his figures are inaccurate. The amount of the Secret Service expenditure has remained the same for the last five years.

  TANGANYIKA

    Cultivated Land
    Mr. Sydney Irvingasked the Secretary of State for the Colonies the proportion of cultivated land in Tanganyika which is farmed by Europeans and Africans, respectively; the proportion of the territory which is at present under cultivation; and the number of African farmers who are growing the main cash crop of Tanganyika, sisal.
    Mr. Profumo: I am consulting the Governor of Tanganyika and will circulate the information in the OFFICIAL REPORT.
    Mr. Irving: Would the hon. Gentleman not agree that there is an inordinately high proportion of cultivated land in the hands of non-Africans? Will he also bear in mind the remarks of the Economist of 29th June that a generous and constructive land policy is vitally necessary and would be in the interests not only of Africans but of non-Africans? Will he do everything he can to bring this initiative about?
    Mr. Profumo: I am consulting the Governor only because I myself do not know what the proportion is and, therefore, I would not venture to go as far as the hon. Gentleman.

RENT ACT (PRESCRIBED FORMS)
The following Question stood upon the Order Paper:
Lady GAMMANS: To ask the Minister of Housing and Local Government what further steps he is taking to see that all the forms mentioned at the end of the pamphlet, entitled "The Rent Act and You," are readily available on the bookstalls.
The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): I will, with permission, Mr. Speaker, answer Question No. 98.
The Rent Act does not place on me a statutory obligation to make available forms prescribed under the Act. What the Act does require me to do is to prescribe what should be in the forms. This I did by Statutory Instrument No. 981 of 1957. I made this Instrument at the earliest possible time on 6th June, immediately after the Act received Royal Assent. Copies of the Instrument, setting out the contents of the forms, were in the Vote Office and on sale in Her Majesty's Stationery Office on the following morning, 7th June.
There is no copyright in the content of these forms. Anyone is at liberty to reproduce and distribute them.
There is only one form which must be served not later than 17th August. This is Form T, not Form G, as suggested in the House yesterday. It is the notice of tenants' improvements affecting gross or

949
rateable value, and the number of people needing to serve this notice will be small.
All the forms are being printed by law stationers and other printers, who make their own arrangements for distribution through the usual trade channels.
So far as printing is concerned, I have no reason to doubt that supplies will be adequate to meet all demands. Information reached me last week that distribution all over the country was going too slowly, and at once I took various measures to improve this.
At my request, the Stationers' Association and the Booksellers' Association has taken steps to urge its members to have the forms on sale and to display notices to that effect. Some of the very large retailers have arranged to have a number of the forms on sale not only in their bookshops, but also on railway bookstalls. The Stationery Office is now selling the forms at their retail bookshops, and Forms A and G, which are those likely to be most in demand, will be available in most towns at Citizens' Advice Bureaux.
Lady Gammans: I thank the Minister very much indeed for his very full statement about these forms. I am sure that all those who have been anxious about the matter will be very pleased.
Mr. Mitchison: Is the right hon. Gentleman aware that there is still very real difficulty in getting the forms? May I suggest to him that the price is excessive, that the forms ought to have been available at the Stationery Office immediately, and that the best plan would have been to distribute them free of cost through council or post offices?
Is the right hon. Gentleman aware, too, that, though he has no formal statutory responsibility, it is his administrative responsibility to make the Act work if he sponsored it, as he did, and that the shortage of the forms at present is leading to people making and using their own forms in what they think is the correct style but which are, in fact, incorrect and invalid, and that this will simply lead to trouble later? Cannot the right hon. Gentleman do anything by way of free distribution through council or post offices?
Mr. Brooke: I want to shoulder my full responsibility in this matter. I
950
pointed out to the House that there is no statutory obligation on me. However, I took action, in fact, several days before the matter was raised in the House. I am sorry I was not here yesterday, but no notice whatsoever was given to me.
There is no monopoly in the production of these forms. From the time that the regulations were published, anyone was at liberty to produce and distribute them. With regard to what the hon. and learned Gentleman has just said, that some of the amateur productions may be invalid, I would point out to him that the regulations refer to
"The forms contained in the…Schedule to these regulations, or forms substantially to the same effect…"
I have followed the practice which, I think, has been universal under all Governments, that whereas the Stationery Office prints the regulations and shows what forms are prescribed, it is left to printers of all kinds or private people who wish to do so to produce the law forms. What has gone wrong on this occasion, I consider, is that there has been an underestimate of the rate at which demand—[HON. MEMBERS: "Hear, hear."]—not an underestimate of the demand, but an underestimate of the rate at which the demand would build up even though there are a good many weeks before any of these forms need be sent in. I think I have given the House a comprehensive account of the actual steps that I have taken to improve the situation as rapidly as possible.
Mr. Mitchison: With regard to the invalidity of the forms, is the right hon. Gentleman aware that his regulations require the notes to be appended to the forms and that the meaner or more ignorant landlords—not always only those—are omitting the notes which are for the benefit of tenants, and, consequently, are invalidating the forms?
Mr. Brooke: It is not for the hon. and learned Gentleman or for me to judge in advance what is valid or invalid. What I am pointing out is that the regulations for which I am responsible refer to
"The forms contained in the…Schedule to these regulations, or formś substantially to the same effect…"
Mr. Lewis: Is the Minister aware that as recently as last weekend I went to six of the principal booksellers in the country

951
but was unable to get the form, and that as recently as yesterday my hon. Friend the Member for Lewisham, North (Mr. MacDermot) telephoned six stationers all of whom said that they had not got the form and that, if they could get it, it would not only cost 6d. but that there would be an additional 25 per cent. Purchase Tax? Does not the right hon. Gentleman think it disgusting— [Laughter.]—this is no laughing matter—that the Government should make old-age pensioners travel all round London to get a form for which they have to pay 6d. and then 25 per cent. Purchase Tax in addition? Will he have the form produced free of charge and circulated to local authorities, Citizens' Advice Bureaux and Members of Parliament, and, if need be, get the national newspapers to publish it, so that people will be able to obtain the form easily and readily from these various sources?
Mr. Brooke: I think that the action which I have already taken will very quickly secure that the forms will be available practically everywhere. [HON. MEMBERS: "No."] With regard to them method of production of the form, I have followed the practice which has been followed by all previous Governments of all colours. I have explained to the House that anybody who wishes to reproduce one of the forms is at liberty to do so. There is no copyright whatever.
Dame Irene Ward: Would it not be a good idea to have the forms available in post offices? However well the distribution is carried out through the Stationery Office, is it not likely to be a rather complicated procedure for people who are not particularly used to filling in forms? Will my right hon. Friend bear in mind that I think it would be helpful to the public if the forms could be available in post offices, where they are likely to have a very much wider distribution than in other places?
Mr. Brooke: I think that I have shown that I am anxious to be as helpful as possible. This is not a matter of filling in forms, but of obtaining the forms, and I am somewhat reluctant to add to the considerable burden of work which post offices already have to carry.
Mr. Shinwell: Would the right hon. Gentleman answer the allegation made
952
by my hon. Friend the Member for West Ham, North (Mr. Lewis) that not only does the form cost 6d., which appears to be excessive and must be an excessive price for many people affected, but that, in addition, there is a Purchase Tax? Surely that is something quite unusual. Will the right hon. Gentleman see that Purchase Tax is not charged on the form?
Mr. Brooke: Purchase Tax has always been chargeable on all law forms that have been produced under all Governments, under all Acts since Purchase Tax was invented, but there is no monopoly whatever in the production of these forms. Anyone can have one of these forms typed or duplicated.
Mr. H. A. Price: Would it not be a good idea to get the Stationery Office to produce some of these forms? I am quite sure that they could then be sold for less than half the 6d. which is being charged for the Solicitors' Law Stationery form?
Mr. Brooke: As I say, I have followed precedent. What has gone wrong here has been nothing to do with the production of the forms, but with their distribution.
Miss Bacon: Could the right hon. Gentleman say why the forms are costing as much as 6d., even without Purchase Tax? Is he aware that this morning the Labour Party Publications Department, because of the shortage of these forms, decided to go ahead and print a quantity, that they will be ready in two days' time and the cost in bulk supply will be under Id., including Purchase Tax?
Hon. Members: Resign.
Mr. Speaker: Order. Hon. Members should have a sense of proportion.
Mr. Brooke: I am very glad if political parties or any other organisations help to make these forms available, but I should have thought that the hon. Lady the Member for Leeds, South-East (Miss Bacon) would realise that in the retail price the major factor is not the cost of production but the cost of distribution.
Mr. Blenkinsop: Is the right hon. Gentleman aware that in my constituency hundreds of tenants have received quite false notices, as far as I can see, duplicated by landlords, because of the lack of

953
forms no doubt, which include none of the essential relevant matters that are on the forms? I have a copy in my possession now. Is he aware that tenants, by lack of knowledge, may be involved in paying rent increases quite wrongly on the basis of this sort of nonsense that has been issued? Will not the right hon. Gentleman accept full responsibility for this fact, which makes complete nonsense of any talk about any defence of the tenant?
Mr. Brooke: I cannot accept that for one moment. I have published these regulations and I have set out in the regulations the contents of the forms. I have indicated that these forms,
"… or forms substantially to the same effect…"
will be valid. It is not for the hon. Member or for me to judge in advance whether the particular form which he holds in his hand is valid.
Mr. Gaitskell: May I ask the right hon. Gentleman whether he will reconsider his attitude in this matter? He will be aware that there is a general feeling in the House that these forms ought to be made available through post or council offices, if possible, free. Will the right hon. Gentleman look at the whole matter again with a view to providing them in that manner, if necessary at the small cost at which my hon. Friend the Member for Leeds, South-East (Miss Bacon) said the Labour Party is prepared to supply them?
Mr. Brooke: In my original statement, I endeavoured to inform the House that I was extremely anxious to do everything in my power to facilitate and expedite the distribution. It is perfectly possible, as far as I am aware, for local authorities to handle these forms, though I doubt whether they would have power to incur net expenditure. [HON. MEMBERS: "Oh."] The powers of local authorities in these matters are limited and a local authority must be expected to cover its costs; but subject to that I am prepared to do all in my power to expedite the distribution of these forms. I would say again that this is not a problem of production, but one of distribution.
Mr. Jay: Is the right hon. Gentleman aware that, after speaking to his office last weekend, I went, on its advice, to most of the bookshops in Charing Cross
954
Road and most of the railway bookstalls in Central London and found that not one of them had a single copy of this form? How could ordinary constituents possibly obtain one in those circumstances? Will the right hon. Gentleman take seriously the suggestion made by his hon. Friend the Member for Lewisham, West (Mr. H. A. Price)?
Mr. Brooke: It was certainly possible last week to obtain copies of the form much nearer than Charing Cross Road. [HON. MEMBERS: "Where."] In Victoria Street. But it was entirely because of the difficulty which I found was being experienced last week that I took this comprehensive action, which I think the House will find will very quickly remedy all the trouble.
Mr. H. Morrison: Surely the Minister must have known that the Rent Act was a highly controversial Act and would affect large numbers of people. Did the right hon. Gentleman underestimate the consequences of the Act in the number of places that would be involved? Did he take no steps to see that the administration of the Act and the supply of forms was adequate? Ought he not now, in view of the revelations made, to see that the forms are available to the post offices and local authorities? Surely the right hon. Gentleman can supply them to local authorities without involving a charge on local rates. If the Minister is in such a muddle with his forms and the administration is clearly out of gear, ought he not to bring in a Bill either to repeal or to postpone the Act?
Mr. Brooke: No, Sir. I am in no muddle, and I underestimated nothing. [HON. MEMBERS: "Oh."] What I think was underrated was the speed at which the demand for these forms would build up, bearing in mind that none of them need actually to be returned for a good many weeks ahead. I am giving the House an undertaking that these forms will be available to everybody. [HON. MEMBERS: "Where?"] Everywhere. They will be available long before the date at which anybody can possibly lose anything by not having sent in a form.
Mr. Isaacs: Did the right hon. Gentleman also underestimate the speed at which the landlords would ask for more rent?
Mr. Brooke: As I said, I underestimated nothing at all.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: I really think that we have had a good run on this Question.
Mr. M. Stewart: The Minister has said that local authorities would not be allowed to incur a net charge in distributing these forms free. If that is so, can he not himself make available forms free to local authorities, so that they can distribute them free to the public without incurring a charge?
Mr. Brooke: I cannot say in advance what a local authority is empowered to spend money on; only the courts can say that. What I am saying is that I can see no objection to a local authority handling these forms, and distributing them, provided that it covers its costs.
Mr. Gaitskell: Will the Minister answer this simple question? Why should he not arrange for these forms to be printed by the Stationery Office, as suggested by one of his hon. Friends, and distributed free to local authorities, so that tenants can get them easily?
Mr. Brooke: Because I think that the steps I have taken already will make any printing by the Stationery Office quite unnecessary.
Hon. Members: Resign.
Mr. Speaker: Order. Mr. Gibson.
Mr. Gibson: Is the Minister aware that in spite of the action which he says he took last week, only this morning I have been informed from a number of places in London that people cannot get Form G? Does not that prove the justice of the complaint that there is very great difficulty in the tenants getting these forms? Is the right hon. Gentleman not aware that the country will regard him as the Minister who pushed this Bill through, was responsible for the Act, and, having got it through, has not made proper arrangements for a speedy supply of the necessary forms?
Mr. Brooke: I am quite sure that within a very short time, thanks to the steps which I have taken, supplies of these forms will be available to anybody who wants them.
Hon. Members: Resign.
Mr. Speaker: Order.

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

ORDERS OF THE DAY

  FINANCE BILL
  Order for consideration, as amended, read.
  Motion made, and Question proposed,
  That the Bill be re-committed to a Committee of the whole House in respect of the Amendment to Clause 29, page 22, line 30, standing on the Notice Paper in the name of the Chancellor of the Exchequer.—[Mr. Powell.]
  Question amended, by adding, at the end:
  "and in respect of the Amendments to Clause 35, page 28, lines 8 and 13, standing on the Notice Paper in the name of Mr. Harold Wilson, and in respect of the Amendment to Clause 35, page 28, line 20, standing on the Notice Paper in the name of Mr. Mitchison "—[Mr. Mitchison.]
  and, as amended, agreed to.
  Bill immediately considered in Committee.
  [Sir GORDON TOUCHE in the Chair]

Clause 29.—(ANNUAL DETERMINATION OF STATUS, AND PROVISIONS ON CHANGES OF STATUS.)
3.55 p.m.
The Financial Secretary to the Treasury (Mr. J. Enoch Powell): I beg to move, in page 22, line 30, at the end to insert:
(3) Where a company which has not qualified as an Overseas Trade Corporation in the period of twelve months beginning with the sixth day of April in any year, but which has so qualified in a previous period, only failed so to qualify in the said period of twelve months because of transactions carried out by it in that period which were, having regard to the activities of the company as a whole, of a minor nature, and relief would, apart from this subsection, be allowable under the Income Tax Acts in respect of a loss sustained by the company in the said period of twelve months in carrying on a trade, or in respect of capital allowances falling to be made in charging the profits or gains of such a trade for the year of assessment comprised in the said period of twelve months, against income tax charged on income of the company which, if it qualified as an Overseas Trade Corporation, would be investment income, then if it appears to the Commissioners of Inland Revenue that the sole or main benefit which the company would derive horn not so qualifying in the said period of twelve months would be the allowance of that relief, together with any corresponding reduction of the liability of the company to the profits tax, they may direct that no such relief shall be given and that the loss or the capital allowances in respect of which it would have been given shall be left out of account for all the
958
purposes of the Income Tax Acts and of the enactments relating to the profits tax.
(4) A company which is aggrieved by the refusal of the said Commissioners to give a direction under subsection (2) of this section or by their giving a direction under subsection (3) of this section may, by notice in writing to that effect given to the Commissioners within thirty days from the date on which notice is given to the company of the refusal or, as the case may be, of the direction, require the question whether a direction ought to be given to be heard and determined by the Special Commissioners, and the Special Commissioners shall hear and determine the question in like manner as an appeal made to them against an assessment to income tax under Schedule D.
All the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.
The object of this Amendment is to make two improvements in this Clause which were suggested during the Committee stage. In its present form, the Clause provides that the Inland Revenue may disregard minor acts or occurrences which would disqualify a company from being an overseas trade corporation if, in its opinion, there was no material advantage to the company by so disqualifying itself. It was pointed out in Committee that it was unusual for this power to be given to the Commissioners without the right of an appeal, and, accordingly, an appeal against the refusal of the Commissioners to give such a direction is provided by the new subsection (4).
It was also pointed out that a company might disqualify itself, not inadvertently hut deliberately, in a particular year to gain a tax advantage thereby. I think that there was general agreement on both sides of the Committee that companies should not be able to disqualify themselves, or qualify at will from year to year, according to the particular tax advantage which they might thereby gain. Subsection (3) provides against that by giving the Commissioners a power to disregard, in the event of a company in their opinion deliberately disqualifying itself for such a purpose, the benefits of allowances which they would thereby gain. It thus provides a penalty and a means of preventing this form of avoidance. The appeal procedure provided in subsection (4) will also apply to this power of the Commissioners to give a direction.
Mr. G. R. Mitchison: We consider it not unreasonable to have an appeal in both the cases provided for here, and we generally welcome the new provision in subsection (3) and its intention.
I am bound to say that I have a little anxiety in this, as in another case to which we shall refer later, about the words used. They are that it must appear to the Commissioners
"…that the sole or main benefit which the company would derive…"
In moving the Amendment the Financial Secretary used slightly different words. He said "deliberately", and it seems to me that there are cases in which the Commissioners might be in some doubt about the sole or main benefit point, but might none the less have reason to suppose that it was a deliberate act on the part of the company.
Therefore, I wish the words could have been rather wider, though in the context of this Clause we hardly feel that that is a ground for objecting to it, and with the general principle that companies should not get benefit from deliberately disqualifying themselves, we entirely agree.
Amendment agreed to.
Clause, as amended, ordered to stand part of the Bill.

Clause 35.—(INTERPRETATION OF PART IV.)
Mr. Mitchison: I beg to move, in page 28, line 8, at the end to insert:
"recognised market" means a market declared by an order of the Board of Trade for the time being in force to be a recognised market for the purposes of this part of this Act".
This is a point about the recognised market, Sir Gordon, and perhaps it would be convenient to discuss with this Amendment the one to page 28, line 13, namely, in page 28, line 13, at the end to insert:
(2) No order shall be made by the Board of Trade under the last foregoing subsection except with the consent of the Treasury and an order so made shall be in the form of a statutory instrument and subject to annulment by a resolution of the Commons House of Parliament.
The Deputy-Chairman: Is it suggested that the first three Amendments to the Clause be discussed together?
4.0 p.m.
Mr. Mitchison: The first Amendment in line 8 and the one in line 13 go together. The second Amendment in line
960
8 is an alternative form. I understood that we were to discuss the first alternative, that is to say, the first Amendment in line 8 and the Amendment in line 13. However, I can, of course, refer to the other as well, that is to say, to the Amendment in page 28, line 8, at the end to insert:
"recognised market" means a market declared by an order of the Board of Trade in the form of a statutory instrument, made with the consent of the Treasury, laid before Parliament and for the time being in force, to be a recognised market for the purposes of this Act".
The Deputy-Chairman: I think that it would be for the convenience of the Committee if all three were discussed together.
Mr. Mitchison: The first Amendment in line 8 and the Amendment in line 3 were moved earlier in Committee. I do not want to repeat too much of what was said then, but, of course, dealings on a recognised market are a very material factor in this part of the Bill and the Bill contains no definition of a recognised market.
If in error a company misconceives what is or what is not a recognised market, it may find itself disqualified accordingly. It is, therefore, important that the character of a recognised market should be made perfectly clear. What was suggested in Committee was that, having regard to the number of doubtful cases, the right course would be to give the Board of Trade power—and this is what the Amendment proposed—to declare what was and what was not a recognised market and to make Orders for that purpose. It was further suggested that if those Orders were made, they should be in the form of a Statutory Instrument laid before the House and subject to annulment in the usual way.
On that point, we had a very definite undertaking from the Government. I having moved the Amendment and given the reasons for it, the Economic Secretary to the Treasury said:
"I am grateful to the hon. and learned Gentleman for moving the Amendment. He has made a very reasonable point. I think that there should be some closer definition of what the term means."
"Some closer definition" is a slightly odd way of putting it, because there is no definition in the Bill. He went on:
"We do not want to accept his actual form of words, but we should like to consider the

961
matter further, before Report. It clearly is the duty of the Board of Trade to draw up the list, in consultation, of course, with the Treasury, Whether the device of a Statutory Instrument is rather too ponderous a one, I do not know, but if the hon. and learned Gentleman would be good enough to withdraw the Amendment, we will consider the matter and raise it again on Report."
With that definite undertaking to raise the matter again on Report, my right hon. Friend the Member for Huyton (Mr. H. Wilson) also made a short speech and ended by saying:
"We welcome the fact that the Chancellor has made this small concession, and if it is the wish of the Committee, we shall be glad to withdraw the Amendment."—[OFFICIAL REPORT, 27th June, 1957; Vol. 572, c. 576–8.]
I then thanked the Economic Secretary and formally asked leave to withdraw the Amendment.
This is a case in which the Government gave a quite definite undertaking to raise the matter again. I have been scanning the Notice Paper from day to day waiting for the Government Amendment which was to raise the matter again. There being no Government Amendment on the Notice Paper, I have come to the conclusion that the Government are to carry out the undertaking which they gave to the Committee by accepting the Amendment which we put forward. If the Government say, in view of the last two or three sentences of the Economic Secretary's statement, that they do not like the Amendment in line 13 and propose to accept only the Amendment at line 8, I should feel that they had sufficiently carried out their undertaking.
However, I am bound to say, in face of that very clear statement, since they have not raised the matter as they undertook to do, that the only conclusion I can draw consistent with their carrying out their pledge is that they will now accept the Amendment. I do not wish to repeat all the arguments which were raised earlier. They appealed to the Government at the time and, quick though the Government are to change their mind, I cannot but think that that which convinced them earlier should convince them if it is repeated at this stage; it therefore seems a pity to repeat it.
I emphasise once again the importance to the Revenue, on the one hand, and to the taxpayer, on the other, of having a definition of a phrase which, if it
962
is misunderstood, will result in the disqualification of companies which ought to be qualified, and the qualification of companies which ought not to be qualified, and which will affect the character of their dealings in ordinary trade.
The remaining Amendment, the second in line 8, was put down as a compromise. It goes a little further than the first, but not quite as far as the other two taken together. It provides for declarations by the Board of Trade to be in the form of a Statutory Instrument, to be made with the consent of the Treasury—as no doubt it would be made, anyhow—and to be laid before Parliament, but it does not contain the power of annulment to which the Economic Secretary may have some objection.
I repeat, the Government are in honour bound in the circumstances of the case to accept the first of the Amendments or the second. I cannot see that they are in honour bound to accept the third, but that is a matter upon which we shall no doubt hear their considered views. If I refrain from the arguments which they found so convincing and accepted so cordially earlier, I do so only to save the time of the Committee, because I am sure that even the Government could not have changed their mind so quickly.
The Economic Secretary to the Treasury (Mr. Nigel Birch): The hon. and learned Member for Kettering (Mr. Mitchison) has given an accurate account of what happened when we were debating this matter earlier. Moved by his usual eloquence, I made the remarks to which he has referred. We undertook to consider this matter and to think whether it was right to do something on Report. We have examined the matter with very great care since then and considered the various alternatives.
Mr. Mitchison: I am sorry to interrupt the right hon. Gentleman, but it is important that these pledges should be honoured. The pledge was that the Government would consider the matter and raise it again on Report. That is to say, it was not merely a pledge to consider whether they would raise it on Report, but a definite pledge to do so. We all understood from the right hon. Gentleman that it was merely a question of the form of words.
Mr. Birch: Of course, we knew that the matter would be raised again on Report—even if we did not raise it ourselves—because the Amendment was bound to be called. I am giving the reasons which prompted us to act as we did.
The object of this provision—which is in line with what the Royal Commission wanted—is to ensure that overseas trading corporations can sell primary products in this country through brokers in terminal markets in the ordinary way without thereby losing their overseas trading corporation status and, at the same time, being put into a position in which they can evade taxation in any way. They are by this means put in much the same position as a company resident abroad, who can be charged to tax in this country in the name of an agent or factor but in whose case, by the provisions of the Income Tax Acts, a bona fide broker does not count as an agent or factor and therefore cannot be charged to tax in that way.
The object of the provision is to put overseas trading corporations into a similar position. The question that arises is one of procedure, namely, who should be responsible for determining this matter? Should it be the Board of Trade or some other Ministry, or should it be the Inland Revenue?
One of the troubles of putting the matter entirely into the hands of the Board of Trade—and this was a point which had not occurred to me when I replied to the hon. and learned Gentleman in Committee—is that many commodities which would be principally affected by this provision are agricultural products, such as tea. They are the responsibility of the Ministry of Agriculture, Fisheries and Food, in which case the Board of Trade would not be a very suitable Department to pronounce upon them.
It was, therefore, thought that it would be better to leave the matter in the hands of the Commissioners of Inland Revenue, with an appeal to the General Commissioners. There are a number of precedents for defining what we mean in general terms and then leaving it to the Commissioners of Inland Revenue to decide. For example, the question of what is an educational establishment for the purposes of taxation is not defined in
964
a list by the Ministry of Education; it is determined by the Commissioners, with an appeal to the General Commissioners. Another perfectly good precedent concerns the question of what, for tax purposes, is a bank carrying on a bona fide banking business. No list is drawn up by the Treasury and published in that case.
I do not think that the hon. and learned Gentleman is right in saying that it would put the companies at risk if there were no list, because if the mistake were a genuine one the company would be protected by Clause 29 (2). We feel that it is more in accordance with usual tax procedure to keep the Bill as it is, and we feel that the procedure will work and that no genuine difficulties will arise. Therefore, I must say, with much regret —and I should like personally to apologise to the hon. and learned Gentleman and to the Committee for going further in Committee than I ought to have gone—that after having considered the matter with very great care we have come to the conclusion that on the whole it is better to leave the provisions as they are.
Mr. Harold Wilson: The right hon. Gentleman should not apologise for having gone too far in Committee; he should apologise for not having gone far enough today. The answer which he has given is quite unsatisfactory, both as regards procedure and the policy question which is involved in the Amendment. Indeed, the more detail into which the right hon. Gentleman has gone in giving his reasons for rejecting the Amendment the more he has produced reasons why he should accept it.
I do not want to repeat all the arguments that we had in Committee; I want to deal with a particularly piffling and silly point which the right hon. Gentleman made towards the end of his speech. He said that some of these recognised markets are in food, and how could the Board of Trade know about markets in food? If he will consult the precedents he will see that what he has said does not add up at all. The Board of Trade does consult the Ministry of Agriculture, Fisheries and Food.
We know that the Cabinet is meeting this afternoon and that it is split on the question of postal charges, which is

965
probably why the Chancellor is not here, but surely the Government have not reached the point where Ministers are not speaking to each other, and officials are not ringing each other up or sending letters to each other. If the right hon. Gentleman will look at the procedure followed in the case of the monopolies legislation he will find that the Board of Trade was given the clear responsibility and duty of referring cases to the Monopolies Commission, some of which cases were within the purview of other Departments.
4.15 p.m.
Tea is the sort of commodity which the right hon. Gentleman had in mind as being under the aegis of the Ministry of Agriculture, Fisheries and Food. That commodity was referred to the Monopolies Commission by the Board of Trade. I have no doubt that it consulted the appropriate Ministry before doing so. When I referred the question of dental goods to the Commission there were consultations with the Ministry of Health—but we were then on speaking terms with each other.
It is very silly for the right hon. Gentleman to say that the Board of Trade can be responsible only for the items which come within its field. If he were to face that point, on consideration he would find that that is not one of the statutory duties of the Board of Trade. The whole of the Companies Act responsibilities involve action in respect of companies which, so far as parent Department responsibilities are concerned, fall elsewhere. I hope that the right hon. Gentleman will not try to persuade the Committee upon these lines, and also that that argument has not entered into the final decision which seems to have been taken by the Treasury.
The question of procedure was mentioned by my hon. and learned Friend. We would have pressed the matter much further in Committee, but for what the right hon. Gentleman said. We all thought that the argument used by my hon. and learned Friend and supported by myself carried conviction on both sides of the Committee. Who knows what a recognised market is, and who will now decide? We should probably all agree that the reason for this formulation is to preclude the possibility of overseas trading corporations selling to associated
966
organisations at prices which turn out to be unreal ones, for the purpose of tax evasion or avoidance. It is because of the difficulty of carrying out these provisions about armslength that this is necessary.
We agree with the right hon. Gentleman that if these overseas trading corporations sell to a recognised terminal market where neither the supplier nor the buyer has any predominant power to determine prices the price can be assumed to be a real and effective one for tax purposes. That is why it is said that the rubber market, the tin market and, so far as it exists, the raw cotton market, are real markets, and that whatever prices are quoted as being ruling prices they are the real ones and there cannot be any question of tax "fiddling."
That is all very clear, but there are these marginal cases which my hon. and learned Friend mentioned. He quoted the case of diamonds. Are they a recognised market? If the Bill is as clear as the right hon. Gentleman thinks, and if it does not require the Amendment, he should tell us whether diamonds are a recognised market for this purpose.
The right hon. Gentleman has muddied the waters considerably with his reference to recognised brokers, because that reference alters the whole position, as I am sure many of his hon. Friends will recognise.
Mr. Birch: The phrase "bona fide broker" is used in one of the Income Tax Acts.
Mr. Wilson: It may be that the phrase "bona fide broker," which is a usual phrase and appears in tax legislation, has different meanings in relation to one commodity market as distinct from another. When the right hon. Gentleman looks the matter up I think he will find that it means one thing in the case of some of these terminal markets, such as rubber, and another thing in relation to other markets. What about timber? I assume that that market was excluded as not being a recognised market. It is not a terminal market. There is no speculation, and no price is quoted each day. I think he will find that it will only confuse the issue if he talks about bona fide brokers in this way.

967
I mentioned in Committee the question of bulk buying, but no reference has been made to it this afternoon by the right hon. Gentleman. My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) was taking part in that debate, and we welcome him back to the Committee from his wire-tapping activities. Both he and I made the point on that occasion. If the Government mean business about Commonwealth trade they will have to reintroduce bulk buying.
In the one case where it still continues, which, as the right hon. Gentleman knows, is that of jute, does the Jute Control, which is responsible for buying raw jute, constitute a recognised market or not? Will O.T.C.s be free to sell to the control, or will it be said that the control does not comprise bona fide brokers and that this is not a recognised market?
The right hon. Gentleman says that this point has been fully considered. Would he therefore tell us what is the position about bulk buying and Government trading under the Clause as he wants to see it, unamended by my right hon. and learned Friend's Amendment?
Sir John Barlow: Before my right hon. Friend answers those questions, may I put one or two questions to him very much on this point? It is easy to recognise the ordinary brokers in most commodity markets, but there are instances in which produce or minerals are sold in this country other than through the recognised brokers, and they may cause a little difficulty.
The question of selling tea has been mentioned. Most of the tea brought from abroad is sold to recognised brokers, but some is sold through merchants' in the ordinary course of events and not through technically recognised brokers. In some of the smaller markets, too, not only of produce but of minerals, where the trade is too small for there to be a recognised market and an official broker, the imports are disposed of through recognised merchants and not, technically, through brokers in any sense of the word.
I think it is the intention of the Economic Secretary that these usual methods of selling through brokers or merchants should be covered, but I hope that he will make the position a little clearer.
968
The main point, I imagine, is that this produce is sold at arms' length to the best advantage in this country, whether it is technically through a recognised broker or through usual merchants through whom it has been sold for many years.
Mr. Birch: Replying, first, to my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), I agree that many difficulties would arise in these cases, but the only way to solve them if there is no recognised market is to hive off that part of the business.
The right hon. Member for Huyton (Mr. H. Wilson) raised several points. I understand that in spite of bulk purchase the jute market would rank as a recognised market.
Mr. H. Wilson: Why?
Mr. Birch: Because it is a market which exists. The timber market would not so rank, because there is not a recognised market for timber. The Clause mentions "brokers in a recognised market." It does not refer to "a bona fide broker"; I quoted that phrase from another Act.
Mr. Mitchison: This is the most unsatisfactory answer which even this Government have produced throughout the Bill. They gave a perfectly clear undertaking, but they did not carry it out. I say no more about that, and I turn to the Economic Secretary's defence of what it is proposed to do.
What is his defence? First, there was this ridiculous point about tea. Tea was the very first example which I mentioned when I raised this subject in Committee. The right hon. Gentleman knows perfectly well that tea is not often grown in this country and that the activities of the Minister of Agriculture, Fisheries and Food in the matter of tea are, to say the least, somewhat limited. It is obviously a question for the Board of Trade.
What was the right hon. Gentleman's second argument? This seemed to me to be a complete misunderstanding of the difficulties to which he is putting people in this matter. He says that if a company makes a mistake, it is protected by Clause 29 (2), which refers to inadvertent acts, and in this way the company can be fished out of its difficulties. There

969
are two points about that. First, it is not an inadvertent act. The company is selling jute or timber or whatever it is, and there is no question of inadvertence; the company is doing what it intends to do, except that it does not know what is and what is not a recognised market. It will not be the only company which does not know.
Suppose that company A gets out of its difficulties under the provisions of what I call the slip subsection. What about company B, company C and company D? Is the fact that company A has made a slip, in thinking that the market in timber was recognised when, in fact, it was not recognised, to be published and are we to have a list in the country of what are and what are not recognised markets? If we are, it seems to me a ridiculous and absurd way of giving effect to what ought to be a simple administrative matter; but if we are not to have such a list, then every other company in the trade will be in complete ignorance and they will all have to slip up one after another, or half of them will have to slip up one after another, and be rescued individually and separately under a Clause which was not intended to cover this point at all and, in fact, does not cover it properly.
The plain English of the matter is that when a Government are taxing people they ought to make it clear what taxes they are imposing, on whom and in what circumstances. In this case, the question of the liability of a company to tax in selling commodities of the kind which it produces in this country depends in part on what is and what is not a recognised market. The phrase is the Government's phrase. It is an extremely difficult phrase to understand, and if they intend to keep it in the Bill it is their business to make clear to the taxpayer and to the companies concerned what they mean by it.
Two or three examples have been given today. We could think of many—jute, timber, diamonds, copper, sherry, and half a hundred other commodities. These people are sincerely and properly carrying on their trade in these commodities in the City of London. What are they to do about this Clause? How do they know what the Government or the Commissioners or anybody else mean by recognised markets unless they are told in the Act which uses the phrase and
970
imposes a liability which varies according to its meaning?
We have been told, "It is all right. Leave it all to the Commissioners of Inland Revenue". We have been told that the Board of Trade does not know enough about tea. How much more do the Commissioners know about tea than do the Board of Trade? I do not know what they will do. Will they consult all the Ministries concerned? Let us turn the right hon. Gentleman's point upon himself. If the Board of Trade is thought to be incapable of deciding what is a recognised market and what is not, by what singular virtue are the Commissioners of Inland Revenue qualified to do it? This is a piece of bureaucratic arrogance from that point of view, and from the point of view of legislation it is a case of a Government including a vague phrase in a Bill and leaving companies to take their chance on the meaning which may be given to it by people who have no particular qualifications to give it a meaning.
Commander C. E. M. Donaldson: On a point of order. I have been in the Chamber for less than a minute, because the clock has not moved since I arrived. The hon. and learned Member for Kettering (Mr. Mitchison) has fixed his eyes on me and has concentrated his argument on me all that time. He has not been concentrating on the Government, to whom he should be addressing his remarks.
The Deputy-Chairman: Hon. Members should address their remarks to the Chair.
Mr. Mitchison: I am sorry, Sir Gordon. I can only assure the hon. and gallant Member for Roxburgh, Selkirk and Peebles (Commander Donaldson) that it was undoubtedly the unconscious attraction of his countenance which induced me to do it.
4.30 p.m.
Mr. H. Wilson: Is this matter to go unanswered by the right hon. Gentleman? The Bill uses the phrase, "recognised market". But it has no meaning in the English language unless we know by whom the market is recognised. The right hon. Gentleman says, "recognised by the Board of Inland Revenue", but the Bill does not say so.

971
This phrase could give rise to considerable litigation and there could be great uncertainty during the operation of the Act. One can imagine cases going before the Special Commissioners and to the High Court, all because of the right hon. Gentleman's laziness in not dealing with the point adequately. The whole Committee must bear the responsibility if the time of companies and of the Board of Inland Revenue is involved in litigation as the result of this slipshod drafting.
The right hon. Gentleman ought to be the first to realise that the phrase causes very great uncertainty. I have heard commodity traders say that they do not know whether they are covered by this phrase or not. The right hon. Gentleman did not answer any of the references made by my hon. and learned Friend the Member for Kettering (Mr. Mitchison) or myself to such markets as diamonds, shellac and some of the rather small, specialised markets.
I think that they would be called "recognised" markets in the sense that if we look at the excellent book by Sir Oscar Hobson, "How the City Works", we find a description of them and they therefore take their places on the map. Whether Sir Oscar Hobson is to be the authority on this matter or anyone else is a very arguable proposition. Is there a market in furs? There are auctions.
We are told that, in the end, the unfortunate inspectors of taxes will have to decide these matters for themselves. One of the curses of the Bill, as we have said many times, is that it places more responsibility on the tax inspectors, who have quite enough work to do and who
already, because of the unfortunate legislation which they have to operate, have to discharge far too much discretion in matters on which legislation should be clear. The Bill would put on them the responsibility of deciding what is and what is not a recognised market.
If the right hon. Gentleman goes on like this he will get a reputation rather similar to that already enjoyed by the Minister of Housing and Local Government, who wasted the time of the House earlier this afternoon for about half an hour because he could not accept a proposition which anyone in his senses would have accepted. But I should be out of order if I developed that point further.
By refusing to accept the Amendment, the right hon. Gentleman is creating great uncertainty, and unless he proposes to tell us that he will accept the Amendment or will, at the very least, publish for the benefit of the Committee and, possibly, for debate a clear list of what the Board of Inland Revenue will accept as recognisd markets, we shall have no alternative but to carry this Amendment to a Division. Hon. Gentlemen who have followed the debate, including the hon. and gallant Member for Roxburgh, Selkirk and Peebles (Commander Donaldson), who came into the Committee a few minutes ago, will recognise that on the merits of the case there is nothing in the Economic Secretary's argument at all.
Question put, That those words be there inserted:—
The Committee divided: Ayes 212, Noes 276.

Division No. 164.]

AYES

[4.34 p.m.

Ainsley, J. W.

Brockway, A. F.

Dalton, Rt. Hon. H.

Albu, A. H.

Brown, Rt. Hon. George (Belper)

Darling, George (Hillsborough)

Allaun, Frank (Salford, E.)

Brown, Thomas (Ince)

Davies, Ernest (Enfield, E.)

Allen, Scholefield (Crewe)

Burke, W. A.

Davies, Harold (Leek)

Awbery, S. S.

Butler, Herbert (Hackney, C.)

Davies, Stephen (Merthyr)

Bacon, Miss Alice

Butler, Mrs. Joyce (Wood Green)

Deer, G.

Bellenger, Rt. Hon. F.J.

Callaghan, L. J.

de Freitas, Geoffrey

Bence, C. R. (Dunbartonshire, E.)

Carmichael, J.

Dodds, N. N.

Benson, G.

Castle, Mrs. B. A.

Donnelly, D. L.

Beswick, Frank

Champion, A. J.

Dye, S.

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

Chapman, W. D.

Edelman, M.

Blackburn, F.

Chetwynd, G. R.

Edwards, Rt. Hon. John (Brighouse)

Blenkinsop, A.

Clunie, J.

Edwards, Rt. Hon. Ness (Caerphilly>

Blyton, W. R.

Coldrick, W.

Edwards, Robert (Bilston)

Boardman, H.

Collick, P. H. (Birkenhead)

Edwards, W. J. (Stepney)

Bottomley, Rt. Hon. A. G.

Collins,V.J.(Shoreditch & Finsbury)

Evans, Albert (Islington, S.W.)

Bowden, H. W. (Leicester, S.W.)

Craddock, George (Bradford, S.)

Fernyhough, E.

Bowles, F. G.

Cronin, J. D.

Finch, H. J.

Boyd, T. C.

Crossman, R. H. S.

Forman, J. C.

Braddock, Mrs. Elizabeth

Cullen, Mrs. A.

Fraser, Thomas (Hamilton)

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

McKay, John (Wallsend)

Shinwell, Rt. Hon. E.

George, Lady Megan Lloyd(Car'then)

Macpherson, Malcolm (Stirling)

Short, E. W.

Gibson, C. W.

Mahon, Simon

Shurmer, P. L. E.

Greenwood, Anthony

Mallalieu, E. L. (Brigg)

Silverman, Julius (Aston)

Grey, C. F.

Mann, Mrs. Jean

Silverman, Sydney (Nelson)

Griffiths, David (Rother Valley)

Marquand, Rt. Hon. H. A.

Simmons, C. J. (Brierley Hill)

Griffiths, Rt. Hon. James (Llanelly)

Mason, Roy

Skeffington, A. M.

Griffiths, William (Exchange)

Mayhew, C. P.

Slater, Mrs. H. (Stoke, N.)

Hale, Leslie

Mellish, R. J.

Slater, J. (Sedgefield)

Hall, Rt. Hn. Glenvil (Colne Valley)

Messer, Sir F.

Smith, Ellis (Stoke, S.)

Hamilton, W. W.

Mikardo, Ian

Sparks, J. A.

Hannan, W.

Mitchison, G. R.

Steele, T.

Harrison, J. (Nottingham, N.)

Monslow, W.

Stewart, Michael (Fulham)

Hastings, S.

Moody, A. S.

Stonehouse, John

Hayman, F. H.

Morris, Percy (Swansea, W.)

Strachey, Rt. Hon. J.

Healey, Denis

Morrison, Rt. Hn. Herbert(Lewis'm,S.)

Strauss, Rt. Hon. George (Vauxhall)

Henderson, Rt. Hn. A. (Rwly Regis)

Mort, D. L.

Stross, Dr. Barnett (Stoke-On-Trent, C.)

Herbison, Miss M.

Moss, R.

Summerskill, Rt. Hon. E.

Hobson, C. R. (Kelghley)

Moyle, A.

Swingler, S. T.

Holman, P.

Mulley, F. W.

Sylvester, G. O.

Holmes, Horace

Noel-Baker, Rt. Hon. P. (Derby, S.)

Taylor, Bernard (Mansfield)

Houghton, Douglas

Oliver, G. H.

Thomas, Iorwerth (Rhondda, W.)

Howell, Charles (Perry Barr)

Orbach, M.

Thomson, George (Dundee, E.)

Hoy, J. H.

Oswald, T.

Thornton, E.

Hubbard, T. F.

Owen, W. J.

Timmons, J.

Hughes, Emrys (S. Ayrshire)

Padley, W. E.

Tomney, F.

Hughes, Hector (Aberdeen, N.)

Paget, R. T.

Usborne, H. C.

Hunter, A. E.

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

Viant, S. P.

Hynd, H. (Accrington)

Palmer, A. M. F.

Weitzman, D.

Hynd, J. B. (Attercliffe)

Pannell, Charles (Leeds, W.)

Wells, Percy (Faversham)

Isaacs, Rt. Hon. G. A.

Pargiter, G. A.

Wells, William (Walsall, N.)

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

Parker, J.

West, D. G.

Jeger, Mrs. Lena (Holbn & St. Pncs, S.)

Parkin, B. T.

Wheeldon, W. E.

Jenkins, Roy (Stechford)

Paton, John

White, Mrs. Eirene (E. Flint)

Johnson, James (Rugby)

Pearson, A.

White, Henry (Derbyshire, N.E.)

Johnston, Douglas (Paisley)

Peart, T. F.

Wigg, George

Jones, David (The Hartlepools)

Pentland, N.

Wilkins, W. A.

Jones, Elwyn (W. Ham, S.)

Plummer, Sir Leslie

Willey, Frederick

Jones, jack (Rotherham)

Popplewell, E.

Williams, Rev. Llywelyn (Ab'tillery)

Jones, J. Idwal (Wrexham)

Prentice, R. E.

Williams, Ronald (Wigan)

Jones, T. W. (Merioneth)

Price, J. T. (Westhoughton)

Williams, W. R. (Openshaw)

Kenyon, C.

Probert, A. R.

Willis, Eustace (Edinburgh, E.)

Key, Rt. Hon. C. W.

Proctor, W. T.

Wilson, Rt. Hon. Harold (Huyton)

King, Dr. H. M.

Randall, H. E.

Woodburn, Rt. Hon. A.

Lawson, G. M.

Rankin, John

Woof, R. E.

Lee, Frederick (Newton)

Redhead, E. C.

Yates, V. (Ladywood)

Lewis, Arthur

Reid, William

Younger, Rt. Hon. K.

Lipton, Marcus

Rhodes, H.

Logan, D. G.

Roberts, Albert (Normanton)

TELLERS FOR THE AYES:

Mabon, Dr. J. Dickson

Roberts, Goronwy (Caernarvon)

Mr. J. Taylor and

MacColl, J. E.

Robinson, Kenneth (St. Pancras, N.)

Mr. G. H. R. Rogers.

McInnes, J.

Ross, William

NOES

Agnew, Sir Peter

Boyd-Carpenter, Rt. Hon. J. A.

Dance, J. C. G.

Aitken, W. T.

Braine, B. R.

Davidson, Viscountess

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

Braithwaite, Sir Albert (Harrow, W.)

D'Avigdor-Goldsmid, Sir Henry

Alport, C. J. M.

Brooke, Rt. Hon. Henry

Deedes, W. F.

Arbuthnot, John

Brooman-White, R. C.

Digby, Simon Wingfield

Armstrong, C. W.

Browne, J. Nixon (Craigton)

Dodds-Parker, A. D.

Ashton, H.

Bryan, P.

Donaldson, Cmdr. C. E. McA.

Astor, Hon. J. J.

Bullus, Wing Commander E. E.

Doughty, C. J. A.

Atkins, H. E.

Butcher, Sir Herbert

Drayson, G. B.

Baldook, Lt.-Cmdr. J. M.

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

du Cann, E. D. L.

Baldwin, A. E.

Campbell, Sir David

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

Balniel, Lord

Carr, Robert

Duncan, Capt. J. A. L.

Barber, Anthony

Gary, Sir Robert

Duthie, W. S.

Barlow, Sir John

Channon, Sir Henry

Eden, J. B. (Bournemouth, West)

Barter, John

Chichester-Clark, R.

Elliot, Rt. Hon. W. E. (Kelvingrove)

Baxter, Sir Beverley

Churchill, Rt. Hon. Sir Winston

Elliott, R. W. (N'castle upon Tyne, N)

Beamish, Maj. Tufton

Cole, Norman

Emmet, Hon. Mrs. Evelyn

Bell, Ronald (Bucks, S.)

Conant, Maj. Sir Roger

Errington, Sir Eric

Bennett, F. M. (Torquay)

Cooke, Robert

Erroll, F. J.

Bennett, Dr. Reginald

Cooper, A. E.

Fell, A.

Bevins, J. R. (Toxteth)

Cooper-Key, E. M.

Finlay, Graeme

Bidgood, J. C.

Cordeaux, Lt.-Col. J. K.

Fisher, Nigel

Birch, Rt. Hon, Nigel

Corfield, Capt, F. V.

Fletcher-Cooke, C.

Bishop, F. P.

Craddock, Beresford (Spelthorne)

Fort, R.

Black, C. W.

Crosthwaite-Eyre, Col. O. E.

Fraser, Sir Ian (M'cmbe & Lonsdale)

Boothby, Sir Robert

Crowder, Sir John (Finchley)

Freeth, Denzil

Bossom, Sir Alfred

Cunningham, Knox

Galbraith, Hon. T. G. D.

Bowen, E. R. (Cardigan)

Currie, G. B. H.

Gammans, Lady

974

975

Garner-Evans, E. H.

Kirk, P. M.

Raikes, Sir Victor

George, J. C. (Pollok)

Lagden, G. W.

Ramsden, J. E.

Gibson-Watt, D.

Lambert, Hon. G.

Rawlinson, Peter

Glover, D.

Lambton, Viscount

Redmayne, M.

Glyn, Col. R.

Lancaster, Col. C. G.

Remnant, Hon. P.

Godber, J. B.

Leather, E. H. C.

Renton, D. L. M.

Gomme-Duncan, Col. Sir Alan

Leavey, J. A.

Ridsdale, J. E.

Goodhart, Philip

Leburn, W. G.

Robertson, Sir David

Gower, H. R.

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

Robinson, Sir Roland (Blackpool, S.)

Graham, sir Fergus

Lindsay, Hon. James (Devon, N.)

Rodgers, John (Sevenoaks)

Grant, W. (Woodside)

Lindsay, Martin (Solihull)

Roper, Sir Harold

Grant-Ferris, Wg Cdr. R. (Nantwich)

Linstead, Sir H. N.

Ropner, Col. Sir Leonard

Green, A.

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

Russell, R. S.

Gresham Cooke, R.

Longden, Gilbert

Sandys, Rt. Hon. D.

Grimond, J.

Low, Rt. Hon. A. R. W.

Schofield, Lt.-Col. W.

Grimston, Hon. John (St. Albans)

Lucas, Sir Jocelyn (Portsmouth, S.)

Scott-Miller, Cmdr. R.

Grimston, Sir Robert (Westbury)

Lucas-Tooth, Sir Hugh

Sharples, R. C.

Hall, John (Wycombe)

McAdden, S. J.

Shepherd, William

Harris, Reader (Heston)

Macdonald, Sir Peter

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

Harrison, A. B. C. (Maldon)

Mackeson, Brig. Sir Harry

Smithers, Peter (Winchester)

Harrison, Col. J. H. (Eye)

Mackie, J. H. (Galloway)

Smyth, Brig. Sir John (Norwood)

Harvey, Sir Arthur Vere (Maeclesfd)

McLaughlin, Mrs. P.

Spearman, Sir Alexander

Harvey, Ian (Harrow, E.)

Maclay, Rt. Hon. John

Speir, R. M.

Harvey, John (Walthamstow, E.)

Maclean, Sir Fitzroy (Lancaster)

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

Hay, John

McLean, Neil (Inverness)

Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

Heald, Rt. Hon. Sir Llonel

Macmillan, Rt. Hn. Harold (Bromley)

Stanley, Capt. Hon. Richard

Heath, Rt. Hon. E. R. G.

Macpherson, Niall (Dumfries)

Stevens, Geoffrey

Henderson, John (Cathcart)

Maddan, Martin

Steward, Harold (Stockport, S.)

Henderson-Stewart, Sir James

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

Steward, Sir William (Woolwich, W.)

Hesketh, R. F.

Maitland, Hon. Patrick (Lanark)

Stoddart-Scott, Col. Sir Malcolm

Hicks-Beach, Maj. W. W.

Markham, Major Sir Frank

Storey, S.

Hill, Rt. Hon. Charles (Luton)

Marlowe, A. A. H.

Taylor, Sir Charles (Eastbourne)

Hill, Mrs. E. (Wythenshawe)

Marples, Rt. Hon. A. E.

Taylor, William (Bradford, N.)

Hill, John (S. Norfolk)

Marshall, Douglas

Teeling, W.

Hinchingbrooke, Viscount

Mathew, R.

Temple, John M.

Hirst, Geoffrey

Maude, Angus

Thomas, Leslie (Canterbury)

Hope, Lord John

Maudling, Rt. Hon. R.

Thomas, P. J. M. (Conway)

Hornby, R. P.

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

Thompson, Kenneth (Walton)

Hornsby-Smith, Miss M. P.

Milligan, Rt. Hon. W. R.

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

Horobin, Sir Ian

Molson, Rt. Hon. Hugh

Thorneycroft, Rt. Hon. P.

Horsbrugh, Rt. Hon. Dame Florence

Moore, Sir Thomas

Thornton-Kemsley, C. N.

Howard, John (Test)

Mott-Radclyffe, Sir Charles

Tilney, John (Wavertree)

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

Nabarro, G. D. N.

Turton, Rt. Hon. R. H.

Hughes Hallett, Vice-Admiral J.

Nairn, D. L. S.

Tweedsmuir, Lady

Hughes-Young, M. H. C.

Nicholls, Harmar

Vaughan-Morgan, J. K.

Hulbert, Sir Norman

Nicholson, Godfrey (Farnham)

Vickers, Miss Joan

Hurd, A. R.

Nicolson, N. (B'n'm'th, E. & Chr'ch)

Wade, D. W.

Hutchison, A. M. C. (Ed'burgh, S.)

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

Wakefield, Edward (Derbyshire, W.)

Hutchison, Sir Ian Clark (E'b'gh, W.)

Ormsby-Gore, Rt. Hon. W. D.

Wakefield, Sir Wavell (St. M'lebone

Hutchison, Sir James (Scotstoun)

Orr, Capt. L. P. S.

Walker-Smith, Rt. Hon. Derek

Hyde, Montgomery

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

Wall, Major Patrick

Hylton-Foster, Rt. Hon. Sir Harry

Osborne, C.

Ward, Rt. Hon. G. R. (Worcester)

Irvine, Bryant Godman (Rye)

Page, R. G.

Ward, Dame Irene (Tynemouth)

Jenkins, Robert (Dulwich)

Pannell, N. A. (Kirkdale)

Waterhouse, Capt. Rt. Hon. C.

Jennings, J. C. (Burton)

Partridge, E.

Watkinson, Rt. Hon. Harold

Jennings, Sir Roland (Hallam)

Peyton, J. W. W.

Whitelaw, W. S. I.

Johnson, Dr. Donald (Carlisle)

Pickthorn, K. W. M.

Williams, Paul (Sunderland, S.)

Johnson, Eric (Blackley)

Pike, Miss Mervyn

Williams, R. Dudley (Exeter)

Joseph, Sir Keith

Pilkington, Capt. R. A.

Wills, G. (Bridgwater)

Joynson-Hicks, Hon. Sir Lancelot

Pitman, I. J.

Wood, Hon. R.

Keegan, D.

Pitt, Miss E. M.

Woollam, John Victor

Kerby, capt. H. B.

Powell, J. Enoch

Yates, William (The Wrekin)

Kerr, Sir Hamilton

Price, David (Eastleigh)

Kershaw, J. A.

Price, Henry (Lewisham, W.)

TELLERS FOR THE NOES:

Kimball, M.

Prior-Palmer, Brig. O. L.

Mr. Oakshott and Mr. Legh.

Mr. Mitchison: I beg to move, in page 28, line 20, after "companies", to insert:
"and to be a subsidiary of each of two, three or four other companies, if and so long as more than one-eighth of its ordinary capital is owned by each of those other companies and more than two-thirds thereof by those other companies together, in each case whether directly or through another company or partly directly and partly through another company or other companies".
A subsidiary company is defined in the Bill at present as a company in which
976
more than half the capital is held by the principal company. A great deal depends on this status; that is to say, the question whether a company is a subsidiary company or not is one of very considerable importance. We have been invited by the Financial Secretary, during the course of our discussions in Committee, to follow him through quite a family of overseas trade corporations. There were the children—the subsidiaries—the grandchildren, and there were uncles and

977
aunts and heaven knows what in this family, and at one point I think the hon. Gentleman came to this conclusion.
I am now referring to the OFFICIAL REPORT for 27th June, at column 520, to a passage in which the Financial Secretary was explaining the effect of a proviso. I cannot do better than quote his own singularly lucid language. It consisted of two sentences, both models of their kind. Let me take them in order:
"So far we have been considering a nonresident shareholding company in an overseas trade corporation, but if that non-resident shareholding company were itself the subsidiary—let us say the mere puppet of a United Kingdom company—the practical effect would be that a United Kingdom company or a United Kingdom resident could be drawing the tax-exempt profits of an overseas trade corporation by drawing them through a nonresident shareholder. It is to prevent this method of avoidance that the case where the non-resident company is a subsidiary of the United Kingdom principal is ruled out."
I then made some observations to the Financial Secretary and I suggested that two or three companies might combine to have a dummy company, and so, without having anything that was a subsidiary of any one of them under the Bill as it is at present drawn, they might, nevertheless, have something that was, in fact and in intention, a subsidiary of two or three of them. As I put it:
"… to combine, the three of them, and to put up a dummy between them, and they will get the benefit."
I then said:
"I should like to know what is the answer to that. I expect that there is one."
The Financial Secretary replied:
"I will certainly pursue that point"— [OFFICIAL REPORT, 27th June, 1957; Vol. 572, c. 520–1.]
It was an engaging picture—the Financial Secretary pursuing the point—and he has been pursuing it ever since, because nothing whatever on this matter has appeared among the Government Amendments on the Notice Paper. I suppose that in the small hours of the morning, one finds the Financial Secretary running round St. James's Park pursuing this particularly elusive point. We are trying to help. At some stage or another he might catch it, and, accordingly, we have tabled this Amendment, the object of which is really quite a simple one, though I agree that it makes the sentence slightly more complicated.
978
4.45 p.m.
It is simply this. If two, three, or four companies have another company in which between them they own more than two-thirds of the capital, and, to eliminate the case of some small shareholder, each of them holds at least one-eighth of the capital, for the purposes of the Bill that company is to be treated as the subsidiary of each of them. I say at once, and I know that the Financial Secretary will agree with me here, that this is about as complicated a bit of legislation as any Government have ever produced, but—and here I know that the hon. Gentleman will not agree with me—it is about as full of holes as the average sieve.
I have been referring to that sieve several times, but this seems to be a rather large hole—this method of combining to form a subsidiary of two or three companies—and it presents intriguing possibilities when it is a sort of family conspiracy. To take the Financial Secretary's little family, perhaps uncles and nephews will combine to form a subsidiary between them. The relationship at this point really baffles the prohibited marriages notice that appears on church walls occasionally, but perhaps we need not go any further into that metaphor for fear of shocking unnecessarily those concerned with the collection and payment of taxes.
It is abundantly clear, and here I speak most seriously, that one of the easiest ways to get the benefit of this, and to go beyond what is the intention of the Committee and beyond the intention of the Government, is to have subsidiaries—a couple of companies combining to form a single company which will, in effect, act as a subsidiary of both of them. To meet that difficulty, to help the Financial Secretary to end his tiring chases at night and to catch at last the elusive point which he has been following for so long, we submit this Amendment.
Mr. Powell: This is the point which, on 27th June, as the hon. and learned Member for Kettering (Mr. Mitchison) has so literally reminded the Committee, I undertook to pursue. I agree with the hon. and learned Member that there is here, certainly in theory, the possibility of avoidance. Two or more United Kingdom companies might set up a milch cow, non-resident, company in order to draw the tax free trading profits of an overseas trade corporation.

979
I also agree with the hon. and learned Member that the only way in which that possibility could be dealt with would be by a quite elaborate extension for this purpose of the normal meaning of "subsidiary company." My advice to the Committee, having considered this, is that, although this theoretical possibility of avoidance exists, the danger—at any rate as so far advised—is not so serious as to involve the really extensive recasting which would be necessary if we were to include in the Bill such a redefinition of a subsidiary company. The Amendment might, indeed, serve the purpose in regard to Clause 25 which the hon. and learned Member had particularly in mind, but it would involve a drastic recasting of most of the other parts of the Bill where a subsidiary company appears in a quite different role and function.
I can assure the Committee that this is a possibility which the Inland Revenue will watch very carefully. It will be able to trace the payments made by overseas trade corporations to non-resident companies and will, in turn, be able to trace the receipts of resident United Kingdom companies from non-resident companies. Therefore, it will have the material in its hands for discovering whether this theoretical avoidance device becomes a practical one.
I can assure the Committee that should that be the case the Government would accept the necessity of dealing with it in subsequent legislation, but the danger does not at this stage appear to be so serious as to justify what, in effect, would be a recasting of the provisions of Part IV of the Bill wherever they affect relations between a subsidiary and a principal company.
Mr. H. Wilson: We all recognise the difficulties in which the Financial Secretary is placed. I must confess that my heart goes out to him in sympathy, having heard that he started pursuing the point, but, when half way round St. James's Park, it became a dummy and now, he tells us, it has become a milch cow.
Mr. Powell: There always was a mulch cow in St. James's Park.
Mr. Wilson: I did not know that Financial Secretaries were in the habit of chasing round St. James's Park in the
980
middle of the night. To encourage the hon. Gentleman to run a little faster and to be more energetic in pursuit of this milch cow, I thought that we should give him some encouragement by dividing in favour of the Amendment, but he has made it clear that this point is very much in the minds of the Revenue which, therefore, will watch it.
The hon. Gentleman has produced a fair argument that this Amendment would entail a lot of consequential changes in other parts of the Bill. Therefore, I think that with a warning we might be prepared to let this go, but in doing so I would draw to his attention the warning given on a not very dissimilar question to a predecessor, the present Minister of Housing and Local Government.
The Committee may recall the autumn Budget of 1955 when, in the Finance Bill, there was an important Clause to deal with the question of dividend stripping. It was a very thoroughly drafted Clause and in the course of the debate on it I expressed a doubt whether an ingeniously minded gentleman might find a way round it. I asked that the Government should devise legislation to deal with that point more speedily. The right hon. Gentleman replied that certainly they would do so. If they found new measures were introduced for the purpose of avoiding that legislation, they would introduce retrospective legislation.
I understand that since then three new methods have been worked out for getting round the provisions in respect of dividend stripping, but none has been introduced because of the fear that the Government would introduce retrospective legislation. I hope that the warning that the Financial Secretary has just given, that the Inland Revenue will be watching whether people will "fiddle" their way round it, will be taken as a similar discouragement to setting up special tax arrangements, the kind of dummy companies to which my hon. and learned Friend referred, and that they will be stopped from doing so.
I will not press the hon. Gentleman now to give an assurance that any action introduced to deal with this matter will be retrospective, but I hope that he will bear that previous case in mind. I hope that the realisation that the Inland Revenue will deal with evasions of this kind might be as effective in the long

981
run as if the Government had accepted the Amendment.
Mr. Mitchison: In view of what has been said, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause ordered to stand part of the Bill.
Bill reported, with an Amendment; as amended (in Committee and on recommittal), considered.

New Clause.—(AMENDMENT AS TO REGULATIONS UNDER FINANCE ACT, 1933, SCH. 5.)
Any statutory instrument made in exercise of the power to make regulations conferred on the Board of Trade by the Fifth Schedule to the Finance Act, 1933 (which contains provisions for determining the country of origin of imported goods for purposes of preference under the Import Duties Act, 1932, and the Ottawa Agreements Act, 1932), shall be subject to annulment in pursuance of a resolution of either House of Parliament.—[Mr. Powell.]
Brought up, and read the First time.
Mr. Powell: I beg to move, That the Clause be read a Second time.
The desirability of this new Clause arises in the following way. Under the simplification of Customs duty procedure which is introduced by Clause 5 and the Second Schedule to the Bill, preference will be allowed in cases of duty leviable upon a component part of goods in respect of the provenance of the goods themselves and not of the component part. That is to say, in future, in order to decide whether preference is allowable in respect of that particular duty it will be necessary only to look at the country of origin of the goods which contain the dutiable article and not to go back to the country of origin of the dutiable article which forms part of the goods.
As a result, it will be necessary to make new preference regulations on this new and simplified basis. The preference applies, however, to two kinds of duty— protective duties levied under the 1933 Finance Act and Rvenue duties levied under the 1919 Finance Act. Unfortunately, while the preference regulations under the 1919 Act are prayable, those under the 1933 Act—probably by a mere oversight—are not prayable.
It is, consequently, not practicable to make one set of new preference regulations without producing the monstrosity
982
of a set of regulations part of which could be annulled by a Prayer by this House and part of which could not. It is to make it possible to make one set of regulations which will be subject to annulment by this House that the annulment procedure is applied by this new Clause to regulations under the 1933 Act.
5.0 p.m.
Mr. Roy Jenkins: The proposed Clause seems very reasonable to us, and we certainly would not wish to oppose it. We hope that the Government Front Bench will welcome the new Clauses that we move in the way that we are able to welcome this one.
Question put and agreed to.
Clause read a Second time, and added to the Bill.

New Clause.—(REBATES OF CUSTOMS DUTY AND EXCISE DUTY ON HYDROCARBON OILS FOR USE IN PUBLIC SERVICE VEHICLES DRIVEN BY DIESEL FUEL.)
On and after the fifth day of August, nineteen hundred and fifty-seven, there shall be allowed from the customs duty a rebate at the rate of two shillings and sixpence a gallon and from the excise duty a rebate at the rate of one shilling and threepence a gallon on the delivery of hydrocarbon oil for use in any mechanically propelled vehicle driven by diesel fuel and licensed as a public service vehicle for the carriage of passengers.—[Mr. Ernest Davies.]
Brought up, and read the First time.
Mr. Ernest Davies: I beg to move, That the Clause be read a Second time.
Mr. Deputy-Speaker (Sir Gordon Touche): It will probably be for the convenience of the House to discuss at the same time the next two Clauses— "Rebates of customs duty and excise duty on hydrocarbon oils for use in mechanically propelled vehicles driven by diesel fuel and for use on roads," and "Rebate of customs duty and excise duty on motor spirit."
Mr. Ernest Davies: I think that will be for the convenience of the House, Mr. Deputy-Speaker. These Clauses have been tabled because of our disappointment at the failure of the Chancellor of the Exchequer to take any action about the reduction of the Petrol Duty except to remove the extra shilling which was

983
added during the Suez crisis. Thus, the burden of tax remains as it was previously, and it is very substantial, particularly for public transport.
The three Clauses differ. The first Clause proposes simply that all public service vehicles—that is, those vehicles used for road passenger transport—should be exempt from tax in respect of diesel oil. The second Clause does the same in respect of all diesel oil used in road transport. Therefore, it applies equally to public service vehicles and road goods vehicles. The third Clause is very different. It is a straightforward proposal for a reduction of 6d. in the duty in the case of both light and heavy oil.
The reason why we suggest that there should be this discrimination in favour of diesel oil, which is commonly known as derv, is that the effect of the high tax on the cost of living in respect of fares for both road passenger vehicles and the carriage of goods by road transport generally is a direct charge, and, with the rise in other costs, the tax thus has a greater effect.
When we have previously moved Clauses similar to these we have been met with the argument that it is impracticable to have discrimination as between the users of different forms of fuel—that is, between the users of petrol and the users of diesel oil—but I would point out to the Economic Secretary that this system is pursued in every other country in Western Europe as well as some countries elsewhere. I have here a list of the differentials as between gasolene and gas oil in Western European countries. Clearly, the costs of transport in those countries are, as a consequence, less than in this country, and that puts this country at a disadvantage in the competitive market in Europe.
In Belgium and the Netherlands, for instance, where the price of petrol is roughly the same as here—being 4s. 4d. and 4s. respectively, for the regular grade —the tax on petrol is 2s. 7d. in the case of Belgium and 2s. 4d. in the case of the Netherlands. However, in the case of gas oil the tax is only 1s. 2d. instead of 2s. 7d. in Belgium, and it is practically negligible in the Netherlands, being only about ld. per gallon. The consequence is that the price of derv in Belgium is only Is. 9d.
984
compared with 4s. 3d. in this country at the present time, and in the Netherlands it is only 1s. 7d. compared with 4s. per gallon for petrol there.
In some other countries diesel oil is completely free of tax although the petrol tax may be as high as it is here. That is certainly the case in the Scandinavian countries of Sweden and Denmark where the price of petrol and the tax are roughly the same as here, but the price of derv is very much cheaper, being only Is. 10d. because it is completely free of tax. In every one of these countries of Western Europe that situation prevails, whereas in this country the tax is the same on both derv and petrol and, consequently, the price of the two oils is the same.
With regard to the advantage of the price of diesel oil being reduced, there is no question that if it encourages the consumption of diesel oil in preference to petrol a considerable economy is made. In actual fact, the lighter vehicles which are diesel-operated consume roughly only half the amount of fuel that petrol vehicles do. In other words, the mileage of a light diesel vehicle is twice that of a petrol-driven vehicle for the same quantity of fuel. The heavier diesel vehicles, which are mainly buses and coaches and heavy goods vehicles, consume anything from 25–50 per cent. less oil than do petrol-driven vehicles. Therefore, although the initial capital costs may be higher, there is a considerable saving in operating costs, which reduces transport costs generally, and there is obviously a saving in imports because if less oil is consumed, less oil needs to be imported. Another important factor is that, with the steady expansion of the Western European market and the coming of the Common Market and the Free Trade Area, and, thus, with increased competition, this country will be at a disadvantage if its transport costs are at a higher level than those of its competitors on the Continent.
One argument which has been used against these proposals by every spokesman from the Treasury Bench—although the team changes, each time we make these proposals the same brief is produced, and it is getting a little dusty—is that what is proposed is not administratively possible. If every other country in Western Europe finds it administratively

985
possible to have a differential tax as between derv and petrol, I cannot see why we cannot have it. Our Civil Service is reputed to be one of the finest in the world, and it is held to be fairly ingenious —as we have found it to be to our disadvantage on occasion. Surely it has the ability to devise a foolproof method of imposing a differential tax as between the two forms of oil used in road transport.
As a matter of fact, an opportunity exists already for evasion if it were not possible to introduce a system which prevented it. As no evasion has been suggested, it seems that there is some system in vogue at the present time which prevents the creation of a black market in respect of oil which is not taxed. The oil which is not taxed does not appear to be consumed in a way it should not be consumed; otherwise something would be known about it.
At present, the same oil is used by the railways for different purposes, some being taxed and some not. The railways use in their buses and goods vehicles diesel oil on which tax is imposed. In their diesel units and for other purposes they use precisely the same oil which is not taxed. Diesel oil is used for a great number of purposes—agriculture, heating, stationary oil motors and so on —for which it is not subject to tax. That being the case, there is discrimination at the present time, and I cannot see why it should not be possible to have differential taxes as between the two forms of oil.
We consider the first of these proposed new Clauses the most important, because it relates to public service vehicles and public transport faces considerable difficulties at this time. Costs are mounting and fares rising. There comes a point, as is well known, when the law of diminishing returns operates, when fares can no longer be increased because the higher they go the more encouragement is provided for people to desert public transport and use other forms of transport. We are all aware of the vast increase in the number of motor scooters and light motor cycles as well as the increase in the number of people who use private cars. This is a disadvantage because it causes a greater congestion on the roads. Public transport is slowed down, which makes it less efficient and causes the service to deteriorate. Costs
986
are increased, and, incidentally, the danger on the roads becomes greater.
If members of the public are driven to desert public transport, it means that those who must use it will have to pay correspondingly higher fares because there will be fewer passengers over which the cost can be spread. If this process continues, it will mean that many unremunerative services will have to be cut out. It is well known that bus undertakings subsidise one another, there is cross-subsidisation in the industry because that is the only way a large number of rural services can be provided. In a recent Report of the British Transport Commission, it is stated that 200 million car miles of unremunerative services are run each year. If costs continue to rise and it is impossible to increase fares without disastrous results, more and more of these unremunerative services, which are mainly rural services, will have to be cut out. This would prove most unfortunate because a large number of people are obliged to use public transport every day in order to get to their work. It is impossible for these people to use other forms of transport.
The acceptance of this Clause would result in considerable assistance being afforded to public service transport, because the vast majority of buses and coaches are diesel operated. A Question which I put to the Minister of Transport and Civil Aviation on 10th July elicited the information that of 75,000 public service vehicles no less than 62,000, which represents 82 per cent., were dieselengined, and 13,000 vehicles, or 18 per cent., were petrol driven.
The argument previously used has been that if there were a favourable differential for diesel oil it would encourage a conversion from petrol to diesel oil and the duty payable on petrol would no longer accrue to the Treasury. That is a false argument, because although there would remain nearly 18 per cent. of vehicles which are petrol driven, proportionately, they do far less mileage than the dieselengined vehicles. The 82 per cent, of diesel vehicles do about 90 per cent. of the mileage. In view of that, it is no longer convenient to advance the argument either that there would be a conversion from petrol to diesel oil and the Treasury would lose a considerable sum in duty, or that it would affect rail transport. The mileage in the rural areas

987
which is covered by petrol driven vehicles is by no means considerable, and all the time the number of diesel driven vehicles is increasing proportionately, as is shown by the number of registrations published periodically.
The costs of public transport are rising all round. There is another proposed new Clause on the Notice Paper, which is not to be selected, in which it is proposed to reduce the duty on public service vehicles. I will not discuss that, except to say that the incidence of the vehicle Excise licence on public transport is most unfair. It adds to the cost and, if it is to be retained at the present level, that is another argument, why the duty on diesel oil should be reduced. Actually, £5½ million is paid in Excise licences to the Treasury, which represents as much as a 5½d. tax on fuel, which is a considerable amount. Were the tax reduced, the incidence would not be so great.
5.15 p.m.
I do not understand why the Government are so prejudiced against public transport. During the last month it has been announced that other costs are to be increased, and these are within the control of the Government. The public service licence is to go up from £4 to £6, and the cost of a certificate of fitness is to be increased from £5 to £5 10s. Orders to that effect have been laid. All these increasing costs make greater the difficulties of the operators. The cost of accepting the new Clauses would not be very great. Only one-sixth of the diesel oil consumed today is used in road passenger transport and, therefore, subject to duty. In reply to a Question, the Chancellor of the Exchequer stated earlier this month that the cost of removing the duty on diesel oil used in public service vehicles would be £30 million. That is a large sum, but the removing of that amount of duty would bring considerable aid to the industry.
The cost of removing the duty on all diesel oil, as is proposed in the second new Clause, would be £68 million. The reduction of the total duty by taking off 6d. all round would, on last year's tax figures, cost about £70 million. So the cheapest of the proposals contained in these new Clauses is that in the first, which is the one we favour most and which we consider practical. I hope that
988
the Economic Secretary will not just use the old brief to which I have referred and brush this matter aside without giving any hope of some relief.
The outlook for the road passenger transport industry is pretty grim at the present time. Costs are rising and there is a new wage demand which is the subject of negotiation at the moment. Fares are almost certain to rise unless some relief is provided for the industry. If fares are increased, we shall get back again into that vicious circle of traffic being lost and losses on the services increasing. Unremunerative services will be cut out and there will be an all-round deterioration in public transport. That is the outlook which faces us. It is within the power of the Chancellor to change it and bring some relief to the industry.
Mr. David Jones: I beg to second the Motion.
I hope the right hon. Gentleman will not tell us tonight what a predecessor of his told us last year and the year before, that one of the reasons why the Treasury would not look at this reduction was that petrol-driven vehicles were primarily used in the rural areas and diesel-run vehicles were used mainly in the urban areas. I hope that the knowledge of even the Minister of Pensions and National Insurance of the public transport industry has improved since then.
The figures quoted by my hon. Friend the Minister for Enfield, East (Mr. Ernest Davies) shows quite clearly that far and away the greatest number of public service vehicles are now driven on diesel oil, and he pointed out that the taxation on diesel oil used for public service vehicles is higher than that imposed by any other country in Western Europe. It is at present about 2s. 6d. per gallon.
The diesel-engined vehicle used in public service transport is mainly of the double-decker type, but whether double or single-deck, in the traffic conditions encountered in most parts, those vehicles do little more than 12 miles to the gallon, if as much. I have been at some pains today to check with some of the people engaged in the industry. I find that in some of the hillier parts, particularly in South Wales, vehicles do not run at much more than seven miles to the gallon but that the industry as a whole regards ten

989
miles as the average distance that can be got out of a gallon of diesel oil, whether used in a double-decker or single-decker vehicle. It is the condition of the roads rather than the size of the vehicle that primarily controls the consumption.
It obviously follows, therefore, that the first three coppers of every mile of route covered by a public service transport vehicle go automatically to the Treasury. In the past years, there has been a good deal of debate in this House about the withdrawal of rural transport services. I know of one depot in a rural area where, of more than forty routes operating, more than thirty are in rural areas and either break even or lose money. They lose money, in the main—the vehicles being diesel-engined— because of that first 3d. per mile that goes to the Treasury.
At the present moment there is a wage claim pending in the passenger transport industry. If that claim is conceded it must of necessity mean an increase in fares. It must also of necessity mean that a growing number of public service vehicle routes will become unremunerative and will need to be withdrawn. Another disturbing feature is the effect of the public service transport fares which have to be charged to men going to and from their work. I think particularly of my own constituency on Teesside, where large numbers of people travel many miles by bus each day to their work, either at I.C.I. at Billingham, the Dorman Long works at Wilton, or at the I.C.I. extension.
It costs them a good deal of money to travel return journeys of five or six miles each day of the week, and they find it more economical for four or five of them to combine to invest in a secondhand car and to abandon the public service transport. That does two things. It turns a profitable route into an unprofitable one, but much more important, it congests our narrow roads. The result is that the speed of the public service vehicles is reduced and the route becomes unremunerative.
I believe that all these difficulties can be obviated. If the Chancellor means what he says in public, if he really wants to maintain or reduce working-class family costs, this seems to be the best
990
way in which he can spread £30 million over a very large section of the working population. It is estimated that we have about 22½ million insured workers, and I would hazard a guess that about 75 per cent. of them travel to work mainly on public transport. A reduction of 3d. per mile in the operating costs as a result of accepting the first new Clause would enable large numbers of bus companies —particularly those operating workmen's services—to maintain their services.
Obviously, if their costs continue at their present level, and if other costs, including wage costs, increase, more and more will the bus companies need to apply for increased fares. One has only to look at the passenger trade journals to see the large number of applications that have been made in past months to retain the increased fares brought about by a piece of legislation introduced by the present Prime Minister, when Chancellor of the Exchequer, to get over the difficulty consequent upon Suez. I suppose it is technically true that as a result of the withdrawal of the 1s. additional tax to pay for Suez the additional charges which were imposed on fares have been theoretically withdrawn, but in actual practice what has happened is that the vast majority of bus companies, both municipally and privately owned, have applied to the licensing authorities to retain those increased fares to meet increased costs.
Any further increase in costs is bound to result in a diminution of the number of services operated to the detriment of the productivity efficiency of the people engaged in industry. If the Chancellor is anxious to demonstrate that he really means what he says outside this House, he should accept the first new Clause, which will cost him £30 million in a year. But if the Economic Secretary and the Financial Secretary, who are now occupying the Government Front Bench, want to be much more generous than that, there is no difficulty. They can adopt the second new Clause and give away £60 million—and there is no reason why they should not give away £60 million mainly to working folk, having regard to what they have already given to the higher income groups; or, if they want to be still more generous, they have got a third chance.

991
5.30 p.m.
Both occupants of the Treasury Bench at the moment have either a direct or indirect connection with the Principality, and there is, as both of them know, a saying in the Principality—"Three tries for a Welshman." I suggest that if they want to be really generous at this stage they can adopt the third alternative offered to them. Certainly if they want to make a gesture to the working people, in view of the very necessary costs involved to enable them to get to and from their work, the first proposed new Clause ought to be accepted.
If this Clause cannot be accepted, I hope that we shall get some real reasons why instead of falling back on the old tag that I mentioned at the beginning of my speech. Here is an opportunity for the Chancellor to do something to maintain stability and to anticipate increased costs in public service transport which are bound to follow in the next few weeks.
Mr. Donald Chapman: My hon. Friend the Member for The Hartlepools (Mr. D. Jones) has referred to local authorities and bus companies being forced to apply for the retention of the extra fares charged during the Suez crisis, and my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) said that companies and undertakings would soon be bound to apply for yet further increases.
I should like to give one example of an undertaking that has had to do both those things; indeed, the whole scheme has just reached a final conclusion. The figures involved are very instructive. In Birmingham, £21,000 a week is now being lost on public transport. That is an enormous figure. If there were no increase in fares at the moment, we should end 1957 with something like £1 million deficit on the transport undertaking.
The result of this has been that the Corporation has had to apply for permission to charge higher fares, and the commissioners have been bound to grant that request, so that there is to be something like a 1½d. increase on all the higher fares. Fares of 5½d., 6½d., 7½d. and so on will be increased by l½d. In a city the size of Birmingham, that matters a great deal. We have an increasing number of people moving out from the old,
992
derelict built-up areas of the city to live in the suburbs, and they are finding that their expenditure on daily travel to and from work is increasing by something like 25 per cent. The result of this will be another twist in the inflationary spiral. It will not end merely with increased fares. The next thing will be a demand by the engineering industry for increased wages to counteract the effect of the increased bus fares throughout the Black Country.
I am glad that the Chancellor has returned to the Chamber. He is looking a little more haggard than he did before the Second Reading and the early part of the Committee stage of the Bill. Perhaps that is because on the other side of the House he has become the centre of another internecine quarrel. The original Budget which was greeted with waiving Order Papers is now realised to be something which will give yet another twist to the inflationary spiral. The right hon. Gentleman ought to realise that, particularly when we deal with a proposed new Clause like this.
In 1954–55–56 after some earlier increases, in Birmingham we tried by every means possible to follow the lead of the Government to hold prices. As a result, the Birmingham undertaking was able to pay off some of its early deficiencies. But now in 1957, coinciding with the row on the other side of the House about the inflationary situation, we have had further increases. The matter does not end there. When the undertaking's fares go up, wages have to go up to enable people to pay the fares, and the whole thing starts off again.
In a circumstance like this, what a wonderful opportunity to use some of this revenue which the right hon. Gentleman has been happily distributing elsewhere to much less good effect. The tax concession of 2s. 6d. off derv, which is proposed in one of the new Clauses, would more than meet the cost of preventing Birmingham undertakings from going into the red this year. Indeed, if only the Government would meet us half way there would be no reason at all for another twist to be given to the inflationary spiral in Birmingham by increasing passenger fares by something like 25 per cent.
There is another way in which this whole procedure is farcical. The commissioners have granted the request for these

993
increases in Birmingham in the hope that this will enable the undertaking to pay off its deficit and set aside £100,000 a year for replacement of new buses, starting in 1962. What a hope. There is no hope at all, because in two years time at the very latest under the present Government they will be in the red again, because the inflationary spiral will have gone up a few more stages.
This matter becomes quite farcical, because we are continually planning to get these undertakings out of the red and then they run into the red again because of the Government's general policy of inflation. I should have thought this was a wonderful opportunity to use some of the money which the Chancellor has been distributing in this Budget to much better purpose in arresting some of the really terrible things which cause inflation in this country.
It is instructive to see how all this reacts in Birmingham. We do not have any honest appraisal of the situation by the Conservative Party; we are not told that this is the result of Government policy. The whole thing is sidetracked into a lot of nonsense about the efficiency of the undertaking. What undertaking, whatever its efficiency, is going to face an increased wages bill of £125,000 a year? What undertaking is going to cheesepare here and there, cutting down the frequency of buses and so on—which is one of the nonsensical things suggested as a solution to this problem—ending in further anxiety and industrial dislocation?
Instead of placing the fault where it lies, at the door of the Government and at the door of this kind of taxation which could very well have been relieved in this Budget, the party opposite are running around with silly stories about the nature of the efficiency of the undertaking. This is the best-run undertaking in the country. The buses are comfortable and the services are frequent. We are told to imperil all that, and we cannot get out of the Government the sort of tax concession which would enable the undertaking to operate without loss.
Generally speaking, the suggestion embodied in this proposed new Clause, together with our earlier suggestion relating to 15 per cent., 10 per cent. and 5 per cent. Purchase Tax reductions, is about the best tax concession that the Chancellor could have given in this
994
Budget. It would have really helped towards curing the terrible inflation in this country.
Mr. Birch: The hon. Member for Enfield, East (Mr. Ernest Davies) hoped that I would not speak from the usual Treasury brief. I have not read previous Treasury briefs, but I dare say that it will bear a family resemblance. I thought that the hon. Member's brief was of good sound vintage, because he dealt with the points normally raised on this subject.
At the end of his speech, the hon. Member for Northfield (Mr. Chapman) went fairly wide in his interesting discussion of the local politics of Birmingham and in his reflections on general economic policy. I understand that we are shortly to have a debate on general economic policy and, therefore, I hope that he will forgive me if I do not pursue that subject now.
We are at the moment discussing three new Clauses, all of which do rather different things, which makes the debate a little confusing to follow. There is, first, the Clause to exempt derv used in public transport, secondly, the Clause to exempt derv altogether, and, thirdly, the Clause to reduce the tax on petrol by 6d. a gallon. When we are discussing these new Clauses, we are getting into very big money indeed. If we add together what the hon. Gentleman wants us to do, it comes to £113 million. I think that he himself worked it out as a little more. But £113 million in excess of all the relief given in the Budget is a very big sum indeed. All I can say is that if we want to reduce inflation I do not think that is the way to do it.
Mr. D. Jones: I think the right hon. Gentleman must be a little wrong, because the first new Clause is embraced in the second, and if he accepts the second I do not suppose that he wants to add the first to it.
Mr. Birch: I have not done so. I did say that the first was included in the second, but adding the effect of the new Clauses together, the cost is slightly lower than that stated by the hon. Gentleman the Member for Enfield, East. It is £113 million. We know that inflation has been described as too much money chasing too

995
few goods. Here is a device for increasing the amount of money without increasing the amount of goods. I do not think that we can do it.
Mr. Chapman: The right hon. Gentleman is now failing, very conveniently for his own purpose, to distinguish between the two kinds of inflation which we have always tried to distinguish. There is the one inflation of too much money chasing too few goods, but there is also the other one, which he has not mentioned, which is the wages-prices inflation, the two chasing each other in a momentum of their own, and that is the one at issue in this new Clause.
Mr. Birch: I do not think that a large reduction of taxation would do much to help cost inflation. All taxation is odious, and nothing would be nicer than to reduce this tax, to take 2s. 6d. off the Income Tax and to do a lot of other very desirable things which I daresay hon. Gentlemen opposite would argue would help cost inflation. I do not think that they would.
To take the second new Clause first, that dealing with the exemption of derv altogether, I do not want to plead administrative difficulties. I do not think that if we exempted derv altogether there would be much administrative difficulty, but it would be extremely costly, and it would have, as the hon. Gentleman realised, two effects. He realised the first one, at any rate. It would stimulate most actively the turnover of vehicles from petrol to derv, and therefore the cost would steadily and rapidly increase. It would have the second effect, which I am sure the hon. Gentleman does not intend, of being disastrous for the shale industry, because it would remove the preference, but no doubt that could be overcome by other means.
Mr. Ernest Davies: That is quite negligible, and I do not think the right hon. Gentleman will produce it as a serious argument. Will he not accept that there is already a conversion from petrol to diesel engine vehicles? This process has been going on at a progressively increasing rate for a very long period, because it is more economical for diesel engines to be employed, and, therefore, is it not desirable that there should
996
be encouragement of conversion from petrol to diesel engines?
5.45 p.m.
Mr. Birch: I am not sure that the hon. Gentleman's argument works in the direction he says. If conversion to derv is now taking place at an increasing rate, I do not see any very strong reasons for stimulating it still further.
Coming back to the first new Clause, concerning bus companies, it has been rightly said that it would cost £30 million. So far as the effect on the cost of living in general is concerned, I understand that if we remove the tax altogether it would make a difference of something under a halfpenny on a 3d. fare, which is less than one-third of a point of the cost of living index; so there is not a great deal in that argument.
We were taken to task by the hon. Member for The Hartlepools (Mr. D. Jones), or previous Treasury Ministers were taken to task, on the argument that it would be unfair to some public transport which worked on petrol. He is quite right in saying that the great bulk of public transport is now done on derv. It is equally true that there are many vehicles still on the road, particularly in the rural areas, which use petrol.
Mr. D. Jones Mr. D. Jones indicated dissent.
Mr. Birch: I think that my advice may be better than that of the hon. Gentleman. I do not think that would be a very fair way of dealing with the situation. Once we start discriminating like that we get into administrative difficulties.
The exemption of bus companies would, I think, cause quite considerable administrative difficulties. We should also get into difficulty as to where to draw the line. If we exempt someone who wants to go by bus, why should we not exempt his essential food which has to go in a lorry. Once we start on that slope we get into a very tricky position indeed. So I would say that the overwhelming reason for rejecting this new Clause is the cost, which is quite prohibitive, and I think that we should think very carefully now before we make an exemption to a single class of user in that way.
Mr. H. Wilson: The right hon. Gentleman's arguments are again rather strange for the House to have to follow. It is, of course, true that the proposals in these

997
new Clauses, if taken together, would involve a very heavy loss of Revenue. But let me remind the right hon. Gentleman that it was the Chancellor of the Exchequer in his Budget only three months ago who taught us to think in terms of very big tax concessions.
Surely my hon. Friend the Member for Northfield (Mr. Chapman) was right when he said that if we are to give away £100 million of taxation our proposals would have a very real bearing on the problem of cost inflation and would, in fact, be very strongly disinflationary. They would, in fact, give a twist to the wages-prices spiral in a direction very different from the one which we have come to know so recently. What the Chancellor said in his arguments—I shall not now go into the question of Surtax which we are debating later—was, of course, directly provocative to the Treasury, and influences both cost inflation and demand inflation. So the right hon. Gentleman was right off the rails about that in his reply to my hon. Friend.
The argument in relation to current costs in relation to the problem of the transport undertakings, and in relation, above all, to fares and the pressure on wages was put very clearly by my two hon. Friends who moved and seconded the new Clause. All hon. Members, whatever their constituencies, have a pretty clear idea of the problems arising for their constituents as a result of higher bus fares and charges of that kind.
There is a very special problem—I speak of this with very close knowledge of my own constituency—where there is a large housing estate on the outskirts of a big town. My constituency is to a very large extent made up of Liverpool overspill housing estates. These are outside the city boundaries, which means, incidentally, that my constituents have no control over the local authority which provides the houses or the bus services or fails to provide them. However that may be, by and large, the people who dwell on these housing estates are in many cases the lower paid wage earners and are very often, because of the rules by which the houses are allocated, those with the largest families and the heaviest family costs to bear.
Many of these people—not all of them, because of what was done to provide local
998
factory employment in the area—have to travel long distances back to the city to work, to the docks and so on. Some of them have suffered from the diminution of overtime working, and some of them have been hit by short-time working. When their bus fares increase as the result of the Government's economic policy—these increases come on top of very much higher rents, for they are the highest-rented people in the area—real hardship is involved.
I will not pursue the point any further, because I want to remind the Economic Secretary—and the Chancellor, too, were he still here—of the commitments and statements made by his own side on this question in past years. We were glad to see the Chancellor pop in for a moment a few minutes ago. My hon. Friend the Member for Northfield was quite wrong to suggest that the right hon. Gentleman was looking haggard; he ought to have been, but he was not. He is far too complacent about the situation. He goes on the air and on television, under these new arrangements whereby Ministers are apparently allowed to broadcast the Government's side of the case and the Opposition is not allowed to broadcast its side, and tells the country that there is nothing to worry about.
Exports, the right hon. Gentleman says, are all right; production is all right. The only trouble is this little business of inflation. Then he tells us that this inflation has nothing to do with the Government, and he washes his hands of the whole business. As I said at the weekend, the Chancellor talks rather like a Minister of Transport who, speaking on the subject of road safety, says that if people would only drive more carefully we should have no more trouble. The Chancellor's attitude is that it is all the result of our wicked population, principally the trade unions, of course, who ask for more earnings.
Mr. Ellis Smith: Did the Chancellor say that?
Mr. Wilson: The right hon. Gentleman did not use those exact words, but if my hon. Friend would study the speech he made last Wednesday, significantly at the opening of one of these vast new office blocks, and the statement which he made to the National Production Advisory Council last Friday—we have not heard

999
what the National Production Advisory Council thought of the Chancellor, of course—he will find that I did not misrepresent what the Chancellor said. For an account of what he said to the 1922 Committee, we are indebted to the Daily Express.
I am sorry that the Chancellor is not here now because I want to remind him and other right hon. Gentlemen of what members of the Cabinet have said on the very issues we are currently debating. Let us begin with the Foreign Secretary. I know that many of my hon. Friends do not know who the Foreign Secretary is, and I wish I did not; but we used to see a lot of the right hon. and learned Gentleman at the time of the Suez crisis. There was a time, of course, when he used to be very much involved in Finance Bill debates. Frankly, I think that they cost the nation a great deal less than some of his activities during the last few months. In those days, when he used to keep the Committee up during the long hours of the night, he often treated us to his views on matters of taxation. One of his favourite subjects was the tax on petrol and derv, and, during the Second Reading debate on the Finance Bill in 1951 he said:
"Now I come to one or two of the specific tax proposals, first of all the tax on petrol. That is a directly inflationary tax."
That was the view of the Foreign Secretary in 1951, when petrol was selling for about 3s. a gallon. Now, the Economic Secretary tells us that this is not an inflationary tax, and to reduce it would have no bearing on the cost inflation.
Mr. Ede: The right hon. Gentleman says that it would stimulate it.
Mr. Wilson: That it would be inflationary to do so. Obviously, there has been no consultation between the Economic Secretary and the Foreign Secretary. I have pointed out that Ministers were obviously not speaking to one another, and that the Board of Trade did not consult the Minister of Food about the commodity markets. The Foreign Secretary went on to say:
"It is time that someone in the House drew attention to the enormously increased taxation which road transport has been called upon to bear during the past two years."
1000
Of course, that taxation has been immeasurably increased since then. The right hon. and learned Gentleman made some observations about taxable capacity, the very thing we are talking about:
"The very fact that there is not that reserve of taxable capacity is proved by this tax, because the Chancellor has had to go to a tax which is, in my submission, directly inflationary in order to get the necessary amount of money." —[OFFICIAL REPORT, 8th May, 1951; Vol. 487, c. 1890–1.]
I suggest that the Economic Secretary should have some discussion with the Foreign Secretary about this.
Actually, such sentiments as those were not new in the mouth of the Foreign Secretary, for he had said something similar on the subject in 1950 during the Committee stage of the Finance Bill. He referred then specifically, as my hon. Friends have been doing, to the effect upon bus fares and local rates. This was in the days when the Conservatives used to be concerned about local rates. He said:
"That is yet another example of the way in which this impost is going to increase the burden of the cost of living upon ordinary people in this country. It is a thoroughly bad tax … I do not think that there could be a better case for not having this increase in taxation."—[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 253.]
That was said when petrol had gone up from 2s. 3d. to 3s. per gallon.
It is not only the Foreign Secretary who has said these things. The Chancellor of the Exchequer himself used to make very passionate speeches, as we all remember. His speeches were usually about analgesia or euthanasia or that kind of subject, but one of his most passionate speeches in a Finance Bill debate was on the subject of the monstrous level of taxation. This was in 1950, when petrol was 3s. a gallon, and on that occasion—I will not attempt to rival the passion which he put into the words—the right hon. Gentleman said:
"Every housewife, as she goes shopping and has to pay the extra 1d. in her bus fare, knows the effect of this kind of taxation. I agree with my hon. Friend who said that no tax could have been better designed to force up prices and to increase export costs."
That is exactly the argument of my hon. Friend the Member for Northfield, an argument which the Economic Secretary could not follow and specifically repudiated. Yet his own chief, the present

1001
Chancellor of the Exchequer, referring to the petrol tax, said that
"no tax could have been better designed to force up prices and to increase export costs."
The Chancellor of the Exchequer, with £100 million to give away this year, has done nothing at all in the matter of petrol tax, except to remove the impost introduced at the time of Suez in the autumn Budget of the right hon. Gentleman who is now Prime Minister, who, being cleverer than the Lord Privy Seal, did not call it an autumn Budget.
The Chancellor went on to say:
"We believe that the whole of this tax is unnecessary"—
the whole of this tax, not just the increase—
"is vicious, and is calculated to do all the things which the Chancellor, if he were a wise one, would not at present be attempting to do." —[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 267–269]
Had not the Economic Secretary been told in his brief what the Chancellor of the Exchequer said during those debates during 1950, or is he prepared to concede, with us, that the present Chancellor of the Exchequer is not a wise one? It has been very clear for some months. The Chancellor himself told us that no wise Chancellor would levy the tax at all, and we are proposing only a small reduction.
Of course, I do not want to leave anybody out, though I shall have to, but I might be accused of being a little selective or of being invidious were I to leave out the Lord Privy Seal. In the Budget debate in 1950, the Lord Privy Seal, referring to the tax on petrol, which raised the price to 3s. a gallon said:
"It is not a case of fair shares for all, but a case of those with sufficient money who can afford the petrol being able to buy it."— [OFFICIAL REPORT, 19th April, 1950; Vol, 474, c. 153.]
That was the view of the Lord Privy Seal when petrol went up to 3s. a gallon.
6.0 p.m.
There were very many other right hon. Gentlemen opposite who expressed their views, There was the Minister of Supply. There was the present Minister of Pensions and National Insurance. There was, in fact, the Economic Secretary to the Treasury, who was one of the most powerful advocates of a reduction in petrol taxation in 1950 and 1951, but I will not embarrass him by quoting the hyperbole with which he treated the
1002
Finance Bill Committee in those years—[HON. MEMBERS: "Why not?"]—chiefly because I do not have the quotations with me. I did, however, look them up carefully for the purposes of our debate on 10th December last. I commend to the right hon. Gentleman a study of his speeches on that occasion.
I could keep the House going on all night with quotations from what various Parliamentary Secretaries and Whips have said on this subject, but perhaps, before I conclude, I ought to quote the words of the Chancellor of the Duchy of Lancaster, who has the duty of explaining Government policy to those who do not yet understand it. Perhaps these words of his might be helpful to him in his task of explaining the meaning of the Economic Secretary's speech this afternoon.
During the Committee stage of the 1950 Finance Bill, the present Chancellor of the Duchy of Lancaster said:
"I will not repeat the argument, or the expression of astonishment, that at a time when this country needs above all lower costs, at a time when this country is above all bothered by a rising cost of living"—
which was then about 30 per cent. lower than it is today—
"there should have been selected for this particular piece of money raising an instrument which increases the cost of production and increases the cost of living to a much greater extent than right hon. Gentlemen on the other side of the Committee are prepared to admit."
The right hon. Gentleman then made a bitter attack on the working of the tax, particularly in relation to medical practitioners, especially in rural areas, and this is how he concluded his comments:
"… it still remains what it was at the beginning, a tax on the industrial and commercial costs of this country. It is a tax which will result in an increase in the cost of living."—[OFFICIAL REPORT, 14th June. 1950; Vol. 476, c. 277–80.]
That, again, as I have reminded the Committee, was when petrol was 3s. a gallon. Today, it is between 4s. and 5s. a gallon depending on the quality, or the alleged quality, of the petrol. It is at a time when all the problems that were quoted on that occasion are with us, but on an increasing scale, and when the cost of living, which was then referred to not only by the Chancellor of the Exchequer, but by the Chancellor of the Duchy of Lancaster, the Minister of Supply, the Economic Secretary, the Foreign Secretary and the rest of them, has risen and is still rising at an alarming rate.

1003
I am surprised, therefore, that the right hon. Gentleman has not even studied what he and his colleagues said on that occasion. If right hon. Gentlemen studied what they said, I am sure that they would be prepared to admit that it would be less inflationary to withdraw
some of their other concessions in the Budget and to accept the new Clause which has been introduced by my hon. Friend.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 224, Noes 282.

Division No. 165]

AYES

[6.2 p.m.

Ainley, J. W.

Griffiths, David (Rother Valley)

Mulley, F. W.

Albu, A. H.

Griffiths, Rt. Hon. James (Llanelly)

Noel-Baker, Rt. Hon. P. (Derby, S.)

Allaun, Frank (Salford, E.)

Griffiths, William (Exchange)

Oliver, G. H.

Allen, Soholefield (Crewe)

Hale, Leslie

Orbach, M.

Awbery, S. S.

Hall, Rt. Hn. Glenvil (Colne Valley)

Oswald, T.

Bacon, Miss Alice

Hamilton, W. W.

Owen, W. J.

Balfour, A.

Hannan, W.

Padley, W. E.

Bence, C. R. (Dunbartonshire, E.)

Harrison, J. (Nottingham, N.)

Paget, R. T.

Benton, G.

Hastings, S.

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

Beswick, Frank

Hayman, F. H.

Paling, Will T. (Dewsbury)

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

Healey, Denis

Palmer, A. M. F.

Blackburn, F.

Henderson, Rt. Hn. A. (Rwly Regis)

Pannell, Charles (Leeds, W.)

Bletikinsop, A.

Herbison, Miss M.

Pargiter, G. A.

Blyton, W. R.

Hobson, C. R. (Keighley)

Parker, J.

Boardman, H.

Holman, P.

Paton, John

Bottomley, Rt. Hon. A. G.

Holmes, Horace

Pearson, A.

Bowden, H. W. (Leicester, S.W.)

Houghton, Douglas

Peart, T. F.

Bowles, F. G.

Howell, Charles (Perry Barr)

Pentland, N.

Boyd, T. C.

Hoy, J. H.

Plummer, Sir Leslie

Braddock, Mrs. Elizabeth

Hubbard, T. F.

Popplewell, E.

Brockway, A. F.

Hughes, Cledwyn (Anglesey)

Prentice, R. E.

Brown, Rt. Hon. George (Belper)

Hughes, Emrys (S. Ayrshire)

Price, J. T. (Westhoughton)

Brown, Thomas (Ince)

Hughes, Hector (Aberdeen, N.)

Price, Philips (Gloucestershire, W.)

Burke, W. A.

Hunter, A. E.

Probert, A. R.

Butler, Herbert (Hackney, C.)

Hynd, H. (Accrington)

Proctor, W. T.

Butler, Mrs. Joyce (Wood Green)

Hynd, J. B. (Attercliffe)

Randall, H. E.

Callaghan, L. J.

Irvine, A. J. (Edge Hill)

Rankin, John

Carmichael, J.

Isaacs, Rt. Hon. G. A.

Redhead, E. C.

Castle, Mrs. B. A.

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

Reeves, J.

Champion, A. J.

Jeger, George (Goole)

Reid, William

Chapman, W. D.

Jeger, Mrs.Lena(Holbn &St.Pncs,S.)

Rhodes, H.

Chetwynd, G. R.

Jenkins, Roy (Stechford)

Robens, Rt. Hon. A.

Clunie, J.

Johnston, Douglas (Paisley)

Roberts, Albert (Normanton)

Coldrick, W.

Jones, David (The Hartlepools)

Roberts, Goronwy (Caernarvon)

Collick, P. H. (Birkenhead)

Jones, Elwyn (W. Ham, S.)

Robinson, Kenneth (St. Pancras, N.)

Collins,V.J.(Shoreditoh & Finsbury)

Jones, Jack (Rotherham)

Ross, William

Cove, W. G.

Jones, J. Idwal (Wrexham)

Shinwell, Rt. Hon. E.

Craddock, George (Bradford, S.)

Jones, T. W. (Merioneth)

Shurmer, P. L. E.

Cronin, J. D.

Kenyon, C.

Silverman, Julius (Aston)

Crossman, R. H. S

Key, Rt. Hon. C. W.

Silverman, Sydney (Nelson)

Cullen, Mrs. A.

King, Dr. H. M.

Simmons, C. J. (Brierley Hill)

Dalton, Rt. Hon. H.

Lawson, G. M.

Skeffington, A. M.

Darling, George (Hillsborough)

Lee, Frederick (Newton)

Slater, Mrs. H. (Stoke, N.)

Davies, Ernest (Enfield, E.)

Lee, Miss Jennie (Cannock)

Slater, J. (Sedgefield)

Davies, Harold (Leek)

Lewis, Arthur

Smith, Ellis (Stoke, S.)

Davies, Stephen (Merthyr)

Lipton, Marcus

Sorensen, R. W.

de Freitas, Geoffrey

Logan, D. G.

Sparks, J. A.

Delargy, H. J.

Mabon, Dr. J. Dickson

Steele, T.

Dodds, N. N.

MacColl, J. E.

Stewart, Michael (Fulham)

Donnelly, D. L.

MacDermot, Niall

Stonehouse, John

Dye, S.

Mclnnes, J.

Stones, W. (Consett)

Ede, Rt. Hon. J. C.

McKay, John (Wallsend)

Strachey, Rt. Hon. J.

Edwards, Rt. Hon. John (Brighouse)

Macpherson, Malcolm (Stirling)

Strauss, Rt. Hon. George (Vauxhall)

Edwards, Rt. Hon. Ness (Caerphilly)

Mahon, Simon

Stross,Dr.Barnett(Stoke-on-Trent,C.)

Edwards, Robert (Bilston)

Mallalieu, E. L. (Brigg)

Summerskill, Rt. Hon. E.

Edwards, W. J. (Stepney)

Mann, Mrs. Jean

Swingler, S. T.

Fernyhough, E.

Marquand, Rt. Hon. H. A.

Sylvester, G. O.

Fienburgh, W.

Mason, Roy

Taylor, Bernard (Mansfield)

Finch, H. J.

Mayhew, C. P.

Taylor, John (West Lothian)

Fletcher, Eric

Mellish, R. J.

Thomas, lorwerth (Rhondda, W.)

Forman, J. C.

Messer, Sir F.

Thomson, George (Dundee, E.)

Fraser, Thomas (Hamilton)

Mitchison, G. R.

Thornton, E.

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

Monslow, W.

Timmons, J.

George, Lady Megan Lloyd(Car'then)

Moody, A. S.

Tomney, F.

Gibson, C. W.

Morris, Percy (Swansea, W.)

Ungoed-Thomas, Sir Lynn

Greenwood, Anthony

Mort, D. L.

Viant, S. P.

Grenfell, Rt. Hon. D. R.

Moss, R.

Watkins, T. E.

Grey, C. F.

Moyle, A.

Weitzman, D.

Wells, Percy (Faversham)

Willey, Frederick

Woof, R. E.

Wells, William (Walsall, N.)

Williams, David (Neath)

Yates, V. (Ladywood)

West, D. G.

Williams, Rev. Llywelyn (Ab'tillery)

Younger, Rt. Hon. K.

Wheeldon, W. E.

Williams, Ronald (Wigan)

Zilliacus, K.

White, Mrs. Eirene (E. Flint)

Williams, W. R. (Openshaw)

White, Henry (Derbyshire, N.E.)

Willis, Eustace (Edinburgh, E.)

TELLERS FOR THE AYES:

Wigg, George

Wilson, Rt. Hon. Harold (Huyton)

Mr. Short and Mr. Deer.

Wilkins, W. A.

Woodburn, Rt. Hon. A.

NOES

Agnew, Sir Peter

Duthie, W. S.

Jenkins, Robert (Dulwich)

Aitken, W. T.

Eden, J. B. (Bournemouth, West)

Jennings, J. C. (Burton)

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

Elliot, Rt. Hon. W. E. (Kelvingrove)

Jennings, Sir Roland (Hallam)

Alport, C. J. M.

Elliott,R.W.(N'castle upon Tyne,N)

Johnson, Dr. Donald (Carlisle)

Amery, Julian (Preston, N.)

Emmet, Hon. Mrs, Evelyn

Johnson, Eric (Blackley)

Arbuthnot, John

Errington, Sir Eric

Jones, Rt. Hon. Aubrey (Hall Green)

Armstrong, C. W.

Erroll, F. J.

Joseph, sir Keith

Ashton, H.

Fell, A.

Joynson-Hicks, Hon. Sir Lancelot

Astor, Hon. J. J.

Finlay, Graeme

Keegan, D.

Atkins, H. E.

Fisher, Nigel

Kerby, capt. H. B.

Baldock, Lt. Cmdr. J. M.

Fletcher-Cooke, C.

Kerr, Sir Hamilton

Baldwin, A. E.

Fort, R.

Kershaw, J. A.

Balniel, Lord

Fraser, Sir Ian (M'cmbe & Lonsdale)

Kimball, M.

Barlow, Sir John

Freeth, Denzil

Kirk, P. M.

Barter, John

Galbraith, Hon. T. G. D.

Lagden, G. W.

Baxter, Sir Beverley

Gammans, Lady

Lambert, Hon. G.

Beamish, Maj. Tufton

Garner-Evans, E. H.

Lambton, Viscount

Bell, Philip (Bolton, E.)

George, J. C. (Pollok)

Lancaster, Col. C. G.

Bell, Ronald (Bucks, S.)

Gibson-Watt, D.

Leather, E. H. C.

Bennett, F. M. (Torquay)

Glover, D.

Leavey, J. A.

Bennett, Dr. Reginald

Glyn, Col. R.

Leburn, W. G.

Bevins, J. R. (Toxteth)

Godber, J. B.

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

Bidgood, J. C.

Gomme-Duncan, Col. Sir Alan

Legh, Hon. peter (Petersfield)

Biggs-Davison, J. A.

Goodhart, Philip

Lindsay, Hon. James (Devon, N.)

Birch, Rt. Hon. Nigel

Gower, H. R.

Linstead, Sir H. N.

Bishop, F. P.

Graham, Sir Fergus

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

Black, C. W.

Grant, W. (Woodside)

Longden, Gilbert

Body, R. F.

Grant-Ferris, Wg Cdr. R. (Nantwich)

Lucas, Sir jocelyn (Portsmouth, S.)

Boothby, Sir Robert

Green, A.

Lucas, P. B. (Brentford &Chiswick)

Bossom, Sir Alfred

Gresham Cooke, R.

Lucas-Tooth, Sir Hugh

Bowen, E, R. (Cardigan)

Crimond, J.

McAdden, S. J.

Boyd-Carpenter, Rt. Hon. J. A.

Grimston, Hon. John (St. Albans)

Macdonald, Sir Peter

Braine, B. R.

Grlmston, Sir Robert (Westbury)

Mackeson, Brig, Sir Harry

Braithwaite, Sir Albert (Harrow, W.)

Hall, John (Wycombe)

Mackie, J. H. (Galloway)

Brooke, Rt. Hon. Henry

Harris, Reader (Heston)

McLaughlin, Mrs. P.

Brooman-White, R. C.

Harrison, A. B. C. (Maldon)

Maclay, Rt. Hon. John

Browne, J. Nixon (Craigton)

Harrison, Col. J. H. (Eye)

Maclean, Sir Fitzroy (Lancaster)

Bullus, Wing Commander E. E.

Harvey, Sir Arthur Vere (Macclesfd)

McLean, Neil (Inverness)

Burden, F. F. A.

Harvey, Ian (Harrow, E.)

MacLeod, John (Ross & Cromarty)

Butcher, Sir Herbert

Harvey, John (Walthamstow, E)

Macmillan,Rt.Hn.Harold(Bromley)

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

Hay, John

Macpherson, Niall (Dumfries)

Campbell, Sir David

Head, Rt. Hon. A. H.

Maddan, Martin

Carr, Robert

Heath, Rt. Hon. E. R. G.

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

Cary, Sir Robert

Henderson, John (Cathcart)

Maitland, Hon. Patrick (Lanark)

Channon, Sir Henry

Henderson-Stewart, Sir James

Markham, Major Sir Frank

Chichester-Clark, R.

Hesketh, R. F.

Marlowe, A. A. H.

Clarke, Brig. Terenoe (Portsmth,W.)

Hioks-Beaoh, Maj. W. W.

Marples, Rt. Hon. A. E.

Cole, Norman

Hill, Rt. Hon. Charles (Luton)

Mathew, R.

Conant, Maj. Sir Roger

Hill, Mrs. E. (Wythenshawe)

Maude, Angus

Cooke, Robert

Hill, John (S. Norfolk)

Maudling, Rt. Hon, R.

Cooper, A. E.

Hinchingbrooke, Viscount

Mawby, R. L.

Cooper-Key, E. M.

Hirst, Geoffrey

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

Cordeaux, Lt.-Col. J. K.

Hobson, John(Warwick & Leam'gt'n)

Milligan, Rt. Hon. W. R.

Corfield, Capt, F. V.

Holt, A. F.

Moore, Sir Thomas

Craddook, Beresford (Spelthorne)

Hope, Lord John

Morrison, John (Salisbury)

Crosthwaite-Eyre, Col. O. E.

Hornby, R. P.

Nairn, D. L. S.

Crowder, Sir John (Finchley)

Hornsby-Smith, Miss M. P.

Nicholls, Harmar

Crowder,Petre(Ruislip—Northwood)

Horobin, Sir Ian

Nicholson, Godfrey (Farnham)

Cunningham, Knox

Horsbrugh, Rt. Hon. Dame Florence

Currie, G. B. H.

Howard, John (Test)

Nicolson, N. (B'n'm'th.E. & Chr'ch)

Dance, J C. G.

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

Noble, Comdr. Rt. Hon. Allan

Davidson, Viscountess

Hughes Hallett, Vice-Admiral J.

Oakshott, H. D.

Davies,Rt.Hn.Clement(Montgomery)

Hughes-Young, M. H. C.

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

D'Avigdor-Goldsmid, Sir Henry

Hulbert, Sir Norman

Orr, Capt. L. P. S.

Deedes, W. F.

Hurd, A. R.

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

Digby, Simon Wingfield

Hutchison, A. M. C. (Ed'burgh, S.)

Osborne, C.

Dodds-Parker, A. D.

Hutchison, Sir Ian Clark(E'b'gh, W.)

Page, R. G.

Donaldson, Cmdr. C. E. McA.

Hutchison, Sir James (Scotstoun)

Pannell, N, A. (Kirkdale)

Doughty, C. J. A.

Hyde, Montgomery

Partridge, E.

du Cann, E. D. L.

Hylton-Foster, Rt. Hon. Sir Harry

Peyton, J. W. W.

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

Iremonger, T. L.

Pickthorn, K. W. M.

Duncan, Capt. J. A. L.

Irvine, Bryant Godman (Rye)

Pike, Miss Mervyn

1006

1007

Pilkington, Capt. R. A.

Smithers, Peter (Winchester)

Tllney, John (Wavertree)

Pitman, I. J.

Smyth, Brig. Sir John (Norwood)

Turner, H. F. L.

Pitt, Miss E. M.

Spearman, Sir Alexander

Turton, Rt. Hon. R. H.

Powell, J. Enoch

Speir, R. M.

Tweedsmuir, Lady

Price, David (Eastleigh)

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

Vaughan-Morgan, J. K.

Price, Henry (Lewisham, W.)

Spens Rt. Hn. Sir P. (Kens'gt'n, S.)

Vikers, Miss Joan

Prior-Palmer, Brig. O. L.

Stanley, Capt. Hon. Richard

Wade, D. W.

Raikes, Sir Victor

Stevens, Geoffrey

Wakefield, Sir Wavell (St. M'lebone)

Ramsden, J. E.

Steward, Harold (Stockport, S.)

Walker-Smith, Rt. Hon. Derek

Rawlinson, Peter

Steward, Sir William (Woolwich, W.)

Wall, Major Patrick

Redmayne, M.

Stoddart-Scott, Col. Sir Malcolm

Ward, Rt. Hon. G. R. (Worcester)

Remnant, Hon. P.

Storey, S.

Ward, Dame Irene (Tynemouth)

Renton, D. L. M.

Studholme, Sir Henry

Waterhouse, Capt. Rt. Hon. C.

Ridsdale, J. E.

Taylor, Sir Charles (Eastbourne)

Watkinson, Rt. Hon. Harold

Robertson, Sir David

Taylor, William (Bradford, N.)

Whitelaw, W. S. I.

Robinson, Sir Roland (Blackpool, S.)

Teeling, W.

Williams, Paul (Sunderland, S.)

Rodgert, John (Severnoaks)

Temple, John M.

Williams, R. Dudley (Exeter)

Roper, Sir Harold

Thomas, Leslie (Canterbury)

Wills, G. (Bridgwater)

Sctiofield, Lt.-Coi. W.

Thomas, P. J. M, (Conway)

Wood, Hon. R.

Scott-Miller, Cmdr. R.

Thompson, Kenneth (Walton)

Woollam, John Victor

Sharples, R. C.

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

Yates, William (The Wrekin)

Shepherd, William

Thorneycroft, Rt. Hon. P.

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

Thornton-Kemsley, C. N.

TELLERS FOR THE NOES:

Mr. Barber and Mr. Bryan.

New Clause.—(EXEMPTION FROM TAXATION OF PAYMENTS OF COMPENSATION TO VICTIMS OF NAZI OPPRESSION.)
Compensation for loss of life, or for injury to body or health, or for loss of profession, trade or managerial position, or dismissal from employment, or for loss of pension rights, paid out of German public funds under the laws of the Federal Republic or the Länder (States) of the Federal Republic of Germany to victims of National Socialist persecution shall be excluded from the compensation of income for the purposes of the enactments relating to income tax and surtax in any year in which such compensation has been or is so paid and any assessments made as regards sums so received in compensation shall be revised accordingly and repayment of any tax paid in respect thereof shall be effected or allowed for in any subsequent assessment.—[Mr. J. Foster.]
Brought up, and read the First time.
Mr. John Foster: I beg to move, That the Clause be read a Second time.
The object of this Clause is to exempt from taxation in the United Kingdom certain payments which are made by the German Government to victims of Nazi oppression. I could make a rather lawyer-like list of the various forms of compensation paid by the German Government, but that might bore the House.
The position, in layman's language, is that the German Government have decided to make compensation, inadequate though it must be, to victims of Nazi persecution and, as the compensation is in the nature of an extraordinary payment and from that point of view does not have the aspect of an income payment, the German Government, quite properly, have decided that these payments should not be subject to German
1008
Income Tax. The British Government, on the other hand, decided that these payments—and I am speaking about the whole category—should be liable to United Kingdom Income Tax.
The result is that the British Government are getting the advantage of the remission of German Income Tax. This means that, at the expense of the German taxpayer and of the victim, the British Government are receiving an extra amount of tax, namely, the tax which the German Government remitted to the victim. I submit that this is unfair, and the object of the Clause is to try to remedy the injustice. It is unnecessary to stress to the House the peculiar nature of these payments. They do not partake, from a commonsense point of view, of the nature of payments of income at all. Technically, they come under United Kingdom Income Tax law because they are paid at intervals.
It may be found that certain categories may yet be exempt. It would be interesting to know from the Financial Secretary that that is the case, but that does not affect the principle which, I should have thought, must be that on moral grounds the United Kingdom Government are not justified in levying tax on compensation paid to these unfortunate victims. This moral argument finds favour with the Governments of the United States, Sweden and Holland. In all those countries legislation has been passed on the lines o f this Clause, because they feel that it is not right for their Government to take advantage of a remission of this tax made by the German Government and put it in their own pockets.

1009
6.15 p.m.
That is the short point. It is surrounded by a number of technicalities. It would be possible, perhaps, to distinguish one payment from another, but it is better to leave the House with the broad point of principle. It is a moral point, and we have found in our history that our Governments have not been insensitive to moral points of view. I am prepared to concede that technically these payments are liable to United Kingdom Income Tax, but I submit that when compensation is paid to somebody who may have lost his nearest relatives in some concentration camp, or to somebody who has serious bodily injury or has lost his self-employment or employment through Nazi outrages, it is entirely morally wrong for Her Majesty's Government to levy a tax which is increased by the amount that the German Government have remitted to the victim.
There is one technical point that I want to bring to the notice of the House. It has been said, in correspondence, by the Inland Revenue that it would be difficult to do what the Clause proposes without creating a precedent. Other Governments have found it possible to do it without creating a precedent. It is also suggested that this is rather like a widow's pension, but in my submission it has no relation to that at all. The Inland Revenue argues that if we exempt from tax this payment of compensation we should be creating a precedent for letting off widows' pensions in this country, or we should be creating anomalies between these payments and widows' pensions in the United Kingdom.
There are several answers to that. First, the German Government have calculated these payments on the footing that Income Tax would not be paid, and yet the United Kingdom Government come along and take 8s. 6d. in the £. Widows' pensions in this country have an earned-income relief allowance, but I understand that the Inland Revenue here denies this relief to these periodical payments. If that is so, it shows that the payments are of a different kind.
I submit that there is an important moral point in the Clause, and I ask the Financial Secretary to look at it. He need not accept the Clause. It would be quite easy for him to do by administrative concession what the Clause proposes. It is
1010
not necessary for the Clause to be passed by the House, but it is an indication to my hon. Friend that he should recognise the strength of the moral principle underlying it.
Sir Thomas Moore: I beg to second the Motion.
Mr. J. Grimond: I want to say a few words in support of what has been said by the hon. and learned Gentleman the Member for Northwich (Mr. J. Foster). I have no doubt that the sympathy of the Treasury will be entirely with the victims of Nazi oppression whom this proposed Clause is designed to help. I have also no doubt that the Treasury has interpreted the existing Clause strictly, and correctly, because if there is any change in Treasury practice it must come from this House and nowhere else.
I urge upon the Minister that there seems to be, at least prima facie, a strong case for making an exception to the general rule for these unfortunate people. As the mover of the Motion has said, it is a curious definition of income when it includes compensation of this kind which I rather think, although it is paid periodically, will not last for very long. Although it is not the business of the Treasury to decide how this money was earned, there seems to be a strong case for compassion in this instance.
There also seems to be a compassionate argument in favour of a definite and restricted class. No doubt the tax argument against it will be that it would create a precedent and that it would be difficult to know where the process should stop. The possibility of extension to widows has been mentioned. Yet if the precedent is morally extended to people in a like position, that is to say, to refugees and people to whom compensation is being paid, I cannot see that it will be anything but a good precedent.
I sometimes think that we are over-nervous of precedents on the ground that all precedents are necessarily bad. I cannot believe that there will be a large leakage from the Treasury if this precedent is extended even to all people who could claim to be in a similar position, that is to say, that they were in receipt of payments by way of compensation for harm or loss caused to them by oppression. An additional argument is that

1011
they have been relieved of tax liability by the Government which is making the payments.
I do not think that there is much purpose in going into the technical details of the matter. No doubt these have been studied by the Treasury, which is well versed in the law as it stands. However, I make my plea to the Minister that there seems here to be a case for the exception of a narrow class of deserving people, and the plea is greatly strengthened by the fact that other countries have found it possible to relieve these people of taxation and so has enabled them to receive their payments in full.
Mr. Sydney Silverman: I will not detain the House long in speaking in support of the Clause. My point arises out of the suggestion that in some way, if the Government were to do what is asked of them, they might be creating a precedent. I confess that I do not quite follow the meaning of that argument.
We are dealing here with the handful of survivors of a unique historical event. I do not think there has been at any other time in world history such a mass crime as was committed in Germany in the circumstances which are referred to in this proposed Clause. It is not, one would suppose, a matter which would ever be repeated, and if it is not a matter which will be repeated, then I suppose there is little ground for fearing that there will ever be any other class of persons on whose behalf the same claim can be made by relying on this category as a precedent.
Indeed, one of the few—and I say "few" advisedly—bright things in the post-war world is that the German people have brought themselves to admit guilt in this matter. Although there can be no real reparation, having regard to the nature of the crime, at any rate it would be something to agree to pay to those who survive a slight measure of compensation, but they have gone rather beyond that. They have paid quite large sums of reparation which the State of Israel has been able to use for constructive purposes.
If anything could serve to lessen the human guilt involved in the original events, it is the fact that the German
1012
people, or a great many of them—one likes to think a majority—look with shame upon their record in this matter and are prepared to do something to make good some part of the material loss to those who survive.
In those circumstances it seems a little, shall we say, out of the national character for this country to levy a revenue tax upon compensation of that kind. It is not like us to do it. In the old days, when all our passions ran so high about the German nation, one would have said then—although I think it would not have been true—that it was completely outside the German character that they could be brought to admit guilt and pay some kind of reparation. But if, in those days, we had imagined such a possibility, who would have imagined that a British Government, when that came to pass, would have thought that they were entitled, or morally justified, in having some kind of rake-off in this way? I hate to use the word "rake-off," but ugly words sometimes bring out a point more clearly.
It is difficult to say how these payments could even technically be regarded as income, but, like other hon. Members, I do not want to go into the technical aspects. It is certainly not property which produces income. It is certainly not a gainful occupation or the reward of one. No one goes in for being a refugee of this kind in order that people earn the kind of reward for it that is being paid. So I am not certain on what technical basis it is held that this is income in that sense.
But let us suppose that it is income. Let us suppose that all the law and all the technicalities and all the legal arguments entitle us to charge it with tax. I think that we would say to the Government, "Nevertheless, do not charge it, since the United States, Sweden, Holland and Germany have agreed not to do so. Poverty stricken as we no doubt are, in spite of our need for revenue, we do not really need to take it in this way." I hope, therefore, that the hon. Gentleman will be able to say, whether he accepts the Clause or not, that a charge of this kind will not be made.
6.30 p.m.
Mr. Powell: It is impossible to approach the subject matter of the new Clause without emotion and without

1013
evoking associations which, in our different ways, we all have in our minds; but in considering the Clause I must ask the House not to take counsel of emotion too far but to look dispassionately not only at what is proposed, but at its wider bearings.
The new Clause would deal with four classes of case. It deals, first, with periodical payments to persons who have suffered injury to body or health. I can deal with that straight away, because I can tell the House that those annuities do not attract Income Tax. The new Clause then deals with compensation for loss of life, that is to say, annuities paid to the relatives—in the majority of cases, I suppose, to the widows—of those who lost their lives in Germany. It deals, thirdly, with those in receipt of annuities for loss of position or dismissal from employment and, finally, with annuities for loss of pension rights.
I will take the last of those three remaining types of case first, annuities which are for loss of pension rights. It is evident that since those are in substitution for a pension, the nature of such payments must be of the nature of a pension and subject to tax in the same way as a normal pension. I add, however, that this class of case has not actually been referred to the Inland Revenue and that, therefore, is a provisional view. Of course, particular circumstances will be investigated to ascertain whether such payments do fall to be treated as equivalent to a pension.
Sir Hugh Lucas-Tooth: Is my hon. Friend dealing with the case of those losing public pensions?
Mr. Powell: I am dealing with the fourth of the cases covered in the new Clause, annuity payments specifically for loss of pension rights. I was not dealing with, and I am now coming to, annuity payments which are for compensation for loss of husband or relative, or compensation for loss of a position or employment. It is extremely difficult, indeed I put it to the House that it is impossible, to distinguish the situation of the widow of a victim of German persecution from that of a British war widow whose husband was killed in the war against Germany and perhaps done to death in a German prison.
1014
Whatever the emotions and prejudices with which we all approach the subject matter of the new Clause, we cannot imagine that it could be right to put those widows' pensions—and they will be mostly widows' annuity payments—in a different and preferential position compared with the payments to war widows. Under our law—and that is not under discussion at the moment—war widows' pensions are treated, as are other widows' pensions, as a form of income. It would be impracticable, unjust and would, sooner or later, and probably sooner, arouse serious ill-feeling if we were to give this privilege to the annuity payments which are compensation for loss of life.
Finally, there are annuity payments for loss of position or dismissal from employment. I have made careful inquiries into the treatment of similar payments which are made in other circumstances where a person loses his employment or is dismissed prematurely and is compensated for it by annuity. I am assured that in those cases there is no doubt that it would be treated as taxable income. There again the difficulty arises of distinguishing between a German, perhaps a Jewish, professor who lost his chair in the 1930s and who, as an elderly man, is now receiving annual compensation, and an Englishman who lost his employment, perhaps under very unfortunate circumstances, and who, in consequence, is in receipt of an annuity.
Mr. S. Silverman: Does it not make some slight difference—it may not be conclusive—that the compensation for the people the subject of this Clause was calculated or assessed on the assumption that tax would not be paid?
Mr. Powell: I am coming to that. The underlying principle here is that there must be parity of treatment for similar income received by those who are liable to tax in this country.
We cannot make a distinction between one kind of income and another, either on the basis of the circumstances in which that income arose, or—and now I come to the point of which the hon. Member for Nelson and Colne (Mr. S. Silverman) reminded me—the tax treatment of that income in the foreign country in which it arises. It would he impracticable for us to treat incomes received and enjoyed by British taxpayers differently according to the tax law of the country in which they

1015
originated, even where, as here, those tax laws have been deliberately and for political and possibly moral purposes framed in a special way.
We cannot be guided by supposed analogies with the treatment of these payments by other countries. For example, I understand that the United States treats them as not liable to tax, but the United States, also under its law, treats war widows' pensions as not liable to tax.
The House will see that the only practicable course is for us to maintain consistency in our own tax code and treat within that code similar income in a similar way, irrespective of the original circumstances and irrespective of foreign tax. I therefore ask the House not to make this alteration in the law. At the same time, I say that every type of annuity payable by the German Government will be carefully investigated by the Inland Revenue and by Her Majesty's Government to ensure that it is treated fairly and on all fours with comparable income arising in this country.
Mr. Douglas Houghton: I am sure that hon. Members on both sides of the House will sympathise with the Financial Secretary for having had to give an explanation of this Clause, an explanation which I am sure came unpalatably to him. We all listened to the persuasive arguments of the hon. and learned Member for Northwich (Mr. J. Foster), and noticed the response of the House to what he said.
This is a matter which is bound to excite our sympathy and our compassion with victims of Nazi persecution and cruelty. Many endured horrible sufferings and suffered grievous losses. We wish that we could exempt money compensation for their sufferings and losses from United Kingdom Income Tax. At the same time, I think that the Financial Secretary has done his duty in warning the House that we should probably be treading a very difficult path if we were to follow the course proposed in the Clause. The hon. Gentleman has already given us the example of a soldier in the British Army, shot in cold blood by his captors, whose widow receives a pension which is taxable. It may be that some of the forms of compensation coming within the scope of the
1016
new Clause would be little more than money compensation for dismissal and deportation from the country concerned before the war started, or on behalf of a professor or other person who just managed to escape from potential danger and was dismissed or sentenced to some punishment in his absence. All these difficult types of case might come within the scope of the Clause.
I think that the hon. and learned Member for Northwich was advocating a most dangerous doctrine if he wanted the House to accept a comprehensive administrative concession upon matters of tax liability. We cannot concede to the Commissioners of Inland Revenue too much discretion in the levying of taxes imposed by this House. They are entrusted by Letters Patent with the care and management of the Income Tax Acts, and they must discharge that duty fairly and fearlessly. The degree of discretion left in their hands to ease the tax burden on the citizen is necessarily narrow.
Mr. J. Foster: I would ask the hon. Member two questions. First, did he approve of the extra-statutory concession given during the war to refugees, exempting them from tax in respect of foreign-owned securities? Secondly, does he think it right that these claims for periodical payments for loss of life should not have the benefit of an earned income concession while widows' pensions in England do?
Mr. Houghton: There may be some anomalies in the methods of taxing various payments which are made. Some anomalies may be merely reflections of the same sort of thing that exists in our own internal tax arrangements. If there are any which need remedying the House can attend to them. But I am sure that we have realised in the past that one concession, very often justified in isolation, swiftly creates a sense of injustice when a further comparable and equally deserving concession is asked for and difficulties are found in extending the scope of what has been done on previous occasions.
We also have to consider whether it would be proper to grant this concession not to the victims of persecution generally, but to the victims of a particular form of persecution, namely Nazi persecution. No doubt there are some

1017
payments coming from Japan at present which might equally be brought within the scope of the Clause.
Mr. S. Silverman: I think that I am right in saying that the agreed compensation paid by the Japanese and distributed here was regarded as a payment not subject to Income Tax.
Mr. Powell: Of course, it is not paid as an annuity.
Mr. Houghton: There are other payments being made by Japan apart from the distribution from Japanese blocked assets, which were the subject of an agreement between the British and Japanese Governments. But we have to consider the position of those who suffer here from negligence on the roads, and injury and death sustained at work. Many difficulties of that kind are bound to arise in taxation law.
Mr. Silverman: I really cannot see the force of this part of my hon. Friend's argument. I have never heard that compensation paid for damages in a road accident is subject to Income Tax.
6.45 p.m.
Mr. Houghton: My hon. Friend may remember that on 6th January, 1956, there was a very important case in the House of Lords — the British Transport Commission v. Gourley—where consideration was given to the question whether a lump sum payment for loss of earnings should be written down—
Mr. Silverman: No, no, no.
Mr. Houghton: My hon. Friend says, "No, no, no." I wish that he would allow me to complete what I am saying. The House of Lords decided that a lump sum payment by way of compensation for loss of earnings could be written down by the court to take account of the taxation which would have been borne on those earnings had they been received. That was the point at issue in that case.
Mr. Silverman: What has that to do with this case?
Mr. Houghton: My hon. Friend asks what it has to do with this case. It has this to do with it—that payments which represent annual payments and which are income in the hands of the recipients are, generally speaking, taxable according to
1018
our tax law. Certain forms of lump sum compensation, while not taxable, may be modified in amount on account of the indirect relief from tax which would otherwise be given.
I do not rely solely upon those illustrations, by any means, for bringing to the notice of the House the obvious difficulties which the Clause would create in all sorts of directions. We cannot ignore the fact that persons who receive different forms of compensation for injury and death in this country pay tax according to the law, and there seems to be no real justification for treating similar payments made by Germany differently from those made by employers or other persons responsible for paying compensation for injuries inflicted to citizens at home.
At all events, I think that the House will agree that the difficulties confronting the Legislature in giving this type of special exemption are formidable indeed, and would carry us much further than we realise at the moment. The full extent to which they would carry us would be appreciated only if we followed the course of the concession right through our taxation system, and considered its effect upon payments very similar to these, or even identical in kind, but made from other sources and in different circumstances. I could not advise my right hon. and hon. Friends to press the Minister to accept the Clause, or to invite the House to divide in favour of it.
Sir H. Lucas-Tooth: I do not in any way quarrel with the principles which have just been enunciated by the hon. Member for Sowerby (Mr. Houghton), but I do not think that they are altogether applicable in this case. He cited a decision of our courts that payment by way of damages could be reduced in respect of Income Tax. We have no knowledge of the extent to which this payment may have been reduced by the German Government in consideration of German Income Tax law, and that alone stultifies the hon. Member's argument in this case.
I have had considerable correspondence with my hon. Friend the Financial Secretary about a very closely analogous case concerning the pensions payable by the German Government to ex-German public servants. He will remember that we had a very considerable and extended correspondence in this matter, and that he

1019
finally wrote to me a letter which I accepted.
I should like to read an extract from that letter, as I think that it has a bearing on the principle in this case:
"… I promised to ascertain the basis of payment of these pensions, as we both agreed that this should make the question of taxability fairly clear one way or the other."
In other words, it was not the fact of being a pension that was important, it was the basis on which that pension is assessed.
"… If the official is not offered, or does not wish to accept, reinstatement—and this must include all the persons at present living in the United Kingdom—he is given until he reaches normal retiring age a 'pension' equal in amount to the emoluments he would have received on reinstatement; after he reaches retiring age he is given the normal pension based on those emoluments. If the official was over the retiring age, or was incapable of working, before the Law came into force, he is entitled to receive the pension he would have had if he had remained in employment …"
In that case, pensions were normally assessed on the basis that they were pensions in the normal sense of the word; something equivalent as a pension to what they were replacing and which were intended, so far as I know, to be payable throughout the lives of the recipients. It seems to me that the present case is different. Here the payments are not, as I understand, necessarily based on any conception of being equivalent to the amount that they are replacing. Indeed, the German Government have drawn the distinction that whereas the pensions given to former public servants, the ones which I have been discussing with my hon. Friend, are taxable in Germany, the German Government have freed from tax the payments we are now considering. So there is a distinction made in the basis of those payments on the part of the payers, the German Government.
I should imagine that if we examined these pensions carefully, we should find that they were much more in the nature of damages payable over a period of time and, indeed, I believe I am right in saying that in some cases, if not in all, there is an actual total limit of the amount so payable. I understand that in some cases there is a limit of 25.000 Reichmarks. If that be so, clearly these payments must contain something in the nature of a capital element which should
1020
not be wholly assessed for Income Tax purposes. I do not wish to go into the technicalities of this matter, but my hon. Friend has given a somewhat technical answer, and I thought it fair to say that there is some technical argument the other way.
I would not press the House to accept this Clause, because I think it may well be that the objections against the wording of this Clause advanced by my hon. Friend and by the hon. Member for Sowerby are sound. I do not think that my hon. Friend would disagree with that. He opened his remarks by saying that probably what is necessary to be done is to reconsider all this matter in the Treasury. I ask my hon. Friend to reconsider it in the light of the remarks which have been made today. If, by other means than legislation, he can bring about some of the results we wish, that would certainly benefit a number of hard and deserving cases
Mr. Austen Albu: With his usual clarity, my hon. Friend the Member for Sowerby (Mr. Houghton) has put the difficulties which arise in making discrimination in taxation as between individuals. The Financial Secretary, naturally, has put forward difficulties from his point of view. He asked us to discuss this matter without emotion. That is not an easy thing to do for those people who may have relations or friends—as have most of us who happen to be of the Jewish race—who have suffered in this way. The only reason that I intervene in this discussion is to ask the Financial Secretary to look again at some of the arguments advanced by the hon. Member for Hendon, South (Sir H. Lucas-Tooth).
If it be the fact that these sums, call them pensions or what you will, are not the full sums which would have been paid for pension or compensation had they been subject to tax in the country of origin, in Germany, then it seems to me that they could well be looked at in a different way when they are received in this country. Because if they were the full sum which would normally be subject to tax, the arguments advanced from both Front Benches may well apply. But I understand that that is not the case.
I hope that the Financial Secretary will not close his mind and his heart to this matter, but will examine it again and see whether a ruling can be given, if not

1021
in the full terms of this proposed new Clause, at any rate taking account of the arguments which have been put forward. I hope that what the hon. Gentleman has said does not represent his last thoughts on the matter.
Sir Leslie Plummer: I am sure that my hon. Friend the Member for Sowerby (Mr. Houghton) gave careful thought to the facts contained in the lucid and logical speech which he has just concluded. It would be unlike my hon. Friend if he did not pay meticulous attention to the problem presented to the House on a matter of this kind. I am sure that he spoke officially from the Front Bench. I am speaking as a Member of the House of Commons and I wish to say that in putting forward the difficulties of Income Tax collectors, or assessors, or whoever handles these problems, my hon. Friend fails, in my opinion, to recognise that compassion should be given to the people suffering at the present time and who would be assisted were this proposed Clause accepted.
I would have thought that the difficulties of Income Tax collectors would be removed were such a Clause put on the Statute Book. I would have thought that, armed with the authority of Parliament, the difficulties of those responsible for the collecting or assessing or fixing of tax would be reduced and in some cases removed. After all, the officials who have to operate our tax collecting machinery are well versed and accustomed to having to discriminate in some way or another. They find no difficulty in discriminating between the amount of tax to be levied on the estate of a man who leaves his fortune in land and that of a man who leaves his fortune in equities or stocks and shares of one kind or another.
I do not think that the Financial Secretary should suggest that we should not review this problem with compassion. It will be a sad day for this nation when the House of Commons rejects compassion as an argument. The argument has also been adduced that a Jewish professor who was fired out of his job in the 1930s should not be treated differently from a professor in this country who, by an unfortunate accident, may have lost his job and is receiving compensation. But there is all the difference in the world between the German professor who has been
1022
derided and held up to calumny and has had physical assaults on him, and every vile infliction that the Nazis could think of put on him, and a man who may have lost a job in this country, but who is, at the same time, treated respectably and regarded as a respected member of society.
I know that this is a compassionate argument and that it is very difficult for logicians to say that it should be accepted. But there comes a time when, in my view, logic and the administrative needs should give way to compassion. I put this to the Financial Secretary for reconsideration and I wish to support what has been said by my hon. Friend the Member for Edmonton (Mr. Albu).
7.0 p.m.
The intention of the German Government in their treatment of these people was not that these people should receive full compensation for all that they have suffered. None of the people could receive more than a tithe of what they were entitled to if their injuries had been the result, say, of a road accident. They get only a tithe of what any civilised nation would regard as their just due. For us to say that we shall take some portion of that for ourselves is to admit that the passage of time has hardened our consciences which, at one time, were alive and alert to the sufferings inflicted on these harmless and innocent people by one of the worst Governments the world has ever known.
We all have sympathy for the Income Tax administrators and for the Treasury, but both Departments can get along and have plenty of people to support them. It is our responsibility to help, by our compassion and our actions, the people who have borne the hardships, cruelties and bestialities that would have been our lot if we had lost the war.
Mr. John McKay: We have to find what is the fair thing to do. The Financial Secretary to the Treasury and my hon. Friend the Member for Sowerby (Mr. Houghton) have dealt very fully with the facts of the situation. They showed that this is a special plea for certain classes and that we might remember classes of our own people who have more reason to ask for help.
Millions of our own people have been crying out for help to enable them to

1023
live in a satisfactory way. They, also, are pensioned people. Despite all the pleas that have been made for the special class referred to in the proposed new Clause, I am sure that a much stronger plea could be made for our own people living in our own country, some of whom have not much longer to live. This is special pleading for a section of the community who, apparently, are able to pay taxes. Their incomes are at least large enough to enable them to pay taxes and to have a good standard of life. We have not been told their incomes; we are rather at sea with regard to them. Some hon. Gentlemen have been making this special plea for tax relief, while allowing the taxes on other people to be increased.
Where does justice lie? Knowing how we are penalising millions of our people who are not taxed because they have not a standard of life which we think is reasonable, are we justified in giving special opportunities and tax relief to sections of the community who have had large incomes? A more logical case than has been put by the Financial Secretary and my hon. Friend the Member for Sowerby could not be presented. I am surprised that any hon. Member should join in the special pleading on a basis of compassion. If people are to be helped, let it be those who are not Income Tax payers.
Major W. Hicks Beach: As I understand the position, a tax allowance is given in Germany to the unfortunate people who are receiving these compensation payments. Is it not a sound proposition that in this country the appropriate tax allowance at the German rate should be allowed as a deduction from the tax assessment? That would be in the nature of tax relief, and seems a reasonable compromise which should be easy to administer. I hope that the Government will consider whether something cannot be done to help these unfortunate people along the lines which I have suggested.
Question put, and negatived.

New Clause.—(DEPLETION ALLOWANCE FOR UNITED KINGDOM MINERALS.)
Subsection (1) of section three hundred and five of the Income Tax Art, 1952, shall be amended by the insertion at the end of paragraph (b) of the fallowing words—
"or
1024
(c) on the acquisition of, or rights in or over, the deposits;"
and by the deletion of proviso (ii) to the said subsection:
Provided that no company or person shall by virtue of this section be liable to pay any more tax than that company or person would have been liable to pay if this section had not been passed.—[Mr. Stevens.]
Brought up, and read the First time.
Mr. Geoffrey Stevens: I beg to move, That the Clause be read a Second time.
My intention is to give to our extractive industries operating in this country a tax allowance in respect of wastage through consumption of the raw materials of their trade.
The present position ignores the very important fact that every prudent undertaking of this kind has in the past acquired deposit lands containing gravel, ore, chalk, or whatever it may be, sufficient for its needs for many years ahead. This is done for two very good reasons: the incidence of various Town Planning Acts and because certain of these extractive industries make use of extremely expensive capital equipment. Only if the undertaking can be guaranteed a number of years' continuous use of that capital equipment can the equipment be economically used.
It now seems that prudent companies which have protected themselves against the future are to be penalised while undertakings which have led and are leading a hand-to-mouth existence are benefiting and, unless something on the lines of the proposed new Clause is enacted, will continue to benefit in the future.
The matter has twice been the subject of investigation. The first investigation was by the Tucker Committee on the Taxation of Trading Profits. In paragraph 234 of its Report the Committee said:
"It will be sufficient for us to record our view that the business profits of a concern of the kind in question"—
that is, an extractive industry—
"cannot be properly computed without a proper allowance for depletion of minerals."
Again, in paragraph 238, the Report said:
"We cannot do more than record our view that the operating company's profits are not properly computed unless it receives an allowance based on the full amount which it has expended on the acquisition of the minerals."

1025
It is true that the Committee qualified that view by referring to the position of the vendor of those lands, who perhaps has received a good price for them. In the same paragraph the Committee raised the question of the position of the seller where some part or the whole of the proceeds of the sale might perhaps be subject to tax.
It was for that reason that the Committee said that a final decision on this point was outside its terms of reference, and that it was a proper subject for consideration by the Royal Commission on the Taxation of Profits and Income. That Royal Commission gave very close consideration to this problem, and paragraph 427 of its Report says:
"We have reviewed the existing method of computing the profits of mining ventures for the purposes of taxation."
Leaving the rest of the paragraph, and turning to paragraph 428, we find this:
"We came to the conclusion that these complaints against the existing method were justified and that we ought to recommend a change."
A little later, in paragraph 445, the Commission did recommend a change, and said this:
"We have decided therefore that we ought to recommend that in future a depletion allowance should be given in respect of the cost of acquisition of mineral rights or areas."
The Commission limited that recommendation when it said:
"It should be granted only in respect of sums paid after the date of the new system coming into force."
In other words, the prudent undertakings are once more cut out. For me, at least, a very large part of the force of that recommendation is extinguished by what the Royal Commission chose to say in the preceding paragraph. The argument against giving the depletion allowance to reserve land at present acquired is that the vendor may have received some element of tax-free sums in the amount which he received, and the Royal Commission have this to say about that point:
"No doubt the disallowance "—
that is, of any charge for depletion in the purchaser's account—
"is an element which has to be taken into account by any purchaser who is trying to fix a competitive price for an area; but to sup-pose that it s necessarily a determining element on each occasion or that it is even probable that conditions will exist under which the
1026
tax difference will be reflected recognisably in the purchase price appears to us to sacrifice too much to dogma."
In other words, the Royal Commission said quite clearly that the tax element is normally entirely ignored at the time when the bargain was struck between the vendor and the purchaser.
I see two possible difficulties in the way of the acceptance of this Clause. First of all, there is the question of the administrative machinery which might be needed in order to give effect to this Clause and the basis upon which a depletion allowance could be arrived at. Machinery adequate for the purpose is already provided in the shape of the existing depletion allowance for subsequently acquired land in Part III of the Income Tax Act, 1952, where allowances are made on the basis of the ratio of the annual output to remaining reserves. A similar basis will be used in connection with reserve lands in hand.
The other objection may deal with the question of cost. I tabled a Question to my right hon. Friend the Chancellor in April this year asking what might be the cost of giving this depletion allowance, and the answer was that it was exceedingly difficult to determine what the cost of the concession might be. Quite clearly, it might be fairly substantial, but the extractive industry in this country is a very large one, and since the cost might be considerable, it is possible that my hon. Friend who will reply will say that on this ground alone the concession cannot be considered in this year's Budget.
At the same time, and even if he says that, this matter is one of very considerable importance to a very large industry in this country, and I hope that when my hon. Friend comes to reply, he will at least give a very clear indication of the attitude of the Chancellor in this matter. A year ago, we had from his predecessor some kind of intimation that the Government would again examine the problem. I hope that, if that is the kind of reply which he is to give on this occasion, which I can quite understand, he will at any rate be more definite and more forthcoming than on the last occasion.
7.15 p.m.
Mr. John Arbuthnot: I beg to second the Motion.
There is not very much I can add to the very adequate way in which my hon.

1027
Friend the Member for Langstone (Mr. Stevens) has explained the purpose behind the Clause and the problem involved in it. Here we have an extremely important industry to the country, and it was rather disturbing to hear the answer of my right hon. Friend the Chancellor of the Exchequer that he did not know what the cost of a concession of this kind would be. That really is rather unsettling for the industry. If the Chancellor himself does not know what the cost of such a Clause may be, it is rather difficult for the industry to decide what probability there is of such a Clause being accepted, either now or at some future date. I hope it will be possible to have a clarification of the position in reply to this debate.
It seems unreasonable that there should be one part of the industry—the larger part—which has its reserves in hand, so to speak, which receives no allowance, and yet the smaller part of the industry, which has not been so wise in obtaining reserves in hand, receives an allowance. It is taxation of a profit that is in fact an unreal one. I hope it will be possible to do something to meet the problems of this industry, which is so important to the nation.
Sir T. Moore: I wish to support the Clause so admirably and lucidly sponsored and explained by my hon. Friend the Member for Langstone (Mr. Stevens). In doing so, I shall follow the time-honoured formula and declare my interest. I am closely associated with a company which has, for 140 years, been supplying bricks for the homes, factories, schools and hospitals and even the prisons of this country, and very good bricks they were and are, in spite of the destruction caused by Hitler's bombs to houses erected with them.
In order to do all this, as my hon. Friend has explained, the undertakings that are concerned in this industry had to acquire quarry land all over the country and erect very expensive and intricate machinery and buildings in order to turn the raw materials into bricks. These quarries get worked out in time, and the very expensive and intricate machinery is of no further use in the locality in which it is erected.
Mr. Emrys Hughes: Are there quarries in Scotland?
Sir T. Moore: Yes, one of them is, but if the hon. Gentleman wants any further information, perhaps he will see me outside, because I do not want to detain the House by answering somewhat irrelevant questions.
These quarries get worked out in time, but the machinery is of no further use in the locality of the quarry. Under the existing legislation, there is no depletion allowance for the working-out process of a quarry. I know that my right hon. Friend the Economic Secretary to the Treasury will probably argue that those who acquired this quarry land were fully aware of the fact that there was no depletion allowance, and yet they took the risk, and that is quite true. They did, but it was in the national interest that they should do so, and the nation has benefited as a result. They not only had to acquire land but to acquire such land as would supply reserves to justify the erection of expensive and intricate machinery.
The anomaly of which we complain has already been considered by the Tucker Committee. Although that Committee agreed that a depletion allowance should be granted so as to allow a proper appreciation of profits to be made, it did not feel able to go further than to refer the matter to the Royal Commission. The Royal Commission was a great disappointment in its recommendations on this matter. Although it in turn recommended that a depletion allowance should be granted, it limited it to new entrants to the industry.
To my mind, that was a great injustice, because the old members of the extractive industries had taken a risk, devoted time and money to research—chemical research—and every kind of development, and are to have no depletion allowance, but the new entrants profiting by the skill, enthusiasm and determination given to the industry by the older members are to be able to step in and get the depletion allowance, if the recommendation of the Royal Commission is adopted.
I do not know what any other hon. Member may say, but I think that between us we have proved the case, which is incontrovertible. I agree that possibly the Treasury might find it difficult to grant this request on this occasion as a certain amount of legislation would be inevitable, but the Treasury could give

1029
us hope that next year, when, no doubt, we shall be in a much more favourable financial position than we are in today— [HON. MEMBERS: "Oh."]—we shall have the good will of the Treasury in this matter.
When this question was discussed last year a very convincing speech was made by my hon. Friend the Member for Essex, South-East (Mr. Braine). To such an extent was that speech convincing that the then Economic Secretary practically gave an undertaking—I shall not say that he went quite so far as to give an undertaking—that the whole matter was being very carefully and fully considered and that something would possibly be done. In view of that partial guarantee that something would be done, we ask that something shall be done now, or if not now, next year.
Mr. Birch: My hon. Friend the Member for Langstone (Mr. Stevens) moved the Motion for his new Clause with great lucidity. In support, he quoted a great many of the things which were said about depletion allowances in the Report of the Royal Commission. My hon. Friend the Member for Ayr (Sir T. Moore) pointed out in his reference to the Royal Commission that its recommendation extended only to new works. This Clause, as my hon. Friend is aware, goes considerably further than the recommendations of the Royal Commission, in that it would mean that expenditure incurred since 6th April, 1946, would qualify in full for allowances to be given in future.
My hon. Friend who is now the Parliamentary Secretary to the Ministry of Education spoke for the Government on this subject last time and gave a promise that the matter would be carefully considered. I do not think he went very much further than that. It has been extremely carefully considered. To say that our minds are not closed on this matter yet is as far as I can go to satisfy my hon. Friends. My hon. Friend the Member for Langstone was certainly right in saying that adoption of the Clause would call for extremely complicated legislation. There are a number of different types of minerals involved. There would have to be all sorts of provisions as to sales between associates and so on, and it would work out as a very complicated piece of legislation.
1030
Further, as I think was recognised, the circumstances of different extractive industries in this country are not the same and a tax relief which benefits one does not benefit another. For example, the Cornish tin industry—like the "foolish virgins" to which my hon. Friend the Member for Dover (Mr. Arbuthnot) referred—which has many good friends in the House, would not be benefited, because, in general, it works on the royalty principle. The principal industries which would be benefited at present are sand and gravel, ironstone, chalk and brick clay. I do not think it would be quite true to say that any of those industries was really subjected to the full blast of foreign competition; they are reasonably prosperous.
My hon. Friend the Member for Dover raised the question of cost. The reason it is so difficult to estimate what the cost would be is that at the moment I understand, as a result of the way the industry is set up, this provision would mostly benefit the sand and gravel industries; but if there were depletion allowances, there is no doubt that there would be changes in the structure and a lot more companies would qualify for this relief. It is not easy to say how many. Therefore, there would be a considerable contingent liability which we cannot altogether estimate. Certainly the points made by the Royal Commission on this matter are weighty, but they are also extremely complicated. We have not yet reached a firm conclusion on them and, as I said, all I can offer my hon. Friends is an open mind.
Mr. Douglas Jay: The Economic Secretary said that his mind is not yet closed, but can he answer this question? Is the position now that the Government have accepted the logic and principle of this argument, as did the Royal Commission, but that they feel the legislation would be too complicated and the administrative problems too difficult? Is that the position, or is the hon. Gentleman telling us that the Government have not yet accepted the principle of the argument?
Mr. Emrys Hughes: I find myself in some doubt as to whether or not I can support the hon. Member for Ayr (Sir T. Moore).
Sir T. Moore: It is the first time.
Mr. Hughes: It may be the first time, but I feel somewhat compassionate because he made a very interesting speech in which he put a case for consideration of a company operating, I understood, in Scotland. If it is likely to benefit any of my constituents, I should be only too pleased to support it, because he knows that when it comes to helping industry in Scotland we sometimes agree.
I was puzzled when the Minister referred to the "foolish virgins". What are they doing in this quarry? There has been such a degree of ambiguity in this debate that I am extremely doubtful as to whether when the hon. Member for Ayr goes into the Division Lobby I should accept him as my leader. All I wish to know—perhaps the hon. Member can tell me—is where this quarry is located, whether it is in South Ayrshire, Ayr Burghs or whatever other location, and what exactly would be the advantage which would accrue to my constituents. [An HON. MEMBER: "Ask the virgins."]
Mr. Stevens: In view of the undertaking I have extracted from my hon. Friend, that he will keep an open mind on the subject and not regard it as a closed book, I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(EXEMPTION FROM INCOME TAX OF CERTAIN TRADING PROFITS OF ALLOTMENT AND GARDEN ASSOCIATIONS.)
Income tax shall not be chargeable on profits arising from mutual trading by allotment and garden associations registered under the Industrial and Provident Societies Acts, 1893 to 1954, when these associations do not distribute to members any profits arising from such transactions.—[Mr. T. Williams.]
Brought up, and read the First time.
7.30 p.m.
Mr. Thomas Williams: I beg to move, That the Clause be read a Second time.
This Clause deals with a rather small point compared with the subjects with which we have we have been dealing. I know that the National Allotments and Gardens Association has been in touch with the Treasury. It has felt, ever since 1933, when this tax was originally imposed upon Co-operative societies generally, that it was unable to discriminate between an ordinary Co-operative
1032
society with a turnover of millions of pounds, and a tiny garden or allotment society whose turnover might be a few shillings or pounds.
The size of the revenue obtained by the Treasury is so small that the Financial Secretary does not know what it is, according to a reply that he gave to a Parliamentary Question which I asked. It was the old formula, of course, that the figures were not available to him. I do not know whether he has got the figures today, but if he has I hope that he will tell the House exactly how much revenue is collected from allotment and garden societies which are registered under the Industrial and Provident Societies Acts, 1893–1954. I should imagine that the sum is so infinitesimal as to be not worth collecting.
The Financial Secretary and all Chancellors since 1933 have excused themselves by saying that they cannot discriminate between an allotment and garden society and a huge Co-operative society with a turnover of many millions of pounds. Why they should think that this would be forming an unpleasant precedent I really cannot understand. After all, it is curious that if a garden or allotment society carrying on similar activities on behalf of its members, and only its members, and distributing no profits among its members at all, is not registered it is not taxed. It is only if the allotment society is registered under the Industrial and Provident Societies Acts that the Treasury demands—it must be its ounce of flesh, since it is not big enough to be called a pound of flesh.
Why do these allotment societies feel that this is an unnecessary imposition? First, the Ministry of Agriculture desires to encourage allotment holders to cultivate their plots. Local authorities like their tenants in council houses to cultivate their gardens. These people come together in a society which purchases seed potatoes, fertilisers, seeds, and other things wholesale, and retails to its members at a determined price, which leaves a very tiny margin in hand.
The societies have a use for that tiny margin. An allotment society may lease an area of land for twenty-five or fifty years. The allotment holder is charged his normal rent and the society has to maintain, perhaps, hedges and ditches and be responsible for work on and

1033
around the land which has been leased for a period of years or, perhaps, bought outright. Therefore, a small margin is required, and this comes from the small profit which is made in buying wholesale and retailing to the societies' members as cheaply as possible.
I do not think that I am called upon to make a lengthy oration. It is not sufficient for the Financial Secretary to repeat what was said in a letter sent by one of his Departmental officials, namely, that this was debated in the House in 1933 and that there has not been a sufficient change between then and now for the Chancellor to change his mind. I would not expect Conservative Chancellors of the Exchequer to change their minds every quarter of a century, but, at least, I think that the Financial Secretary will have to find a far better excuse for rejecting this proposed new Clause than the one that has been made from time to time over the years.
I hope that the hon. Gentleman will have looked at this question and will have noted the trifle in terms of cash produced for the Treasury, will have noted how unnecessarily it disturbs allotment and garden societies, and will feel that it is not the sort of precedent of which he or the Chancellor may be afraid. I hope that he will release these societies who are registered and let them get on with the job which is well worth doing, without the embarrassment of bookkeeping and the problems created by the tax collector who collects a tax which is not really worth collecting.
Mr. A. J. Champion: We are, as my right hon. Friend the Member for Don Valley (Mr. T. William) has said, concerned with small groups of people who meet together for the purpose of furthering their work on gardens and allotments. They come together in order that they may purchase co-operatively seeds, fertilisers, garden requisites and the like. Their task is, indeed, very limited, but they carry out the very important function of fostering the domestic production of food.
The usefulness of these associations is, of course, recognised by the Minister of Agriculture. In his fertiliser schemes, which he presents to the House from time to time under the Act of 1952, he makes specific mention of these associations and tells us that subsidy can be claimed by
1034
them on behalf of their members in certain circumstances, always provided that the associations are registered under the Industrial and Provident Societies Acts, 1893–1928, or have written rules governing their constitution and management.
It might be suggested that it would be advisable for these societies which get together for this purpose not to register under these Acts and thus avoid payment of Income Tax on their mutual trading activities. But the fact is that most of these associations have control of some land. They either lease or buy land in order to carry on their activities. They usually have their land under a lease agreement, and in order to have that, they are urged to register under the Acts which I have mentioned.
It is quite clear, as my hon. Friend has said, that these are not societies which distribute dividends in any way. Any slight profit which they make is devoted to the administrative costs of running their little associations or financing the replacement of stocks and the maintenance of the sheds and so on which are necessary to enable them to keep their small stocks of fertilisers and other materials. In addition, they have to look after the boundary hedges and ditches of the land which they lease.
This tax is only a deterrent and a nuisance to these associations. It does not bring anything worth while to the Treasury. Indeed, I very much doubt if the amounts which accrue to the Treasury as a result of this small tax will pay for the cost of collecting it. My right hon. Friend has already mentioned some of the figures. And they seem to me to support what I am saying about the value of this tax to the Treasury.
We know that this tax is levied under Section 444 of the Income Tax Act, 1952, which re-enacted a Section of the Act of 1933. That Section of the 1933 Act was, of course, aimed against any profits made by the Co-operative societies. I am not entering into any old controversy about whether it is right or wrong for the Cooperative societies to have been mulcted in Income Tax, but it seems that we are using a very big stick to lambast a very small group of people who are doing a task entirely different from that of the normal Co-operative society.

1035
I appeal to the hon. Gentleman to accept this new Clause. It will not mean much to the Treasury, and it is, as I say, a source of annoyance and a deterrent to those people who come together to do a job in which they should be encouraged. Anyone who has seen the declining allotments on the edge of great towns will realise that we should do everything in our power to increase a useful activity which is being carried out by many decent citizens of this country.
Mr. Powell: This new Clause seeks to exempt from Income Tax profits arising from mutual trading by the associations of which the right hon. Gentleman the Member for Don Valley (Mr. T. Williams) and the hon. Gentleman the Member for Derbyshire, South-East (Mr. Champion) have spoken. It is probable that under the law as it stands at the moment profits arising from mutual trading are not liable to Income Tax. The point is that the net surpluses accumulated by the registered associations are not regarded by the Inland Revenue as profits arising from mutual trading, and so far the associations have not sought at law to controvert that interpretation.
The question is, therefore, not whether we should do what the new Clause suggests but whether we should provide that the surpluses of these associations should, whether they are profits arising from mutual trading or not, not be liable to Income Tax. The wider problem of the surpluses of registered societies, of which this Clause deals with a very small part, was considered at great length and with great care by the Royal Commission on the Taxation of Profits and Income which came to the definite conclusion that surpluses should be taxable.
Paragraph 593 of the final Report says:
"Our proposal"—
the Commission was assuming at the moment that these surpluses are not taxable—
"is that no surplus derived by a corporation from trading operations should be exempt from taxation as profits under Case I of Schedule D on the ground of mutuality."
I will not trouble the House with the long argument which brought the Royal Commission to the unanimous conclusion that these surpluses, of which the small
1036
surpluses made by these association are a tiny example, should not be exempt from Income Tax. But that is one of the new factors which have arisen since 1933 and which the right hon. Gentleman the Member for Don Valley invited me to put before the House, and I think that there we should not depart in this respect either from the law as it is in practice established at the moment or from the recommendations of the Royal Commission.
Question put and negatived.

New Clause.—(EXEMPTION FOR CERTAIN CHARITABLE ORGANISATIONS.)
Charitable organisations set up for the sole purpose of giving annual treats, or trips or other help to retired aged people, incapacitated persons, or special treats for school children, where all officials are honorary, shall be exempt from income tax.—[Mr. McKay.]
Brought up, and read the First time.
7.45 p.m.
Mr. McKay: I beg to move, That the Clause be read a Second time.
In Northumberland, particularly in the mining villages, it is the custom to have organisations set up for the special purpose of helping old people at Christmas and also to give them a free treat in the summer time. There has been a general feeling in the county—and I think that the same applies to the whole of Durham and probably to nearly all of the mining areas—that there was no necessity for such organisations to take any action so far as the tax law was concerned.
They have gone on obtaining funds for these special purposes, never expecting that they might, in certain circumstances, have to pay Income Tax. Recently however, in one part of my constituency, where one of these organisations had been set up for the special purpose of giving treats to aged people and also for providing trips in the summer time for old people and school children, the Income Tax authorities found that there were times when it was getting interest on money deposited in the bank which had accumulated largely as a result of the miners in the villages having contributed regularly by means of a levy on their wages for these objects.
Naturally, the organisations which are arranging for these trips and treats deposit the money in the bank until the time arrives when these trips or special

1037
treats take place, and the interest accumulates. In this case the Income Tax authorities went back six years and are taxing this small village organisation £22. The whole of the money had been obtained in the way that 1 have described. There is no doubt that the whole of the work has been on a voluntary basis, that the money has been voluntarily contributed, and that the objects are entirely charitable.
It appears, from what I have been told by Income Tax officers, that the reason the organisation was taxed was that it had no rules and regulations and had not been registered, and on those grounds it was not exempt from tax. The Income Tax authorities are apparently pressing the fight and insisting that the £22 must he paid. It may be said in reply that there is no doubt that if the organisation had taken the necessary trouble it would be recognised as a charitable organisation and be free from tax. The whole point is that, to keep within the regulations, as I understand it, the organisation has to be registered, proper rules have to be drawn up, trustees must be appointed and a certain rigmarole has to be gone through.
People concerned in these local charitable organisations are not considering the law. They know what they are doing, which is simply trying to help old people and young children, and no one dreams that there is any possibility that, because people are putting a little money aside pending the arrival of the date for the various treats, the money will accumulate interest and be liable to tax.
My object is to draw attention to this case and also, if possible, to have the position made more flexible, in the sense that there should not be imposed upon these little charitable organisations the necessity for drawing up regulations, being registered, appointing trustees and so on, all in legal fashion. There are hundreds of such organisations in Northumberland and Durham, and I have heard of very few which have gone through the process of registration. Many of them, quite probably, would be liable to tax if the whole thing were investigated. Yet such a consequence would be against the whole principle of the general law itself, which exempts charitable organisations from Income Tax.
1038
I want the matter to be ventilated, and I want the Government to look at the matter with a view to making the requirements sufficiently elastic, so that, even when a little charitable organisation has not gone through all the legal processes, a liability to tax should not be imposed when the authorities are satisfied that, in reality, it is entirely a charitable organisation.
Mr. Norman Dodds: I beg to second the Motion.
Anyone who has heard the speech of my hon. Friend the member for Wallsend (Mr. McKay) must be rather puzzled and, if what he says is true, shocked that such a thing could occur. As my hon. Friend has indicated, there are men and women who want to help others less fortunate than themselves. Some of these people, out of their goodness of heart, are prepared to give up a great deal of time for that object, but the majority of them do not understand the law and cannot be bothered with trivialities of the sort described by my hon. Friend. It is to be expected in our present state of society that there must be rules and regulations, but there can be occasions when these things are carried too far.
I have known my hon. Friend long enough to realise when he has a good case and when he is deeply disturbed, as he is about this matter. If what he says is correct, this sort of thing may apply at any time to any similar organisation. Therefore, in seconding the Motion, "That the Clause be read a Second time," I ask the Government to give an explanation which will remove the doubts and fears of all who are concerned to see charitable work of this kind maintained and developed in our country.
Mr. Powell: The terms of the proposed new Clause cover many types of purpose, some of which, I am advised, might well be charitable and thus exempt from tax under the law as it stands, some of which certainly never have been held to be charitable and so exempt, and some of which have probably been held to be charitable until the famous decision known as Baddeley v. Commissioners of Inland Revenue about two years ago, the effect of which was to show that certain activities, including the promotion of moral, social and physical wellbeing and the provision of facilities for social and physical training and recreation,

1039
were not, as they had hitherto been supposed to be, charitable.
Since that decision, a great deal of study has been devoted to putting the law regarding charities on a more definite and satisfactory basis. It is fully recognised by the Government that the situation could not possibly be left in the situation in which the Baddeley case left it. It is, however, a most complex and difficult subject which must be treated as a whole. I was able to tell the House two or three months ago that good progress was being made and, although I could not, and still cannot tonight, announce the Government's conclusions, the work is nearing completion.
I must, therefore, advise the House that, until we can deal with the problems of the definition of "charitable purpose" which draw with them the appropriate tax treatment as a whole, which we can do only in the light of the Baddeley decision and as a legislative act, it would be quite wrong to take particular aspects, however deserving—I have no dispute with the hon. Member for Wallsend (Mr. McKay) about that—
Mr. Dodds: Would the hon. Gentleman say that, in the meantime, until the matter is decided, the tax authorities will be asked to be very reasonable, particularly in the kind of case referred to by my hon. Friend the Member for Wallsend?
Mr. Powell: Of course, the tax authorities must administer the law as it is made known at the time, and there are very narrow limits within which they can and, indeed, ought to exercise discretion.
As I say, this is a subject which requires to be looked at and treated as a whole. I must, with some regret, advise the House that, until that is done, it would be wrong to take certain aspects of it, however meritorious, and deal with them in isolation.
Mr. H. Wilson: I am glad to hear the Financial Secretary address himself in that spirit to the purpose of the new Clause moved by my hon. Friends the Members for Wallsend (Mr. McKay) and Erith and Crayford (Mr. Dodds). Clearly, there is a very strong case for something to be done. It is quite undesirable, and
1040
outside the intention of Parliament, and, I am sure, outside the desire of the Board of Inland Revenue, that cases of this kind should attract Income Tax. But, as the hon. Gentleman says, the Board of Inland Revenue has to administer the law as it understands the law to be. The only real substantial challenge on the point was settled in a way which, as he fairly says, leaves the law in a most unsatisfactory state. It is good to hear that the work is nearing completion and that something will, perhaps, be done certainly not later than the next Budget, whenever that may be.
I hope that my hon. Friend will meanwhile, if the Treasury is agreeable, seek the advice of the Treasury, which will, I know, be helpful on this point, to see how the liability under the law of the organisation to which he referred might be mitigated. We had a debate last year on the question of the taxation of small lotteries run for charitable purposes, of football pools for football club supporters' clubs, political bodies and, above all, church and educational bodies and charities. On that occasion, the Solicitor-General, if I remember rightly, was very helpful in saying that there was a way round liability for Income Tax. He was not sure whether it was his duty as Solicitor-General to advertise the fact in the House, but on that occasion he did tell us about it. I am sure that, if his speech—delivered, if I remember aright, on 10th July last year—is studied, the sponsors of this kind of organisation might find that it was possible to put themselves outside the tax jurisdiction.
In addition, as the House will be aware, very largely as a result of that debate last year, the Board of Inland Revenue has made new regulations bearing on the position of charitable and other small lotteries, football pools and so on. I have, in fact, drawn the attention of my hon. Friend the Member for Wallsend to the announcement made by the then Chancellor of the Exchequer on 14th December last year in a written answer to the hon. Member for Southampton. Test (Mr. J. Howard), pointing out that, by a rearrangement of some of these schemes, any taxable profit—it is rather silly, really, to call it taxable profit—any surplus which has possibly attracted tax could be reconstituted so as to form a donation.

1041
8.0 p.m.
I am sure that if my hon. Friend and those who have inspired him to introduce the Clause were to seek the advice of the Treasury, they could probably be given advice about how to conduct their affairs in such a way as not to attract tax on something which, I am sure, the Chancellor does not to wish to attract tax, until the day, referred to by the Financial Secretary, when the Treasury is in a position to present new and more radical changes in the tax law. It would be wrong, I am sure my hon. Friend would agree, to try to prejudice the whole reconsideration of the law affecting charities on this one case. I hope, therefore, that my hon. Friends will accept the assurance which we have been given by the Financial Secretary.
Mr. McKay: I hope that the Financial Secretary will look into the case which I have mentioned, of which his Department has particulars, and I trust that he will have some influence in getting the demand withdrawn. In the circumstances, I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(PROFITS TAX ON BUILDING SOCIETIES.)
(1) The profits tax chargeable on the profits arising in any chargeable accounting period beginning after the thirty-first day of March, nineteen hundred and fifty-seven, and ending after the passing of this Act from the business of a building society shall be computed after allowing the deduction of any dividends or interest payable by that society in respect of shares in or deposits with or loans to that society and after allowing the deduction of any income tax payable by that society in respect of those dividends or that interest by virtue of arrangements entered into under section four hundred and forty-five of the Income Tax Act, 1952.
(2) In the last foregoing subsection the expression "building society" means a society regulated by any of the Acts regulating building societies, or a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, which carries on a business of such a nature that it could have been established under any of the Acts regulating building societies, and no other business.
(3) This section shall be construed as one with the enactments relating to the profits tax.
(4) Nothing in this section shall affect section forty-two of the Finance Act, 1947 (which limits the amount of the profits tax payable by a building society), or any enactment relating to income tax.—[Mr. H. Wilson.]
Broucht up, and read the First time.
Mr. H. Wilson: I beg to move, That the Clause be read a Second time.
The House will remember the very interesting debate we had in Committee on a new Clause sponsored by the hon. Member for Huddersfield, West (Mr. Wade). On that occasion, it became clear that not only the whole of the Liberal Party but the Labour Party and a substantial number of Conversatives opposite, were in favour of the principles enunciated by the hon. Member in support of the complete exemption from Profits Tax of building societies.
On that occasion, there was a very strong expression of opinion by hon. Members opposite. It was obvious that they were quite dissatisfied with the answer then given by the Financial Secretary, so much so that the debate continued for some time, as the Financial Secretary will remember—I do not think it was his happiest moment during these Finance Bill debates—and during that time one hon. Member after another on the benches opposite made it quite clear that the considered view of the Committee as a whole was in favour of the acceptance of the new Clause of the hon. Member for Huddersfield, West.
At that point, the Chancellor had to be sent for. With great speed, he seized himself of the feeling in the Committee and said that this matter would be further considered before the Report stage, which is where we find ourselves tonight. We had hoped that the Chancellor would have put down a new Clause as a result of that consideration, but fearing that it was just possible that he would not do so, both the hon. Member for Huddersfield, West and my hon. and right hon. Friends and myself put down separate new Clauses dealing with the question of the taxation of building societies.
Neither the new Clause of the hon. Member for Huddersfield, West—"Relief from profits tax for building societies"—nor our own Clause goes anything like as far as the hon. Member for Huddersfield, West proposed in Committee. No complete exemption is here proposed. We took account of the difficulties mentioned by the Chancellor in Committee, and particularly his references to the Royal Commission.
The reason given by the Financial Secretary for not accepting the new Clause during the Committee stage was

1043
that the Treasury was currently considering all the recommendations in the Royal Commission's Final Report about the Profits Tax, which is a long and complicated subject, and that until that was done it was impossible to treat one small part of it, namely, that part relating to the Profits Tax on building societies.
As a number of us pointed out in Committee, however, the relevant paragraphs —paragraphs 576 and 577—of the Royal Commission Report made it clear that the Commission did not think that this all hung together with the consideration of the rest of the Profits Tax. The Royal Commission's main recommendations in the Majority Report on Profits Tax were in terms of merging the distributed and the undistributed Profits Tax rate into a sort of corporation Profits Tax or a single merged Profits Tax rate.
The Royal Commission made it clear in paragraph 577—it is right for me to quote it again—that it recommended
"that only the retained profit should be taxed: at the flat rate if our proposals are accepted, or at the undistributed rate if profits tax continues in its present form."
Therefore, in the minds of the Royal Commission, it was quite unnecessary to take any particular line about the Profits Tax. The Commission still had a clear and definite recommendation in respect of building societies. That disposes of the argument, put forward on that occasion by the Financial Secretary, that this matter could not be dealt with out of turn.
Other arguments were put forward. I remember suggesting to the Committee that the Government had certainly taken out of their turn all the recommendations relating to Profits Tax on overseas trade corporations. Indeed, they have gone beyond the Royal Commission in relation to Profits Tax on such corporations. The Government have prejudiced their whole consideration of Profits Tax in that respect in their haste to introduce this, to our mind, risky and suspect change in our tax law on overseas trade.
Therefore, when it suits the Government to do so, they do not mind taking something out of its turn, even to the extent of going against the Royal Commission. When it does not suit them to do so, however, they say that they cannot possibly consider the recommenda-
1044
tions of the Royal Commission because they have to consider the Profits Tax recommendations as a whole.
On that occasion in Committee, we were prepared to accept that the Chancellor was in some difficulty about the matter and could not accept the whole hog proposals of the hon. Member for Huddersfield, West. We were quite prepared that night to vote for the new Clause moved by the hon. Member, and I am sure he was prepared to vote for it too, and the whole of his party with him. Nevertheless, we accepted the assurance of the Chancellor that he would look at this matter again. He made it clear that he was not giving any pledge that legislation would be introduced on Report and that he was facing difficulties. We still had hopes that, pressed as he was by the arguments used on that occasion, he would be able to produce something new. He has not done so.
I can speak only for my right hon. and hon. Friends and myself. I cannot speak for the Liberal Party, but their thinking is probably similar to ours. In those circumstances, we were faced with two choices. One would have been to re-table the new Clause that the hon. Member had put down. We decided not to do so. What we ask for in our new Clause is much less thorough-going than was asked for by the hon. Member for Huddersfield, West. We are, in fact, embodying in the Clause the exact proposals of the Royal Commission on Profits Tax and Income Tax. The Royal Commission advised against exempting the whole lot from Profits Tax and said:
"we recommend that only the retained profit should be taxed."
My hon. and learned Friend the Member for Kettering (Mr. Mitchison), who has had a great deal to do with the Clause, has gone to endless trouble to ensure not only that the Royal Commission's recommendations are fulfilled in our new Clause, but that all the complicated Income Tax arrangements which operate in the case of building societies were taken into account in the drafting of the Clause. I need not speak in detail on its effects. The Chancellor will, I am sure, agree that although he might have drafted it better himself, if he had had the will to do so, it fulfils the recommendation of the Royal Commission.

1045
Having said that, I do not propose to repeat all the arguments that were deployed in Committee. On that occasion, in a fairly lengthy speech, the hon. Member for Huddersfield, West put the argument why building societies were justified in claiming special treatment. The gaps in his argument, in so far as there were any, were filled by the hon. Member for Wimbledon (Mr. Black), who dealt particularly with the point about the reserves, which we all felt was an important one.
I put other considerations of a rather broader and more philosophical character, particularly those relating to the fact that building society shares cannot be traded on the Stock Exchange, cannot be the subject of movement up and down in value, and cannot be the subject of capital gains. Therefore, by those very facts, not only do they represent a superior form of economic organisation, but also they do not involve all the very ticklish problems to which attention is drawn in the Royal Commission's Report on the subject of undistributed profits and the possibility of increases in the notional value of those profits.
It is not necessary to rehearse all these arguments tonight. We on this side of the House have shown a great moderation in not pressing once again the new Clause which we supported and would have been prepared to vote on in Committee. We have put the much more moderate proposal of this new Clause, which strictly represents the views of the Royal Commission. And since the Commission itself did not say that this was dependent on reconsideration of the whole Profits Tax problem, I do not see how in heaven's name the Financial Secretary or the Chancellor of the Exchequer can wriggle out of it on that argument.
We are disappointed that the right hon. Gentleman has not put an Amendment of his own on the Order Paper. It means either that he does not intend to do anything about this matter or that when he looked at our new Clause he decided that, however hard he worked on it, he could not produce a better draft to do what the whole House demands should be done. If the Chancellor accepts the new Clause and we all join in paying tribute to my hon. and learned Friend the Member for Kettering, the House will be satisfied, but I warn the right hon. Gentleman that our forbearance in Committee
1046
is not likely to be repeated in the House tonight.
Mr. Nigel Fisher: In supporting the new Clause, I do not, like the right hon. Member for Huyton (Mr. H. Wilson), think it is necessary to argue the merits of the matter again, because I do not think that they are seriously contested even by the Treasury. I think that we are all on common ground on the merits of the argument. Building societies are not trade organisations, not profit-making organisations and, we think, should not be subject to Profits Tax at all. But if there is to be a Profits Tax it should be at least on the so-called profits and not on gross earnings, because money is the commodity in which a building society deals.
It is not goods. Its raw material is its money and without the money it derives from investors it could not advance money for house purchase, and it would have to close down its business altogether. That being so, I think that we are entitled to argue that no other company has to pay Profits Tax on its earnings without first being allowed to deduct the cost of its raw materials. Some hon. Members may think that building societies, because they have a special economic and social value to the nation, should have special treatment. I do not think that anybody would deny that, at least, they should receive equal treatment. That is all that we are asking for, and all that the right hon. Member for Huyton and the hon. Member for Huddersfield, West (Mr. Wade) have asked for in the new Clause.
In Committee, the Financial Secretary quoted paragraph 562 of the Royal Commission's Report and said that Profits Tax should apply to all profits without distinction between corporations. That may be very well. If so, that should be applied in the same way to all corporations, building societies included, and the cost of the raw materials in which they trade should be allowed as a deductable cost before Profits Tax is applied. In paragraph 577 of the Royal Commission's Report only the retained profits are recommended for taxation, and I should have thought that it only has to be stated to be accepted. The Commission goes on to say that it can find no principle to account for or to justify the basis of the tax as it now stands.

1047
8.15 p.m.
Even the Financial Secretary said that the Government do not reject the recommendation of the Royal Commission in this respect. If he does not reject it, why does he not accept it? It seems to me that we are only playing with words. It does not seem to me a serious argument at all, if we accept that this change would not be inflationary. If it would have that effect, in view of the Chancellor's speeches in recent days I should be the last to press for the change, but no money will be distributed through accepting the Clause. There will be no increases in dividends and no rises in the capital value of shares. The only result will be increases in reserves, and those reserves will be invested in the gilt-edged market, which seriously needs support at present.
This Profits Tax on building societies is unjust, inappropriate and totally irrelevant to the circumstances of the societies. In Committee, I said that I would like something much more valid by way of argument than we had from the Financial Secretary on that occasion. I said that unless we heard that this matter would be dealt with seriously, if not this year, then definitely next year, I could not go into the Lobby in support of my right hon. Friend. That is still my position.
The Chancellor has not proposed a Government Clause, which we find very disappointing. We cannot leave it quite like that. We ought to have an assurance. That is the very minimum for which we could ask. We ought to have an assurance that my right hon. Friend is prepared to meet our arguments next year. If we are given that assurance, I am prepared to accept it, because I have a trusting disposition. I am not a rebel. I am a loyal supporter of my right hon. Friend and of the Government. I think that my right hon. Friend is a very good Chancellor, but there are limits.
I seriously ask that we should be given this assurance—and I am speaking of my hon. Friends. If we show loyalty and restraint on this occasion, which I have indicated and I am anxious to show if possible, we should have an assurance that we shall be rewarded next year by being given the substance of the demand that we make on this occasion. That is the only basis on which I can give my right hon. Friend the support that I owe to him and which I am anxious to give
1048
to him personally and to the Financial Secretary.
Mr. Donald Wade: I dealt with this subject at some length in Committee on 2nd July and I do not propose to go over the ground again. It occurred to me that in asking permission to withdraw the Clause that I moved in Committee, I might have quoted at my own expense a line of Tennyson's in "The Revenge":
"You fly them for a moment to fight with them again."
But I hoped that after some days of reflection on the part of the Chancellor we should reach the Report stage and find that there was no necessity to fight at all, because the right hon. Gentleman had accepted the contention put forward on all sides in Committee.
As the right hon. Member for Huyton (Mr. H. Wilson) pointed out, we are not asking for the full extent of the relief that was asked for in Committee. Hon. Members who are supporting the new Clause are asking for an alteration of the incidence of Profits Tax on building societies on the lines recommended by the Royal Commission. But I ought to put on record the fact that the building societies still consider that they are not appropriate bodies to be called upon to suffer Profits Tax at all. The reasons for that were fully explained in the debate in Committee.
When he was discussing the Clause which I moved in Committee, the Financial Secretary stated that, building societies were engaged in the business of lending money on mortgage. He appeared to me to put some emphasis on the word "business". That may have been somewhat misleading, although I feel sure that the Financial Secretary did not intend to create any misunderstanding. There is, of course, not a precise definition of the word "business". In its widest sense it can include any activity. One might properly refer to the business of selling Premium Bonds. Whether that is a successful business is a matter on which the opinion of hon. Members may differ, but no one has suggested that the promoters of Premium Bonds should be subjected to Profits Tax.
There are many different methods of encouraging savings, and building societies do so in two ways. First, they encourage people to save by putting their

1049
money on deposit or on share account with a building society and, secondly, they facilitate home ownership by enabling the purchase price to be paid by instalments. The advantage of this latter form of investment to the economy was mentioned on more than one occasion by the present Prime Minister when he was Minister of Housing and Local Government.
I will make one quotation. On 7th May, 1954, in an address to the Building Societies Association, and after paying tribute to the societies, the right hon. Gentleman said:
"The economists tell us that there are very sound reasons for encouraging and helping a man to own his own house because it is an excellent form of saving and induces a habit of thrift which is of the greatest value to the community"
To dismiss this form of saving as a mere business is really not very helpful.
I also think it fair to point out that a building society is not really a profit making institution. Furthermore—and I hope that the Chancellor will bear this in mind—the building society is debarred from trading by the Building Societies Acts and, therefore, it does not come into quite the same category as some of those other special classes of corporations referred to by the Royal Commission.
However, I will not pursue that point further tonight. The practical question which we have to face today is how to check the inroad on reserves and the fall in the ratio of reserves to total assets which is, in a large measure, the consequence of the imposition of Profits Tax. This is a matter of urgency since, so I am informed, the building societies have put off taking the very unpleasant step of throwing the burden of this tax on to the borrowers and, as I understand, they cannot defer that indefinitely.
If the Government will not now relieve the building societies altogether from Profits Tax, it would certainly be an advance in the right direction if the method of assessment were altered on the lines of the Royal Commission recommendation. The case for that has been made out so overwhelmingly that it is not necessary for me to repeat it.
Before I sit down, may I draw the attention of the Chancellor to one or two points of substance which should be considered when deciding how this change should be brought about? First, I suggest that the date on which the new method
1050
of assessment takes effect is a matter of some importance. Building societies terminate their financial year at different times. The chargeable accounting period, therefore, varies and to achieve justice as between one building society and another I suggest that the best method to adopt would be to fix a date, such as the date when this Act comes into force, after which the new method of assessment would apply. In making the change-over it would not create any great administrative difficulties to provide that there should be one chargeable accounting period up to the date of the Act coming into force and another for the period from that date up to the end of the building societies' financial year.
My second suggestion is that some consideration must be paid to the fact that there may be a few building societies which have not entered into an arrangement under Section 445 of the Income Tax Act, 1952. That point was taken into account in the wording of the proposed new Schedule in my name in page 2515 of the Notice Paper, dealing with the computation of Profits Tax payable by building societies, which, I think, will not be called, but to which I believe I may refer.
Thirdly, and this is most important in arriving at the net surplus, or what the Royal Commission called the "retained profit", there must be deducted not only the interest paid to the investors but also the tax on that interest which the building societies account for to the Inland Revenue. That point, I am glad to say, is covered both in this Clause and in my proposed Schedule.
To turn to the general principles, as I see them, in considering whether this reform should be introduced, and introduced without delay, there are really only two simple questions which one must ask. First, is the imposition of Profits Tax on building societies in its present form just, and secondly, would the removal of this tax have any inflationary effect? The answer to both those questions is, in my view, no.
There is only one other point which should be put. The building societies are not asking for any discrimination in their favour. They are only asking for the removal of a tax which is admitted on all sides to be discriminatory against them. Therefore, I hope that the

1051
Chancellor will either accept this Clause or give a clear and definite assurance that the relief asked for will be granted at an early date.
Mr. Stevens: I have listened with the closest possible attention to the speeches of the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), my hon. Friend the Member for Surbiton (Mr. Fisher), and the hon. Gentleman the Member for Huddersfield, West (Mr. Wade). I could not find fault with anything they said, but while they spoke as it seemed to me the truth and nothing but the truth, I do not think the House has had the whole truth.
I have enormous sympathy with what they said. Most of us would agree that Profits Tax is a shocking tax. I do not think it is quite as bad a tax as Purchase Tax, which is the worst tax that man ever conceived, but Profits Tax has had an unhappy history. It started as the National Defence Contribution, and the late Neville Chamberlain had to go into reverse quickly and produce another form of national defence contribution, which subsequently became the Profits Tax. We have not heard half enough tonight about the evils of Profits Tax; we have only heard one aspect.
8.30 p.m.
We have heard about the evils of the two differential rates of Profits Tax, but nothing about the Sword of Damocles in the shape of non-distribution. [HON, MEMBERS: "It was out of order."] I should be out of order if I developed that theme, but I do not think I am out of order in drawing the attention of the House, when considering this one small point, to the fact that we shall be losing our sense of justice and perspective if we do not bear in mind the much wider scope of the tax as a whole.
Profits Tax is a thoroughly bad tax, and there is not the slightest doubt that it affects building societies adversely, but building societies are not alone, and I am puzzled why they should be singled out in this fashion. [An HON. MEMBER: "They do not make a profit."] Neither do nationalised industries, but they have not been singled out. I thought the right hon. Gentleman the Member for Huyton, who has no doubt read the Final Report of the Royal Commission on the Taxation
1052
of Profits and Income, might challenge me on that and say that the Royal Commission recommended that public utility undertakings should be left as they were. However, what the right hon. Gentleman did not say, and what my right hon. Friend has not said, is that the Royal Commission recommended that industrial and provident societies should be treated exactly the same as building societies.
In paragraph 573 of its Final Report, the Commission said:
"Our conclusion is that it would be right to treat the so-called dividend"—
that is, of industrial and provident societies, not building societies—
"as interest and we recommend that if our proposal for a flat-rate tax is implemented only the retained balance of profit should be taxed."
Mr. Chapman: The hon. Member must not finish at that point. The paragraph ends by saying:
"… but the existing special treatment of co-operative societies is not, so far as we know, a current subject of controversy and we think that the best practical course would be to leave their situation unaltered …"
Mr. Stevens: I notice that the right hon. Gentleman the Member for Huyton was very careful to refrain from mentioning Co-operative societies. There was probably some special reason for that omission.
Mr. H. Wilson: The special reason was that it would have been out of order to talk about Co-operative societies on a Clause limited to building societies.
Mr. Deputy-Speaker (Major Sir William Anstruther-Gray): We must keep discussion of the Clause as strictly as may be to the subject of building societies.
Mr. Stevens: I naturally accept your Ruling, Mr. Deputy-Speaker, but I was merely asking why building societies should be singled out for the special treatment, with which I entirely agree. I was suggesting that there are other organisations worthy of similar consideration.
Profits Tax is a thoroughly bad tax. My hon. Friend the Member for Surbiton was asking for more than he knew when, in the most menacing fashion, he looked at the Chancellor and said that as my right hon. Friend did not reject the advice of the Royal Commission he ought to accept it. In its three Reports, the Royal

1053
Commission made about 200 or more recommendations, and if my right hon. Friend were to accept all that he did not reject, we should spend many weeks or months dealing with them. Interested though my hon. Friend is in these difficult and technical problems of administration and finance, he is asking too much of the House when he suggests that we should consider that kind of argument.
I entirely agree with the special pleading, but I suggest that it would be entirely wrong to take it out of its context as applied to the objections to Profits Tax as a whole. I go much further than did my hon. Friend the Member for Surbiton. He required an assurance from the Chancellor that something would be done about building societies and Profits Tax next year. I look for far more than that next year. I look for a recasting of Profits Tax as a whole, and I hope that we shall have some indication in that direction tonight, but I see no reason why that assurance should be limited to building societies.
Mr. Cyril W. Black: Is it my hon. Friend's case that the House should never seek to rectify any injustice unless at the same time it can rectify every other injustice?
Mr. Stevens: That is not my case. My case is that if by rectifying one injustice we raise many more, then we are an unwise House of Commons.
The Chancellor of the Exchequer (Mr. Peter Thorneycroft): At least upon the narrower issue of the Clause I detect a good deal of unanimity in the House. To start with, I would say that no one can criticise the drafting of the Clause; indeed, it has met with very favourable comment wherever it has been studied. The second thing I would say about it is that it is much narrower than the proposal which we were discussing in Committee, which was really for all-out exemption. I do not think that that could be accepted at any time, or in any foreseeable circumstances.
This is a narrower proposal, based upon one of the many recommendations of the Royal Commission. My hon. Friend the Member for Langstone (Mr. Stevens) is quite right in saying that there were many proposals of the Royal Commission dealing with Profits Tax.
1054
Since the Committee stage, I have again studied not only the recommendations of the Royal Commission but the somewhat tangled history, which other hon. Members have described, of the imposition of Profits Tax and the way in which it came to be levied upon building societies.
I say at once that I have some sympathy with the case put forward. There is some force in it. But it does not stand alone in the recommendations concerning Profits Tax. I am not saying that we must do everything at once; we cannot deal with all the forms of Profits Tax at once; but this proposal is undoubtedly linked up with many others. Let us leave aside for a moment the major recommendation of the Commission about assimilating the two rates of tax so that that question will not be introduced into our controversy. It raises major issues with which we are not concerned now.
Nevertheless, there are many other recommendations about Profits Tax. There are proposals dealing with the way in which profits should be computed in the case of Co-operative societies or nationalised industries, and I certainly think that those cases should be considered at the same time as that of building societies. Whether or not they are linked with the wider question of the assimilation of the two rates of tax does not seem to me particularly to matter for this purpose. If we are laying down in a Finance Bill the way in which we should deal with profits of building societies, I think that we should also lay down the way in which we should deal with the profits of Co-operative societies and nationalised industries, upon which certain recommendations were also made.
Nevertheless, as I say, I have some sympathy with the point of view put forward. I have read the speeches made in Committee and I have listened to many arguments—mainly upon the same theme. What I would say to my hon. Friend the Member for Surbiton (Mr. Fisher) is that I shall certainly study the various proposals, covering a rather wider section than merely building societies, during the coming year. I shall study them with the intention of trying to produce comprehensive proposals for dealing with various bodies which are facing this kind of problem. I think that that will be a

1055
fairer and more convenient way of dealing with the problem than simply by taking the building societies, however good their case may be, out of their context, and not dealing with the organisations with which they are linked.
Mr. Glenvil Hall: I have listened with the utmost care to what the Chancellor has said. I am not surprised at what he said; it was the sort of reply that I expected to receive from him. But the House should let him know that it is deeply shocked and disappointed at the tone that he has taken and the arguments that he has used. When the matter was discussed in Committee there was an overwhelming expression of opinion on the part of hon. Members on both sides that the Chancellor should do something in respect of the Profits Tax levied on building societies.
We were told, either by the Economic Secretary or the Financial Secretary, that the Chancellor would examine the arguments put forward in the debate, and the arguments that have been put forward by hon. Members on both sides were absolutely overwhelming in favour of something being done this year. Yet all that has rolled off the Chancellor as though nothing had ever been said, and as though the Financial Secretary or the Economic Secretary, whichever was the mouthpiece of the Chancellor, did not give an undertaking that he would examine the matter with an open mind, and also consider all the arguments that have been used.
The gilt-edged market is in a very peculiar position. A large number of organisations, including building societies, are extremely worried. One of the things troubling the building societies is that they must invest their surplus funds in trustee securities which, to a large extent, means that they have to put them into gilt-edged securities, and the margin is not enough. In addition to the fact that their reserves cannot be built up, they have the absolute knowledge that those reserves are sinking in value owing to the action of the Government. Yet, the Government having done that to the building societies, the Chancellor, after promising to look at this matter in a proper way, has given us this answer tonight.
I hope that my hon. Friends will carry this matter to a Division. We gave way
1056
last time because we hoped that something would be done. I hope that we shall not make the same mistake tonight.
Mr. Chapman: I am surprised at the "scuttle" of hon. Members opposite. During the Committee stage the Financial Secretary said precisely what the Chancellor has said tonight. On that occasion hon. Members opposite made most vitriolic speeches in which they stated why they could not accept what the Financial Secretary had said. Then the Financial Secretary said that it was not possible to deal with this matter outside a general adjustment of Profits Tax and hon. Members opposite got up one after another to protest.
We on this side of the House felt that we had some allies in righteousness among them. Now, after all that, and after listening to precisely the same case from the Chancellor, they are, I understand, prepared to troop meekly into the Lobby to support the Government.
Do we recall what was said by the hon. Member for Surbiton (Mr. Fisher) on 2nd July? He has run away tonight faster than all the rest—
Mr. Ellis Smith: Do not upset him.
Mr. Chapman: But we could see this coming. I bow to the superior knowledge of my hon. Friend about the procedure in this House, but we could see this thing coming a long way off.
On 2nd July, the hon. Member for Surbiton said:
"I was very disappointed with that reply"—
that is, the reply the replica of which he has listened to tonight—
"because I thought that the argument he used was frivolous and almost an insult to the intelligence of hon. Members …I do not think that I have ever heard from my hon. Friend, whose power in debate and whose high intellectual calibre I much respect, a weaker case in answer to a serious debate …"—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 968.]
Mr. Fisher: I have taken the precaution of noting the words I said on that occasion. I said that unless we could be given some indication—I chose my words with care, naturally—that this matter would be taken seriously, if not this year, definitely next year, I could not go into the Lobby with the Government. That is what I said. We have been given that assurance tonight, that my right hon. Friend will

1057
look at the matter seriously next year. I know perfectly well that my right hon. Friend is a man of honour and integrity in these matters, as, indeed, were his predecessors. When we have had such assurances in the past, about Entertainments Duty and Profits Tax, and so on, they have always been implemented. The least one can do is to support one's right hon. Friends when one knows that they are men of honour and integrity.
Mr. Chapman: But that is not an answer to what the hon. Gentleman said in the earlier part of his speech on 2nd July, when commenting on precisely the same sort of speech as he has heard tonight. It may be that in the last half-dozen or so words, towards the end of what he was saying, he began to be afraid of his party Whips and his reputation with his party and decided to climb down a bit. But his first thoughts were good thoughts. He ran away towards the end of his speech on that occasion and he has run away again tonight. It is a most deplorable performance. We thought that we had some allies on the other side of the House—
Mr. Ede: And it was only a fortnight ago.
Mr. Chapman: Yes, as my right hon. Friend says, it was only a fortnight ago. I have lost a great amount of the respect that I had for the hon. Gentleman—
Mr. S. Silverman: May I ask my hon. Friend a question? I understood the hon. Member for Surbiton (Mr. Fisher) to say —he said it before and he has said it again now—that he would be satisfied with a definite assurance that the Chancellor would put this matter right next year, and, therefore, he is satisfied tonight because he thinks that the Chancellor has given him that assurance. I do not think he did. I would like my hon. Friend to say whether he heard the Chancellor give a definite assurance.
8.45 p.m.
Mr. Chapman: I am sure that my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) is right. All that the Chancellor said is what he said in Committee, that he would look at the Profits Tax as a whole. He said he had sympathy, but he said that earlier. This was still the speech at which Government supporters had protested. It is now most disappointing to find them running away.
1058
What was also really shocking was the speech made by the Financial Secretary to the Treasury in Committee. I would read what he said. In the light of what we had been talking about earlier it is most disappointing. He quoted with evident approval paragraph 562 of the Royal Commission's Report and he used this sentence:
"The main principle that we wish to see adopted is that a tax on the profits of corporations should apply to all profits without distinction between corporations …"
It is of the nature of equity in the imposition of taxation that these profits, this surplus, should be treated as liable to Profits Tax, like any other profits or surplus thrown up in the course of business.—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 960.]
This was after the Financial Secretary had spent days justifying a departure from that very principle in respect of overseas trading corporations. He told us that there was great merit in departing from the universality of Profits Tax for those corporations because of the good that they were doing abroad for Britain. When it came to building societies he turned tail, made a complete volte face and started enunciating the the principle that he had spent days denying.
Is it not a fact that, in the battle against inflation on the home front, building societies are doing, by their encouragement of small savings, as good a job for Britain as overseas trading corporations are doing abroad? I think that the hon. Member for Hastings (Mr. Cooper-Key) said, "Stuff and nonsense."
Mr. E. M. Cooper-Key: No.
Mr. Chapman: It sounded like it, but I beg the hon. Gentleman's pardon if I am wrong.
Mr. Cooper-Key: It was "drivel".
Mr. Chapman: Then the hon. Member for Hastings had better ask his hon. Friend the Financial Secretary whether the encouragement of small savings is a matter of drivel in the present inflationary situation. One of the best things we can have in this country is a further surge in private saving. The Chancellor knows it well, and I hope that he will now turn on his hon. Friend the Member for Hastings and tell him that he is talking drivel if he says the opposite.
The Financial Secretary is convicted from day to day of absolute inconsistency

1059
in his arguments and in the principles he has put forward. His hon. Friends the Members for Surbiton and Holland with Boston (Sir H. Butcher) have now begun to run away, but I would remind them that it is as important to encourage small private savings as it is to encourage over-sea trading corporations.
Mr. H. Wilson: I hope that my hon. Friend the Member for Northfield (Mr. Chapman) will not misrepresent the Chancellor on this question of saving. Surely the whole point made by the Chancellor on television was that the Government had no responsibility at all for savings and that it was all a matter for the private citizen.
Mr. Chapman: My right hon. Friend is quite right. The performance which the Chancellor put up on television, in the manner of washing his hands of the whole situation, is very different from what he says in the House of Commons. Government Members are anxious to get away from responsibility at the moment, but I should think that the Chancellor would reach out gratefully for any straw which would help him to increase private savings.
Mr. Ellis Smith: On television, he was affected by the company he was in.
Mr. Chapman: My hon. Friend has the advantage of me; I do not know whose company he was in, but I will leave it at that.
We are due for an explanation from the Financial Secretary. He is a man who values his reputation in serious argument, and it is a shocking thing that he should have spent days leading us up the garden about overseas trade corporations and using the opposite argument with building societies. After what we have heard tonight, especially from hon. Members opposite, who have made tonight friendly speeches about the Chancellor, saying that he is a nice man, a man of integrity, and that all will come right next year, the building societies will be able to draw their own conclusions.
Hon. Members opposite had fire in their bellies only two weeks ago. Now, after the Chief Whip has been telling them about the situation of their own party in the country and the danger of
1060
further splits, they are now running away from all that they said then. It is a shocking thing, and something of which they ought to be thoroughly ashamed.
Sir Herbert Butcher: We have seen the hon. Member for Northfield (Mr. Chapman) lashing himself into excitement and smacking the bench in front of him with his Order Paper, but it would have been worth while, before he devoted too much energy to the party line, to examine the position.
My right hon. Friend the Chancellor came to the House during the Committee stage of the Clause which had been put down by the hon. Member for Huddersfield, West (Mr. Wade), and gave a pledge that between Committe stage and Report he would most carefully examine it. He went out of his way to make it quite clear that there was no undertaking at all that he would do any more than examine it between Committee stage and Report stage. I must say that I was slightly disappointed with that reply. I had hoped that before Report, my right hon. Friend would have found himself able to table a Clause, but what has he done this evening? It is worth while realising how far the Chancellor has moved.
As I understand it, and I speak subject to correction if I am wrong, the Chancellor has suggested that, before he submits the next Budget, he will examine the Profits Tax position as a whole, without pledging himself to do anything. He has said he would specially examine the Profits Tax in relation to these special institutions, such as the nationalised industries, Cooperative and provident societies, municipal trading and building societies, with the intention of moving in the direction recommended by the Royal Commission. I say at once that I would have preferred him to have done it at this Report stage, but I am not prepared for the sake of twelve months between this Budget and the next to be found in the same Lobby as hon. Gentlemen opposite. It would be a poor—
Mr. Chapman: The hon. Gentleman was saying the opposite of that in Cornmittee. Has he not read his own words? He said:
"It is not good enough for my hon. Friend to say that he is not prepared to deal with this small and minor point of the building

1061
societies' liability to Profits Tax because the Chancellor is not in a position to deal with Profits Tax as a whole."—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 964.]
He is now turning round like all his hon. Friends and running away.
Sir H. Butcher: The hon. Gentleman is not chronologically accurate, because the intervention of the Financial Secretary had preceded the promise given by the Chancellor. I have already made it clear that I would have preferred to see the position of the building societies corrected in the 1957 Budget, but if it comes to a choice between the alternatives of joining hon. Members opposite in the Lobby tonight and waiting a year to secure the concession, the position of hon. Members on this side is transparently clear.
Mr. Wade: Did the hon. Member for Holland with Boston (Sir H. Butcher) understand the Chancellor to give a definite assurance that it would be dealt with next year? That seemed to be the implication of the remarks of the hon. Member. It would be enlightening if he would say that he understood the assurance to be a definite one to deal with it next year.
Sir H. Butcher: I should prefer the Chancellor to repeat the words he used because I have a feeling they were selected with care. My feeling is that the whole question of Profits Tax is to be examined, and, if it is not felt that the whole question of Profits Tax is to be reformed, there will be a special intention to deal with the various bodies which I enumerated earlier.
Mr. Glenvil Hall: What we really want is an assurance from the Chancellor that next year he will deal with this matter.
Mr. H. Wilson: I cannot make a second speech, of course, without the leave of the House, but perhaps I might have that leave for long enough to indicate the position of the Opposition in
regard to the withdrawal or otherwise of the Clause.
We cannot regard the reply of the Chancellor as in any way justifying the withdrawal of the Clause tonight. We have had his assurance as far as it goes. Frankly, it is not good enough, because the arguments have been fully deployed, and since they have been fully deployed and accepted by hon. Members in all parts of the House, we cannot regard the Chancellor's assurance as in any way satisfactory. No one in this House, with the possible exception of the hon. Member for Langstone (Mr. Stevens), accepts the argument of the Chancellor about the need to relate this to the whole of the Profits Tax. It may be of some help, of some comfort, to building societies to know that if the present Chancellor is still here—
Mr. S. Silverman: Which is doubtful.
Mr. Wilson: —which is extremely doubtful—he may feel moved to introduce some kind of relief. He has not even said he will accept this kind of relief, which in any case is only a halfway house, as we made plain.
We found last year when we pressed the previous Chancellor on a rather different matter that there was nothing more helpful in pushing him along in the direction in which he had half made a commitment than giving him the encouragement of having been made to vote in the Division Lobby. Therefore, we have no intention of withdrawing the proposed new Clause. We hope that enough hon. Members opposite will vote in accordance with their beliefs and their consciences in order to ensure that what they want to see will become the law of the land this year.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 197, Noes 250.

Division No. 166.]

AYES

[8.58 p.m.

Ainsley, J. W.

Blackburn, F.

Brockway, A. F.

Albu, A. H.

Blyton, W. R.

Brown, Rt. Hon. George (Belper)

Allaun, Frank (Salford, E.)

Boardman, H.

Brown, Thomas (Ince)

Allen, Scholefield (Crewe)

Bottomley, Rt. Hon. A. G.

Burke, W. A.

Awbery, S. S.

Bowden, H. W. (Leicester, S.W.)

Butler, Herbert (Hackney, C.)

Bacon, Miss Alice

Bowen, E. R. (Cardigan)

Butler, Mrs. Joyce (Wood Green)

Balfour, A.

Bowles, F. G.

Callaghan, L. J.

Benson, G.

Boyd, T. C.

Carmichael, J.

Beswick, Frank

Braddock, Mrs. Elizabeth

Castle, Mrs. B. A.

Champion, A. J.

Hynd, H. (Accrington)

Randall, H. E.

Chapman, W. D.

Irvine, A. J. (Edge Hill)

Rankin, John

Chetwynd, G. R.

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

Redhead, E. C.

Coldrick, W.

Jeger, George (Goole)

Reeves, J.

Collick, P. H. (Birkenhead)

Jeger, Mrs. Lena (Holbn & St.Pncs,S.)

Rhodes, H.

Craddock, George (Bradford, S.)

Johnson, James (Rugby)

Robens, Rt. Hon. A.

Cullen, Mrs. A.

Jones, David (The Hartlepools)

Roberts, Albert (Normanton)

Dalton, Rt. Hon. H.

Jones, Elwyn (W. Ham, S.)

Roberts, Goronwy (Caernarvon)

Darling, George (Hillsborough)

Jones, Jack (Rotherham)

Robinson, Kenneth (St. Pancras, N.)

Davies, Ernest (Enfield, E.)

Jones, J. Idwal (Wrexham)

Ross, William

Davies, Stephen (Merthyr)

Jones, T. W. (Merioneth)

Royle, C.

Deer, G.

Kenyon, C.

Short, E. W.

de Freitas, Geoffrey

Key, Rt. Hon. C. W.

Silverman, Sydney (Nelson)

Delargy, H. J.

King, Dr. H. M.

Skeffington, A. M.

Donnelly, D. L.

Lawson, G. M.

Slater, Mrs. H. (Stoke, N.)

Ede, Rt. Hon. J. C.

Lee, Frederick (Newton)

Slater, J. (Sedgefield)

Edelman, M.

Lee, Miss Jennie (Cannock)

Smith, Ellis (Stoke, S.)

Edwards, Rt. Hon. John (Brighouse)

Lever, Harold (Cheetham)

Sorensen, R. W.

Edwards, Rt. Hon. Ness (Caerphilly)

Lewis, Arthur

Soskice, Rt. Hon. Sir Frank

Edwards, Robert (Bilston)

Lipton, Marcus

Sparks, J. A.

Edwards, W. J. (Stepney)

Logan, D. G.

Steele, T.

Fernyhough, E.

Mabon, Dr. J. Dickson

Stewart, Michael (Fulham)

Fienburgh, W.

MacColl, J. E.

Stonehouse, John

Finch, H. J.

MacDermot, Niall

Stones, W. (Consett)

Forman, J. C.

McInnes, J.

Strachey, Rt. Hon. J.

Fraser, Thomas (Hamilton)

McKay, John (Wallsend)

Summerskill, Rt. Hon. E.

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

MacPherson, Malcolm (Stirling)

Sylvester, G. O.

George, Lady Megan Lloyd (Car'then)

Mallalieu, E. L. (Brigg)

Taylor, Bernard (Mansfield)

Gibson, C. W.

Mann, Mrs. Jean

Taylor, John (West Lothian)

Greenwood, Anthony

Mason, Roy

Thomas, Iorwerth (Rhondda, W.)

Grenfell, Rt. Hon. D. R.

Mellish, R. J.

Thornton, E.

Grey, C. F.

Messer, Sir F.

Tomney, F.

Griffiths, David (Rother Valley)

Mitchison, G. R.

Ungoed-Thomas, Sir Lynn

Griffiths, Rt. Hon, James (Llanelly)

Monslow, W.

Usborne, H. C.

Griffiths, William (Exchange)

Moody, A. S.

Viant, S. P.

Grimond, J.

Morris, Percy (Swansea, W.)

Wade, D. W.

Hale, Leslie

Mort, D. L.

Watkins, T. E.

Hall, Rt. Hn. Glenvil (Colne Valley)

Moyle, A.

Wells, Percy (Faversham)

Hamilton, W. W.

Mulley, F. W.

Wells, William (Waisall, N.)

Hannan, W.

Noel-Baker, Rt. Hon. P. (Derby, S.)

West, D. G.

Harrison, J. (Nottingham, N.)

Oliver, G. H.

Wheeldon, W. E.

Hayman, F. H.

Orbach, M.

White, Mrs. Eirene (E. Flint)

Healey, Denis

Oswald, T.

White, Henry (Derbyshire, N.E.)

Henderson, Rt. Hn. A. (Rwly Regis)

Owen, W. J.

Wilkins, W. A.

Herbison, Miss M.

Padley, W. E.

Willey, Frederick

Hobson, C. R. (Keighley)

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

Williams, David (Neath)

Paling, Will T. (Dewsbury)

Williams, Rev. Llywelyn (Ab'tillery)

Holman, P.

Palmer, A, M. F.

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

Holmes, Horace

Pannell, Charles (Leeds, W.)

WilHams, W. R. (Openshaw)

Holt, A. F.

Pargiter, G. A.

Willis, Eustace (Edinburgh, E.)

Houghton, Douglas

Paton, John

Wilson, Rt. Hon. Harold (Huyton)

Howell, Charles (Perry Barr)

Pentland, N.

Woodburn, Rt. Hon. A.

Hoy, J. H.

Plummer, Sir Leslie

Woof, R. E.

Hubbard, T. F.

Popplewell, E.

Yates, V. (Ladywood)

Hughes, Cledwyn (Anglesey)

Prentice, R. E.

Zilliacus, K.

Hughes, Emrys (S. Ayrshire)

Price, J. T. (Westhoughton)

Hughes, Hector (Aberdeen, N.)

Probert, A. R.

TELLERS FOR THE AYES:

Hunter, A. E.

Proctor, W. T.

Mr. Pearson and Mr. Simmons.

NOES

Agnew, Sir Peter

Bishop, F. P.

Craddock, Beresford (Spelthorne)

Amery, Julian (Preston, N.)

Body, R. F.

Crosthwaite-Eyre, Col. O. E.

Arbuthnot, John

Boothby, Sir Robert

Crowder, Petre (Ruislip—Northwood)

Armstrong, C. W.

Bossom, Sir Alfred

Cunningham, Knox

Ashton, H.

Braine, B. R.

Currie, G. B. H.

Atkins, H. E.

Braithwaite, Sir Albert (Harrow, W.)

Dance, J. C. G.

Baldock, Lt.-Cmdr. J. M.

Brooman-White, R. C.

Davidson, Viscountess

Baldwin, A. E.

Browne, J. Nixon (Craigton)

D'Avigdor-Goldsmid, Sir Henry

Balniel, Lord

Bullus, Wing Commander E. E.

Deedes, W. F.

Barber, Anthony

Butcher, Sir Herbert

Digby, Simon Wingfield

Barlow, Sir John

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

Donaldson, Cmdr. C. E. MoA.

Baxter, Sir Beverley

Carr, Robert

Doughty, C. J. A.

Beamish, Maj. Tufton

Cary, Sir Robert

du Cann, E. D. L.

Bell, Philip (Bolton, E.)

Chichester-Clark, R.

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

Bell, Ronald (Bucks, S.)

Clarke, Brig. Terence (Portsmth, W.)

Duncan, Capt. J. A. L.

Bennett, F. M. (Torquay)

Conant, Maj. Sir Roger

Duthie, W. S.

Bennett, Dr. Reginald

Cooke, Robert

Eden, J. B. (Bournemouth, West)

Bevins, J. R. (Toxteth)

Cooper, A. E.

Elliot, Rt. Hon. W. E. (Kelvingrove)

Bidgood, J. C.

Cooper-Key, E. M.

Elliott,R.W.(N'castle upon Tyne, N.)

Biggs-Davison, J. A.

Cordeaux, Lt.-Col. J. K.

Emmet, Hon. Mrs. Eve'yn

Birch, Rt. Hon. Nigel

Corfield, Capt. F. V.

Errington, Sir Eric

1064

1065

Erroll, F. J.

Jones, Rt. Hon. Aubrey (Hall Green)

Pitt, Miss E. M.

Fell, A.

Joseph, Sir Keith

Pott, H. P.

Fisher, Nigel

Keegan, D.

Powell, J. Enoch

Fletcher-Cooke, C.

Kerr, H. W.

Price, David (Eastleigh)

Fort, R.

Kershaw, J. A.

Price, Henry (Lewisham, W.)

Fraser, Sir Ian(M'cmbe & Lonsdale)

Kimball, M.

Prior-Palmer, Brig. O. L.

Freeth, Denzil

Kirk, P. M.

Raikes, Sir Victor

Gammans, Lady

Lagden, G. W.

Ramsden, J. E.

Garner-Evans, E. H.

Lambert, Hon. G.

Rawlinson, Peter

George, J. C. (Pollok)

Lambton, Viscount

Redmayne, M.

Glover, D.

Lancaster, Col. C. G.

Remnant, Hon. P.

Glyn, Col. R.

Leather, E. H. C.

Renton, D. L. M.

Godber, J. B.

Leavey, J. A.

Rldsdale, J. E.

Gomme-Duncan, Col. Sir Alan

Leburn, W. G.

Robertson, Sir David

Goodhart, Philip

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

Robinson, Sir Roland (Blackpool, S.)

Gower, H. R.

Legh, Hon. Peter (Petersfield)

Rodgers, John (Sevenoaks)

Graham, Sir Fergus

Lindsay, Hon. James (Devon, N.)

Roper, Sir Harold

Grant, W. (Woodside)

Lindsay, Martin (Solihull)

Ropner, Col. Sir Leonard

Grant-Ferris, Wg Cdr. R. (Nantwich)

Linstead, Sir H. N.

Russell, R. S.

Green, A.

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

Schofield, Lt.-Col. W.

Gresham Cooke, R.

Longden, Gilbert

Scott-Miller, Cmdr. R.

Grimston, Sir Robert (Westbury)

Lucas, Sir Jocelyn (Portsmouth, S.)

Sharples, R. C.

Gurden, Harold

Lucas, P. B. (Brentford & Chiswick)

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

Hall, John (Wyoombe)

Lucas-Tooth, Sir Hugh

Smithers, Peter (Winchester)

Harris, Reader (Heston)

McAdden, S. J.

Smyth, Brig. Sir John (Norwood)

Harrison, Col. J. H. (Eye)

Macdonald, Sir Peter

Soames, Christopher

Harvey, Sir Arthur (Macclesfield)

Mackie, J. H, (Galloway)

Spearman, Sir Alexander

Head, Rt. Hon. A. H.

McLaughlin, Mrs. P.

Speir, R. M.

Heald, Rt. Hon. Sir Lionel

Maclay, Rt. Hon. John

Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

Heath, Rt. Hon. E. R. G.

Maclean, Fitzroy (Lancaster)

Stanley, Capt. Hon. Richard

Henderson, John (Cathcart)

McLean, Neil (Inverness)

Stevens, Geoffrey

Henderson-Stewart, Sir James

MacLeod, John (Ross & Cromarty)

Steward, Harold (Stockport, S.)

Hesketh, R. F.

Macpherson, Niall (Dumfries)

Steward, Sir William (Woolwich, W.)

Hicks-Beach, Maj. W. W.

Maddan, Martin

Stoddart-Scott, Col. M.

Hill, Mrs. E. (Wythenshawe)

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

Storey, S.

Hill, John (S. Norfolk)

Maitland, Hon. Patrick (Lanark)

Studholme, Sir Henry

Hinchingbrooke, Viscount

Markham, Major Sir Frank

Taylor, Sir Charles (Eastbourne)

Hirst, Geoffrey

Marshall, Douglas

Taylor, William (Bradford, N.)

Mathew, R.

Temple, John M.

Hobson, John (Warwick & Leam'gt'n)

Maude, Angus

Thomas, Leslie (Canterbury)

Holland-Martin, C. J.

Maudling, Rt. Hon. R.

Thomas, P. J. M. (Conway)

Hope, Lord John

Mawby, R. L.

Thompson, Kenneth (Walton)

Hornby, R. P.

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

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

Hornsby-Smith, Miss M. P.

Milligan, Rt. Hon. W. R.

Thorneycroft, Rt. Hon. P.

Horobin, Sir Ian

Morrison, John (Salisbury)

Thornton-Kemsley, C. N.

Horsbrugh, Rt. Hon. Dame Florence

Mott-Radolyffe, Sir Charles

Tilney, John (Wavertree)

Howard, John (Test)

Nabarro, G. D. N.

Turner, H. F. L.

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

Nicholls, Harmar

Turton, Rt. Hon. R. H.

Hughes Hallett, Vice-Admiral J.

Nicholson, Godfrey (Farnham)

Vickers, Miss Joan

Hughes-Young, M. H. C.

Nicolson, N. (B'n'm'th, E. & Chr'ch)

Wakefield, Edward (Derbyshire, W.)

Hulbert, Sir Norman

Noble, Comdr. Rt. Hon. Allan

Wakefield, Sir Wavell (St, M'lebone)

Hurd, A. R.

Nugent, G. R. H.

Walker-Smith, Rt. Hon. Derek

Hutchison, Michael Clark (E'b'gh,S.)

Oakshott, H. D.

Wall, Major Patrick

Hutchison, Sir Ian Clark (E'b'gh, W.)

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

Ward, Rt. Hon- G. R. (Worcester)

Hutchison, Sir James (Sootstoun)

Orr, Capt. L. P. S.

Ward, Dame Irene (Tynemouth)

Hyde, Montgomery

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

Whitelaw, W. S.I.

Hylton-Foster, Rt. Hon. Sir Harry

Osborne, C.

Williams, R. Dudley (Exeter)

Iremonger, T. L.

Page, R. G.

Wills, G. (Bridgwater)

Irvine, Bryant Godman (Rye)

Pannell, N. A. (Kirkdale)

Woollam, John Victor

Jenkins, Robert (Dulwich)

Partridge, E.

Yates, William (The Wrekin)

Jennings, J. C. (Burton)

Peyton, J. W. W.

Jennings, Sir Roland (Hallam)

Pickthorn, K. W. M.

TELLERS FOR THE NOES:

Johnson, Dr. Donald (Carlisle)

Pilkington, Capt. R. A.

Mr. Bryan and Mr. Finlay.

Johnson, Eric (Blackley)

Pitman, I. J.

Clause 1.—(ENTERTAINMENTS DUTY.)
Mr. Deputy-Speaker: The next Amendment selected is that in page 1, line 22, in the name of the right hon. Member for Huyton (Mr. H. Wilson). It would be permissible and, I think, convenient to discuss at the same time the Amendment in the name of the hon. Member for Govan (Mr. Rankin), in page 1, line 23, at end insert:
(3) Entertainments duty shall not be chargeable during any calendar year commencing with the first day of January on payments for
1066
admission to any cinematograph theatre in respect of which the Commissioners of Customs and Excise are satisfied that during the first twelve months of the preceding period of fifteen months the receipts in respect of payments for admission (excluding entertainments duty) have not exceeded the expenses of that cinematograph theatre.
but to have the vote only on the first Amendment.
Mr. Glenvil Hall: I notice, Mr. Deputy-Speaker, that you have not thought fit to call the new Clause standing in the name of my right hon. and

1067
learned Friend the Member for Montgomery (Mr. C. Davies), myself and other hon. Members—"Reduction of sixty per cent. rate of purchase tax." It would be improper for me to ask you why, but as the Clause was tabled in order to elicit from the Government a statement about their intention with regard to the tax on musical instruments, I was wondering, as they have promised to look into it, whether you would give the Financial Secretary an opportunity now of letting us know the Government's position.
Mr. Deputy-Speaker: I cannot do that. The right hon. Gentleman said that he would be wrong to question the selection, and I should be equally wrong if I were to give a reply.
Mrs. Eirene White: I beg to move, in page 1, line 22, to leave out "eleven pence" and to insert:
"the specified sum.
(3) For the purpose of the last foregoing subsection, the specified sum is—

(a) if the amount of the payment for admission, including the amount of the duty, is less than two shillings and nine pence, the sum of eleven pence; or

(b) if the amount of the payment for admission, including the amount of the duty, is two shillings and nine pence or more, the sum of one shilling".

In moving the Amendment in the name of my right hon. Friend the Member for Huyton (Mr. H. Wilson) and other hon. Members, I am glad, Mr. Deputy-Speaker, that you have suggested that we might discuss with it the following Amendment because, although they deal with slightly different points, they are both concerned with the state of the cinema industry and the effect of the Government's proposals.
When we discussed the Entertainments Duty during the Committee stage, we suggested that a much more generous remission might be made by the Government, and that they should omit the first shilling of all seat prices from the calculation of the duty. We made another suggestion, which is relevant to what we are about to discuss, that it would be a very good thing if they omitted altogether from their calculations for tax the new statutory levy. Both these suggestions were rejected. At that time, we were under some disadvantage because the House was not then in possession of the facts concerning
1068
the statutory levy; these were laid before us only some time later, and, in fact, the Regulations made under the Cinematograph Films Act were passed by the House last week.
Now that we know what the combined effect of the levy and tax proposals is, we find—as I suggested to the Chancellor would be the case—that the result of taking the two things together is that, once again, there are considerable anomalies in the incidence of tax and levy combined. Largely for that reason, we are suggesting tonight that, in order to give at least some help where we think it most necessary, to an industry which is still very hard-pressed despite some tax remission, something should be done in regard to seats costing 2s. 9d. or more.
It might be asked, "Why take the seats at rather higher prices for the purpose of relief? Surely, if you are considering that sort of thing, the more natural course would be to ask for greater relief in respect of seats at lower prices". When one looks into the figures, one finds that, with the arrangements for the levy and tax combined, the lower-priced seats, in fact, now leave rather more in the pockets of the exhibitor than do the higher-priced seats. Taking the range from 2s. 9d. up to 3s. 6d., which is the range within which by far the greater number of cinema seats is sold in this country, we find that the exhibitor is only ¾d. per seat better off under the tax remission offered by the Government. In respect of the lower-priced seats, on the other hand, he has certain advantages, and the maximum advantage he gets per seat is 2¼d.
The exhibitor gets the advantage at various odd points on the scale. That is one of the troubles, because, since the Government were unable to accept our earlier suggestions, we now find these peculiar anomalies returning. On a 1s. seat, the exhibitor will be 1d. per seat better off. On a 1s. 3d. seat, he will be l¾d. better off. On a 1s. 4d. seat he will be l½d. better off, and on a 1s. 6d. seat he will be 2d. better off. Curiously enough, if he puts up his price by 1d. he may find that the net result is to make him slightly worse off than he would be if he did not put up the price at all. In the price range from 2s. 9d. upwards, the exhibitor feels that he has been treated badly, because his net gain is only ¾d. per seat. In the

1069
range of prices somewhat higher, from 3s. 6d. upwards, he is only 1d. or 1¼d. better off.
We have had the very strongest representations from the exhibitors that, although the public believes them to be very much more prosperous owing to the remission of Entertainments Duty in the Budget, they will, in fact, be not much better off, partly because they have to pay extra levy and also because they have had to pay additional film hire. Also, like so many others, they have recently had to meet an extra wages burden, though that is incidental and we really cannot bring that into the argument.
9.15 p.m.
The net effect of having what the public believes to be a remission of £6½ million is that the exhibitor will benefit, so it is reckoned, by not more than £2¼ million altogether and that those who are selling the higher priced seats will benefit least. The great bulk of the business comes in the 2s. 9d.-3s. 6d. seats. That is why the exhibitors have asked us to concentrate on this group. When we asked for a larger remission at an earlier stage, the Chancellor resisted our request because, he said, it would cost the Revenue an additional £2 million, which he felt was excessive and, therefore, he could not accept our proposal.
I have asked the Cinematograph Exhibitors' Association what it calculates the cost of this proposal would be. I am told that the closest calculation it can make is that in a full year it would amount to about £680,000. In the current year, because the levy regulations do not take effect just yet, the net cost would be about £300,000. That is not a very large sum in an industry in which the general pressure of economic forces has been particularly hard in the last few years.
We believe that it is necessary to do something if we are to avoid large-scale closures of cinemas over the next few years. We hope very much that the way we propose tonight will commend itself to the Government as being an intelligent method of meeting a difficult situation. I shall not say anything on the second Amendment, on which my hon. Friend the Member for Govan (Mr. Rankin) would like to speak. Our main point is that once again we are suffering from anomalies as a result of the Government's policy. We believe that our suggestion
1070
would do a great deal towards meeting those difficulties and we think that the amount for which we now ask is not excessive in the light of the conditions of the cinema industry, which is well known to hon. Members on both sides.
Mr. John Rankin: I beg to second the Amendment.
As my hon. Friend the Member for Flint, East (Mrs. White) said in so ably moving the Amendment, I want briefly to deal with the second Amendment, which appears in my name. I fully endorse all that my hon. Friend has said in advancing the claim for a more just distribution of the £6½ million which the Chancellor has given. Now that we see how the levy and the tax are working out, it has become perfectly clear, as my hon. Friend said, that those cinemas in which the gross admission price is 2s. 9d. upwards are being unfairly treated in relation to those cinemas in which the price is 2s. 8d. or less. We feel that with the co-operation of the Chancellor, which, we hope, will be forthcoming later in this debate, this discrepancy could be easily ironed out.
My Amendment deals with those cinemas which are not small cinemas or which are not operating in the marginal class, for we agree that both of these cases have been fairly treated by the President of the Board of Trade. But despite the promises that were clearly made in Committee, the type of cinema to which I referred, whore the access is just above the £150 mark, sometimes making a little profit and sometimes a loss, has been left completely out of the President's reckoning.
In Committee on the Cinematograph Films Bill [Lords] on 12th March, I moved an Amendment dealing specifically with this type of cinema and also including the small cinema and the marginal cinema. The Amendment asked that these cinemas should be exempt from liability to the levy.
In reply to the case that was then put up, the Parliamentary Secretary to the Board of Trade said:
"I tried in my winding-up speech on the Second Reading to show that the Regulations would contain safeguards to cover excessive hardship for certain cinemas. The Amendment proposed by the hon Member for Govan would assist cinemas which are in difficulties, but we feel that it is inappropriate

1071
for it to be written into the Bill because it is properly a matter for the Regulations."
That was one of the difficulties that faced us throughout the Committee stage of that Bill. We were repeatedly told by the Government Front Bench that this matter and the next matter would be dealt with in the regulations. To some extent we were working with the blinkers on. We had to wait until the regulations came along and with them would come the Kingdom of Heaven also for the cinema people.
The Parliamentary Secretary went on:
"I give an assurance to the hon. Gentleman that we are now considering the exact form which any Regulations should take and that we have in mind a proposal somewhat similar to this Amendment. When it has been worked out we intend to submit it to the Cinematograph Films Council for its consideration and opinion. I stress that we have undertaken to submit draft Regulations to the Council for its advice before they are finally tabled for consideration by Parliament."—[OFFICIAL REPORT, Standing Committee B, 12th March, 1957; c. 80-1.]
There was an explicit promise that a regulation in keeping with the Amendment I had proposed would be tabled in due course after consultation with the Cinematograph Films Council.
It is opportune to ask the Financial Secretary to the Treasury whether or not any attempt was made to honour the promise that was given in Committee, because, when we considered the regulations, absolutely no regard whatsoever was paid to the promise that was made. The President of the Board of Trade had let us down.
It has been admitted time and time again, during the many debates that we have had on the cinema industry, that the levy and the tax are tied very closely together. That has not been denied. Now, despite the promise made to consider the exemption of this type of cinema from the operation of the levy, and the betrayal of that promise, nothing more can be done regarding the levy. However, we ask the Chancellor whether he will seek to honour the promise made by his colleague, the President of the Board of Trade, and relieve this type of cinema from the incidence of Entertainments Duty.
We are not asking for a great deal. There are not many cinemas which come into this category. I hope that the Chan-
1072
cellor will agree that it is important from the point of view of the producer to keep as many cinemas open as possible. It is important from the point of view of the producer, the renter, the public, and also of the Chancellor that he should seek to build up the cinemas so that they may give him some income in the future rather than impose such burdens on them as may cause them to close, and so penalise not only the Chancellor but all those who derive a living and get enjoyment from films.
This is a reasonable plea to make. It gives the right hon. Gentleman the chance to honour a promise that has been broken by his colleague, and to do so at a very small price. I hope, therefore, that when he replies to the debate the right hon. Gentleman will say that he will accept this Amendment.
Mr. Geoffrey Hirst: I had a great deal to say on this subject at an earlier stage of these proceedings and I hesitate, therefore, to keep the House more than one minute tonight in supporting the suggestions made. At the same time, we should not be unmindful of what has been done by the Government on two occasions to help the cinema industry. We are sometimes inclined in our criticisms to overlook that, but we are grateful for the assistance given on two separate occasion in this respect. The trouble is that the amount, although helpful, has fallen somewhat short of the need, and it seems a pity to spoil the occasion for a ha'p'orth of tar, since it is not very much more that is being asked for tonight.
My right hon. and hon. Friends should not be altogether unmindful of the reasonable way in which the Opposition has put forward this Amendment. I am a relatively new Member, but some of us here have sat on the Opposition benches and made much stronger and more unrealistic requests than have been made on this occasion. I want to be fair, because I have myself done so, and therefore I respect the restraint of the Opposition in this matter. I shall not go into details. I have a good brief here, but I will spare my hon. Friends that because they know it all.
I hope that a little resilience will be produced, because there is no doubt that, although anomalies always arise, the anomaly to which the hon. Lady the

1073
Member for Flint, East (Mrs. White) referred, though not a matter of life and death, was a substantial one. It must be wrong if we force people into a loss position which might well mean a business closing down through a type of taxation which hits them not on profits but on turnover. That point has been made many times, and it is a substantial one.
9.30 p.m.
Mr. Powell: The hon. Lady the Member for Flint, East (Mrs. White) admitted that the Amendment would give assistance to the larger cinemas on the whole and, on the whole, to the circuit rather than the individual cinemas.
Mrs. White: I said no such thing. I said that we were proposing to help with the rather more expensive seats, but there are many cinemas of modest size which are not circuit cinemas which have seats at 2s. 9d.
Mr. Powell: This proposal deals with seats at 2s. 9d. and above, and it remains a fact that the bulk of the assistance which the proposal would give would inevitably go to the larger and, on the whole, the circuit cinemas. I do not make that a case against the Amendment, but it is worth noticing.
The second point the hon. Lady made was that we were returning to the anomalies of the old scale of Entertainments Duty from which we had got away. Certainly it was one of the intentions of the reformation of the scale of Entertainments Duty in Clause 1 to remove the very large variation in the incidence of Entertainments Duty on differently priced seats. That has been done. The progression from the point at which Entertainments Duty becomes chargeable is now an absolutely steady and even progression.
When the hon. Lady quoted anomalies, they were variations in the amount of relief per seat and according to the price of the seat which is given by the Clause, but the anomalies are due to the removal of the variations in the existing scale and its replacement by a level, steadily graduated scale. They are anomalies of which we are getting rid, not anomalies which we are creating.
It is true that the form in which the levy is to be imposed falls with slightly more weight upon seats priced at 2s. 9d. and above, but that is no reason why a
1074
further approximately £750,000 should be added to the total amount of remission of Entertainments Duty. The total amount of levy which will be obtained is that which was envisaged when my right hon. Friend came to his conclusion that £6½ million worth of Entertainments Duty was the appropriate amount of remission. There is no reason in the particular form of levy, which has been decided in consultation with the British Films Council and to which the House has agreed after debate, why we should alter the amount of the remission.
The hon. Member for Govan (Mr. Rankin) spoke of a more just distribution of the £6½ million as though it was that for which he was asking. In fact, he was asking for the £6½ million to be increased to £7¼ million and we had better get it into its right perspective. The relationship between the amount of the levy and the amount of the remission for the industry as a whole is not affected by the form of the levy. I do not believe that the form of the levy, which has been decided in consultation with the industry and by the House, will sensibly affect the benefit which the remission of duty will bring to the industry.
I must briefly mention the matters raised in the Amendment which is not directly before the House, but which the hon. Member for Govan touched upon. It would be quite out of the question to relate an indirect tax—and this is a tax upon admissions—to the state of profitability or otherwise of a particular undertaking. It would be rather like relating the levy of Purchase Tax to the question whether a particular wholesaler was or was not making a profit. If one is imposing an indirect tax, one cannot have regard to the trading position of the individual trader, and we are dealing here with an indirect and not a direct tax.
Putting that question entirely on one side, however, there is no necessary relationship between taxable capacity and the test envisaged in the hon. Member's Amendment. Many of these cinemas which individually, on his basis, do not make profits are members of groups which, taken as groups, may be making quite substantial profits and may be in quite a comfortable commercial position.
Mr. Rankin: Surely that is a general remark which applies to some of the cinemas whose position has already been

1075
recognised by the Government—the marginal type—and dealt with during the course of the Bill. The argument applies to them as well.
Mr. Powell: It is quite true that there is built into the Entertainments Duty—irrationally, if one likes to say so—the rural areas exemption, but I believe that that exemption is valued by hon. Members on both sides of the House. It is admittedly a fiscal anomaly, but it was deliberately introduced for social reasons, to avoid certain results following in the rural areas. It in no way justifies us in picking out certain cinemas, not necessarily in rural areas, which upon a certain method of calculation may be making no profit, and waiving Entertainments Duty in their case.
Mr. Rankin: Accepting all that, why did the Parliamentary Secretary make a promise—presumably on behalf of the Government and his right hon. Friend—to deal with that type of cinema?
Mr. Powell: I am sorry; I am now dealing with Entertainments Duty. The hon. Member has had his opportunity to debate the question of the levy when it
was before the House. On his proposal, I would only say that if the estimate made by the industry itself, as to the scope of an Amendment of this sort, is correct, the cost would be approximately £7 million in a full year. In other words, it would mean doubling the remission which has been made by the Bill. It will therefore be seen that in any case it is quite out of the question within the scope of the proposals included in the Bill. Therefore, both upon the narrower matter which the hon. Lady's Amendment raises and upon the wider matters to which the hon. Member for Govan introduced us, I must advise the House not to accept the Amendment.
Mr. Rankin: In his reply the Financial Secretary stated that I had had the opportunity, during the proceedings on the Bill, to deal with the position—
Mr. Speaker: The hon. Member cannot make a second speech upon this matter except by leave of the House.
Question put, That "eleven pence" stand part of the Bill:—
The House divided: Ayes 244, Noes 192.
9.45 p.m.
Mr. Powell: I beg to move, in page 2, line 27, at the end to insert:
(7) The power conferred by subsection (1) of section two of the Finance (New Duties) Act, 1916, to make regulations for carrying the provisions of that Act as to entertainments duty into effect shall include power to make regulations for carrying into effect the provisions of this or any other Act as to the duty.
This is a very technical Amendment, which is designed to make it possible at a fairly early date to consolidate the law relating to Entertainments Duty. If this Amendment were not made it would be necessary in the consolidating Act to restrict the regulation-making power to the effect of the 1916 Act, but to exclude from it the effect of all subsequent Acts relating to Entertainments Duty. There is no practical effect other than to make it possible to avoid that absurdity in any future consolidating Measure.
Mrs. White: I do not propose to go into the technicalities of this Amendment. It is unfortunate that we should be preparing to consolidate an Entertainments Duty which has become exclusively a cinema tax and has very little basis in logic. It is because the duty is levied upon the purchaser of the ticket and not on the exhibitor in the cinema that we land ourselves in so many difficulties in one Finance Bill after another.
1080
I cannot say that we welcome this provision, because I think that the time has come when, far from consolidating it, we ought to discuss the whole logical or illogical basis of it. As we do not know precisely what the Government have in mind for the future, and as they regard this as a necessary enabling step, I think that we have to accept it; but I think we should make our protest that the Government are not prepared to look very thoroughly into the whole basis of a tax which has become very anomalous in its operation.
Amendment agreed to.

Clause 11.—(INCREASE OF PERSONAL RELIEFS.)
Mr. H. Wilson: I beg to move, in page 7, line 31, to leave out from "income" to the end of line 35.
We are now, as we were during the Committee stage on 29th May, debating the concession being made to Surtax payers. On that occasion, considerable anxiety was expressed on this side of the House about the concession to Surtax payers, but the Chancellor, who, at that time, was rather more buoyant than he has appeared in recent speeches in the country, justified or tried to justify all that the Government were doing in the matter of Surtax by saying that it would enable us to have an increase in production.

1081
The right hon. Gentleman referred to the capitalist system in the United States of America, and finally, as the crowning glory of his argument, said "After all, look at what they do in Russia," and concluded by saying:
"If in Europe, in the United States of America and in Russia they are prepared to offer rewards to those who are doing the big jobs, we should be foolish, and, indeed, failing in our duty, if we did not move a little in the same direction."
I immediately followed the right hon. Gentleman, and I said:
"Now we understand why Mr. Khrushchev, when he was here last year, said that if he lived in this country he would be a Conservative."—[OFFICIAL REPORT, 29th May, 1957; Vol. 570, c. 450.]
I see no reason to change the form of words which I used then because of anything that has taken place since.
I understand that the Chancellor is still in trouble with his Cabinet split about Post Office charges this evening, and we quite understand if it is not possible for him to be here for this discussion on Surtax, but if he had been here I am sure that he would realise that when he was saying that big rewards are given in the Soviet Union to some of the big executives he was wrong to say that they were allowed to keep a great deal more of their earnings than is the case in this country. He did not make sufficient allowance for the relative insecurity of employment in the top executive positions in the Soviet Union.
Nor do I think that the right hon. Gentleman has paid sufficient attention to another point to which we have drawn his attention, which is that in the Soviet Union they do not have the same tax provisions in respect of compensation for loss of office. [Interruption.] I think that we have got on very quickly with the Finance Bill today, possibly due to the fact that hon. Gentlemen who are now interrupting have not been with us for most of the time.
When we debated the question of the Surtax concession on the Finance Bill—properly speaking, they are actually changes in the earned income allowance to those who are in the Surtax range—we debated it rather more widely than is permitted by the Amendment. This Amendment is specifically related to that part of the concession which deals with
1082
the one-ninth earned income allowance in incomes of over £4,000 per annum.
We made it clear during the Committee stage that we were prepared, as part of a just and balanced Budget, to see some change made in the earned income position of Surtax payers, and that we thought it was reasonable, as was suggested in the Second Report of the Royal Commission, that perhaps there might be a concession made up to about £2,500 a year.
We were, in fact, more reasonable than that. We recognised that under this Government there has been this continuing inflation since the Royal Commission made its Second Report in 1954, and, therefore, our Amendment was based on the figure of £2,500, scaled up to allow for changes in the cost of living. That was voted down and I would be out of order tonight to deal at any length with the two-ninths earned income concession. In regard to the range beyond that, again we were prepared to see the acceptance of the Royal Commission's recommendations of one-ninth for the next £500, but what the Chancellor has done is to give one-ninth on the next £2,000.
I do not want to repeat the arguments used in Committee. I do not think that is necessary. Most of the reasons given by the Chancellor in the Budget debate in April, and as recently at 29th May, have now been shown to be completely hollow. He said, for example, that the purpose of this concession was to discourage emigration of our best brains. I do not think it necessarily follows that the executives, scientists, designers, craftsmen and others, upon whom above all our scientific future depends, are in the Surtax ranges. They are much less likely to be found in the ranges of £4,000 to £10,000 upwards.
We have had no evidence from hon. Members, nor even noble Lords, opposite suggesting that that is the case. We are only too well aware that the greater part of the emigration of the people we can least afford to lose occurs among those who are below the Surtax ranges altogether, those earning between £600 or £700 up to £2,000, who are outside the scope of these earned income concessions. For that vast and important group, which includes particularly the more virile, many of whom are emigrating, this Bill

1083
does nothing, except if the person in question has a child of more than 12 years of age. He then has a very small amount.
In Committee we had a very long and, many people thought, a rather inconclusive discussion on the relation of taxation to the amount of work done—incentives to production, and so on—and there was much bandying about of quotations from the Royal Commission's Report and, in particular, quotations from the Social Survey. In general, we took the view which prevailed with the Royal Commission. It could see no connection between the level of taxation and the amount of work done.
All of us agree that more work needs to be done. I for one have been deeply moved, and I am sure that hon. Members on this side have been moved, by the fact that the Chancellor, in the very grave speech that he made last Wednesday, when he opened a block of offices in the City, said that what we need is more work. I was interested to see that in his pronouncement to the National Production Advisory Council for Industry, on Friday, he said what troubled him was that we were being paid too much and that we wanted more work.
I was interested to find that the right hon. Gentleman said the same on television last night. This is interesting because, last year, we complained of industrial stagnation and said that it was the deliberate policy of the former Chancellor, who now, for some unaccountable reason, has become Prime Minister, which caused that stagnation. He said that expansion for production must be halted, that we were going too full out and efforts had to be retarded. Let us hear no more from the Government side of the House that people are not working hard enough, because, last year, it was the deliberate policy of the Government to ensure that they did not work hard enough.
I do not think there will be much room for a lot of debate tonight about the relation between incentive and the total volume of industrial production. It has now become quite clear that under this Government we get either stagnation in production or an inflationary boom that is completely outside the control of the Government, and there does not seem to be any middle position.
1084
10.0 p.m.
That was not the only argument that we had about this Surtax position. I think we have been reasonably fair on this side of the House in suggesting that some improvement in the earned income position affecting the lower paid Surtax payers would not be unreasonable, provided it was part of a socially and economically just Budget. But this particular concession comes in a Budget where, as everyone knows, most of the concessions have been given either to the Surtax payers or to big industrial groups, particularly through the medium of the overseas trade corporations.
Time and time again in Committee and tonight the Government have said,"We cannot yield on this particular hardship case, on this fair proposal to relieve some taxpayers, because we have not got the money." Yet, they have given away in this field, covered largely by the Clause which we are now discussing, taxation amounting to £130 million in a full year. We warned the Government at the time of the Budget that they were going too far in this direction. We warned them that this would be regarded as highly provocative in the industrial sphere.
I do not think that anyone who really considered the repercussions of the Chancellor's action in the industrial sphere could have any doubt about what the reaction would be. The Chancellor nevertheless showed a total disregard of the economic and social consequences of his action as far as Surtax was concerned. That was in April. That was one of many reasons why in the Budget debate I described his Budget speech as an assignment with inflation.
I wonder how the Chancellor regards his Surtax concessions today. Does he not see any connection between his frivolous and irresponsible Budget and the very grave situation which he himself had to describe in those two speeches that he made last Wednesday and last Friday? I do not intend to follow him in those speeches tonight. I do not intend to deal in the slightest with the general inflationary situation, because we shall be having a full debate on the inflationary position, I hope, in the very near future.
By that time we hope that the Chancellor of the Exchequer will have got out of his hand-washing attitude. By that time we hope that he will have accepted

1085
the responsibility of the Government for the inflationary position and will be able to announce real policies for dealing with the subject of inflation. I hope that we shall have constructive proposals put forward, although I should be very much out of order if I were to attempt to outline any of them this evening.
As to this Clause which we seek to amend, even in the conditions of April, when there were still many who thought that the danger facing this country was deflation rather than inflation, we thought that these proposals were irresponsible and inflationary, and if we thought so then—and I am sure that the whole House must now realise how right we were about it—how much more do we feel that this argument can be sustained tonight, in the middle of the present inflationary crisis? I know the Chancellor said last night that there was not a crisis, that exports and production were going up. The only trouble was this little matter of inflation, and nobody was to blame, least of all the Government, who merely held the ring and stood on one side.
The real truth about the Budget was, as many of us said within 24 hours of the Chancellor sitting down in the Budget debate, that he was not concerned with the economic or the social position of the country. It was a direct appeal to the wavering Tory abstainers who had let him down in a long succession of by-elections. That was why we said, as early as 10th April, that this was directed not towards the economic position of the country but to the wilds of Warwick and Leamington, the backwoods of Beckenham, and all those other places. [An
HON. MEMBER:"Hornsey."] Hornsey came a little later. The Government deferred the Hornsey by-election until after the Budget because they knew how popular the Budget would be, and they got their answer at Hornsey as they have had it in those other places.
Since then, the Chancellor has been driven to almost as many expedients in trying to justify his Budget as the Foreign Secretary was in trying to justify Suez a few months earlier, and with about the same degree of success. He said that it would stop emigration. We all know perfectly well that the Surtax payers with £4,000 a year or more are not the people who emigrate. Many of them are uncertain as to whether they would get as
1086
much at that in the United States or, indeed, in the Soviet Union, or any of the other places to which the Chancellor was directing their attention. Many of them are able to get, in addition to their salaries, various perquisites and privileges of a kind which do not fall within the scope or even the attention of the Board of Inland Revenue. So that particular argument also falls to the ground.
It was not possible for us again this evening to raise the whole wide subject of Surtax or of earned income relief. It was not possible for us to move—and I am sure that it would not have been selected if we had—precisely the same Amendment as we moved in Committee. We have, therefore, confined our argument to the £4,000 to £10,000 range where as the Chancellor told us in his Budget broadcast, it was essential to give belated justice to the Surtax payer. It is three and a half months later now and there still has not been given belated justice to the old-age pensioners who have a much higher claim on any of the Chancellor's priorities at present. Indeed, since that time, and partly because of the Budget, the inflationary position has got a great deal worse and the position of the old-age pensioners has correspondingly deteriorated as a result. But I should be out of order in pursuing that point any further.
I think that we are entitled, even at this late stage in the Finance Bill—and this is no laughing matter, I assure hon. Members opposite—to suggest to the Chancellor that if he wants to make the sort of appeal to the country, which it will be very difficult for a Chancellor like him to make, but which he must make if this country is to solve its inflationary difficulties, then, as a first step, and only as a first step, he should accept this Amendment, cut down on the largesse to the higher paid Surtax payer and give his concessions to those in greatest need because of the Government's proposals, and then produce a thorough-going and comprehensive series of proposals for dealing with the economic problems facing the country, both at home and abroad.
It is because we regard this as one of the most provocative acts of the Budget, the one which has done a great deal of harm both to our social system and to the economy, that we have put down this Amendment tonight, and in the likely

1087
event of the Government refusing to accept it we shall once again, with a much stronger case on our side as a result of the last three and a half months, go into the Division Lobby in favour of what we propose.
Mr. Birch: The right hon. Member for Huyton (Mr. H. Wilson) introduced some larger economic issues in his speech, which he rightly says will shortly be debated by the House, and I shall not, therefore, deal with them. The arguments on both sides about earned income reliefs have already been fully deployed in the Budget debate, in the debate on Second Reading, and in debate during the Committee stage, so it is rather "cold mutton" to have it at this time.
The right hon. Gentleman was, I thought, a little unfair in attempting to knock down my right hon. Friend the Chancellor by saying that his comparison with Russia was not correct, on the ground that the Russians had no security of office or no compensation for loss of office. That is not quite true, I think. After all, Mr. Malenkov has been made manager of a most important plant at Ust-Kamenogorsk, which, I suppose, is Russian equivalent of a peerage and a seat on a gas board. It is not fair to say that there is no compensation at all for loss of office in Russia. It is true, as my right hon. Friend said, that we are, on the whole, at the bottom of the league compared with most countries in the sense that our taxation is a great deal higher than most others, and still very high indeed by any standards.
Many different views have been expressed by hon. and right hon. Gentlement opposite in the course of debate about how high the level of earned income relief ought to go. During the debate on the Second Reading of the Finance Bill there was a sort of Dutch auction among them, during which they all suggested different sums. Now, on this Amendment, which takes up what was, I think, a Liberal Amendment which was not called, we are denounced once again for having done what we believe to be right from the point of view of stimulating production—I emphasise it again—and right from the point of view of keeping the ablest men in the country. If I may say so, it is a little tough to be denounced in quite these terms when
1088
we remember that the hon. and learned Member for Kettering (Mr. Mitchison) argued that earned income relief should run without limit for those under Schedule E or opting to be under Schedule E. When we refused to accept his Amendment, he denounced the whole proposition with almost maenad frenzy; so that the conflict of views among right hon. Gentlemen opposite seems to be a little odd.
On the question of whether or not this is an inflationary Budget, it is right to remind hon. Members that we have had Amendments which would have cost hundreds of millions of pounds. We have resisted them. This Budget provides a larger surplus than the one before, and it is not, in fact, an inflationary Budget. If we accepted the Amendment it would save only £4½ million, and that must be put against the hundreds of millions which hon. and right hon. Gentlemen opposite have suggested we should remit in taxation. These are not, I should have thought, very deflationary proposals.
Mr. H. Wilson: I wonder whether the right hon. Gentleman would elucidate that point. When he said that this Budget provided for a bigger surplus than last year's Budget, what does he mean by that? Is it not a fact that the Chancellor's Budget provides for a £560 million surplus, and did not his predecessor also budget for exactly a £560 million surplus? Is not the only difference between them that his predecessor was out in his calculations by about £300 million, and what guarantee have we that this Chancellor equally is not out by £300 million?
Mr. Birch: We must wait for the event for that. All I am saying is that we have discussed this matter up hill and down dale. There is nothing new to be said. We believe that the line we have adopted is right. We consider that the line proposed in this Amendment and in related Amendments to extend the concessions still further is wrong, and we stand pat where we are.
10.15 p.m.
Mr. Deputy-Speaker (Sir Gordon Touche): The Question is,"That the words proposed to be left out stand part of the Bill."
Mr. Jay: I do not know whether the Economic Secretary has nothing more to say in defence of the Budget than we have just heard from him.
Mr. Gerald Nabarro: On a point of order. Is it in order for the debate, to continue after the Question has been put?
Mr. Deputy-Speaker: I had not collected the voices.
Mr. Jay: I was merely asking the Economic Secretary whether he really finds it impossible to give any better reply than that which we have heard so far. He defended the Russian social system and drew a bit closer together the link between the Tory party and Mr. Khrushchev, but he gave no answer to the arguments of my right hon. Friend the Member for Huyton (Mr. H. Wilson).
I ask the Treasury Ministers in all seriousness—and we would like to ask the Chancellor this if he were here—whether the Chancellor is really sure that he was so wise to give away this extra purchasing power in his Budget in April. The Economic Secretary says that there is nothing further to discuss, but does he not think that the experience of the intervening economic debates since April may throw at least some doubt on the wisdom of the Chancellor's decisions in his Budget? Does he think that we can draw no lesson from the inflationary consequences which that Budget has had?
After all, the Chancellor relieved taxation by £130 million in a full year. Although we were prepared to agree that some reliefs were wise, we did not believe that the Chancellor was right to go so far as to add this extra £130 million of tax relief on top of the other reliefs which he had given. The Chancellor himself said, in his Budget speech:
"I reject unequivocally the view that the sole duty of a Chancellor is to remove taxation at whatever risk to the economy …Actions of that character might conceivably buy from the undiscerning a momentary popularity. It would be short lived."—[OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 987.]
I suggest to the Economic Secretary that the popularity of the Budget, if ever there was any, has been extremely short lived. The country today is coming to see that it was an obviously inflationary Budget. It has contributed to the existing situation—
Viscount Hinchingbrooke: How?
Mr. Jay: —which the Chancellor himself has been lamenting. The noble Lord asks "How?" It has done so in precisely the way that we warned the Chancellor it would at the time of his Budget speech.
Viscount Hinchingbrooke: The right hon. Gentleman is arguing on a point of Surtax. The law is not yet made. No Surtax concessions have yet been given. Even if they had been, they would not operate for another year. How can they have an effect on inflation?
Mr. Jay: The noble Lord knows perfectly well that as soon as the concessions are granted in the law Surtax payers spend more freely. [HON. MEMBERS: "Oh."] Of course they do.
Mr. Nabarro: Surely, the right hon. Gentleman is forgetting that those same Surtax payers have to meet the bill for their incomes being assessed for Surtax in respect of the year before last. How can they spend the money that they have not got? Is it not a fact that these Surtax reliefs proposed in the Budget cannot affect the revenue at the earliest until 1st January, 1958, and, therefore, cannot have any influence at all on the inflationary position, of which the right hon. Gentleman is speaking?
Mr. Jay: Surely, the hon. Member knows that these are earned income reliefs and that the P.A.Y.E. adjustments have already been made.
Mr. Nabarro: The right hon. Gentleman is exactly wrong. These Surtax reliefs cannot come into effect and be felt by the Surtax payer—[HON. MEMBERS:"Earned income reliefs."]—well, earned income reliefs which affect the Surtax payer. They do not alter the coding of an Income Tax payer. They cannot benefit him until 1st January next at the earliest.
Mr. Jay: The hon. Member is wrong both technically and in substance. Even if he was not wrong technically, it is the case that Surtax payers anticipate these future concessions. If the hon. Member wants any confirmation of that, let him look at the banking figures for the last two months and he will see the increase in bank loans, which has contributed to this inflationary pressure.

1091
The noble Lord the Member for Dorset, South asked how this process has occurred. I gave the warning to the Chancellor in the Budget debate that, in the first place, the action he had taken in the Budget in this respect followed in no way from any economic analysis that he gave us in the Budget, and secondly, that in our view unless there was some factor that he had not revealed to the House, and that he has still not revealed, he was taking a grave risk with the gold reserve and the economic position of the country later in the year. I submit that that which we said in the Budget debate in April has been abundantly confirmed since then and that the consequences which we then predicted are now becoming evident to the country.
Mr. Nabarro: I rise only to correct the fallacy in the speech of the right hon. Member for Battersea, North (Mr. Jay). We are talking on the Amendment about earned income relief and its effect upon Surtax-payers in the bracket of income between £4,000 and £9,985 a year. In fact, these abatements in respect of earned income relief cannot affect the actual payment made by the Surtax-payer at the earliest date until 1st January, 1958. They did not in any way lead to a recoding on 21st June last.
I know this to be exactly true because, when these Budget proposals came in, I was in very grave doubt as to how the earned income relief affecting Surtax-payers would operate—whether by re-coding or by abatement of Surtax on the 1st January following, which would be, of course, the payment of Surtax in respect of assessment of the earned income of the individual for the year but one preceding. A ruling was given to me by the Inland Revenue that the earliest effects would be felt on the 1st January following. [HON. MEMBERS:"Schedule D."] On Schedule D—but these earned income reliefs that we are discussing are in respect of the Surtax-payer in either Schedule D or Schedule E.
Mr. Mitchison Mr. Mitchison rose—
Mr. Nabarro: Please allow me to finish. This is not an easy argument, by any means.
1092
The right hon. Member for Battersea, North, therefore, might be in very small part right, but in the greater part he is wrong. It is the fact that the earliest date on which the monetary benefit can be felt by a Surtax-payer in respect of this earned income relief is 1st January next and in no part will be felt on and after 21st June, which is the date on which recoding for Income Tax takes place.
Mr. Houghton: All directors are assessable under Schedule E Pay-As-You-Earn. Managers and executives and others in employment are assessable under Schedule E, Pay-As-You-Earn. It is true that shopkeepers and self-employed traders are assessable under Schedule D, which is not Pay-As-You-Earn. All Schedule E payers have received recoding notices. Clause 11 (5) refers to the earliest date at which the benefits of the reliefs can be given, which was 21st June. Hon. Members who are assessed on Schedule E will know that they have already received the benefits of earned income relief beyond the point of £2,025 a year, if they are assessed under Schedule E, up to £10,000.
None of this earned income relief makes any difference to Surtax. The difference to Surtax is in the deduction of personal reliefs by £100 for marriage, children, etc. from Surtax liability but not earned income relief. My right hon. Friend was right when he said that, in respect of all deductions under Pay-As-You-Earn, the people assessed under Schedule E who will benefit from these reliefs are already receiving the benefit of them.
Mr. Nabarro: That was a very long intervention, and my own was not an intervention. My only observation on the somewhat technical intervention of the hon. Gentleman is that in the Amendment we are discussing there is nothing about Schedule D or Schedule E. The fact is that the earliest date on which monetary benefits can be derived by a Surtax-payer from this concession is on 1st January next. If the hon. Gentleman will see me after the debate, I will prove it.
Question put, That the words proposed to be left out stand part of the Bill:—
The House divided: Ayes 224, Noes 172.

Division No. 167.]

AYES

[9.38 p.m.

Agnew, Sir Peter

Conant, Maj. Sir Roger

George, J. C. (Pollok)

Amery, Julian (Preston, N.)

Cooke, Robert

Glover, D.

Arbuthnot, John

Cooper, A. E.

Glyn, Col. R.

Armstrong, C. W.

Cooper-Key, E. M.

Godber, J. B.

Ashton, H.

Cordeaux, Lt.-Col. J. K.

Goodhart, Philip

Atkins, H. E.

Corfield, Capt. F. V.

Gower, H. R.

Baldock, Lt.-Cmdr. J. M.

Craddock, Beresford (Spelthorne)

Graham, Sir Fergus

Baldwin, A. E.

Crosthwaite-Eyre, Col. O. E.

Grant, W. (Woodside)

Balniel, Lord

Crowder, Petre (Ruislip—Northwood)

Grant-Ferris, Wg.Cdr. R.(Nantwich)

Barber, Anthony

Cunningham, Knox

Green, A.

Barlow, Sir John

Currie, G. B. H.

Gresham Cooke, R.

Baxter, Sir Beverley

Dance, J. C. G.

Grimston, Hon. John (St. Albans)

Beamish, Maj. Tufton

Davidson, Viscountess

Grimston, Sir Robert (Westbury)

Bell, Philip (Bolton, E.)

D'Avigdor-Goldsmid, Sir Henry

Gurden, Harold

Bell, Ronald (Bucks, S.)

Deedes, W. F.

Hall, John (Wycombe)

Bennett, F. M. (Torquay)

Digby, Simon Wingfield

Harris, Reader (Heston)

Bennett, Dr. Reginald

Donaldson, Cmdr. C. E. McA.

Harvey, Sir Arthur (Macclesfield)

Bevins, I. R. (Toxteth)

Doughty, C. J. A.

Heald, Rt. Hon. Sir Lionel

Bidgood, J. C.

du Cann, E. D. L.

Heath, Rt. Hon. E. R. G.

Biggs-Davison, J. A.

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

Henderson, John (Cathcart)

Birch, Rt. Hon. Nigel

Duncan, Sir James

Henderson-Stewart, Sir James

Bishop, F. P.

Duthie, W. S.

Hesketh, R. F.

Body, R. F.

Boothby, Sir Robert

Eden, J. B. (Bournemouth, West)

Hill, Mrs E. (Wythenshawe)

Bossom, Sir Alfred

Elliot, Rt. Hon. W. E. (Kelvingrove)

Hill, John (S. Norfolk)

Braine, B. R.

Elliott,R.W.(N'castle upon Tyne,N.)

Hinchingbrooke, Viscount

Braithwaite, Sir Albert (Harrow, W.)

Emmet, Hon. Mrs. Evelyn

Hirst, Geoffrey

Brooman-White, R. C.

Errington, Sir Eric

Hobson,John (Warwick & Leam'gt'n)

Browne, J. Nixon (Craigton)

Erroll, F. J.

Holland-Martin, C. J.

Bryan, P.

Fell, A.

Hope, Lord John

Bullus, Wing Commander E. E.

Finlay, Graeme

Hornby, R. P.

Butcher, Sir Herbert

Fisher, Nigel

Hornsby-Smith, Miss M. P.

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

Fort, R.

Horobin, Sir Ian

Carr, Robert

Fraser, Sir Ian (M'cmbe & Lonsdale)

Horsbrugh, Rt. Hon. Dame Florence

Cary, Sir Robert

Freeth, Denzil

Howard, John (Test)

Chichester-Clark, R.

Gammans, Lady

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

Clarke, Brig. Terence (Portsmth, W.)

Garner-Evans, E. H.

Hughes Hallett, Vice-Admiral J.

Hughes-Young, M. H. C.

Maitland, Hon. Patrick (Lanark)

Ropner, Col. Sir Leonard

Hulbert, Sir Norman

Markham, Major Sir Frank

Russell, R. S.

Hurd, A. R.

Marlowe, A. A. H.

Schofield, Lt.-Col. W.

Hutchison, Michael Clark (E'b'gh.S.)

Marshall, Douglas

Scott-Miller, Cmdr. R.

Hutchison, Sir Ian Clark(E'b'gh, W.)

Mathew, R.

Sharples, R. C.

Hutchison, Sir James (Scotstoun)

Maude, Angus

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

Hyde, Montgomery

Mawby, R. L.

Smithers, Peter (Winchester)

Hylton-Foster, Rt. Hon. Sir Harry

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

Soames, Christopher

Milllgan, Rt. Hon. W. R.

Spearman, Sir Alexander

Iremonger, T. L.

Morrison, John (Salisbury)

Speir, R. M.

Irvine, Bryant Godman (Rye)

Mott-Radclyffe, Sir Charles

Spens, Rt. Hn. Sir P.(Kens'gt'n, S.)

Jenkins, Robert (Dulwich)

Nabarro, G. D. N.

Stanley, Capt. Hon. Richard

Jennings, Sir Roland (Hallam)

Nairn, D. L. S.

Stevens, Geoffrey

Johnson, Dr. Donald (Carlisle)

Nicholls, Harmar

Steward, Harold (Stockport, S.)

Johnson, Eric (Blackley)

Nicholson, Godfrey (Farnham)

Steward, Sir William(Woolwich, W.)

Jones, Rt. Hon. Aubrey (Hall Green)

Nicolson, N.(B'n'm'th,E. & Chr'ch)

Stoddart-Scott, Col. Sir Malcolm

Keegan, D.

Noble, Comdr. Rt. Hon. Allan

Storey, S.

Kerr, Sir Hamilton

Nugent, G. R. H.

Studholme, Sir Henry

Kershaw, J. A.

Oakshott, H. D.

Taylor, Sir Charles (Eastbourne)

Kimball, M.

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

Taylor, William (Bradford, N.)

Kirk, P. M.

Orr, Capt. L. P. S.

Teeling, W.

Lagden, G. W.

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

Temple, John M.

Lambert, Hon. G.

Page, R. G.

Thomas, Leslie (Canterbury)

Lancaster, Col. C. G.

Pannell, N. A. (Kirkdale)

Thomas, P. J. M. (Conway)

Langford-Holt, J. A.

Partridge, E.

Thompson, Kenneth (Walton)

Leather, E. H. C.

Peyton, J. W. W.

Thorneycroft, Rt. Hon. P.

Leavey, J. A.

Pickthorn, K. W. M.

Thornton-Kemsley, C. N.

Leburn, W. G.

Pilkington, Capt. R. A.

Tilney, John (Wavertree)

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

Pitman, I. J.

Turner, H. F. L.

Legh, Hon. Peter (Petersfield)

Pitt, Miss E. M.

Turton, Rt. Hon. R. H.

Lindsay, Hon. James (Devon, N.)

Pott, H. P.

Vickers, Miss Joan

Lindsay, Martin (Solihull)

Powell, J. Enoch

Wakefield, Edward (Derbyshire, W.)

Linstead, Sir H. N.

Price, David (Eastleigh)

Wakefield, Sir Wavell (St. M'lebone)

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

Price, Henry (Lewisham, W.)

Walker-Smith, Rt. Hon. Derek

Longden, Gilbert

Prior-Palmer, Brig. O. L.

Wall, Major Patrick

Lucas, Sir Jocelyn(Portsmouth, S.)

Profumo, J. D.

Ward, Rt. Hon. G. R. (Worcester)

Lucas, P. B. (Brentford & Chlswick)

Raikes, Sir Victor

Ward, Dame Irene (Tynemouth)

Lucas-Tooth, Sir Hugh

Ramsden, J. E.

Whltelaw, W. S. I.

Macdonald, Sir Peter

Rawlinson, Peter

Williams, Paul (Sunderland, S.)

Mackie, J. H. (Galloway)

Redmayne, M.

Williams, R. Dudley (Exeter)

McLaughlin, Mrs. P.

Remnant, Hon. P.

Wills, G. (Bridgwater)

Maclay, Rt. Hon. John

Renton, D. L. M.

Woollam, John Victor

McLean, Neil (Inverness)

Ridsdale, J. E.

Yates, William (The Wrekin)

MacLeod, John (Ross & Cromarty)

Robertson, Sir David

Macpherson, Niall (Dumfries)

Robinson, Sir Roland (Blackpool, S.)

TELLERS FOR THE AYES:

Maddan, Martin

Rodgers, John (Sevenoaks)

Mr. R. Thompson and

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

Roper, Sir Harold

Colonel J. H. Harrison.

NOES

Ainsley, J. W.

Dalton, Rt. Hon. H.

Hayman, F. H.

Albu, A. H.

Davies, Ernest (Enfield, E.)

Healey, Denis

Allen, Scholefield (Crewe)

Davies, Stephen (Merthyr)

Henderson, Rt. Hn. A. (Rwly Regis)

Awbery, S. S.

Deer, G.

Herbison, Miss M.

Bacon, Miss Alice

de Freitas, Geoffrey

Hobson, C. R. (Keighley)

Balfour, A.

Delargy, H. J.

Holman, P.

Benson, G.

Donnelly, D. L.

Holmes, Horace

Beswick, Frank

Ede, Rt. Hon. J. C.

Holt, A. F.

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

Edelman, M.

Houghton, Douglas

Blackburn, F.

Edwards, Rt. Hon. John (Brighouse)

Howell, Charles (Perry Barr)

Blyton, W. R.

Edwards, Rt. Hon. Ness (Caerphilly)

Hoy, J. H.

Boardman, H.

Edwards, Robert (Bilston)

Hubbard, T. F.

Bottomley, Rt. Hon. A. G.

Edwards, W. J. (Stepney)

Hughes, Cledwyn (Anglesey)

Bowden, H. W. (Leicester, S.W.)

Fernyhough, E.

Hughes, Emrys (S. Ayrshire)

Bowen, E. R. (Cardigan)

Fienburgh, W.

Hughes, Hector (Aberdeen, N.)

Boyd, T. C.

Finch, H. J.

Hunter, A. E.

Braddock, Mrs. Elizabeth

Forman, J. B>

Hynd, H. (Accrington)

Brockway, A. F.

Fraser, Thomas (Hamilton)

Irvine. A. J. (Edge Hill)

Brown, Rt. Hon. George (Belper)

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

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

Brown, Thomas (Ince)

George,Lady Megan Lloyd(Car'then)

Jeger, George (Goole)

Burke, W. A.

Gibson, C. W.

Jeger,Mrs.Lena(Holbn & St.Pncs.S.)

Butler, Herbert (Hackney, C.)

Greenwood, Anthony

Jones, David (The Hartlepools)

Butler, Mrs. Joyce (Wood Green)

Grenfell, Rt. Hon. D. R.

Jones, Elwyn (W. Ham, S.)

Callaghan, L. J.

Grey, C. F.

Jones, Jack (Rotherham)

Carmichael, J.

Griffiths, David (Rother Valley)

Jones, J. Idwal (Wrexham)

Castle, Mrs. B. A.

Griffiths, Rt. Hon. James (Llanelly)

Jones, T. W. (Merioneth)

Champion, A. J.

Griffiths, William (Exchange)

Kenyon, C.

Chapman, W. D.

Grimond, J.

Key, Rt. Hon. C. W.

Chetwynd, G. R.

Hale, Leslie

King, Dr. H. M.

Coldrick, W.

Hall, Rt. Hn. Glenvil (Colne Valley)

Lawson, G. M.

Collick, P. H. (Birkenhead)

Hamilton, W. W.

Lee, Frederick (Newton)

Craddock, George (Bradford, S.)

Hannan, W.

Lee, Miss Jennie (Cannock)

Cullen, Mrs. A.

Harrison, J. (Nottingham, N.)

Lever, Harold (Cheetham)

1078

1079

Lewis, Arthur

Pentland, N.

Swingler, S. T.

Logan, D. G.

Plummer, Sir Leslie

Sylvester, G. O.

Mabon, Dr. J. Dickson

Popplewell, E.

Taylor, Bernard (Mansfield)

MacColl, J. E.

Prentice, R. E.

Taylor, John (West Lothian)

MacDermot, Niall

Price, J. T. (Westhoughton)

Thomas, Iorwerth (Rhondda, W.)

McInnes, J.

Probert, A. R.

Thomson, George (Dundee, E.)

McKay, John (Wallsend)

Proctor, W. T.

Thornton, E.

MacPherson, Malcolm (Stirling)

Randall, H. E.

Tomney, F.

Mallalieu, E. L. (Brigg)

Rankin, John

Ungoed-Thomas, Sir Lynn

Mann, Mrs. Jean

Redhead, E. C.

Usborne, H. C.

Mason, Roy

Reeves, J.

Watkins, T. E.

Mitchison, G. R.

Rhodes, H.

Wells, Percy (Faversham)

Monslow, W.

Robens, Rt. Hon. A.

Wells, William (Walsall, N.)

Moody, A. S.

Roberts, Albert (Normanton)

West, D. G.

Morris, Percy (Swansea, W.)

Roberts, Goronwy (Caernarvon)

Wheeldon, W. E.

Mort, D. L.

Robinson, Kenneth (St. Pancras, N.)

White, Mrs. Eirene (E. Flint)

Moyle, A.

Ross, William

White, Henry (Derbyshire, N.E.)

Mulley, F. W.

Royle, C.

Wilkins, W. A.

Noel-Baker, Rt. Hn. P. (Derby, S.)

Short, E. W.

Willey, Frederick

O'Brien, Sir Thomas

Silverman, Julius (Aston)

Williams, David (Neath)

Oliver, G. H.

Skeffington, A. M.

Williams, Rev. Llywelyn (Ab'tillery)

Oram, A. E.

Slater, Mrs. H. (Stoke, N.)

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

Orbach, M.

Slater, J. (Sedgefield)

Williams, W. R. (Openshaw)

Oswald, T.

Smith, Ellis (Stoke, S.)

Willis, Eustace (Edinburgh, E.)

Owen, W. J.

Sorensen, R. W.

Wilson, Rt. Hon. Harold (Huyton)

Padley, W. E.

Soskice, Rt. Hon. Sir Frank

Woodburn, Rt. Hon. A.

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

Sparks, J. A.

Woof, R. E.

Paling, Will T. (Dewsbury)

Steele, T.

Yates, V. (Ladywood)

Palmer, A. M. F.

Stewart, Michael (Fulham)

Zilliacus, K.

Pannell, Charles (Leeds, W.)

Stonehouse, John

Pargiter, G. A.

Strachey, Rt. Hon. J.

TELLERS FOR THE NOES:

Parker, J.

Summerskill, Rt. Hon. E.

Mr. Pearson and Mr. Simmons.

Division No. 168.

AYES

[10.26 p.m.

Agnew, Sir Peter

Gresham Cooke, R.

Nabarro, G. D. N.

Aitken, W. T.

Grimond, J.

Nairn, D. L. S.

Amery, Julian (Preston, N.)

Grimston, Hon. John (St. Albans)

Nicholls, Harmar

Arbuthnot, John

Grimston, Sir Robert (Westbury)

Nicholson, Godfrey (Farnham)

Armstrong, C. W.

Hall, John (Wycombe)

Nicolson, N. (B'n'm'th, E. &Chr'ch)

Ashton, H.

Harris, Reader (Heston)

Noble, Comdr. Rt. Hon. Allan

Atkins, H. E.

Harrison, Col. J. H. (Eye)

Oakshott, H. D.

Baldock, Lt -Cmdr. J. M.

Harvey, Sir Arthur (Macclesfield)

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

Baldwin, A. E.

Heald, Rt. Hon. Sir Lionel

Orr, Capt. L. P. S.

Balniel, Lord

Heath, Rt. Hon. E. R. G.

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

Barber, Anthony

Henderson, John (Cathcart)

Page, R. G.

Barlow, Sir John

Henderson-Stewart, Sir James

Pannell, N. A. (Kirkdale)

Barter, John

Hesketh, R. F.

Partridge, E.

Baxter, Sir Beverley

Hill, Mrs. E. (Wythenshawe)

Peyton, J. W. W.

Bell, Philip (Bolton, E.)

Hill, John (S. Norfolk)

Piokthorn, K. W. M.

Bell, Ronald (Bucks, S.)

Hinchingbrooke, Viscount

Pilkington, Capt. R. A

Bennett, F. M. (Torquay)

Hirst, Geoffrey

Pitt, Miss E. M.

Bevins, J. B. (Toxteth)

Hobson,John(Warwick & Leam'gt'n)

Pott, H. P.

Bidgood, J. C.

Holland-Martin, C. J.

Powell, J. Enoch

Birch, Rt. Hon. Nigel

Holt, A. F.

Price, David (Eastleigh)

Bishop, F. P.

Hope, Lord John

Price, Henry (Lewisham, W.)

Body, R. F.

Hornby, R. P.

Prior-Palmer, Brig. O. L.

Bossom, Sir Alfred

Hornsby-Smith, Miss M. P.

Profumo, J. D.

Bowen, E. R, (Cardigan)

Horsbrugh, Rt. Hon. Dame Florence

Raikes, Sir Victor

Braine, B. R.

Howard, John (Test)

Ramsden, J. E.

Brooman-White, R. C.

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

Rawlinson, Peter

Browne, J. Nixon (Craigton)

Hughes Hallelt, Vice-Admiral J.

Redmayne, M.

Bullus, Wing Commander E. E.

Hughes-Young, M. H. C.

Remnant, Hon. P.

Butcher, Sir Herbert

Hurd, A. R.

Ridsdale, J. E

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

Hutchison, Michael Clark (E'b'gh,S.)

Robinson, Sir Roland (Blackpool,S.)>

Carr, Robert

Hutchison, Sir IanClark(E'b'gh, W.)

Rodgers, John (Sevenoaks)

Chichester-Clark, R.

Hyde, Montgomery

Roper, Sir Harold

Clarke, Brig. Terence (Portsmth, W.)

Hylton-Foster, Rt. Hon. Sir Harry

Ropner, Col. Sir Leonard

Conant, Maj. Sir Roger

Iremonger, T. L.

Schofield, Lt.-Col. W.

Cooke, Robert

Irvine, Bryant Godman (Rye)

Scott-Miller, Cmdr. R.

Cooper, A. E.

Jenkins, Robert (Dulwich)

Sharples, R. C.

Cordeaux, Lt.-Col. J. K.

Jennings, Sir Roland (Hallam)

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

Corfield, Capt. F. V.

Johnson, Dr. Donald (Carlisle)

Smithers, Peter (Winchester)

Craddock, Beresford (Spelthorne)

Johnson, Eric (Blackley)

Spearman, Sir Alexander

Crosthwaite-Eyre, Col. O. E.

Jones. Rt. Hon. Aubrey (Hall Green)

Speir, R. M.

Crowder, Petre (Ruislip—Northwood)

Joseph, Sir Keith

Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

Cunningham, Knox

Keegan, D.

Stanley, Capt, Hon. Richard

Currie, G. B. H.

Kerr, Sir Hamilton

Stevens, Geoffrey

Dance, J. C. G.

Kershaw, J. A.

Steward, Harold (Stockport, S.)

Davidson, Viscountess

Kimball, M.

Steward, Sir William (Woolwich, W.)

D'Avigdor-Goldsmid, Sir Henry

Kirk, P. M.

Stoddart-Scott, Col. Sir Malcolm

Deedes, W. F.

Lambert, Hon. G.

Storey, S.

Digby, Simon Wingfield

Langford.Holt, J. A.

Studholme, Sir Henry

Donaldson, Cmdr. C. E. McA.

Leather, E. H. C.

Taylor, Sir Charles (Eastbourne)

Doughty, C J. A.

Leavey, J. A.

Taylor, William (Bradford, N.)

du Cann, E. D. L.

Leburn, W. G.

Teeling, W.

Duncan, Sir James

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

Temple, John M.

Eden, J. B. (Bournemouth, West)

Legh, Hon. Peter (Petersfield)

Thomas, Leslie (Canterbury)

Elliot, Rt. Hon. W. E. (Kelvingrove)

Lindsay, Hon. James (Devon, N.)

Thomas, P, J. M. (Conway)

Elliott,R.W.(N'castle upon Tyne.N.)

Lindsay, Martin (Solihull)

Thompson, Kenneth (Walton)

Emmet, Hon. Mrs. Evelyn

Linstead, Sir H. N.

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

Errington, Sir Eric

Longden, Gilbert

Thorneycroft, Rt.Hon. P.

Finlay, Graeme

Lucas, Sir Jocelyn (Portsmouth, S.)

Thornton-Kemsley, C. N.

Fisher, Nigel

Lucas,P.B.(Brentford & Chiswick)

Tllney, John (Wavertree)

Fletcher-Cooke, C.

Lucas-Tooth, Sir Hugh

Turton, Rt. Hon. R. H.

Fort, R.

Macdonald, Sir Peter

Vaughan-Morgan, J. K.

Fraser.Sir Ian (M'cmbe & Lonsdale)

Mackie, J. H. (Galloway)

Vickers, Miss Joan

Freeth, Denzil

McLaughlin, Mrs. P.

Wakefield, Edward (Derbyshire, W.)

Gammans, Dame Ann Muriel

Maclay, Rt, Hon. John

Wakefield,Sir Wavell (St. M'lebone)

Garner-Evans, E. H.

McLean, Neil (Inverness)

Walker-Smith, Rt. Hon. Derek

George, J. C. (Pollok)

Macpherson, Niall (Dumfries)

Wall, Major Patrick

Gibson-Watt, D.

Maddan, Martin

Ward, Rt. Hon. G. R. (Worcester)

Glover, D.

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

Whitelaw, W. S. I.

Glyn, Col. R.

Markham, Major Sir Frank

Williams, Paul (Sunderland, S.)

Godber, J. B.

Marlowe, A. A. H.

Williams, R. Dudley (Exeter)

Goodhart, Philip

Mathew, R.

Woollam, John Victor

Gower, H. R.

Maude, Angus

Yates, William (The Wrekin)

Graham, Sir Fergus

Mawby, R. L.

Grant, W. (Woodside)

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

TELLERS FOR THE AYES:

Grant-Ferris Wg Cdr. R. (Nantwich)

Morrison, John (Salisbury)

Mr. Wills and Mr. Bryan.

Green, A.

Mott-Radclyffe, Sir Charles

1094

1095

NOES

Ainsley, J. W.

Healey, Denis

Pearson, A.

Albu, A. H.

Henderson, Rt. Hn. A. (Rwly Regis)

Pentland, N.

Allen, Scholefield (Crewe)

Herbison, Miss M.

Plummer, Sir Leslie

Awbery, S. S.

Hobson, C. R. (Keighley)

Popplewell, E.

Balfour, A.

Holmes, Horace

Prentice, R. E.

Benson, G.

Houghton, Douglas

Probert, A. R.

Blackburn, F.

Howell, Charles (Perry Barr)

Randall, H. E.

Blenkinsop, A.

Hoy, J. H.

Rankin, John

Blyton, W. R.

Hubbard, T. F.

Redhead, E. C.

Boardman, H.

Hughes, Cledwyn (Anglesey)

Rhodes, H.

Bottomley, Rt. Hon. A. G.

Hughes, Emrys (S. Ayrshire)

Robens, Rt. Hon. A.

Bowden, H. W. (Leicester, S.W.)

Hughes, Hector (Aberdeen, N.)

Roberts, Albert (Normanton)

Boyd, T. C.

Hunter, A. E.

Roberts, Goronwy (Caernarvon)

Braddock, Mrs. Elizabeth

Hynd, H. (Accrington)

Robinson, Kenneth (St. Pancras, N.)

Brockway, A. F.

Hynd, J. B. (Attercliffe)

Ross, William

Brown, Rt. Hon. George (Belper)

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

Royle C.

Callaghan, L. J.

Jeger,Mrs.Lena (Holbn & St.Pnos,S.)

Short, E. W.

Carmichael, J.

Jones, David (The Hartiepools)

Silverman, Julius (Aston)

Castle, Mrs. B. A.

Jones, Elwyn (West Ham, S.)

Simmons, C. J. (Brierley Hill)

Champion, A. J.

Jones, Jack (Rotherham)

Skeffington, A. M.

Chapman, W. D.

Jones, J. Idwal (Wrexham)

Slater, Mrs. H. (Stoke, N.)

Chetwynd, G. R.

Jones, T. W. (Merioneth)

Slater, J. (Sedgefield)

Coldrick, W.

Kenyon, C.

Smith, Ellis (Stoke, S.)

Collick, P. H. (Birkenhead)

Key, Rt. Hon. C. W.

Sorensen, R. W.

Craddock, George (Bradford, S.)

King, Dr. H. M.

Soskice, Rt. Hon. Sir Frank

Cullen, Mrs. A.

Lawson, G. M.

Sparks, J. A.

Dalton, Rt. Hon. H.

Lee, Frederick (Newton)

Steele, T.

Davies, Ernest (Enfield, E.)

Lever, Harold (Cheetham)

Stewart, Michael (Fulham)

Davies, Stephen (Merthyr)

Lewis, Arthur

Stonehouse, John

Deer, G.

Logan, D. G.

Strachey, Rt. Hon. J.

de Freitas, Geoffrey

Mabon, Dr. J. Dickson

Summerskill, Rt. Hon. E.

Delargy, H. J.

MacColl, J. E.

Sylvester, G. O.

Donnelly, D. L.

MacDermot, Niall

Taylor, Bernard (Mansfield)

Ede, Rt. Hon. J. C.

Mclnnes, J.

Taylor, John (West Lothian)

Edelman, M.

McKay, John (Wallsend)

Thomas, Iorwerth (Rhondda, W.)

Edwards, Rt. Hon. John (Brighouse)

MacPherson, Malcolm (Stirling)

Thomson, George (Dundee, E.)

Edwards, Rt. Hon. Ness (Caerphilly)

Mallalleu, E. L. (Brigg)

Thornton, E.

Edwards, Robert (Bilston)

Mann, Mrs. Jean

Tomney, F.

Edwards, W. J. (Stepney)

Mason, Roy

Ungoed-Thomas, Sir Lynn

Fernyhough, E.

Mitchison, G. R.

Usborne, H. C.

Fienburgh, W.

Monslow, W.

Watkins, T. E.

Finch, H. J.

Moody, A. S.

Wells, William (Walsall, N.)

Forman, J. C.

Morris, Percy (Swansea, W.)

Wheeldon, W. E.

Fraser, Thomas (Hamilton)

Mort, D. L.

White, Mrs. Eirene (E. Flint)

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

Moyle, A.

White, Henry (Derbyshire, N.E.)

George,Lady Megan Lloyd(Car'then)

Mulley, F. W.

Willey, Frederick

Gibson, C. W.

Noel-Baker, Rt. Hon. P. (Derby, S.)

Williams, David (Neath)

O'Brien, Sir Thomas

Williams, Rev. Llywelyn (Ab'tillery)

Greenwood, Anthony

Oliver, G. H.

Williams, W. R. (Openshaw)

Grenfell, Rt. Hon. D. R.

Oram, A. E.

Willis, Eustace (Edinburgh, E.)

Grey, C. F.

Orbach, M.

Wilson, Rt. Hon. Harold (Huyton)

Griffiths, David (Rother Valley)

Oswald, T.

Woodburn, Rt. Hon. A.

Griffiths, Rt. Hon. James (Llanelly)

Owen, W. J.

Woof, R. E.

Hale, Leslie

Padley, W. E.

Yates, V. (Ladywood)

Hall, Rt. Hn. Glenvil (Colne Valley)

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

Zilliacus, K.

Hamilton, W. W.

Palmer, A. M. F.

Hannan, W.

Pannell, Charles (Leeds, W.)

TELLERS FOR THE NOES:

Harrison, J. (Nottingham, N.)

Pargiter, G. A.

Mr. J. T. Price and Mr. Wilkins.

Hayman, F. H.

Parker, J.

10.35 p.m.
Mr. Houghton: I beg to move, in page 7, line 41, after "by", to insert:
"inserting after the word 'establishment' in subsection (1) the words 'or for the year of assessment has been totally incapacitated' by".
This Amendment deals with a comparatively small matter, and we hope that the right hon. Gentleman will be able to make this deserving concession to the incapacitated child. It was a matter dealt with in the report of the Royal Commission on Taxation, where, in paragraph 193, the Commission drew attention to the fact that whereas a child undergoing
1096
further education after the age of 16 entitled the parent to a continuation of the child allowance, a child over the age of 16 totally incapacitated could not qualify for the child allowance though the parent was entitled to the dependent relative relief.
The Commission drew attention to the fact that whereas the child allowance was taxed at £85, as it was then, the dependent relative relief was at £60, and the Commission said:
"In these circumstances the drop in the allowance from £85 to £60 seems a needless hardship; and we recommend that a person

1097
who is receiving a child allowance in respect of an incapacitated child when it attains the age of 16 should be entitled to the same figure of allowance for the intervening years until it attains 21, always assuming that the state of incapacity continues during any year of claim".
Since those words were written, the child allowance has gone up, and in Clause 11 of this Bill for a child over 16 continuing education the relief now is £150. As the House will remember, for a child over 11 it is £125. I presume that an incapacitated child over 11 will qualify for the child allowance of £125 but at the age of 16 will not qualify for any child allowance at all. Beyond that, the parent will qualify only for the dependent relative allowance, which is lower, as the Royal Commission remarked. We propose, therefore, that the relief for an incapacitated child for the whole of the year of assessment over the age of 16 up to the age of 21 shall have the same tax relief as for a child of the same age continuing education and receiving therefore the higher child relief of £150.
A great strain on household resources, and many other problems, accompany the parents who have incapacitated children rising to adult years. The Royal Commission was right in suggesting that such parents should not be worse off than parents of children able to continue education after 16. We hope that the right hon. Gentleman will see his way to pick out this deserving additional relief from the Commission's Report. The cost would be very small and would not give any further twist to the inflationary spiral. This is a human as well as a taxation problem, and we hope that at this late stage of our Finance Bill discussions the right hon. Gentleman will be able to make the concession.
Mr. Jay: I beg to second the Amendment.
Mr. Powell: The hon. Member for Sowerby (Mr. Houghton) has drawn attention to the fact that at age 16 the allowance receivable by the parents of an incapacitated child will fall from £125, which is the amount of the child allowance from 11-plus to 16-plus, to £60, the amount of the dependent relative allowance. That was the fall to which—although there was then a smaller child allowance—the Royal Commission drew attention.
1098
The child allowance and the dependent relative allowance are only part of the picture. It is true that at age 21—this was the reason why the Royal Commission brought age 21 into this matter at all—the parents can make a payment of an annuity to a child under a covenant; but I notice that the Opposition have not included that age-limit in the proposal which is before the House, but would propose to grant the full child allowance of £150 without limit of age.
There is, however, another and, I believe, much more relevant factor which comes into play at the age of 16. Irrespective of the means of the parents, the State then steps in and pays a grant to the incapacitated child—a National Assistance grant without regard to the means of the parents—which rises from 23s. 6d. at age 16 by gradations to 36s.—£3 a week or £150 a year —at age 21.
Therefore, in the case of greatest hardship, where the burden of an incapacitated child must necessarily weigh most heavily on the parents, from 16 onwards the State steps in and puts an amount of additional income into that house which exceeds the maximum that could possibly be gained by means of the child allowance at its upper figure of £150 a year. I suggest that that is the right way of dealing with the burden and problem of an incapacitated child, and not by a special dependent relative allowance which would help least those with the least resources. This is a direct payment which will, on the contrary, help most where the need is greatest.
10.45 p.m.
There is another reason why I suggest that we ought not to make this special exception from the general law as to dependent relatives by distinguishing the incapacitated child. As the years went on, it would become impossible to justify £150 dependent relative allowance for a child and only £60 for a person in any other relationship but equally dependent upon the taxpayer. In fact, this would in practice inevitably mean that the dependent relative allowance would have to be adjusted to the same figure as the full child allowance, which, of course, would have major financial and other repercussions. I would say to the House, therefore, that I do not believe that this problem of the drop in tax relief for the

1099
parents of an incapacitated child really exists as the Royal Commission represented it. In fact, in carrying this relief above the age of 16 for an incapacitated child, we should not only create a gross anomaly and sense of grievance in regard to other incapacitated and dependent relatives, but we should not be taking the most direct and most helpful way of assisting parents in this position, which is done at the moment by the State stepping in directly through the National Assistance Board.
Mr. Godfrey Nicholson: I listened with great interest to what my hon. Friend the Financial Secretary said. I think that this calls for some comment. Surely one can imagine that if the Amendment were accepted it would actually save money, because many people would prefer to keep their incapacitated child out of their own income, for which they could get relief for Income Tax purposes, and fall back on National Assistance. I can imagine many families which would rather not draw National Assistance, and so money would be saved for the Treasury.
I am a little tired of hearing that no exception can ever be admitted because of the concatenation of consequences it would carry in its train. Surely, that is, to some extent, a confession of failure. People should be encouraged to look after their incapacitated children out of their own income if that can be made possible for them by the State. I do hope that in future Finance Bills this matter will be looked at again.
Mr. Houghton: I can speak again only by leave of the House. Perhaps I may be permitted to do so for two minutes to comment on what the Financial Secretary said. It is true that in some cases the parents of the incapacitated child may apply for National Assistance, but in other cases they would not. Many parents who are taxpayers would feel inhibited from applying for National Assistance for their incapacitated child and would prefer to have their need met by tax relief.
There is nothing in this Amendment which restrains or restricts in any way applications to the National Assistance Board for the special help which is available in case of need. With regard to the comparison between the incapacitated child and another dependent relative, I think the House would agree that a child stands in a much closer relationship to the parent than any other dependent relative can to the taxpayer. There is something very special about that. It would be unwise for us to compare incapacitated children with other dependent relatives. We should rather compare an incapacitated child with a child of the same age who is fit and well and able to continue normal education.
I hope that, in the circumstances, the House will mark its approval of the recommendation of the Royal Commission by voting for the Amendment.
Question put, That those words be there inserted in the Bill:—
The House divided: Ayes 162, Noes 207.

Division No.169.]

AYES

[10.50 p.m.

Ainsley, J. W.

Cullen, Mrs A.

Hall, Rt. Hn. Glenvil (Colne Valley)

Albu, A. H.

Dalton, Rt. Hon. H.

Hannan, W.

Allen, Scholefield (Crewe)

Deer, G.

Harrison, J. (Nottingham, N.)

Awbery, S. S.

de Freitas, Geoffrey

Hayman, F. H.

Balfour, A.

Delargy, H. J.

Healey, Denis

Benson, G.

Donnelly, D. L.

Henderson, Rt. Hn. A. (Rwly Regis)

Blackburn, F.

Ede, Rt. Hon. J. C.

Herbison, Miss M.

Blenkinsop, A.

Edelman, M.

Hobson, C. R. (Keighley)

BIyton, W. R.

Edwards, Rt. Hon. John (Brigthouse)

Holmes, Horace

Boardman, H.

Edwards, Rt. Hon. Ness (Caerphilly)

Holt, A. F.

Bottomley, Rt. Hon. A. G.

Edwards, W. J. (Stepney)

Houghton, Douglas

Bowden, H. W. (Leicester, S. W.)

Fernyhough, E.

Howell, Charles (Perry Barr)

Bowen, E. R. (Cardigan)

Fienburgh, W.

Hoy, J. H.

Boyd, T. C.

Finch, H. J.

Hubbard, T. F.

Braddock, Mrs. Elizabeth

Forman, J. C.

Hughes, Cledwyn (Anglesey)

Brockway, A. F.

Fraser, Thomas (Hamilton)

Hughes, Emrys (S. Ayrshire)

Brown, Rt, Hon. George (Belper)

George, Lady Megan Lloyd(Car'then)

Hughes, Hector (Aberdeen, N.)

Callaghan, L. J.

Gibson, C. W.

Hunter, A. E.

Carmichael, J.

Greenwood, Anthony

Hynd, H. (Accrington)

Castle, Mrs. B. A.

Grenfell, Rt. Hon. D. R.

Hynd, J. B. (Attercliffe)

Champion, A. J.

Grey, C. F.

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

Chetwynd, G. R.

Griffiths, David (Rother Valley)

Jeger, Mrs.Lena(Holbn & St.Pncs,S.>

Coldrick, W.

Griffiths, Rt. Hon. James (Llanelly)

Jones, David (The Hartlepools)

Collick, P. H. (Birkenhead)

Grimond, J.

Jones, Elwyn (W. Ham, S.)

Craddock, George (Bradford, S.)

Hale, Leslie

Jones, Jack (Rotherham)

Jones, J. Idwal (Wrexham)

Padley, W. E.

Steele, T.

Jones, T. W. (Merioneth)

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

Stewart, Michael (Fulham)

Kenyon, C.

Palmer, A. M. F.

Stonehouse, John

King, Dr. H. M.

Pannell, Charles (Leeds, W.)

Summerskill, Rt. Hon. E.

Lawson, G. M.

Pargiter, G. A.

Sylvester, G. O.

Lee, Frederick (Newton)

Parker, J.

Taylor, Bernard (Mansfield)

Lever, Harold (Cheetham)

Pearson, A.

Taylor, John (West Lothian)

Lewis, Arthur

Pentland, N.

Thomas, Iorwerth (Rhondda, W.)

Logan, D. G.

Plummer, Sir Leslie

Thomson, George (Dundee, E.)

Mabon, Dr. J. Dickson

Popplewell, E.

Thornton, E.

MacColl, J. E.

Prentice, R. E.

Ungoed-Thomas, Sir Lynn

MacDermott, Niall

Probert, A. R.

Usborne, H. C.

Mclnnes, J.

Randall, H. E.

Wade, D. W.

McKay, John (Wallsend)

Rankin, John

Watkins, T. E.

MacPherson, Malcolm (Stirling)

Redhead, E. C.

Wells, William (Walsall, N.)

Mallalieu, E. L. (Brigg)

Rhodes, H.

Wheeldon, W. E.

Mann, Mrs. Jean

Robens, Rt. Hon. A.

White, Mrs. Eirene (E. Flint)

Mason, Roy

Roberts, Albert (Normanton)

White, Henry (Derbyshire, N.E.)

Mitchison, G. R.

Roberts, Goronwy (Caernarvon)

Willey, Frederick

Monslow, W.

Robinson,Kenneth (St. Pancras, N.)

Williams, David (Neath)

Moody, A. S.

Ross, William

Williams, Rev. Llywelyn (Ab'tillery)

Morris, Percy (Swansea, W.)

Royle, C.

Williams, W. R. (Openshaw)

Moyle, A.

Short, E. W.

Willis, Eustace (Edinburgh, E.)

Mulley, F. W.

Silverman, Julius (Aston)

Wilson, Rt. Hon. Harold (Huyton)

O'Brien, Sir Thomas

Simmons, C. J. (Brierley Hill)

Woodburn, Rt. Hon. A.

Oliver, G. H.

Slater, Mrs. H. (Stoke, N.)

Woof, R. E.

Oram, A. E.

Slater, J. (Sedgefield)

Yates, V. (Ladywood)

Orbach, M.

Sorensen, R. W.

Oswald, T.

Soskice, Rt. Hon. Sir Frank

TELLERS FOR THE AYES:

Owen, W. J.

Sparks, J. A.

Mr. J T. Price and Mr. Wilkins

NOES

Agnew, Sir Peter

Errington, Sir Eric

Iremonger, T. L.

Aitken, W. T.

Finlay, Graeme

Irvine, Bryant Godman (Rye)

Amery, Julian (Preston, N.)

Fisher, Nigel

Jenkins, Robert (Dulwich)

Arbuthnot, John

Fletcher-Cooke, C.

Jennings, Sir Roland (Hallam)

Armstrong, C. W.

Fort, R.

Johnson, Dr. Donald (Carlisle)

Ashton, H.

Fraser, Sir Ian (M'cmbe & Lonsdale)

Johnson, Eric (Blackley)

Atkins, H. E.

Gammans, Dame Ann Muriel

Jones, Rt. Hon. Aubrey (Hall Green)

Baldock, Lt.-Cmdr. J. M.

Garner-Evans, E. H.

Joseph, Sir Keith

Baldwin, A. E.

George, J. C. (Pollok)

Keegan, D.

Balniel, Lord

Gibson-Watt, D.

Kershaw, J. A.

Barber, Anthony

Glover, D.

Kimball, M.

Barlow, Sir John

Glyn, Col. R.

Kirk, P. M.

Barter, John

Godber, J. B.

Lambert, Hon. G.

Baxter, Sir Beverley

Goodhart, Philip

Langford-Holt, J. A.

Bell, Philip (Bolton, E.)

Gower, H. R.

Leather, E. H. C.

Bennett, F. M. (Torquay)

Graham, Sir Fergus

Leavey, J. A.

Bevins, J. R. (Toxteth)

Grant, W. (Woodside)

Bidgood, J. C.

Grant-Ferris, Wg Cdr. R. (Nantwich)

Leburn, W. G.

Birch, Rt. Hon. Nigel

Green, A.

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

Bishop, F. P.

Gresham Cooke, R.

Legh, Hon. Peter (Petersfield)

Body, R. F.

Grimston, Sir Robert (Westbury)

Lindsay, Hon. James (Devon, N.)

Bossom, Sir Alfred

Hall, John (Wycombe)

Lindsay, Martin (Solihull)

Browne, J. Nixon (Craigton)

Harrison, Col. J. H. (Eye)

Linstead, Sir H. N.

Bullus. Wing Commander E. E.

Harvey, Sir Arthur (Macclesfield)

Longden, Gilbert

Butcher, Sir Herbert

Head, Rt. Hon. A. H.

Lucas, Sir Jocelyn (Portsmouth, S.)

Carr, Robert

Heald, Rt. Hon. Sir Lionel

Lucas, P. B. (Brentford & Chiswick)

Chichester-Clark, R.

Heath, Rt. Hon. E. R. G.

Lucas-Tooth, Sir Hugh

Clarke, Brig. Terence (Portsmth, W.)

Henderson, John (Cathcart)

Macdonald, Sir Peter

Conant, Maj. Sir Roger

Henderson-Stewart, Sir James

Mackie, J. H. (Galloway)

Cooke, Robert

Hesketh, R. F.

McLaughlin, Mrs. P.

Cooper, A. E.

Hill, Mrs. E. (Wythenshawe)

Maclean, Fitzroy (Lancaster)

Cordeaux, Lt.-Col. J. K.

Hill, John (S. Norfolk)

McLean, Neil (Inverness)

Corfield, Capt. F. V.

Hinchingbrooke, Viscount

Macpherson, Niall (Dumfries)

Craddock, Beresford (Spelthorne)

Hirst, Geoffrey

Maddan, Martin

Crosthwaite-Eyre, Col. O. E.

Hobson,John(Warwick & Leam'gt'n)

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

Cunningham, Knox

Holland-Martin, C. J.

Markham, Major Sir Frank

Currie, G. B. H.

Hope, Lord John

Marlowe, A. A. H.

Dance, J. C. G.

Hornby, R. P.

Mathew, R.

Davidson, Viscountess

Hornsby-Smith, Miss M. P.

Mawby, R. L.

D'Avigdor-Goldsmid, Sir Henry

Horsbrugh, Rt. Hon. Dame Florence

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

Deedes, W. F.

Howard, John (Test)

Morrison, John (Salisbury)

Digby, Simon Wingfield

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

Mott-Radclyffe, Sir Charles

Donaldson, Cmdr. C. E. McA.

Hughes Hallett, Vice-Admiral J.

Nabarro, G. D. N.

Doughty, C. J. A.

Hughes-Young, M. H. C.

Nairn, D. L. S.

du Cann, E. D. L.

Hurd, A. R.

Nicholls, Harmar

Eden, J. B. (Bournemouth, W.)

Hutchison, Michael Clark (E'b'gh,S.)

Nicholson, Godfrey (Farnham)

Elliot, Rt. Hon. W. E. (Kelvingrove)

Hutchison, Sir Ian Clark (E'b'gh, W.)

Nicolson, N. (B'n'm'th, E. & Chr'ch)

Elliott,R.W.(N'castle upon Tyne,N.)

Hyde, Montgomery

Oakshott, H. D.

Emmett, Hon. Mrs. Evelyn

Hylton-Foster, Rt. Hon. Sir Harry

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

1102

1103

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

Roper, Sir Harold

Thomas, P. J, M. (Conway)

Page, R. G.

Ropner, Col. Sir Leonard

Thompson, Kenneth (Walton)

Pannell, N. A. (Kirkdale)

Schofield, Lt.-Col. W.

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

Partridge, E.

Scott-Miller, Cmdr. R.

Thorneycroft, Rt. Hon. P.

Paton, John

Sharples, R. C.

Thornton-Kemsley, C. N.

Pickthorn, K. W. M.

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

Tilney, John (Wavertree)

Pilkington, Capt. R. A.

Smithers, Peter (Winchester)

Turton, Rt. Hon. R. H.

Pitt, Miss E. M.

Speir, R. M.

Vaughan-Morgan, J. K.

Pott, H. P.

Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

Vickers, Miss Joan

Powell, J. Enoch

Stanley, Capt. Hon. Richard

Wakefield, Edward (Derbyshire, W.)

Price, David (Eastleigh)

Stevens, Geoffrey

Wakefield, Sir Wavell (St. M'lebone)

Price, Henry (Lewisham, W.)

Steward, Harold (Stockport, S.)

Walker-Smith, Rt. Hon. Derek

Prior-Palmer, Brig. O. L.

Steward, Sir William (Woolwich, W.)

Wall, Major patrick)

Profumo, J. D.

Stoddart-Scott, Col. M.

Ward, Rt. Hon. G. R. (Worcester)

Ramsden, J. E.

Storey, S.

Whitelaw, W. S. I.

Rawlinson, Peter

Studholme, Sir Henry

Williams, Paul (Sunderland, S.)

Redmayne, M.

Taylor, Sir Charles (Eastbourne)

Wills, C. (Bridgwater)

Remnant, Hon. P.

Taylor, William (Bradford, N.)

Woollam, John Victor

Ridsdale, J. E.

Teeling, W.

Yates, William (The Wrekin)

Robinson, Sir Roland (Blackpool, S.)

Temple, John M.

Rodgers, John (Sevenoaks)

Thomas, Leslie (Canterbury)

TELLERS FOR THE NOES:

Mr. Bryan and Mr. Brooman-White.

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

AGRICULTURE (HEATHER BURNING)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Oakshott.]
10.59 p.m.
Mr. Rupert Speir: I am sure that the vital importance of a good young heather crop is well known to the Minister and to the county agricultural executive committees, but the simple fact is that, unless the hill farmers get an adequate supply of young heather, and unless it is burned regularly, it is useless as a crop for both sheep and for game. Furthermore, the older the heather gets the more fiercely it burns, and, therefore, the greater is the fire danger for neighbouring occupiers.
Events in Northumberland, and even, perhaps in Durham, have clearly demonstrated in the early months of this year that there is a need for a different and more flexible attitude on the part of the Ministry towards the administration of the heather-burning Regulations. In fact, all those responsible for administering these Regulations require to approach this subject in a less rigid manner. The Regulations concerned are the Heather and Grass Burning Regulations, 1949, which were made under the Hill Farming Act, 1946.
1104
No doubt it will come as a surprise to many people that farmers are not allowed by law to burn heather when they think it necessary and desirable. But, as the law is at present, burning is prohibited in England and Wales after the end of March and before the beginning of November. Generally it is prohibited, but there are licences, either general or special, which can be obtained.
My submission is that this licensing system is too rigid and unimaginative and needs revision. I realise that it is too late to make any change in the system this year, but I hope that when the Minister replies he will be able to say that they will make the arrangements more flexible next year, because I believe this rigid system of licensing has led to much heather which should have been burned this year in Northumberland remaining unburned.
Certain of my constituents have been prosecuted and fined for burning heather after the prohibited period. This year, during the early months, particularly in March, the weather in the north of England was particularly wet and unsuitable for heather burning, whereas in the early days of April the conditions were ideal. But when applications were made for permits, they were refused.
It is ironical that those who were prosecuted in Northumberland for burning heather after the prohibited date were often doing so within sight of the Scottish border, on 11th April, and if they had been burning heather a few yards farther north, across the border, they would not have been contravening the law, and could have gone on burning heather until the end of April without obtaining any

1105
permits. Therefore, it is understandable that they and other members of the hill farming community in Northumberland think, to put it politely, that the law in this respect is somewhat absurd.
It may be said that if, after the prohibited period, anyone wants to burn heather, he can do so by applying to the Minister for a licence. But there is a very big "but" to this clause, because the Regulations require the farmer in question to apply to the Minister for a special licence in writing at least 28 days before the date proposed for the burning. Surely that is red tape at its worst, because it must be apparent to everyone that to burn heather the conditions must be right for burning and the heather must be really dry. To give notice of intention to burn a month ahead of the time is patently farcical. It reminds me of the story of the farmer who got a young man for lambing and applied for his deferment. The reply came back saying that it was much regretted that his deferment could not be agreed to and suggesting that the lambing should be deferred instead.
I know the Minister can point out that the administration of these heather-burning Regulations is left largely to the local people, that is to say, the county agricultural executive committees, who should be aware of the local requirements. All I can say is that as far as Northumberland is concerned the local requirements of the hill farmers have been very sadly neglected. There are very strong feelings in the hill areas of both Northumberland and Durham on this subject.
I ask my hon. Friend to ensure that if he is to allow the administration of these Regulations to remain in the hands of the county agricultural executive committees, they should adopt a somewhat less artbitrary attitude than they have been adopting during the past year. I am sure the Minister is sympathetic to the hill farmers in this matter and wants to help them and not to hinder them. All they are asking is that they should have the rights which the lowland farmer now enjoys—that is, the right to farm their land according to the best of their abilities and as they think is wisest in the best interests of good husbandry.
Therefore, I ask the Minister to say at least, if he cannot say more, that he will look at the whole administration of the
1106
Regulations and that Northumberland, if not also Durham, should be put on a par with Scotland—in other words, that burning should be allowed without any licences until the end of April. If the Minister cannot go as far as that, at least let him say that burning will be allowed without licences or permits up to the middle of April; and if the weather conditions so demand, an open general licence should be granted to the end of April, so that farmers can burn after the middle of April, when the weather previously has been unfavourable. That is all we are asking. We are perfectly reasonable in this matter, and I hope that my hon. Friend will give a reply of a similar nature.
11.7 p.m.
The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): I am grateful to my hon. Friend the Member for Hexham (Mr. Speir) for raising this matter, which is, I agree, an important one in his part of the country. It is not an easy matter, and I will try to set out the pros and cons as well as I can.
I accept at once my hon. Friend's remarks in opening about the need for burning heather to some extent for good farming practice, although it is sometimes debatable what area should be burnt each year. Sometimes, I am told, there is a tendency to burn a bit too much, and at other times a tendency to burn too little. It is a question of finding the right degree. I accept, however, the main point made by my hon. Friend.
I do not think that the general purpose of the heather burning Regulations is in question. The power to regulate burning is to be found, as my hon. Friend said, in Section 20 of the Hill Farming Act, 1946. As far as I am aware, it is in no way controversial, because it is generally agreed that some control is necessary as a safeguard against forest fires and—I stress this—to prevent injury to wild life, particularly to nesting birds during springtime.
The difficulty is in drawing the line between necessary and unnecessary restrictions. Perhaps I can explain more nearly the precise effect of the Regulations. At all times of the year they prohibit the starting of burning in the hours of darkness and require reasonable pre-

1107
cautions to be taken to keep the burning under control and to prevent damage to adjacent land. They also require 48 hours' notice to be given to other persons with an interest in the land or in adjacent land.
The important restriction in the Regulations is a general prohibition on all burning between 31st March and 1st November, and that was the main point of my hon. Friend's remarks. This prohibition is not absolute, as my hon. Friend reminded us, and the Minister is free to issue special licences to allow burning in the prohibited period. As the merits of applications for special licences depend almost entirely on local conditions, my right hon. Friend has delegated his power to issue them to the county agricultural executive committees. The procedure is laid down for obtaining these special licences and applications must be made to the committee in writing at least 28 days before the date proposed for the burning. My hon. Friend was critical of that, and I will return to it presently; the applicant must simultaneously give notice in writing to other persons having an interest in the land or in any adjacent land, informing them that they have the right to make representations to the committee within seven days of receiving this notification.
There are a number of other provisions in the Regulations, but I need not mention them now as they are not relevant to my hon. Friend's complaint.
Taking the country as a whole, it is fair to say that these Regulations have worked quite smoothly. There has been no complaint about the general conditions under which permitted burning may be carried out, and they are not onerous. For most farmers, the right to burn between 1st November and 31st March, subject to very simple safeguards laid down in the Regulations, has proved quite satisfactory. There has been from time to time, however, a fair demand for special licences to burn in April, because weather conditions have not been suitable for burning during the normal permitted period.
Many of these applications have been made in Northumberland and Durham, and, in the ordinary way, there has been no difficulty in granting them, though this
1108
year, as I will try to explain, was an exception, for particular reasons. During the last two years or so we have had suggestions that the Regulations are unduly restrictive. The main complaint relates to the closing date of 31st March for the permitted period. It has been suggested to us that in some of the upland areas in Northumberland and Durham the regular arrival in the county agricultural executive committee offices of applications for special licences for April prove that that month, or part of it, should be included in the permitted period, not for the whole country, but for the upland areas of the North-East, where climatic conditions are much like those in Scotland.
Scotland has its own code of law on this subject. There, heather burning is permitted up to 15th April, but it can also go on until 30th April if the permission of the landlord is obtained. That is the differentiation between the two halves of April in Scotland. For land of more than 1,500 ft. above sea level there is provision for further extension. In consequence, it can happen, as indeed it did this year, that a farmer with land on both sides of the border may be burning legally on one part and illegally on the other, and that the police may take him to court in one country and not in the other. I realise the feeling on that point, and that is a matter which we are considering very carefully.
As to the 28-day period for applications for special licences, to which my hon. Friend the Member for Hexham attaches considerable importance, realise that it is irritating to farmers who cannot make their plans very easily so far ahead. But I would ask my hon. Friend to face the position. It is not easy to see how the period can be shortened materially, because, as I reminded him, seven days' notice has to be given for other interested parties to give notice of objection. That is a quarter of 28 days gone straight away. I do not think that we can cut that down. The remainder of the period is left because we have to arrange for meetings of the county agricultural executive committee to deal with the applications. If a number of applications come in on successive days, it can be seen that it is difficult to have a much shorter period than 28 days, because one cannot

1109
reasonably expect a committee to meet continuously on different days. Therefore, there must be a few days in between. It might be possible to make a small reduction in this period, but I think that it would be difficult administratively, and we have to face that fact.
I believe also that this particular irritant would not be so great if we were able to deal with the other side of the question, in other words, give a general licence. I am sure my hon. Friend would agree. In view of that, we have entered into consultation with the interested organisations, and have also consulted the Nature Conservancy and the Hill Farming Advisory Committee for England and Wales, which is responsible for advising the Minister on the exercise of his powers under the Hill Farming Act, under which these Regulations were made.
Apart from the farmers who made the original suggestion and whose position is clear enough, any idea of extending the date was not received with any enthusiasm. Still, now that we have the views of those concerned, we are in a position to consider whether a change ought to be made. The matter is not, of course, immediate, as the argument is about what is to happen in April, 1958, and it would be only right to use the time at our disposal to assemble what scientific data there may be and generally to give this question mature consideration.
On the experience of the years before 1957, it might well have been possible to conclude that in Northumberland and Durham at any rate, the prohibition on burning, say during the first fortnight of April, was not really worth keeping. Unfortunately, 1957 proved a test case for the utility of the Regulations. The winter was wet and warm. The wet weather made burning difficult in permitted periods, and the warmth had the well-known effect of advancing the nesting of game birds. As a result, although there were many applications for special licences for burning in April, the effect of granting them would have been to destroy an unusually large number of nesting birds, because the nesting was taking place unusually early.
The two county committees independently decided that the proper course was to refuse these licences. The
1110
decision naturally went against the grain with the farmers, but bearing in mind that the committee members are first and foremost agriculturists, I do not think anyone can seriously doubt that they were acting objectively and that their decision was probably the right one.
Mr. Speir: No doubt the members of the committees were agriculturists, but I doubt whether many hill farmers were on the committees when these decisions were taken.
Mr. Godber: My hon. Friend probably knows the composition of the committees more closely than I do, but they were local men and I should have thought that they would have some regard for the feelings of the hill farmers—but I take his point.
The main point I wish to make in this connection is that this experience has shown that any new regulations relaxing the control over burning in April will need very careful consideration indeed. Had less restrictive regulations been in operation this year, the wild life might have suffered grievously. We cannot assume that the weather conditions were unique and could never recur, and we must bear in mind this important possibility when considering what changes, if any, are to be made.
We are still working on this problem, and my hon. Friend will not expect me to announce any conclusions tonight. The best assurance I can give him is that, while we must keep a balanced outlook on this matter, I have a great deal of sympathy with the point of view which he has expressed so persuasively tonight. We have got to look at this again and see whether it is safe for us to relax, in the form of general licences, for these counties for at least a little of the month of April. If we feel that we can make some relaxation, from the agricultural point of view we would be most anxious to do so. We will endeavour to find some means of satisfying the desires my hon. Friend has put forward. I am grateful to him for raising what is, I know, an important matter to his constituents. I hope he will accept my assurances.
Question put and agreed to.
Adjourned accordingly at nineteen minutes past Eleven o'clock.

GILBERT AND ELLICE ISLANDS
  Co-operative Societies' Officer
  Co-operative Societies' Officer
KENYA
  Co-operative Depôt and Trading Centre, Maragua
  Co-operative Depôt and Trading Centre, Maragua
FEDERATION OF RHODESIA AND NYASALAND
  Mineral Prospecting Licence
  Mineral Prospecting Licence
  Uranium Mining (Wages and Conditions)
  Uranium Mining (Wages and Conditions)
  Kariba Scheme (Displaced Persons)
  Kariba Scheme (Displaced Persons)
  Leasehold Farms
  Leasehold Farms
NIGERIA
  Co-operative Staff, Eastern Region
  Co-operative Staff, Eastern Region
  College of Arts, Science and Technology
  College of Arts, Science and Technology
  Fernando Po Area (Wages and Conditions Agreement)
  Fernando Po Area (Wages and Conditions Agreement)
SIERRA LEONE
  Fourah Bay College (Recommendations)
  Fourah Bay College (Recommendations)
TANGANYIKA
  African National Union (Public Meetings)
  African National Union (Public Meetings)
CYPRUSO
  Prisoners, Wormwood Scrubs (Treatment)
  Prisoners, Wormwood Scrubs (Treatment)
  DWELLING-HOUSES (ACTIONS FOR POSSESSION)
  DWELLING-HOUSES (ACTIONS FOR POSSESSION)
MINISTRY OF WORKS
  Lambeth Bridge House
  Lambeth Bridge House
  Requisitioned Properties. St. Marylebone
  Requisitioned Properties. St. Marylebone
  Members' Library (Air Conditioning)
  Members' Library (Air Conditioning)
  Westminster Hall
  Westminster Hall
SCOTLAND
  Poliomyelitis
  Poliomyelitis
  Legal Aid
  Legal Aid
  Domiciliary Consultants (Visits)
  Domiciliary Consultants (Visits)
  Hospital Beds and Admissions
  Hospital Beds and Admissions
  Electricity Supplies, Torridon
  Electricity Supplies, Torridon
  Red Deer
  Red Deer
  Murders
  Murders
  Schools, Arbroath
  Schools, Arbroath
NATIONAL FINANCE
  £5 Notes
  £5 Notes
  Price Stabilisation
  Price Stabilisation
  Commonwealth Countries (Sterling Balances and Economic Policy)
  Commonwealth Countries (Sterling Balances and Economic Policy)
  Ex-residents in Egypt (Blocked Accounts)
  Ex-residents in Egypt (Blocked Accounts)
WATER SUPPLIES
  Epping and Ongar
  Epping and Ongar
  Stockend and Edge Areas, Gloucestershire
  Stockend and Edge Areas, Gloucestershire
  Wales
  Wales
LOCAL GOVERNMENT
  Public Health (Campers)
  Public Health (Campers)
  Sewerage Schemes, Swaffham, Mitford and Launditch
  Sewerage Schemes, Swaffham, Mitford and Launditch
  Housing Programmes
  Housing Programmes
  Clean Air Council (Membership)
  Clean Air Council (Membership)
  National Parks Act (Grants)
  National Parks Act (Grants)
  Acton, Ealing and District Rent Tribunal
  Acton, Ealing and District Rent Tribunal
  Tall Buildings
  Tall Buildings
  Land, Scotland (Private Acts)
  Land, Scotland (Private Acts)
  Air Pollution (Power Stations)
  Air Pollution (Power Stations)
  Air Pollution Officers
  Air Pollution Officers
  Expenses Allowances
  Expenses Allowances
  Rivers (Pollution)
  Rivers (Pollution)
MAURITIUS
  Emigration to Madagascar
  Emigration to Madagascar
MINISTRY OF DEFENCE
  Singapore (Defence Cuts)
  Singapore (Defence Cuts)
COMMONWEALTH RELATIONS
  Federal Government of Rhodesia and Nyasaland (African Members)
  Federal Government of Rhodesia and Nyasaland (African Members)
HOME DEPARTMENT
  Murders
  Murders
EMPLOYMENT
  Coal Mines (Hungarian Refugees)
  Coal Mines (Hungarian Refugees)
PENSIONS AND NATIONAL INSURANCE
  Locum Tenens (Benefits)
  Locum Tenens (Benefits)
TRADE AND COMMERCE
  Apples
  Apples

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

BRITISH PENSIONERS OF CIVIL SERVICES IN INDIA
2.35 p.m.
LORD HAILEY: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they can give any indication of the numbers of British pensioners of the former Civil Services of the Crown in India who are now precluded by the fact of their residence in India or Pakistan from the benefits of the Pensions (Increase) Act of 1956.]
THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT): My Lords, I am sorry that it is not possible to give any indication of the numbers of British pensioners of the former Civil Services of the Crown in India who are now precluded by the fact of their residence in India or Pakistan from the benefits of the Pensions (Increase) Act, 1956. The pensions of those who settled in India or Pakistan on retirement are, for the most part, paid to them direct by the Indian or Pakistan authorities, and no record either of the original number or of those who still survive is available in this country. Her Majesty's Government would not, I am afraid, feel justified in asking the Governments of India and Pakistan for the information.
LORD HAILEY: My Lords, if the noble Lord will permit me to ask a supplementary question, may I ask him whether Her Majesty's Government actually contemplate any measures, either legislative or other, in order to remove the disability under which these officers now rest? I need not remind the noble Lord that they were expressly recruited by the Secretary of State for service in India, and if, after the end of that service, they continue to live in India they are disqualified from receiving benefits under
1140
the Act which they would receive if they were living in any other country in the globe.
LORD MANCROFT: My Lords, the principle that the Government of India should be responsible for any increases to be paid to pensioners in India dates back, as the noble Lord knows better than any of us, to 1920. The principle which has been followed, both in the Superannuation (Miscellaneous Provisions) Act, 1948, and in the Pensions (Increase) Act, 1956, is that the United Kingdom Government do not pay increases to persons living in the area of India, Pakistan, Burma or Aden. It would be impracticable for Her Majesty's Government to pay pension increases to the vast number of pensioners, of all races, of the former Indian Services who are living in India or Pakistan. It would be equally out of the question for Her Majesty's Government to single out European pensioners now living in India or Pakistan for pension increases.

THE SUPER-GRID
2.39 p.m.
LORD BRAYE: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether it would not be wise, in the interest of national economy, to make a halt on the costly super-grid project in England and Wales until such time as investigation could reveal whether its use would justify the expense, in view of the now rapid development of small nuclear power stations which may possibly be erected in a short time close to the districts in which power is needed, and thus possibly render the super-grid projects, such as the Donnington-Iver super-grid and others, which were planned over ten years ago, obsolete before construction.]
THE MINISTER OF POWER (LORD MILLS): My Lords, the Government are advised that the generation in small nuclear power stations of the electricity required in this country is unlikely to prove economic within the near future. Indeed, technological progress is making it economic to produce increasingly large quantities of electricity in each generating

1141
unit. It will, therefore, remain necessary to transport large blocks of power over considerable distances by means of a super-grid system. As noble Lords are aware, however, one of the purposes for which the super-grid was originally designed was to transport power from generating stations on the coalfields, particularly the East Midlands, to consuming areas in other parts of the country. The advent of nuclear power has made it possible to site power stations in consuming areas away from the coalfields and has therefore made necessary alterations in the lay-out of the super-grid. I understand, however, from the Central Electricity Authority that these changes will not affect the need for a line from Donning ton to Iver.
LORD BRAYE: My Lords, may I ask the noble Lord, as a supplementary question, why work has already been suspended on one super-grid?
LORD MILLS: My Lords, I think the answer is obvious: it is because the advent of nuclear power has necessitated a re-examination of the lines of the super-grid. The suspension of the line to which the noble Lord refers arises from that cause.
LORD LUCAS OF CHILWORTH: My Lords, would the noble Lord not agree with me that the present public concern over Government expenditure on projects which are abandoned after considerable money has been spent is worthy of his most serious consideration? Is he further aware that the 275 kilovolt grid that was started to be built from Fleet, in Hampshire, to Drakelow, in Derbyshire has been abandoned and that the cost already incurred has been considerable? Would he give the House the assurance that he is ever vigilant that public money is not wasted on redundant schemes?
LORD MILLS: My Lords, in answer to the noble Lord, I would say that it is quite evident that the changes in the generation of power which have been occurring have necessitated re-examination of the lines of the super-grid. I suggest to the noble Lord that it is much more economic to face facts and to do away with a line, rather than carry on a line which should not now be erected or completed. I can give the noble Lord every assurance that this matter has my
1142
constant care and attention. It is essential, in providing the electricity which the country needs, that every economy should be exercised in the distributive system.
LORD LUCAS OF CHILWORTH: Would the noble Lord permit me to ask him one further question? Has the siting of the projected atomic power stations had any regard to the erection of the 275 kilovolt super-grid, or will there have to be another super-grid to fit the siting of the atomic power stations?
LORD MILLS: My Lords, I thought I made it clear in my Answer that it was necessary in certain respects to alter the original siting of the super-grid. It will be necessary to provide connections from the atomic power stations to the super-grid at convenient points. The general location of the super-grid as originally determined has been varied because of the changes which have occurred.
LORD LAWSON: My Lords, may I ask the noble Lord whether there has been any serious examination of the possibility of undergrounding wires in respect of the super-grid?
LORD MILLS: In answer to the noble Lord, Lord Lawson, may I say that I have explained in your Lordships' House before that, except in very exceptional circumstances, the undergrounding of cables is not a practicable proposition. I gave your Lordships an idea of the cost. The cost of an overhead line is about £20,000 a mile, and the cost of undergrounding is about £300,000 a mile. Even then, as a result of undergrounding, there are losses which are very considerable. It is not a practicable proposition at present to substitute underground for overhead lines.
LORD LAWSON: My Lords, may I ask the noble Lord whether those costs are based upon the use of bull-dozing for undergrounding or on ordinary manpower?
LORD MILLS: My Lords, the matter goes very much further than that simple statement. Considerable losses of electricity occur by reason of undergrounding; there has to be boosting by means of stations. That adds to the cost and makes it quite prohibitive to substitute underground for overhead lines, except in very exceptional circumstances

SUMMER PRICES OF GAS COKE
2.45 p.m.
LORD AMMON: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether attention has been called to the misleading advertisement and announcements issued by the South Eastern Gas Board as to dates of summer gas coke prices.]
LORD MILLS: My Lords, I am in correspondence with the noble Lord about this matter. This is the first year in which there has been a summer price scheme for gas coke. In general, the scheme has operated satisfactorily, but I fully appreciate the noble Lord's concern about the wording of these advertisements, and I am looking into the matter, in order to ensure that the difficulty to which he has drawn my attention does not arise in the future.
LORD AMMON: My Lords, I thank the noble Lord for his reply. I hope he will have it made clear that the date fixed is the date when delivery is made.

EGYPT: BRITISH SUBJECTS' LOSSES
2.47 p.m.
LORD KILLEARN LORD KILLEARN rose to draw attention to the continuing distress of British citizens expelled by order of Colonel Nasser from Egypt and deprived of resources held both in Egypt and in the United Kingdom; to urge upon Her Majesty's Government the need for decision to grant interim relief to admitted claims pending a just and full final settlement; and to move for Papers. The noble Lord said: My Lords, I rise to put before your Lordships the Motion standing in my name on the Order Paper. Before going further, I should like to express my thanks to the noble Earl the Leader of the House, and to the House, for having agreed to waive the Standing Orders of the House in order to give precedence to this Motion over Government Business. I am grateful for that, and I should imagine that the whole House will welcome this gesture to allow time for a free and full debate on a matter of prime public importance.
To turn to the Motion itself. I had hoped—indeed we had all hoped—that in the interval before the time came for discussion of this matter, which, as your Lordships will remember, was before the House on June 27 and was then adjourned until to-day, there would have been an agreed arrangement of some kind acceptable to both sides. Certainly so far as I am concerned—and I know I speak also for my colleagues—that is what we have been working for; and, without wishing to take any special credit, I can say that in the interval we have worked very hard to that end. I have heard it suggested that we are "trouble shooters" and all that kind of thing. I can assure the House that that is not so. Unfortunately, we have not an agreed arrangement before us. Let me put that to the House at once.
Obviously, I need not recapitulate the reasons why we have continued to press Her Majesty's Government over a period of nearly eight months to do what we believe to be the right and generous thing. I should like to think that the House agrees that persistence in this cause has been right and just. It is a non-Party cause. I may mention en passant (if I may use the French expression) that I have been called all sorts of names in the interval. One high quarter dubbed me an "elbow-jogging Peer". It was not a very nice thing to say, but there we are. I have been accused by another high quarter of blackmail, to which I riposted that I had been accused of many strange things in my life but never before of blackmail and I was not going to take it. I merely fill that in to show that I have had a certain amount of pressure brought to bear on me.
To return to the subject at issue, your Lordships will remember that this is the fourth time that this matter has been debated. On February 28, I raised it in the form of a Motion, which I subsequently withdrew. On March 28, I raised it in the form of a Resolution, on which I asked the House to divide and was defeated by the small majority of three in a voting list of 19 in favour and 22 against, despite the lateness of the hour—and I had taken no steps whatever to hold any noble Lords back here, though I happen to know that a Whip had been issued on the other side. But let that pass. I have no means of issuing a Whip.
One must be grateful for small mercies The British Government have come forward, at very long last, with a scheme of interim relief, which was what my Motion asked for. We all know the saying that one should not look a gift horse in the mouth—not too closely, anyway. The trouble about this gift horse is not that it has too few teeth but that it has too many. I shall develop that point at greater length as I proceed. The first point I should like to put to your Lordships is this: have Her Majesty's Government fulfilled the hope held out by the noble Viscount, Lord Hailsham? Here I quote just a phrase from what the noble Viscount said, from the OFFICIAL REPORT of June 27 [Vol. 204, col. 507]:
"I have always thought that the expression"—
that is, hardship—
"should be given a wide and generous interpretation."
That we all heard at the time with much gratitude. Later on in the same debate of June, the noble Lord, Lord Balfour of Inchrye, dilated on the need for interpreting this "liberally". It was largely on that basis, and especially on what the noble Viscount had said, that we agreed to postpone the debate to give the Government time to study this new formula of hardship. Those were the conditions on which we separated.
The question then which is really before us to-day is: has the term "hardship" been given a "wide and generous interpretation"? It will be for your Lordships to decide after this debate. I repeat that we must remember that it was on the assumption, well expressed by my noble friend Lord Balfour of Inchrye, that the expression "hardship" would be liberally interpreted, that on June 27 I withdraw the self-same Motion that stands on the Order Paper to-day. I had hoped, and indeed have worked hard, for an agreed settlement in the interval. That we have not got.
I turn to the Government statement of yesterday. It was my misfortune that I was not here. I received notification that the statement was to be made only at ten minutes past one, and then I was in the wilds of East Sussex. I made a dash for the A.B.C. and Bradshaw to see whether I could possibly get up here in time to hear the statement made at 3.30,
1146
but it was physically impossible for me to be here. The statement was made and has been circulated in yesterday's OFFICIAL REPORT. I imagine, therefore, that your Lordships have it in your hands and I am going to assume that most of you have seen the statement, which covered the actual terms of the arrangement. Again, I should like to remind your Lordships that what I am going to say should be read in the light of the dictum of the noble Viscount, Lord Hailsham, that the Government's interpretation would be "wide and generous."
May I now turn to the actual terms of the Government scheme? There are certain detailed points which I will deal with only in a general way, first, because I hope that other noble Lords will deal more specifically with them as the debate develops, and secondly, because I arrived here only at half-past-five last night and the time has not beer long in which to study all the details of this arrangement and have expert advice behind one. It is not at all easy. Paragraph 1 of the statement refers to applications for relief under the scheme and provides that applications for loans shall be made to the Resettlement Board.
"The Board will consult the Foreign Office who will, in accordance with the declarations of individual assets registered with it, determine the amount of each applicant's reckon-able assets. The Board will then make payment…"
The first point I would make is that apparently it is left to the entire discretion of the Foreign Office—an admirable body; I happen to be an ex-member of it—but it is not perhaps all that good to have no check upon it at all. The thought that passed through my mind was whether, for the administration of this machinery, the Government would agree that in taking on this duty to
"…determine the amount of each applicant's reckonable assets…"
the Foreign Office could be invited to, or it could be laid down that they should, at least consult with the body known as the Association of British Communities in Egypt.
Perhaps I should here explain what that body is, because many noble Lords may not know. When the members of the British community were evacuated from Egypt in November, being efficient and intelligent they got together at once

1147
and formed an association of the communities that existed in Egypt, opened an office here in the Association's name and set to work. They set up what I would say is an extremely efficient organisation, which at once set about collating all the claims and "vetting" them. They established an expert committee in their midst. I happen to know their legal adviser, as he was my legal adviser at the Embassy in Cairo for many years, and there is no-one better. They have chartered accountants, surveyors and men experienced in these questions in Egypt, so altogether they have established a pretty good method of collating and "vetting" these claims, going through them individually. I have seen some of their work, and it is most businesslike. They have obtained bank statements and certificates of assets and done everything possible. I know that in many cases they have even cut the claims down. I only bring that in because it seems to me that in this task of determining the amounts of each applicant's assets which are "reckonable"—that is a strange word—it would be a good thing if the Foreign Office could be associated in some way with some such body. I suggest that particular body because I know about it, and I know it is fully qualified. In fact, I think it would strengthen the hands of the Foreign Office.
The next paragraph is the tabulation of the assets. There is no point under debate there, because it is acceptable. Then paragraph 3 is the scale of payments, which is the kernel of the whole thing. There is a lot to be said on that, but I am only going to generalise. On a close analysis it will not prove to be as generous as we had hoped and expected. I could give figures, but they have been so hurriedly put together that they might be misleading. One point that stands out is that it stops short at claims of £20,000 and over. That is a nice "fat" sum, and it sounds impressive; but there are, in fact, a number of claimants who have had property seized of a value of more than £20,000. There is no particular reason to stop arbitrarily at £20,000, and by doing so you leave out of account what I might call the higher bracket. I can see no justification why that should be done. I
1148
have here a letter which arrived only five minutes before I came into the Chamber and which, if I have time, I will read at the end of my speech. In this the claimant says he had £38,000, now seized by Egypt.
I turn now to paragraph 4, which says:
"Persons eligible for payments under the scheme are all British nationals who left Egypt as a result of the events of the last year…"
A large number of people left before that event, either on business, on holiday, or for some other valid reason, and were not in Egypt when this trouble blew up. But they lost everything, just the same, and I do not think it can be the intention to leave them out; perhaps it is only a question of loose drafting. Then paragraph 4 continues:
"…and who have, before July 15, 1957, registered declarations of assets with the Foreign Office."
We know that quite a number of these unfortunates are scattered to the four corners of the earth; in fact, the Resettlement Board themselves have helped a number of them to go to Australia and New Zealand. How can they have "registered declarations of assets with the Foreign Office"? That, again, is probably a matter of drafting. I am sure it is not the intention to do these people an injustice, but it is a point of substance which I hope will be looked into.
The next paragraph is headed:
"Relationship to previous loans from Resettlement Board."
That is a most involved affair, and my noble friend Lord Gifford has kindly undertaken to handle it in greater detail. But, as I understand it, the broad point is this: that some of the "lower bracket" people, if they are covered by this paragraph, will be worse off than they are under the Resettlement Board. The information I have is as follows:
"Under lower grades, I am advised quite a number may feel it better not to risk future security."
As I say, that point will be elaborated by my noble friend Lord Gifford: it is a good one.
Paragraph 6 is headed, "Duration of scheme", and on that I have no comment. In regard to paragraph 7 I am afraid we strike rather heavy weather. It says:
"The Board when making payment will ask each individual to sign an undertaking to repay. But no one will be asked to make any repayment until he can receive a return

1149
from the Egyptian Government in respect of his individual claim."
That brings us at once to what I might call the form of receipt. That is the receipt with which these people are confronted for signature prior to a loan.
THE MINISTER OF EDUCATION (VISCOUNT HAILSHAM): My Lords, my noble friend must make it plain that there is no receipt at the moment with which anybody has been confronted. There is no receipt in the published scheme; nor has anyone been confronted with any receipt, because nobody has yet applied for this relief. If my noble friend wants to raise any point about any draft which may be in existence in a confidential form, I should like to know what he is about. I have never refused to discuss possible drafts of possible receipts, but there has been no published scheme of any kind involving a form of receipt. If my noble friend is going to ask me to look at a confidential form, I will do so; but, with respect, I would ask him not to treat in a definitive form something which has been put before him confidentially at some stage of the negotiations.
LORD KILLEARN: I am grateful to the noble Viscount for dotting the "i's". If the thing does not exist, it does not; but I have it here.
VISCOUNT HAILSHAM: What I am saying is this. If my noble friend is dealing with a confidential draft, he should ask me to deal with it in some form other than in public debate. If he is dealing with something that has been published, then I will answer him in debate.
LORD KILLEARN: I indicated to the noble Viscount in the Lobby that I should bring this up, and I had a very hot reception, if I may say so.
VISCOUNT HAILSHAM: It may be that I was objecting to the noble Lord's proposing to do what he is now doing—namely, discussing in public a confidential draft. I take it slightly amiss that my noble friend, for the first time in the whole of my Parliamentary experience, is now seeking to repeat on the Floor of the House something said in the Lobby. That is something from which I have never suffered, even from people who belong to the opposite Party.
LORD KILLEARN: My back is quite broad enough to take all these snubs.
1150
But I come back to the point, which is that when the scale of payments was put before the claimants it was to have behind it a draft receipt, and I am going to read that draft receipt to the House. This is what was to be given to them and if it is a draft—so much the better. This is what they were going to be asked to sign if they accepted what they were offered under the scheme; and, personally, wild horses would not make me sign it. It is addressed to the Anglo-Egyptian Resettlement Board, from whom apparently these loans will be made, and says:
"In consideration of your advancing to me the sum of…pounds, the receipt of which I hereby acknowledge, on grounds of hardship caused to me by action taken on behalf of the Government of Egypt resulting in my being deprived of certain properly or being prevented temporarily or otherwise from pursuing certain claims, particulars of which property and claims are set out in the schedule hereto, I undertake to repay to you or to Her Majesty's Government on demand the sum of…pounds or such part thereof as you or Her Majesty's Government may specify from time to time".
I do not think that that is the sort of document they should be asked to sign. A receipt they must give, of course; but why should they commit their views on a political question? However, I am going to leave this to my noble friend Lord Balfour of Inchrye to deal with, and I only say that I do not think that this is a form of receipt which these unfortunate people should be expected to sign.
I now leave the actual terms of the scheme. I would say that a great deal of time and trouble, and, if you like, bad blood and irritation, could have been avoided if months ago the Government had accepted some such scheme of proportionate advances as we put before the Government in two different forms. It would have been so much better; and in fact the claimants themselves put up a revised scale which would, I think, have satisfied everybody. So far as I know, that suggestion has never been adequately dealt with; it has just been brushed aside, and instead we have what we are faced with to-day. I have told your Lordships about the British Communities Association. Most of these people left Egypt the first week in November, and we are now at the end of July. It seems curious that, so far as I am aware, no member of the Foreign Office has ever visited the office of the Association. There they are, sitting there, with all these claims collated,

1151
revised, and so forth. And the Foreign Office have never taken advantage of the material they have got together—I do not understand why. If they had done so, it seems to me, it would have saved a lot of time, and would have helped a good many people.
I do not know if I have made this point. Under the scale which is before your Lordships, the ceiling is to be £5,000 for all claims over £20,000. I have gone into the figures, and, oddly enough, there are quite a number whose claims exceed £20,000. Under the Government's proposals, all these people would receive £5,000, which, again reverting to the interpretation of "hardship" as being proportionate to what the man had and to his commitments, I am advised is not much. It sounds a lot, but it is not much.
There is one question which I have not touched upon and which, naturally, was not touched upon by the Government—it arose in the debate of June 27. I refer to the vexed and puzzling question of this indemnity to the banks. I admitted then that I did not understand it, and I still do not; and I think many other noble Lords are in the same position. The plain fact remains that many of these unfortunates have large deposits, securities, cash, and "what have you," physically situated in the United Kingdom in British banks, but are not allowed to get delivery of them. If you go to the banks, they say, "Well, on April 11 at the request of the bank, we put in a memorandum to the Bank of England for the information of the Treasury, in which we asked for this indemnity. We have had no answer to that memorandum."
In our last debate, the noble Viscount said that the Government had taken no part in this at all; that they have put no prohibiton on, and so on. Whatever the legal niceties may be, the owners are still not allowed to get from the banks the securities and other assets which they own. The matter was not made any easier by a statement made by the noble Earl, Lord Gosford, in which he endorsed the view that there were legal doubts about this thing, and that possibly (I hope I am not misquoting the noble Earl) these things belonged to the sequestrator—otherwise, General Nasser. That seems a strange doctrine. Whatever the rights
1152
or wrongs of it, this situation has gone on and on. The noble Lord, Lord Gifford, and I spent a whole morning with the late general manager of the bank in Cairo on this question, and I gather that we are not any more forward at all. However, that is a point which I hope the noble Lord, Lord Gifford will cover.
Then, of course, it was suggested by the noble Viscount, Lord Hailsham, in this House on June 27 that if there is any doubt about it, these holders could bring an action against the banks. That sounds all right, provided they could get the right decision. I think one noble Lord deplored the fact that the noble Viscount, Lord Hailsham, would not be available for the purpose. Quite apart from that, this thought has occurred to some of us. Supposing some of these claimants were to issue a writ, and supposing the decision of the court was against them, what would be the effect on their title to these deeds? Would it not confirm Egyptian title? That is a point which I hope some noble Lord will answer in the course of the debate. Perhaps there is no answer. It seems to me "a teaser". Obviously, it affects the decision of whether you are going to bring an action or not. You bring an action because you think you are going to win it. But supposing, through the loss of your case, your title is brought into question; it would obviously affect your readiness to bring an action, would it not? It certainly would mine.
Before I sit down, I commend the Motion to your Lordships' House for debate. I will just add this reminder, because it is not sufficiently known by the public, or perhaps by this House. The Government have agreed to release to the Government of Egypt £20 million sterling of blocked Egyptian balances. I happened to read in the terms of the Agreement between the Egyptian Government and the Sudan that it is about £20 million. I know that that money is for currency purposes in the Sudan, and I know that the Sudanese are grand people and all that. I was High Commissioner for the Sudan for many years. Yet we see this wrangling going on over a few million pounds. On top of that, there was the meeting in Rome—we did not hear much about it, apart from a statement in the Press that another £6 million was to be released for certain types of debt. That is £26 million in all. All that makes it

1153
very difficult for the claimants for whom I am speaking to feel particularly grateful for what is now being offered them.
Before I resume my seat, I should like to say one thing, in spite of all the hard things that have been thrown at me. I am very conscious that we have made substantial—I will not use the word "advance" because that is apt to imply money, but progress since I first had the hardihood of facing the Front Bench to raise this question. For that progress I am sure we are all grateful. I beg to move for Papers.
3.18 p.m.
LORD GIFFORD: My Lords, like the noble Lord, Lord Killearn, in the limited time at my disposal I have studied the statement made yesterday by the noble Viscount. Lord Hailsham, and I would say at once that it represents considerable progress in what one can only say has been, up to now, the intractable attitude of the Government. I should also like to say that this limited success, if we may call it that, has been achieved through the untiring efforts of the noble Lord, Lord Killearn, who has raised this matter in this House on so many occasions. I, for one, am prepared to accept the scale of advances as an interim measure, even though, like the previous speaker, I do not think they are very generous on the higher claims. But I should be glad to have the noble Viscount's assurance—and I understand he would be prepared to give it—that these loans do not rule out further assistance if the settlement of the claims by the Egyptian Government is long delayed.
A great deal has been said about this receipt. I do not propose to labour the point but I should like to say this. As I understood it, it was given as a draft order, as a proposal, not to the noble Lord, Lord Killearn, or to myself but to the representatives of these refugees from Egypt—the British Communities' Association. I thought that, like the first offer which came with it, it was a matter that we were at liberty to discuss, if we thought that it was worded in unfair terms. We do feel that, and therefore I hope that the matter will be further considered and that a new form of receipt will be produced, one which is not so harsh.
I realise also that in yesterday's statement an undertaking was given that no
1154
repayment will be asked for until the return of assets has been received from the Egyptian Government. But I should like to ask this question. Suppose the claim is eventually acknowledged by the Egyptian Government, and (we will say) there is a claim for £5,000; and suppose the Egyptian Government then say, "That is all right; we accept this claim but it is quite exorbitant; we will pay £1,000", what happens then? Is full repayment of the loan demanded, or is the fact that the claim has not been met in full taken into account? I should like also to raise a further point. I think it was staled as likely, though I do not think a definite statement has been made, that these loans will be free of interest. Perhaps the noble Viscount could confirm that. I thought he said that he believed it would be so.
3.22 p.m.
VISCOUNT HAILSHAM: The noble Lord must take it that, if I give the House information which I say is true to my knowledge and belief, and if I subsequently discover that it is false, I should at once take steps to correct my mistake. I have not taken any such steps. I thought I had made that matter plain beyond any doubt.
LORD GIFFORD: Presumably it is the object of the Government to get the refugees out of the hostels and make them self-supporting. As the noble Lord, Lord Killearn, has already indicated, the loans at the lower end of the scale are too little encouragement to bring this about. It is stated that, if anybody accepts a loan, of whatever size, he is then, in general (I think the terms are), debarred from any further help from the Resettlement Board. If a man is living in a hostel and receiving £7 or £8 a week from the Resettlement Board, can one expect him then to give up all that in return for a loan of £500? It seems to me that the way to do it is to grade down the assistance given by the Resettlement Board, taking the loan into account, but not to cut it off altogether. That seems to me the fairest way of doing it.
This is an important point, so I hope your Lordships will forgive me if I mention it again. I think it has been the habit of many British residents in Egypt to take their holidays in the summer. Therefore, many of them were, in fact, out of Egypt on August 2, which is given

1155
as the deadline date. Presumably this matter will not be dealt with too rigidly, and if a resident can show that he intended to return and to carry on his business, although he was not actually "thrown out" on August 2, he will be eligible for these loans. Once again I put in a plea for latitude as regards the date by which claims can be rendered, particularly in cases where the people are overseas or abroad. Some of these people have gone as far as Australia, and it is quite impossible for them to get their claims in by the date mentioned in the statement. I should also like to ask the noble Viscount whether these loans apply to institutions, such as hospitals and schools, whose trustees, in many cases, badly need funds in order to help members of their staff to rehabilitate themselves and find other positions. I was going to say something about the work of the British Communities' Association in preparing claims and statements of assets. I hope that the Foreign Office will make use of this expert knowledge in appropriate cases. I think it may save them from the occasional unfair or exorbitant claim.
I want now to say a little about this most difficult question of the refugees' personal cash and securities which are physically in banks in this country but are held to the order of a bank in Egypt. May I say at once that I have discussed this point with the noble Viscount on a number of occasions and I fully realise the Government's difficulty in the matter. But, as I have said on a number of occasions, I believe that something could be done and that some way of helping these people could be found by a round-table discussion between the banks concerned and officials of the Treasury. I think it is only right to say that the position was aggravated by what was said in this House by a spokesman for the Government. The banks were taking a fairly liberal attitude in this matter until the very definite statement made on February 28 last by the noble Earl, Lord Gosford, doubtless in consultation with the Chancellor of the Exchequer. I think it so important that I should like to read an extract from what he said [OFFICIAL REPORT, Vol. 202, col. 165]:
"I regret to say that it is impossible, under existing legislation, for a bank in this country to disregard its obligation to hold the securities
1156
to the order of a bank in Egypt. The only course at present open to the beneficiary is to test the legality of the bank's decision in a United Kingdom court. I am sorry to say that that is the position."
That, I think, can be taken as an encouragement to the people concerned to test the matter in a court; and that suggestion has been repeated on subsequent occasions by the noble Viscount.
I should like to utter what is, I think, a timely word of warning of what might happen if this took place. I am not a legal man. I do not feel that the case of the Egyptian bank is a strong one, but supposing that a case was decided in their favour in a British court, surely it would make the subsequent difficulties of both Governments much greater and would considerably strengthen the case for the Egyptian Government. So it seems to me most undesirable that legal action should be taken on these lines; yet Government speakers have almost encouraged the unfortunate sufferers to do this. This is a difficult and complicated matter. I can only say that the ordinary person in the street with whom I have discussed it cannot possibly understand why somebody with cash and war loans, Government securities, in his name in a bank in the City of London, cannot withdraw them. The ordinary person is completely mystified about that. He could understand it if the securities were in Egypt; but the fact is that they are here, in a bank in the City of London. To the ordinary person it is quite incomprehensible. I believe that some way over this difficulty could be evolved. In fairness to the noble Viscount, I should like to say that he has told me that people in this position will be eligible for the loans equally with those who have assets physically in Egypt.
I do not know what course the noble Lord, Lord Killearn will adopt to-day, but I feel that specific answers should be given to the points which I and other noble Lords have raised and are going to raise. It should be clearly stated that the loans and the aid now promised are only a first instalment, which may later be increased if settlement with Egypt is long delayed. My Lords, may I conclude by saying: let us never forget that we are talking about British citizens who have lost everything—houses, furniture, motor cars, businesses. They have come

1157
away with just a few things in a suitcase This is a position in which I think hardly anybody, fortunately, in this House, has ever found himself; but it is an appalling position, and their plight should be treated with the greatest sympathy.
3.34 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I feel that my noble friend Lord Killearn owes no apology to your Lordships for returning to this subject to-day, because, after all, we are on the same side in this matter. Our single purpose is to try to obtain for these British citizens fair treatment and restitution of their property. Some of us are perhaps looking out of the same window, some of us out of a different window; those who sit on the Front Bench are looking through the official window and we from another window.
I, too, like the noble Lord, Lord Killearn, regard this scheme as an advance by Her Majesty's Government; I would describe it as an advance in cash against hardship and need. I would point out to your Lordships that the basic principle of the right or otherwise to look to Her Majesty's Government for compensation remains in conflict and is un-decided. I will not debate that because we debated it at some length quite recently; Her Majesty's Government take one view and some of us take another. That still remains an open question.
But, leaving aside that question of principle, and dealing with these proposals on a material and practical basis, there are various points which it is difficult to accept. It is difficult really to accept the scheme as a whole, or to acquiesce in it other than as a temporary measure. My noble friends Lord Killearn and Lord Gifford dealt with some of these points which are difficult to accept and which one would ask Her Majesty's Government to deliberate upon and to consider. The first point—I will summarise them briefly—is the right of the Foreign Office absolutely to determine the claims. The wording of paragraph 1 of the statement is:
"The Board will consult the Foreign Office who will, in accordance with the declarations of individual assets registered with it, determine the amount of each applicant's reckonable assets."
1158
That really puts absolutely in the hands of the Foreign Office the final say as to what is, or is not, an asset.
The second point at issue is the arbitrary date of July 15 for the registration or lodging of claims. I think there is room there for elasticity and consideration by Her Majesty's Government. The next point is, to me, the grave objection which was elaborated by my noble friend Lord Gilford, of putting upon the distressed citizen the obligation to choose whether he will come under this scheme and lose all the benefits which he is now obtaining from the Resettlement Board, or Whether he will opt to stay on the Resettlement Board and not take advantage of this scheme. That seems to me to be a kind of topsy-turvy means test. It means that if he says, "I am getting so much from the Resettlement Board now for myself and my wife, and so much for my children, and that is really of more benefit than getting 70 per cent. of £1,000", he will obviously opt to stay upon the Resettlement Board. I do not think that a man should get the advantage of both schemes, but I suggest that there should not be this absolute declaration that a man should be expected to receive nothing from the Resettlement Board if he opts for this scheme. By all means, let the amount which he gets from this scheme be taken into account when he goes back to the Resettlement Board. By all means, take into account other resources, as it were. But do not deprive him of all benefit such as is proposed in this scheme.
The final and, to me, most serious of all objections is this form of receipt. There was a little brush between my noble friend Lord Killearn and Lord Hailsham as to whether or not this was a confidential document. I have been given a copy of the draft receipt of the Anglo-Egyptian Resettlement Board. I am not going to enter the controversy as to whether it is, or is not, a confidential document. I personally side entirely with Lord Killearn in feeling that he can use and recite to your Lordships the text of a proposal which is put to the Anglo-Egyptian Resettlement Board by Her Majesty's Government as the basis of what their receipt is likely to be.
I would not quarrel with my noble friend Lord Hailsham for anything; but let me put it this way. Would the noble

1159
Viscount, Lord Hailsham, agree that there should be no receipt submitted to applicants if it in fact contained a stipulation that the man must acknowledge that the hardship caused to him resulted from action taken by or on behalf of the Government of Egypt, which has thus resulted in his being deprived of his assets? That is not saying anything about this secret and confidential document. That is asking for an assurance that no such request will be made of anyone when they receive the money. My noble friend Lord Hailsham is perfectly at liberty to answer me on that point, without in any way dealing with the question whether a document is or is not confidential.
My Lords, as I said before, it seems to me that this scheme is an advance, but it seems to be too rigid. I should dearly like to see Her Majesty's Government accept in this scheme what I would term an exceptional clause—that is to say, that where an individual has particular circumstances this scheme shall be elastic as regards both administration and the amount of money given in his particular case. I believe the scheme is an advance, an instalment. I think it has certain anomalies and that it is going to be rather difficult here and there to work.
I would submit this to Her Majesty's Government for consideration. Would they think of setting up an Advisory Committee of the Government Departments concerned, mainly the Foreign Office and the Treasury, and the other interests concerned, mainly the Anglo-Egyptian Resettlement Board and the Association of British Communities in Egypt? Would they consider setting up such an advisory committee, without any executive power (because the executive responsibility and executive power must remain with Her Majesty's Government; one acknowledges that at once)? Such a Committee could be in fairly constant session, at any rate in the beginning, to help to iron out some of these difficulties, to watch the administration of the scheme, to advise, to talk back to the various claimants, explaining the details of the scheme, and at the same time to act as a help to the claimants through their existing organisations up to this Committee. I do not think the contact between the Government Departments and the organisations is quite sufficient. I believe there ought to be a special Committee
1160
of the Government Departments and these organisations watching the administration of the scheme. If the Government would consider such a proposal I should be grateful. Meanwhile I say, without in any way conceding the principle, which still remains undecided, that I think this is a measure of progress for which we can be grateful.
3.43 p.m.
LORD TEVIOT: My Lords, I have had on the Order Paper for some time a Motion on this subject. For various reasons that I will not go into, because they were confidential, I have not put my Motion down for a date. There are certain questions which have not been touched on to-day and which I want to ask my noble friend who is going to reply. I was unable to be here during the other debate that took place on this subject, which was raised by my noble friend Lord Killearn, and I should like to ask one or two questions with regard to it and to give my views.
There is one thing I feel very strongly: that on no account should anything be paid to Egypt until these refugees have been compensated. Already we have been told, and we know, that £20 million has gone for some purpose or other in Egypt, in regard to the Sudan; and in Rome there was another £6 million. My Lords, these wretched people have got into this situation through no fault of their own. Everybody admits that. It appears that they have been robbed of the whole of their property which is situated in Egypt. And now what about their property here—stocks and shares which are actually here? What do we call that? Like many other of your Lordships, I have been in business a great many years, and incidentally as a banker, which I am now. These people should not be allowed to sustain any loss whatever in regard to their assets. Their position, their property, must not be used in any circumstances whatever as a bargaining item with regard to Nasser.
These are questions that have been asked every day, all over the country, by a great many people. If the release of the refugees' property of whatever kind is held up—and it is held up—and their application to get hold of their property is refused, then I believe it is a debt of honour which the Government should recognise, and they should indemnify the banks and agencies who are holding these

1161
properties for their owners. There is no question about it. They have paid for these assets themselves, with their own money, and for safety's sake have deposited these properties in this country. Now they are unable to touch them, in spite of their destitution.
I was unable to be here yesterday, but I have read the statement, I presume from the Government, which the noble Viscount has issued to-day. There is much in it that requires careful study. Two questions immediately caught my eye. One is this question of ex gratia loans. My Lords, I do not quite like the expression "ex gratia" in regard to this matter. It looks to me as if we are doing this in a sort of charitable way. There is no charity about it at all; it is a question of justice and nothing else. The other thing which immediately struck my eye and which has already been referred to by my noble friend Lord Gifford was paragraph 7. I will read it to see whether I am right in picking up its meaning. It says:
"The Board when making payment will ask each individual to sign an undertaking to repay."
That has been touched on by my noble friends Lord Killearn and Lord Gifford.
"But no one will be asked to make any repayment until he can receive a return from the Egyptian Government in respect of his individual claim."
My Lords, what a hope! Have we ever had any indication whatever that such a thing was likely to happen? Now, my Lords, if not, why put that in? There is no hope whatever, as we know from past experience over and over again, that we are likely to get justice in the direction that that indicates.
The property has been referred to; it is all here and it belongs to these people, if anything can belong to anybody. They bought it with their own money and deposited it here in safe keeping with banks, agencies and other sources. I want to know on whose authority the banks and agencies have been prevented from delivering these assets to these owners. Who has given this instruction? I should like my noble friend, if he would be so good, to answer that question. Hardship is a mild word in relation to what these people are experiencing with regard to their own property. The noble Viscount said that the Government securities are not mature for repayment. My noble friend knows perfectly well that
1162
most Government securities are not mature for repayment. But you can go to the Stock Exchange and sell them. That is just what these people want to do and they are debarred from so doing. What is the legal position? I am not quite clear as to whether legal aid to go to the court may be granted. Perhaps the noble Viscount will enlighten me.
VISCOUNT HAILSHAM: My Lords, if I may, I will clear that up immediately. Anyone in this country can apply for legal aid, and, in suitable cases, if they go through the machinery and satisfy the legal aid committees that there is a prima facie serious case—not a frivolous one—they can get legal aid, subject, of course, to the same considerations as to means as anybody else. It is one of the social services which are provided, and I wish the public were more aware of what the legal profession are doing in this respect, because members of it are doing it at some sacrifice to themselves.
LORD TEVIOT: I thank the noble Viscount for that explanation. On June 27 the noble Viscount referred to the expression "blocked account." This is recorded in column 524 of Hansard. He said that the account is not blocked by the British Government. Well, who blocked it?
VISCOUNT HAILSHAM: It is not blocked at all.
LORD TEVIOT: Who put on this apparent blockage, preventing these people from getting hold of what they have paid for and what they own—if they can own anything? Someone is responsible, and I shall be most grateful if the noble Viscount in his reply will give us some information. Believe me, throughout the whole country—not only down here but in my own country in the North—this subject is occupying the attention of many people. Some of them are personally interested in this matter and many are concerned in the legal profession in the capital of my country. I hope that the noble Viscount will be able to answer some of the conundrums which I have put to him, and I trust that I have not fallen foul of him in asking them.
3.54 p.m.
LORD JEFFREYS: My Lords, I rise to support the Motion of my noble friend Lord Killearn, and, if I may, to emphasise the distress of the British

1163
nationals who have been expelled and robbed by order of Nasser and who have no resources to fall back on. There was a time when any British Government could be depended upon to uphold the rights and property of its nationals, and to see that justice was done to them. But things, apparently, are different now. In the past, the Government of the day admitted responsibility for the welfare of its nationals abroad; and in the present case that responsibility is all the more important, when it is remembered how much Egypt owes to British administration and British justice in the past. Surely, these British subjects have an overwhelming claim on the British Government when it is remembered how much our economic strength depends upon fair dealing and upon international trade. If British subjects are liable to be treated as these British subjects have been treated, there will be an end, so far as we are concerned, of good faith and fair dealing, and an end of good trade relations in the future, at least with Oriental countries who have standards of justice which are entirely different from our own.
We have now heard of the assistance—not very adequate assistance, I think—which the Government are proposing to offer to these loyal Britons. It appears that if they want reparations, apart from loans—and very limited loans—which are offered to them by the Government, they must apply for them to the Egyptian Government. What chance is there of these unfortunates receiving just treatment from an Egyptian Government? What chance is there of their receiving just treatment from an Egyptian Government whose own economic position is scarcely a flourishing one? One thing cannot be questioned: had the Suez operation not been embarked upon, all these dispossessed Britons would still be in possession of their homes and assets. They are thus suffering on account of the Government's policy, and the Government must be responsible that they are not left to suffer at the hands of the Egyptian Government. Surely the least the Government should do is to make it clear that no business or financial relations will be entered into with Nasser or his Government until all the claims of these loyal and maltreated British
1164
subjects have been dealt with satisfactorily.
Then we come to the question of the frozen sterling balances in Egypt. Many people think that these balances should never have been allowed to accumulate. Egypt stayed out of the war; and she tried very hard to run with the hare and hunt with the hounds. By so doing, her people made very large profits out of the British Occupation Forces while receiving our protection. And yet we admit a heavy debt in their favour! Surely we should repudiate that debt, and use these frozen balances, first, for the compensation of these British subjects who have suffered from Nasser's injustice, and, next, to pay for the clearing of the Suez Canal from the obstructions placed there by Nasser's orders. One thing should be made clear to Nasser: that in no circumstances will any financial profits or assistance accrue to him or to his Government until the fullest reparations have been made to these British subjects who have suffered from his injustice and from his maltreatment.
I hope very much that something more will be done than is outlined in the statement which was made with regard to these loans. What is a loan of £5,000 to a man who has suffered a loss of not less than £20,000, and what further loans should come to those who have lost a great deal more than £20,000? I hope very much that these British subjects will be dealt with far more generously than the facts outlined in this statement suggest. I hope that these British subjects will be fully recompensed at the expense of Egypt and by the action of our Government.
3.59 p.m.
LORD STRABOLGI: My Lords, I should like to say how very much I agree with everything that noble Lords who have already spoken this afternoon have said, and how pleased I am that Lord Killearn has moved this Motion to-day. Having regard to the statement which was made yesterday by the noble Viscount, Lord Hailsham, we must be grateful that the Government have now begun to do something. But I also think that there is one thing we must be perfectly clear about these are not gifts which the Government are making to these British subjects: they are loans; and they are loans which I do not think are nearly

1165
large enough. I will go into the details, if I may, a little later.
The noble Lord, Lord Killearn, has examined very closely the statement which was made yesterday, and I have little to add to what he had said. But there is just one point about which I should like to put a question to the Government. Paragraph 4 of the statement is headed "Persons eligible," and, with your Lordships' permission, I should like to read it. It says:
"Persons eligible for payments under the scheme are all British nationals who left Egypt as a result of the events of last year, and who have, before July 15, 1957, registered declarations of assets with the Foreign Office."
Of course, July 15 was yesterday, the date on which the statement was made. I should like to hear from the Government what would be the position of British subjects arriving since yesterday, because I am informed by the British Communities' Association that there are still British subjects arriving here from Egypt. I should be very grateful if the noble Viscount would tell us whether they will be eligible for this scheme.
As the noble Lord, Lord Killearn, has said, we cannot look a gift horse in the mouth, but I must confess to a certain amount of disappointment in the sums the Government propose to loan—not to give—to these British subjects. I should have thought that the scheme which was discussed, suggesting a payment of percentages running from 80 to 10 per cent., for sums from a few pounds; up to £100,000, would have been much fairer. If one bases some figures on this scheme, one would see that a British subject who left £3,000 in Egypt would be granted a loan of £2,200, whereas under the Government scheme, they would be loaned only £1,600. For a larger sum, such as £16,000, under a scheme of percentages they would be loaned £9,600; under the Government scheme they get just over £4,000.
I also think it is a matter of great disappointment that the loans stop at the sum of £20,000. I think it would have been much better if the Government had taken into account all those who left in Egypt very much larger sums than this. It is not a case of just one or two millionaires: I am informed that there are 250 British subjects who have claims against Egypt for sums of over £20,000. I happen to know personally of one case of a family, some very old friends of
1166
mine, who lost nearly £250,000 They are able to claim a loan of merely £5,000. I believe that no British subjects are claiming on anything over £100,000 but I think that they should be able to claim on a percentage basis and to receive loans of sums running up to, say £25,000. We must remember that many of these British subjects are elderly men who have been running very important businesses in Egypt. It is very difficult for them to re-establish themselves here. Being able businessmen, they want to start their own businesses over here, but I think that that would be very difficult with the small sums which the Government are proposing to loan them. I hope that this scheme is only a preliminary one, and that later on the Government will consider something on a more generous scale. As has been pointed out by the noble Lord, Lord Jeffreys, that will not in any way prejudice their just claims against Egypt.
I do not want to go into the question of Suez and the intervention campaign, the "extinguishment of a forest fire," or however one cares to put it. I think that the pros and cons of that campaign will be debated by historians for many years to come. I am not so unsympathetic to it as perhaps are some noble Lords on this side of the House, but I think that one thing is clear. One of the objects of the exercise was to protect British lives and property. Yet this, of course, is precisely what it has not done. That is why the Government have such a heavy responsibility in this matter. Let us not forget that these are British subjects. Many of them belong to families who have lived in Egypt for several generations, but they have never forgotten the old country.
During the war they helped us enormously, as my noble friend Lord Killearn will bear out, for he then held his distinguished position in Egypt, while I was a very junior officer. Their sons served in the Forces, as many of them did themselves. They helped the members of the British Forces on leave with hospitality and subscribed for them their money. Apart from that, they were for many years the spearhead of our trading in Egypt. Now that has all come to an end. I shall never forget going round the great cotton spinning mill at Misr Mehalla, one of the largest in the world,

1167
and seeing the whole mill filled with machinery supplied by Messrs. Platt Bros. That is one example of the work these British businessmen and agents were doing by their trading over there. Now they have come back to this country, practically destitute, as the result of an action undertaken by the Government. I hope that the Government will realise their very heavy responsibility in this matter.
4.7 p.m.
LORD FREYBERG: My Lords, I had not intended to take part in this debate except to express my gratitude to my noble friend Lord Killearn for so persistently drawing the attention of your Lordships to the continuing distress of British citizens expelled by Colonel Nasser from Egypt. I can claim a certain knowledge of Egypt because, like my noble friend, I was there during most of the war years, based on Cairo, and I had some 80,000 troops to pass through. We liked the Anglo-Egyptians and got on well with them. Most of these displaced British subjects are known to us and some of them are personal friends.
In common with many Members of your Lordships' House, I have received some letters from British citizens who have been displaced. Let me read a typical one, from a young man, Major Collins, who served in the New Zealand Expeditionary Force with great distinction, went back to New Zealand and returned to start a business in Cairo. He writes to me as follows:
"Dear Sir:
I was a major in your 2nd New Zealand Expeditionary Force, and at war's end I cleaned up the affairs of the New Zealand National Patriotic Fund Board in Egypt, and at the same time I was New Zealand Military Liaison Officer, Middle East.
After completing my various jobs in Middle East, I returned to New Zealand late 1946, got myself 'demobbed', and sailed back to Egypt, April, 1947, to start business.
Owing to a lot of good luck, and some hard work, I built up a business in Egypt in which I employed more than 500 workers, mostly Egyptians, but unfortunately the other day my business was sequestrated and I was summarily bumped out of Egypt.
"I hope you will forgive me uninvitedly offering you my life's story, but I think it is necessary as a lead up to the subject I want to discuss with you.
The subject is, a man called Schlick. Schlick performed excellent work in the New Zealand Forces Club, Cairo, and after I was demobilised
1168
and returned to Egypt. I immediately gave Schlick a job in my new business where he remained right up until December, 1956. The Egyptian authorities discovered that his wife was the proud holder of a British passport, and because of this great sin, expelled her, Schlick, and their five children. Schlick does not have a passport at all, and to-day is a Stateless person under care of the British Consulate in Genoa, Italy…
Schlick wrote to me a most pathetic letter from Genoa last week and begged me to write to you in the hope that you could help him with the necessary authority to go to New Zealand with his family. I wish that I could do something for him in this respect, but I am rather in the same boat"—
this is Major Collins writing—
"as he is right now, having lost everything I owned in Egypt, and I write to you in the hope that you will be able to assist this very deserving case. He would make an excellent citizen of New Zealand…"
When I spoke about this case I had not read the official statement which was issued yesterday; and I am told that Schlick would not come under this scheme, because he is not a British national. That is a difficult situation. However, I feel that we could advise the Board that Schlick's wife is an Englishwoman, and that his five children could be given passports on, or attached to, the wife's passport. So that there would be six people who would be entitled to compensation. I hope that the noble Viscount who is to reply for Her Majesty's Government realises how strongly we all feel about these people who, through no fault of their own, are now described as "displaced, Stateless and homeless."
4.12 p.m.
LORD LLOYD: My Lords, in what I have to say I feel that I must first reiterate in your Lordships' House the basic principles which guide me in this matter. I believe that this particular issue is a quite exceptional one. I know that in the past it has always been a principle that the victims in the wars of this world should get no compensation from any Government. As I say, however, I believe that this is an exceptional case, one which stands on its own, and I am quite certain that ultimately we have the responsibility for seeing that these people get compensation. I feel that every endeavour should be used, in the first instance, to get that compensation from the man who ought to pay it, Colonel Nasser; and I personally hope that Her Majesty's Government will not think of unfreezing a single penny to Colonel Nasser until these

1169
people have received compensation. But ultimately—and I am afraid I must stand completely firm on this—if they fail in that task, then, in my view, adequate restitution must be made to these people, on behalf of us all, by the British Government. It is against that background that I examine these proposals of Her Majesty's Government.
When I look at the proposals I cannot feel that the principle in which I believe has yet been conceded. I cannot see here any concession to the ultimate liability of this country towards these people. I am bound to say that I feel that the scheme, on the whole, is on the niggardly side; if I may say so, it seems to bear the well-known imprint of the Treasury. The scheme has been criticised by a number of noble Lords on different grounds, and I do not propose to weary your Lordships by again going over points that have already been covered. I should, however, like to say a word or two on a few minor points. First of all, the scale of payments seems to me to be quite illogical. I observe that a man who has a claim of £3,000 gets £2,000: but a man who is unlucky enough to have a claim of £4,999 also gets £2,000, and so on and so forth; because the scheme is not drawn up on a percentage basis, but on some obscure basis which, frankly, I do not understand. Then, again, there is the question of repayment. Paragraph 7 of the statement says:
"…But no one will be asked to make any repayment until he can receive a return from the Egyptian Government in respect of his individual claim."
I should like to ask the noble Viscount who is to reply to the debate what is meant by "a return from the Egyptian Government". Supposing you have a man who manages to get an advance of £2,000 from Her Majesty's Government; supposing, after all the negotiations, he gets paid £100 by Colonel Nasser, and that is the best Her Majesty's Government can do for him, is he then expected to repay £1,900 to Her Majesty's Government? If that is so, it seems to me that he will be heavily out of pocket. I may be somewhat obtuse, but the expression, "receive a return from the Egyptian Government", seems to me to be excessively obscure, vague and capable of almost any interpretation anybody likes to put upon it. I think we should have some further explanation about it.
1170
I feel that I must make some reference to the question of the form of receipt. The noble Viscount, Lord Hailsham, has said that this form of receipt is a draft document; that it is highly confidential, and must not be mentioned in your Lordships' House. With the great respect that I have for the noble Viscount, I should not think of mentioning it, except to say this: although this form of receipt has not been published, and is therefore presumably sub judice and not to be discussed, it is an important matter in the whole question of the scheme. If these people are to be asked to sign a form of receipt which is totally unacceptable and unreasonable, it is most unlikely that the scheme will succeed, because they will not sign it. Therefore, it seems to me that although we cannot discuss this form of receipt, it is an important matter (I have seen the form of receipt, and, personally, I think it is most unsatisfactory) and I think that, somehow or other, the noble Viscount will have to do something about it, because I do not think these people can reasonably be expected to sign that particular form of receipt.
Having said that, my conclusion about this whole business to date is simply this. I believe that Her Majesty's Government, by this statement, have made some advance towards our point of view. I do not believe they have yet met our point of view, and it is difficult to know how all this will work out. For example, I dare say that these advances would be less unreasonable if we knew that within, say, two or three months there was to be a settlement with Colonel Nasser, when the whole matter would be decided. But nobody car tell how long this will go on; therefore I do not see how we can express any ultimate satisfaction or certainty about these proposals. Nevertheless, I recognise that Her Majesty's Government have come some way to meet us, and so I shall wait anxiously to hear what the noble Earl the Leader of the House has to say. I should not like to make up my mind finally as to what our reaction should be until I have heard what he has to say. My reaction, so far, is to say this: we do not feel that we have been met entirely, but we do feel that Her Majesty's Government have made some effort to come towards us; that we should continue to watch the situation carefully and reserve our position completely to come back here immediately after the

1171
Recess and ask for a great deal more. That would be my reaction, although, as I have said, I should like to hear what the noble Earl has to say.
4.20 p.m.
LORD MIDDLETON: My Lords, the noble Lord, Lord Lloyd, has said that these are rather exceptional circumstances which we are discussing. Shortly after I became a Member of your Lordships' House about thirty-three years ago, the late Lord Carson used to bring up the case of the Irish nationalists who, in his view, had not had a square deal from the Government. I would not endeavour to copy his invective, but I remember his standing where the noble Lord, Lord Gifford, is now sitting, shaking his first at the Front Bench and accusing them of being traitors. I remember that the second time this debate came up the Government were supported by Labour and Liberal Peers but were defeated by Back-Benchers of the Conservative Party.
The reason for my rising is to draw the attention of the Government to a certain category of individual not included in the list of those who get compensation: I refer to those who were in good employment in Egypt, who have no hope whatsoever of going back to their employment which has either been abolished or nationalised, and who, by reason of their age and lack of other qualifications, are now "on their beam ends" in this country, with little hope of ever being employed again. I suggest that their case should be dealt with as was the case of the directors of railways when the railways were nationalised. They received compensation commensurate with their expectations for the future if the railways had not been nationalised. I hope the noble Viscount will take note of that.
4.22 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, we are all grateful to the noble Lord, Lord Killearn, for raising this matter again, and we are grateful to the Government for having accorded what would normally be a Government Business day for the debate to take place. I agree with the noble Lord, Lord Lloyd, and others, in saying that this scheme, which was announced yesterday, is perhaps some advance in the direction of providing some interim relief. It certainly is no more than that. The point
1172
made by the noble Lord, Lord Balfour of Inchrye, and the noble Lord, Lord Lloyd, is to me of fundamental importance. We have never yet had a completely frank admission on the question of principle as to whether, in these matters arising now as a result of the events in Egypt, the Government themselves have a direct responsibility.
It seemed to me that the noble Viscount, Lord Hailsham, went rather close to it in his first speech on June 27. He was then dealing with a sort of double point with regard to funds in the event of claims in respect of property in war. I think it is worth refreshing our memories with what he did say. He said [OFFICIAL REPORT, Vol. 204, col. 504]:
"Of course, there must be between Governments negotiations in cases of this kind; but it would, at least in my opinion, be disastrous, not merely to these claimants about whom we are talking to-day—and they are important enough—but to the whole fabric of civilised behaviour based on international law, if it were to go out from this House that principles evolved during the centuries were of no account and that the claims of individuals to the restoration of their identifiable property-were to be used simply as bargaining counters in negotiations between the States."
If I may say so to the noble and learned Viscount, I agree with every word of that, and particularly the conclusion. But so far we have had no indication from Her Majesty's Government that in these matters the last part of the noble Viscount's statement is to be followed through, and that those claims from British citizens injured by the events in Egypt form the basis of compensation which, if necessary, is the direct responsibility of Her Majesty's Government, and will not be held back to be merely bargaining counters in negotiations with Egypt on other matters. I think it is due to your Lordships' House that, if the noble Earl the Leader of the House is going to answer the debate, we may be made quite clear on that point. Those of us who studied the noble Viscount's speech of June 27 have been expecting that something would be said upon it.
It is not for me to comment upon the use of a draft receipt here; I did not even know about it and certainly there have not been any consultations on the matter. But when it comes out in the House, as was quoted by the noble Lord, Lord Balfour of Inchrye, that they would have to sign it in connection with words

1173
that would imply the responsibility of the Egyptian Government in respect of the particular matter for which they are to get an advance. I am amazed. It is perfectly true that the immediate eviction of these people from Egypt was done by the Egyptian Government. But in what circumstances? It is true that the Egyptian Government interned citizens of this country, but not until after our forces had entered Egypt. That does not seem to be sufficient ground for saying in a receipt by British citizens under a claim for help or compensation that the Egyptian Government is to be the one Government cited. That is a position I am sure that the country as a whole would not wish to see adopted for these claimants. We are bound to recognise that the course of this operation in Egypt lays a heavy responsibility upon Her Majesty's Government.
I do not propose to go into the details of the statement made yesterday, because it has been quite adequately dealt with by the first three speakers in the debate this afternoon, but I am bound to agree with the noble Lord, Lord Lloyd, that those who are to get the immediate partial relief of these sums will feel that they are being treated rather niggardly. As a matter of fact, I did not have time on the last occasion to quote the figures, but at that time I had a suggestion as to what sort of loan advances should be mace. I am not going to quote the figures now, but they were considerably higher than the sums which are now set out in the statement. In respect of some of the people who could resettle themselves if they had a sufficient advance in respect of their known assets, I think the position may turn out to be exceedingly niggardly indeed. I hope that the last word of the Treasury has not been said on that particular matter.
I have had correspondence with those who belong to that section of people who were injured in their property and prospects by these events in Egypt, and who were the employees of the contractors to the British Government for the maintenance of our bases and stores from the time that the Government took the decision to withdraw our troops from the occupation of that base in Egypt. The noble Viscount, in his speech of June 27, did not say anything very specific about
1174
these particular people, but he did refer to the fact that there were certain cases outside the ones for whom interim relief was being sought, in connection with business interests and the like, which would be settled in another way. It is true that settlements have been made in some cases with the employees of those contractors. But there are two points I wish to make in regard to it. The first is that some of them have accepted sums offered which, in the view of many, were quite inadequate. It meant that unless they accepted the offer of six months' salary and no further responsibility, then for the time being only they would continue while under notice to receive an ordinary monthly salary subject to the deduction of income tax. I do not think that that was really adequate compensation.
In the second place, I would say that we owe people like that something because of what has arisen from these events in Egypt. After all, what happened to them? I praise the Government for the arrangements made much earlier, because they thought there might be difficulties in getting some of their wives and families out, and for the care which has been taken in that respect. After all, when certain things have been done, one ought to recognise them and say, "Thank you". But I do not feel that the people who were doing a job for the Government through the contractors have been well treated. I should say that, as they were interned, in conditions of great indignity, from November until nearly the end of February, with their families all the time suffering great anxiety, waiting and waiting for settlement—and even now some of them do not know what their next job will be—it would be not at all unreasonable that those men should receive a compensatory grant for that treatment in Egypt. It did not occur until we sent out troops and forces to Egypt, and I think that a capital sum should be paid to each one of them, because we must get the principle accepted that the Government have the responsibility and ought to meet it.
I have heard one or two suggestions as to what should happen at the end of this debate and what should be the view of the House. I agree with the noble Lord, Lord Lloyd, that we should listen

1175
to what the final answer from the Government may be, but I think your Lordships' House, on such matters as those that were raised by the noble Lord, Lord Middleton, and others, would agree that unless we can get this general principle accepted, we ought to let the Government know in no uncertain terms that we do not agree with the principle which they have adopted. I think that all sections of the House might keep that in mind while we are listening to the reply, to which we shall all listen very carefully and which I am sure we shall seek to assess fairly and justly. I hope that we are not going to accept, as it were, a long hiatus between now and the end of October, when we reassemble, and be in complete uncertainty as to whether the principle is accepted or whether there is not something which can be more effectively done to help these people. It is not through any fault of their own as British subjects but because of the actions taken by Her Majesty's Government, as well as by the Egyptian Government, that they ought to be properly compensated.
4.34 p.m.
VISCOUNT HAILSHAM: My Lords, although I naturally make no complaint that a good many speeches have ranged somewhat wide, both in the scope and in the context of the matter under discussion—because all these things have to be seen in the context both of the events of last autumn and of the desirability of developing our relations with Egypt on rational lines—I do not think I myself should be serving this House or the community well by going too far from the terms of the Motion. Words spoken in the context of a narrow debate which have a wide connotation are not always of advantage to anybody. Therefore, I shall strive to deal with the points which have been raised in the debate so far as they bear upon the Motion under discussion. I shall try to deal with them all. I should think, according to my enumeration in my now undecipherable notes, that some forty to fifty points have been raised, which would take a long time to discuss in detail; but I hope that, should any noble Lord who has raised points of detail to which he attaches importance feel that I am not dealing with them, he will remind me of them at the appropriate time in my speech. I shall then be only too happy
1176
to deal with them, since my intention is to deal with them all, although I fear that I shall probably overlook one or two through inadvertence.
I will permit myself—I hope I may not be drawn too far afield in doing so—one or two general observations by way of introduction. In the first place, I agree (and I think in this respect I am reflecting the view of the Government), with the general approach to this question adumbrated at the beginning of the speech of my noble and gallant friend Lord Jeffreys and my noble friend Lord Lloyd. Indeed, the Motion in a sense implies as much. We are dealing with people who have been expelled from Egypt "by order of Colonel Nasser"—I quote the Motion—and whose goods have been expropriated in circumstances which I tried to describe and categorise last time as going outside the proper ambit of International Law. I ventured to say then, and I repeat now, that whatever might have been the original justification for such confiscatory action, that justification must have disappeared by now according to the ordinary usages of International Law.
I thought at that time that I was expressing the general view of the House, and I still venture to think that this is the case. The noble Lord, Lord Jeffreys, used much stronger language which I myself might have used had I not been standing at this Despatch Box, but at any rate we think it would be the general view of the House that that was so. The only other observation I would make about this is that I do not altogether share the view expressed by the noble Lord, Lord Teviot, that in no circumstances whatever can the present Egyptian régime be induced to behave in accordance with International Law in this matter. On the contrary, there are some indications that it respects the conscience of mankind in this case, and I hope that nothing which I say this afternoon will indicate anything other than that the British Government hold the Egyptian régime to the legal position and hope that it will perform its obligation in this matter.
If I have seemed on a previous occasion to be at all equivocal, or if any other members of the Government have seemed perhaps to be at all equivocal, about the ultimate solution of

1177
this matter, it is precisely because we hope and believe that it may still be possible to solve this matter in accordance with what I gather all Parties in this House would consider to be justice. What happens if, unhappily, that should not prove to be the case is obviously something which may have to be discussed then; but I know that noble Lords in this House would not desire to press me to say anything which would induce the present Egyptian régime to believe that we were not expecting justice for individual citizens who have been wronged in this way. I am perfectly sure that if I were to say anything of that kind I should not be serving either those citizens or my country. I hope, therefore that I may have a very good measure of understanding and sympathy for the way in which I address myself to dealing with the general aspects of this matter.
The second thing I wanted to say by way of introduction is this. I ask the House to remember the scope of the subject which we are discussing this afternoon and the circumstances in which it arose. We were faced with the situation of persons expelled from Egypt, deprived of access to their goods, whether permanently or temporarily. We dealt first with the question of hardship in a fairly narrow sense. That was the subject of the previous jurisdiction of the Resettlement Board. I think it is fair both to the Government and to the Board to say that neither on June 27 nor to-day, by and large, has it been suggested that within the scope of the original jurisdiction, which deals with everybody on the basis of hardship, the statement had been other than generous, or indeed that the payments had been other than generous, because they have been at something like the rate of £1,500,000 a year, and are continuing now.
On the previous occasion, the noble Viscount, Lord Alexander of HILLSBOROUGH, asked me to give some further account of the operation of the Resettlement Board. I am happy to say that I hope it may be possible, in one form or another, to comply with that request, which we regard as wholly reasonable, before the Recess. But I think it is worth while saying, so far as the hardship of the person and to the person is concerned, that so far there has been no
1178
criticism at all, either on June 27 or on the present occasion, by those who have put forward this Motion. The Motion has been designed, and is so expressed, to meet the case of the classes of person who, in addition to personal hardship of the other kind, have been deprived of resources held both in Egypt and in the United Kingdom. If the scope of my announcement yesterday seemed to some, as I think it probably did, unduly restricted, I would ask the House to remember that it was within the ambit of that rather narrow aspect of the problem that the whole statement was conceived; and it arose from the debate on the previous occasion when the noble Lord, Lord Killearn, said that in his view, at any rate, the expression "hardship" ought to include the deprivation over an extended period of time of assets. I have said in terms that that seemed to me to be a reasonable point to make, and the debate was, in effect, adjourned, in order to explore the possibilities of that exchange of views.
The genesis of yesterday's statement was not the desire to give a comprehensive review of the whole situation; the statement was intended to be the outcome of considering the view which I had expressed to the House, that to be deprived of one's assets over an extended period of time was indeed a hardship. I went so far as to add—which the noble Lord, Lord Killearn, did not do—that, in my view at any rate, the hardship might increase as the period of time extended. I thought that was some indication of what was in our minds on this matter. Well, my Lords, the outcome was, after a considerable period of discussion—perhaps "negotiation" is the wrong word—the announcement of yesterday.
The noble Lord, Lord Killearn, said that he had been working for an agreed solution. I certainly hoped, and hope, that the solution which has been found, when it is placed in its proper context, will be found acceptable. I do not quite know what is meant by "an agreed solution". There are, I think, 6,000-odd persons whose claims may be affected by what the Government propose to do. I know of nobody except the individual 6,000-odd people who can make an agreement. There is no negotiating body—not even the noble Lord. In fact, I should have thought that, whilst I hope

1179
every time to persuade the House that what I suggest is reasonable, short of having 6,000 separate agreements I could not claim that anybody is bound by it, apart from the Government who are putting it forward. I can assure the noble Lord, who claims to have done his best himself to provide an acceptable solution, that there was no other thought either in my mind or in the minds of my colleagues than to do so.
I point out, too, that the Motion which the noble Lord has put down again, in identical terms, relates to the matter of
"interim relief to admitted claims pending a just and full final settlement."
With great respect, I do not think that it is a legitimate complaint against the Government that, in making their announcement acceding to the claim for interim relief, they did not define what the item of "a just and final settlement" would be, because that was something far beyond what was asked for in the Motion. What we sought to do was to recognise that hardship was being caused to those who, by virtue of delay, were deprived of access to their assets and to try to meet that hardship by an interim solution. Of course "interim solution" means neither more nor less than it says. It does not mean that it is the Government's last word; obviously, it does not necessarily mean that it is not. We all hope that to-morrow we shall read in our newspapers that Colonel Nasser will repay everything that he has taken. It may be that some of us do not think that that is very likely. But what further steps, if any, can be taken must depend upon the situation and how it develops.
My Lords, I thought perhaps the best course would be to take the statement, paragraph by paragraph, simply as a kind of structure on which I could reply to the different points which, according to my recollection, had been made upon it by various noble Lords who had taken part in the debate. But before I approach the statement may I say this. The noble Lord, Lord Killearn, was not, I think, right in feeling that we had ever resented that he should have presented this matter for consideration by the House. On the contrary, I should have thought it was a question eminently suitable for discussion in either House of Parliament. I do not think that anyone would complain that the noble Lord,
1180
whose connection with the British community in Egypt is well known and, I think, universally respected, or that my noble friend Lord Lloyd, or other noble Lords who have interested themselves in the matter, should have been so persistent or acute as they have been. On the contrary, we have to be grateful to the Parliamentary system which enables this matter to be debated. If I have a small matter of reproach to mention against the noble Lord, Lord Killearn, to which I will come in due course, it is not connected with the fact that he has put this Motion on the Order Paper or repeatedly referred to the matter; on the contrary, I think that in doing so, he is performing his duties as a Member of Parliament.
The first point which was made was in connection with the application. It is, of course, true that the determination will be in the hands of the Foreign Office. But as I understand the matter, the Foreign Office propose to value the claims, for the purpose of making these loans, at their face value; it is for that reason that a certain percentage has been knocked off. Obviously, when you are dealing with things like second-hand boats on the River Nile—see Item 3 of paragraph 2—or livestock in Egypt prior to November, 1956, which have been sequestrated, you cannot hope to make an absolutely accurate assessment of their value. But the value of the Committee to which the noble Lord, Lord Killearn, has referred, has been acknowledged by the Foreign Office. As I understand it, where a prima facie claim has been made out, the claim is considered on its face value. I do not think, on the whole, that it is reasonable, when the claim is being accepted on that basis, to ask for a formal consultation in every case. I think that the noble Lord must take "Yes" for an answer in this particular case.
That, I think, was the only question which was raised in regard to paragraph 1, except that I think my noble friend Lord Balfour of Inchrye asked for an advisory committee. I have two comments to make upon that. Quite clearly, as I said last time, any suggestion which is made for the improvement of the machinery of discussion or liaison is to be examined carefully and will be welcomed should it prove workable. Hitherto, we have been negotiating partly with

1181
Members of another place and of your Lordships' House who have shown a great deal of interest in the matter, and partly with members of the communities concerned. I am not at all sure that this is not the best way, because the varied nature of this problem is one which lends itself, I am afraid, to discussion mainly of individual cases—as, for instance, the particular special case put before me by the noble Lord, Lord Freyberg. I should certainly like him to send on to me the letter which he read out so that I may consider what can be done. I am not quite sure that an advisory committee is the appropriate machinery. The Resettlement Board itself represents a large number of organisations, and it is possible, I think, to have too wide a ranging system of committees when the personal and direct approach might well have better results. I think my right honourable friends would be most interested in my noble friend's suggestion, and I will see that it is brought to their attention sympathetically.
I think no particular problem arises over paragraph 2 of the statement. This recognises that only certain assets should be reckonable, but the whole list appears to have been acceptable to the House. The noble Lord, Lord Middleton, and I think one other noble Lord who took part in the debate, referred to persons who had contracts of service and had lost their employment. It is quite true that this scheme does not directly assist them. It is not intended to, because it is specifically a scheme which arises out of the discussion we had on June 27. It was designed to meet those who were deprived of access to tangible assets. That does not necessarily mean that these people will not rank for assistance from the Resettlement Board. Many will do so—in fact, many have done so. A limited category, however, will rank for assistance under this scheme. If your Lordships will look at the list in paragraph 2, the third item from the bottom is "Indemnities". I was curious enough to inquire what was meant by "indemnities" in this context, because I was not quite sure what class of asset could be referred to in those terms. I understand that the heading "Indemnities" refers to a right arising under the Egyptian law of master and servant, under a recent decree, which allows terminal payment to a person whose employment
1182
has been terminated, for whatever reason. To that limited extent, they are dealt with by that scheme; otherwise they come under the general scheme.
As regards paragraph 3, I must say that, viewed in its context, in Which I have sought to place it, I do not feel that this scale can be regarded otherwise than as reasonably generous. More than half of the claims, I think I am right in saying, are for sums of £2,000 and under; and they represent, as your Lordships will see from paragraph 2, a considerable variety of different types of asset, not all easily realisable and not all easily calculable. No one has suggested—and I am not going to—that there is an element of conscious inflation about any of these claims, but obviously there is a margin of error when we are dealing with second-hand goods things like vehicles, boats on the river Nile, and livestock; quite obviously the claimants will have wished to do justice to their own claims, and there may be in the valuation an element of doubt of a perfectly legitimate kind. It follows that even if the Government were to allow the claims at 100 per cent. of their value, they would, for the purpose of interim relief, be bound to leave a substantial margin in hand. And I emphasise again that this is an interim relief, which is supplementary to that already received from the Resettlement Board, in the sense in which I shall explain. Therefore, I do not think that a basic scale of 70 per cent. is unreasonable. Quite obviously, those who have lost very large fortunes have lost more; but the scope of this scheme, which is a narrow one, is not designed to give permanent compensation for losses of £20,000 and more. It owes its genesis to a promise by myself to consider giving interim relief, viewing hardship on a generous basis and recognising that deprivation of assets for an extended period might be termed hardship.
The noble Lord, Lord Killearn, for purposes of his own, quite legitimately, reminds us that eight months have passed since October, and that that is a long time. Well, yes; but when it is proposed, as an interim measure, to put claimants into possession of up to £5,000 in the case of large fortunes, free of interest—and, of course, free of tax, because it is a loan—to tide them over whilst the delay continues, I cannot see that such a payment can be described as niggardly or mean.

1183
If it were designed to represent an assessment of the value of the claim or as anything but what it claims to be, namely, to quote the Motion,
"a measure of interim relief pending a just and final settlement",
those words might be used. It would depend on the view one took of the ultimate nature of the obligation. But this is what it claims to be, and nothing more, and I cannot think that £5,000 is a very niggardly figure. Having heard some of the figures which were put forward at some stages by others, I am not sure that there is really so much difference as one might suppose from some of the more excited statements which have sometimes been put forward.
I come now to paragraph 4:
"Persons eligible for payments under the scheme are all British nationals who left Egypt as a result of the events of last year, and who have, before July 15, 1957, registered declarations of assets with the Foreign Office."
There are two points there. All these schemes are at the moment limited to British subjects, and therefore, the Mr. Schlick referred to by the noble Lord, Lord Freyberg, is not himself eligible for the scheme; but if the noble Lord will send me the letter to which he referred I will see whether anything can be done within the scheme for Mr. Schlick's wife or, outside it, for himself. I do not think I should say more about that at the present stage.
I think it is desirable to have placed the date at July 15, 1957, that is, the present moment. It does not refer to the arrival of refugees in this country (if I may deal with the point dealt with by the noble Lord, Lord Strabolgi); it refers to the registration of assets. As noble Lords know, we have for a number of months had a system of registration of assets. The only complaint that has been received so far has been that it has been on the table too long, not that it has been on the table too short a time. It was thought reasonable that the scheme should deal with the registration of assets to the date of that interim measure; and that is what has been done. I am not in the least saying that outside the scope of the covenanted scheme there may not be scope for uncovenanted relief. I should have to see the kind of case which was sought to be brought within the ambit of that before I gave any undertaking
1184
about it. The covenanted scheme is for assets registered up to July 15, a period which in the past has been characterised as too long and not as too short. I do not think it can be said to be unreasonable, provided always it is understood that, if noble Lords find the shoe is pinching or that the scheme does not work, the matter will be considered, though I cannot in general give any undertakings about that.
There was some complaint from the noble Lord, Lord Gifford, and one or two other noble Lords, about the relationship of the scheme to previous loans from the Resettlement Board. That is, of course, an aspect which I am sure will be looked at again as things go on. It does seem to me that at first sight they had perhaps not got the relationship between the two schemes clearly in their minds. The Resettlement Board makes grants and loans. Some of the grants are continuous maintenance grants from week to week. Some of them are terminal grants ending all payments. Some of them are "once and for all" grants, to help in the purchase of furniture. Any grant made up to date is disregarded for the purposes of the scheme: that is to say, the claimant is entitled to the amount of the grant, whatever he will be entitled to under the scheme, in addition, without setting one off against the other. Loans are taken into account because, after all, a loan has to be repaid, and it is reasonable that loans should be reckoned together and taken into account.
The question then arises to what extent can a claimant go on claiming public money under resettlement provisions and getting what may be up to £5,000 of public money. The normal rule is that if you have access to your assets you go off the ordinary resettlement claim and do not come back on it. I should have thought that, with one qualification, that was a just provision. Lord Gifford says: "Why not scale it down in accordance with the grant received?" My view is that that might operate far more harshly on the claimant than what is proposed. The present scheme is that a person receiving public money under an existent resettlement loan can go on doing so and is under no obligation. He does not disentitle himself for three months. In other words, he can go on getting public money for three months without repayment, and then apply under the scheme. If he feels

1185
that he is being prejudiced by the lapse of three months he goes to the Resettlement Board and says: "Let me defer my application under the scheme." So he goes on getting public money without disentitling himself if the Resettlement Board agrees, and is still entitled to his loan under the scheme later on.
I do not think that that can be argued to be a niggardly provision. If it causes hardship, my view is that that will emerge in practice. The door is not shut to adjustment in interim measures. Clearly the Government must, and I, as spokesman of the Treasury must, show a due sense of public responsibility in the disbursement of public monies. People are rather inclined to talk scathingly in terms of charity. This is not charity. It is public money which is being disbursed, and one must consider whether one can justify this payment as a payment of public money. I feel that, with this exception, the House might be willing to allow this scheme to go forward, and then if hardship should emerge your Lordships have the opportunity of bringing it either privately or publicly to the notice of members of the Government. The last thing I would suggest is that in a scheme of this character, designed to give interim relief, categories are at all rigidly determined.
The duration of the scheme is dealt with in the next paragraph. I do not think any point was raised about that. Then comes the obligation to repay. Here I have a slight feeling that injustice has been done to the Government in what was done with the draft receipt. The receipt forms no part of the scheme. The scheme is as stated yesterday. But clearly there must be some sort of a receipt, and a tentative draft of what was proposed was put forward to a representative of the community concerned on the strict understanding that it was not to be published. A promise was given and the receipt was put forward for discussion on that basis. Personally, I believe in a bargain being kept, however sympathetic one may be. The next thing I knew was that I was told that the draft was going to be read out in the House, with the result that it would be published. I say that there is nothing to be ashamed of in that draft, but I feel that if negotiations are to be carried on on the footing of documents which it is agreed shall be regarded as confidential, that kind of
1186
bargain should be kept. I know that neither of my noble friends would have lent themselves to a deliberate breach of a bargain of that kind, and I am not suggesting for a moment that they have done so. But in view of what I am advised were the terms on which that document went forth, I think that when they reflect they will understand why I was a little resentful that that document should have been made a subject of public discussion—for it has been made the subject of public discussion.
LORD KILLEARN: With all respect, how could it be otherwise?
VISCOUNT HAILSHAM: I should have thought that when you were seeking to find a form of words which was satisfactory to both the two negotiating parties, it was the commonest thing in the world to ask that while discussions were in progress the matter should be treated confidentially. If not, I would sincerely suggest to my noble friend: hat an undertaking to treat it as confidential should not have been given. But if given, the undertaking should not have been broken.
LORD KILLEARN: Who gave the undertaking to treat it as confidential? I am quite unaware of anyone having done so.
VISCOUNT HAILSHAM: According to the information I have received, the document was given to Colonel Moore on the distinct understanding that the document should not be published.
THE EARL OF SWINTON: This is to be a form of receipt—not an individual one to Colone Moore—which will be signed by everyone who takes a loan. Is that not so?
VISCOUNT HAILSHAM: Exactly. For that reason it was desired that it should be shown to the people concerned—or at any rate to a representative selection of them—in order to discuss what form of words would be acceptable. Then I find that this thing, which is intended for purposes of discussion and negotiation, to see what form of words would be acceptable, is to be treated as an excuse for public criticism of the Government which has offered it. Surely it is unreasonable—
LORD KILLEARN: No excuse was needed at all. I repudiate the word "excuse". The receipt was put up as

1187
part of a proposal by the Treasury. There is no excuse required whatever. I do not see why these people should be browbeaten by the Treasury into signing something which is quite improper.
VISCOUNT HAILSHAM: I am sorry to say that I see no justification for accusing the Treasury or anyone else of browbeating anyone.
THE EARL OF SWINTON: I am sorry to pursue this matter, but I think we ought to get it clear, and I hope we can do it without undue heat. As I understood the noble Viscount—and I have tried to follow carefully what he has said—one of the difficulties in this case is that you cannot negotiate with anyone or make an agreement with anyone because, on the one side, the Government, of course, can make the offer and stand by that offer, but, on the other side, there are 8,000, 9,000 or 10,000 people, each of whom has a claim or a case. The difficulty is that you cannot make an agreement which is binding on both, because the Government make an offer that no doubt is binding on them, but thousands of claimants cannot be bound because they cannot be got together. That I entirely accept. If you are asked to make an agreement in confidence with them, and the matter is at large for debate in your Lordships' House, and the form of receipt they are asked to sign is obviously a vital factor, I do not understand why there should be all this hullabaloo about the secrecy of the form of receipt.
VISCOUNT HAILSHAM: My Lords, I can see one aspect of what my noble friend is trying to say, but it seems to me that what the Treasury did was more reasonable and generous. They wanted to know what form of words would be acceptable, and they did exactly what they had been invited to do by the noble Lord, Lord Killearn. They got in touch with those who, at any rate, claimed to be, we say rightly—
LORD KILLEARN: My Lords—
VISCOUNT HAILSHAM: Please let me finish the sentence; I am dealing with the question of the noble Earl, Lord Swinton, about representatives of the community concerned. The Treasury put forward a form of words, which certainly I am prepared to justify but which at that stage was purely tentative
1188
and formed no part of the scheme as announced, to ascertain what could be agreed, and they did so precisely because it could be altered. It was not definitive, and these representatives were asked not to take this receipt for granted. That undertaking was not kept. It is a pity that the undertaking was not kept. If an undertaking is unreasonably asked for, then the complaint should be made, "You should not ask for that undertaking and we will not give it." But to give the undertaking and then break it does not seem to me to be the way in which things should be done.
LORD GIFFORD: My Lords, I do not want in any way to discuss the private discussions I had with the noble Viscount in the absence of my noble friend Lord Killearn, but my recollection is that I informed him that this draft receipt was totally unacceptable and that we felt that we must raise the matter in the House because it was fundamental to the whole scheme.
VISCOUNT HAILSHAM: My Lords, the noble Lord is not quite right about that. He told me that he objected to our receipt because of the demand for repayment at any date on demand. It was for that reason that I made representations to my right honourable friend, which resulted in the sentence at the end of paragraph 7:
"But no one will be asked to make any repayment until he can receive a return from the Egyptian Government in respect of his individual claim."
It was never suggested to me that this form of conventional receipt was unacceptable. At that time, I did not know of the undertaking which had been given, but I should have been asked if there had been any question of it. This tentative form of receipt has been objected to on the ground that the noble Lord, Lord Balfour of Inchrye, gave. I do not mind. I do not think that there is anything wrong with this receipt. If there is, we shall try to put it right. But what I do say is that when one is dealing with negotiations of this kind, it is very important to see that undertakings are kept.
LORD BALFOUR OF INCHRYE: My Lords, may I ask the noble Viscount this question? He has been making a series of accusations that someone outside the House has broken a confidence with the

1189
Treasury. I think it is a little unfair that someone outside, whom the noble Viscount has even mentioned by name and who is unable to answer for himself, should be subjected to strictures by a Minister from the Front Bench unless the Minister is prepared—he may well be—to show some acknowledgement by this particular man or organisation that this was a confidential document. It came into my hands and I have no regrets at all at having declared to the House the provisions in this draft receipt, because, I repeat, I think that they make the prospective signatory concede the undecided point of principle, which we are not debating to-day, which I have studiously avoided debating, and which the Government have tried to impose upon the affected individuals by means of making them sign something because they are going to get their money.
VISCOUNT HAILSHAM: My Lords, nobody has tried to impose anything on anybody. That is precisely what we are anxious not to do. We decided to discuss this receipt with the persons, or at any rate with those as near as we could get to the persons, concerned; and if I have made strictures on somebody and named him, I have done so only in response to a direct question.
LORD BALFOUR OF INCHRYE: I did not ask the question. Would the noble Viscount withdraw that the question was from me?
LORD KILLEARN: My Lords, who was it from? It was not from me.
VISCOUNT HAILSHAM: My Lords, I am sure that I did it in response to some noble Lord, because I did not at first give the name and I am sure that some noble Lord from that quarter of the House asked me to identify him. But I feel it is a duty, when the Treasury have advised me that this undertaking was given and not kept, to apprise your Lordships of that fact. If there is any misunderstanding, I shall be happy to think so. I certainly do not want the fact that this unfortunate incident has happened between the Treasury and the person concerned to rob us of any mutual confidence we may have in our future negotiations; and I hope that the House will accept that.
1190
I should like to say something about the terms of the receipt, because I am sure the House will be interested, now that the document has been read, for better or for worse, to know what is thought of the terms of the receipt, and not about the circumstances in which it came into being. That seems to me now to be the point of the matter. The object of the receipt is to identify the payment and identify it as a loan. It was not intended, either by the Treasury or by anybody else, to prejudice anybody's position; only to describe it. All these assets which come within the scheme are assets which have been withheld, expropriated or sequestrated by action of the Egyptian Government. That defines the ambit of the scheme.
Some phrase defining assets of this kind and the way in which they got out of the possession of the owners is, I should have thought, obviously necessary. It certainly was not desired to prejudice the claimant in any way. It was not intended to express any judicial view on the basis of the international position, although I have repeatedly reiterated the view, and do so now, that the sequestration was illegal and that it is the duty of Her Majesty's Government to press the claims of the claimants against the Egyptian Government. If the noble Lord or any of my noble friends have the smallest idea that this receipt was designed in some way to prejudice the claimant or do anything other than define by a factual description the ambit of the scheme to those assets which were, in fact, expropriated as the result of the action of the Egyptian Government, then I should like him to disabuse himself of that idea. There was no idea of that at all.
If the noble Lord came to me or any other member of Her Majesty's Government to discuss a form of words which he felt did not have that effect but was none the less sufficiently precise to suit our purpose, I would not mind. I simply want to get this right. The only thing I am anxious to do is to set it right from both points of view—from the point of view of the claimants and from the point of view of Her Majesty's Government. With the greatest respect, I would say, I think with general approbation, that, valuable as a debate in Parliament is, there are better tribunals for the minuter points of the draftsmanship. I hope that

1191
I have now dealt with the receipt, for the time being. I have gone through the statement.
LORD LLOYD: Before the noble Viscount continues, I would remind him—he invited us to remind him if he missed anything—that I asked whether he could explain in a little more detail the meaning of the phrase, "receive a return from the Egyptian Government". That seems to me to be obscure.
VISCOUNT HAILSHAM: It is bound to be obscure. Suppose all the money comes back from the Egyptian Government: one would not expect the claimant to have both the money and the loan. Equally, I think one would legitimately expect that if the Egyptian Government were to do what we are here agreed is the right thing by any particular asset, the claimant might reasonably be expected to press his individual claim, if it rested with him, under the provisions of any settlement that was made. What is designed by this phrase, without being too precise, is to make sure that the claimant is protected against repayment by himself except in the circumstances named—that is to say, that there are assets available for him, if he seeks to obtain them and takes reasonable steps to obtain them; and secondly to ensure that he will take reasonable steps to obtain them once he has had the loan. It was certainly not in the mind of anyone that anybody would be astute enough to ask for the whole sum back from a claimant who received only 1s. in the £ from the Egyptian Government. If I may say so, with respect, to my noble friend, loans are loans, and I should have thought that this form of receipt, expressed however aptly after discussion, is much less harsh than most other forms of receipt that I have seen, when read in conjunction with the assurance given in the statement yesterday that repayment would not be sought except in the event of there being a return available from the Egyptian Government.
LORD LLOYD: My Lords, I am sorry to interrupt the noble Viscount again, but the whole point of my intervention was that it seemed to me that a great deal depended on the size of the return: it might be total, it might be partial, or it might be virtually non-existent. However, I do not wish to pursue the matter now,
1192
and perhaps I can discuss it with my noble friend at some time, leaving it there at the moment.
VISCOUNT HAILSHAM: I should have thought that my noble friend was right: that this is a point of detail which can be left to discussion between us. As he said, and as I have said myself, it depends a great deal on the size of the return, on the nature of the asset concerned and its value.
LORD GIFFORD: My Lords, before the noble Viscount passes on, I should like to take up two points on paragraph 4 on which I do not think we have a clear answer. First, there is the question of the persons eligible. I mentioned the case of people who had left Egypt before the deadline date, which was August 2, either on holiday or for various other reasons, but who intended to return. Strictly speaking, according to the wording I do not think they are eligible for the loans. The second category is the people who, say, have migrated to Australia and may not have had time to put in their claim by the deadline date of July 15.
VISCOUNT HAILSHAM: I think that those two are questions of detail, but I should have thought, offhand, that the answers were plain from the words of the statement. The test for eligibility does not depend on a fixed date as a terminus a quo, but depends on the fact of their leaving Egypt as a result of events last year; and although, as I understand, administratively, for the purposes of the other scheme, but not for this, a fixed terminus a quo has been used as a test, it has not been rigidly applied, and there is nothing in this scheme to indicate that it would be rigidly applied here.
With regard to registration, I have already dealt with that point. It is thought that the cut-off date is a reasonable one for an interim scheme, in the sense that I have described it. I am sure that if my noble friend finds that it causes injustice in an individual case, and he can produce it, he will have no hesitation in coming to me, or to any other member of the Government, so that we can try to thresh it out together. As I say, these questions of detail are impossible to cover in all their multifariousness. I would respectfully suggest that the right course for the House to take is to accept the scheme and see how it works. After

1193
it has been working for a short time, we shall have experience of its working, and we shall know more clearly if it has any defects and what they are.
I promised to deal with one other subject, a difficult question adverted to in somewhat different terms by several noble Lords; that is to say, the case of claimants who have assets in British banks in this country. The first thing I should like to say is in relation to what was fairly and generously said by my noble friend: that these assets will all rank for Government; loan under this scheme. They come on the last of the list in paragraph 2:
"Securities on deposit in the United Kingdom."
They are reckoned as assets for the benefit of this scheme. But the point raised by several noble Lords is a somewhat different one. These are assets held by British banks in this country. Some are held in the names of British subjects now in this country; some, I understand, are held in the name of Egyptian companies, but, in fact, beneficially owned by British subjects now in this country; some are held on behalf of the branches of the very bank in this country which now holds the assets physically.
As regards that, I have been bound to tell the House on a series of different occasions that I do not understand, and I still do not quite understand (I see the noble and learned Earl, Lord Jowitt, opposite, and in the presence of such a legal authority I speak with some trepidation, but he has been kind to me on more occasions than one and in more capacities than one, so perhaps I will pursue the argument) prima facie, what would necessarily stop a British bank from handing over a British asset physically in this country to a subject of this country who, in fact, owns it as the customer of the bank.
EARL JOWITT: Nor do I.
VISCOUNT HAILSHAM: I am glad to hear that the noble and learned Earl agrees with me. Nor am I quite so clear as some noble Lords appear to be why a British bank should want an indemnity from the Government to hand over to the customer his own money. These are obtuse legal questions. It is wrong for a Minister of the Crown to express art opinion about them, but he is entitled to
1194
a certain amount of scepticism about them, and I think that is as far as I can go. I know that there are cases in the courts of a very different kind, which have been decided by this House in its judicial capacity, in which the exchange control of other countries has been recognised for certain purposes. Perhaps it is—I do not know—that the banks are apprehensive of the results of the finding in those cases. If so, it would be wrong for me, as a Minister of the Crown, and particularly one not holding a portfolio connected with the law, to say anything on that point. All I can say is that the legal rights of such parties ought to be determined by the court, and if the result of their determination of their legal rights seems an injustice to an individual British subject, it would be then, and not before, that on that basis the British subject ought to go to the Government and ask for political or executive action. But it is wrong for the Government in general principle to interfere with the rights of parties which may be the subject of litigation, before they are ascertained in the courts. I would ask the House to accept, on the whole, what I say about that matter.
I think I have now covered the whole ambit of the debate. If I have omitted any point raised by any noble Lord and he feels that I ought to have dealt with it, and will write to me. I will try to deal with it by correspondence, because in the course of a rather diffuse discussion of this kind it is not physically possible to keep all these points in my mind. What I hope to have achieved as the result of my speech is to indicate the scope and nature of this complaint, and to persuade noble Lords in all quarters of the House that we are sincerely anxious to show ourselves sympathetic to the claims of these people who, as has been said repeatedly, have done no wrong at all themselves, and to do so consistently with the stand we have taken on international law, with our general obligations to the public, and with our sense of responsibility as public servants. If, in any way, we have fallen short in that respect, I do not think the House can complain that I have been unwilling to listen to argument or criticism. On the contrary, I welcome argument and criticism. I want each Member of the House to realise that if there is any feeling that an individual case has not been properly examined, or that

1195
what is proposed does any kind of injustice, I would be only too ready to listen to it. But, at the same time, I would deprecate any suggestion that Her Majesty's Government are not anxious to fulfil all the obligations which rest upon them.
5.32 p.m.
LORD KILLEARN: My Lords, we have listened to an unusually interesting debate, and certainly a very illuminating one. If I say that I am not going to divide the House, let me add hastily that it is for one reason, and one reason only. This scheme was announced only at 3.30 yesterday afternoon. It was circulated in the OFFICIAL REPORT only this morning. I do not like it, and many other noble Lords do not like it, but I feel that I should not take your Lordships into the Lobby on a scheme you have not had time to digest or when you do not know what are the issues at stake. It is not easy. Probably many people did not get their OFFICIAL REPORTS, or may not even have read them before the debate. When I was reading from the Government paper, I was conscious that I was talking about things many noble Lords may not have read.
One thing has been apparent throughout this long-drawn-out discussion over all these months. I have been very conscious—and I have rejoiced in the consciousness—that I have had the whole House with me. Not for anything in the world would I estrange the confidence of the House by putting your Lordships in an embarrassing position. Accordingly, I say that I am not going to divide the House deliberately, because I feel it would put many noble Lords in an extremely difficult and embarrassing position by having to vote on a subject which they have not had sufficient time to study.
SEVERAL NOBLE LORDS: Well, well!
LORD KILLEARN: That is my view.
VISCOUNT ALEXANDER OF HILLSBOROUGH: We have had no real answer yet as to where the Government stand on the general principle. We have had no answer at all as to their attitude which made them put that phrase in the receipt form. Are we to wait for months and months to see if we are going to get
1196
an answer? I do not understand the noble Lord. If he wants our support, how does he expect to get it?
THE EARL OF SWINTON: Surely, the noble Lord wants to do what is right.
LORD KILLEARN: The noble Viscount is an old Parliamentary hand, and I value enormously the support which he and his Party have given me throughout. I feel that I owe a duty to this House as a whole, and the strength of this sort of question is that you should have a united House with a united view. Quite seriously, have many noble Lords read this document even now?
LORD OGMORE: We have spent all the afternoon on it.
LORD KILLEARN: I must say en passant that it seems to me "pretty hot work" to issue the thing at 3.30 one day and debate it next morning, the very morning the essential details are first disclosed to the House.
LORD OGMORE: May I ask whether the noble Lord is not being unfair to the Minister of Education, who has given an hour to explaining the scheme?
VISCOUNT HAILSHAM: I hope the noble Lord does not suggest that I was taking unduly long in trying to answer the individual points which have been raised in the debate. May I say to my noble friend that I realise that this scheme was put forward very late. I communicated it to as many noble Lords as I could immediately it was in my hands. If it had been put forward earlier it would not be quite so nice as it is now. The noble Lord must really believe that we were working under considerable pressure, and that we put it before the House as soon as it was in a state in which we could feel that it was justifiable to do so.
LORD KILLEARN: I fully accept what the noble Viscount has said. In my case I was in the country at ten past one o'clock and I was telephoned and told about it. Then it was circulated in the OFFICIAL REPORT this morning for the first time. I repeat, the OFFICIAL REPORT reached noble Lords only this morning. I do not suppose every noble Lord reads his OFFICIAL REPORT with all that care. It is quite on the cards that many noble Lords did not know the detail of what we were talking about. Whether it is right or not, naturally I want to please

1197
everybody, and I honestly do not feel justified in dividing the House. It is for that reason only, I hasten to add, because it might have been very different.
I do not want to raise again the matter about the receipt, but it would be interesting to know—perhaps I may be told outside—if the gentleman to whom this receipt was given was not expected to give it to his sponsors, to whom was he expected to give it?
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS AND LORD PRESIDENT OF THE COUNCIL (THE EARL OF HOME): My Lords, would the noble Lord allow me to interrupt on this question of the receipt? I did not know about this confidential talk. I am sure there must have been a misunderstanding here. If he thought that this was confidential, Colonel Moore would never have given it to other people. I know him well, and I know that if a document is said to be confidential your Lordships would know that it ought not to be used outside. But it is perfectly plain to me—and I hope I am in a fairly impartial position, listening to this—that there has been a genuine misunderstanding.
LORD KILLEARN: I am quite prepared to let it go at that. It was a very important part of the proposed arrangement, and if it has been ventilated it has probably done no harm. It has obviated certain things which I think the whole House agree could not be in that document.
There is one other point I should like to make, and that is on the question of the grades of payment, or whatever the right phrase is. There seems to be a certain tendency in some quarters to look upon this as a question of what I might call "subsistence", but, of course, it is nothing of the kind. These are capital advances. That has been pointed out to me during the debate by one of the claimants, and it is not a bad point. I think we have exhausted every point. I do not like this scheme; I do not pretend to. I think it is ungenerous; I think it is unworthy, and I think it should have been much better. What is more, I believe the day will come when the Government will regret their ungenerous
1198
action. That is my view. The question of Government responsibility I will not pursue any further because my view is well known. It is, of course, understood, as in fact the noble Viscount himself said, that we shall see how the scheme works. That is the essential part of it. The noble Lord, Lord Lloyd, had a very good phrase: "Not met us entirely. Continue to watch, and reserve complete liberty of action." It is on that understanding that I act as I am now doing. Before I sit down, if Her Majesty's Government and the Lords Commissioners know their Scripture they may recognise the following:
"But whoso hath this world's good, and seeth his brother have need, and shutteth up his bowels of compassion from him, how dwelleth the love of God in him?"
VISCOUNT ALEXANDER OF HILLSBOROUGH: Come over here!
LORD KILLEARN: May I follow that up with another quotation which may be even more to the point as addressed to their Lordships at the Treasury? Your Lordships will remember what Cromwell said to the General Assembly of Scotland on August 3,1650:
"I beseech you, in the bowels of Christ,"—
(I hope I am in order in using that expression)
"think it possible you may be mistaken."
I address those two quotations to the Lords of the Treasury and their representatives on the Front Bench. Having done so, I beg leave to withdraw my Motion for Papers.
SEVERAL NOBLE LORDS: No.
THE LORD CHANCELLOR (VISCOUNT KILMUIR): Is it your Lordships' pleasure that the Motion be withdrawn?
SEVERAL NOBLE LORDS: No.
On Question, Whether there shall be laid before the House Papers in regard to the continued distress of British citizens expelled by order of Colonel Nasser from Egypt and deprived of resources held both in Egypt and in the United Kingdom, and as to the need for decision to grant interim relief to admitted claims pending a just and full final settlement?
Their Lordships divided: Contents, 23; Not-Contents, 62.

CONTENTS

Attlee, E.

Colwyn, L.

Nathan, L.

Ferrers, E.

Douglas of Barloch, L.

Ogmore, L.

Jowitt, E.

Haden-Guest, L.

Pethick-Lawrence, L.

Lucan, E. [Teller.]

Henderson, L.

Quibell, L.

Latham, L.

Shepherd, L.

Alexander of Hillsborough, V.

Lawson, L.

Silkin, L.

Stansgate, V.

Lucas of Chilworth, L.

Strabolgi, L.

Mathers, L.

Wilmot of Selmeston, L.

Burden, L. [Teller.]

NOT-CONTENTS

Kilmuir, V. (L. Chancellor.)

FitzAlan of Derwent, V.

Grantchester, L.

Hailsham, V.

Hampton, L.

Home, E. (L. President.)

Massereene and Ferrard, V.

Hastings, L.

Mersey, V.

Howard of Glossop, L.

Reading, M.

Soulbury, V.

Jessel, L.

Stonehaven, V.

Leconfield, L.

Buckinghamshire, E.

Mancroft, L.

Fortescue, E. [Teller.]

Addington, L.

Melchett, L.

Gosford, E.

Ailwyn, L.

Merrivale, L.

Halifax, E.

Amherst of Hackney, L.

Mills, L.

Howe, E.

Ashbourne, L.

Monson, L.

Morley, E.

Baden-Powell, L.

Rathcavan, L.

Munster, E.

Birdwood, L.

St. Just, L.

Onslow, E. [Teller.]

Broughshane, L.

St. Oswald, L.

Perth, E.

Chesham, L.

Savile, L.

St. Aldwyn, E.

Derwent, L.

Somers, L.

Selkirk, E.

Digby, L.

Strang, L.

Suffolk and Berkshire, E.

Dynevor, L.

Strathclyde, L.

Swinton, E.

Dovercourt, L.

Strathcona and Mount Royal, L.

Ennisdale, L.

Stratheden and Campbell, L.

Crookshank, V.

Fairfax of Cameron, L.

Tweedsmuir, L.

Devonport, V.

Freyberg, L.

Waleran, L.

Falmouth, V.

Resolved in the negative, and Motion disagreed to accordingly.

ELECTRICITY BILL
5.50 p.m.
Order of the Day for the consideration of the Commons Amendments to one of the Lords Amendments read.
LORD MILLS: My Lords, I beg to to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Lord Mills.)
On Question, Motion agreed to.
COMMONS AMENDMENTS TO ONE OF THE LORDS AMENDMENTS AND COMMONS CONSEQUENTIAL AMENDMENT
[The references are to Bill (61) as first printed in the House of Lords.]
The Commons Amendments are printed in italics.

LORDS AMENDMENT
After Clause 30, insert the following new clause—
Special provisions as to public inquiries
(".—(1) Where an application has been made to the Minister for his consent or
1200
authorisation under paragraph (b) of section ten of the Schedule of 1899, or for his consent under section two of the Electric Lighting Act, 1909, and the local planning authority after giving public notice, considering any objection that may be made and consulting with the local authorities, the Council for the Preservation of Rural England and other appropriate national and local bodies, have notified the Minister that there are objections by the planning authority or by persons aggrieved by the application or by the local authorities or bodies consulted and that those objections have not been withdrawn, the Minister (either in addition to, or in lieu of, any other hearing or opportunity of stating objections) shall cause a public inquiry to be held, and, before determining whether to give his consent or authorisation, shall consider the objection and the report of the person who held the inquiry:
Provided that this subsection shall not apply where the Minister proposes to accede to the application subject to such modifications or conditions as will give effect to the objection of the local planning authority.
(2) Where in accordance with the preceding subsection a public inquiry is to be held in respect of an application by an Electricity Board, the Minister shall inform the Board accordingly; and the Board shall in two successive weeks publish a notice stating—

(a) the fact that the application has been made, and the purpose thereof, together with a description of the land to which it relates;

(b) a place in the locality where a copy of the application, and of the map referred to therein, can be inspected; and

1201

(c) the place, dale and time of the public inquiry.

(3) A notice under the last preceding subsection shall be published in one or more local newspapers circulating in the locality in which the land in question is situated, or circulating respectively in the several localities in which different parts of that land are situated, as the Board publishing the notice may consider appropriate.
(4) If it appears to the Minister that, in addition to the publication of a notice in accordance with subsections (2) and (3) of this section, further notification of the public inquiry should be given (either by the service of notices, or by advertisement, or in any other way) in order to secure that the information specified in paragraphs (a) to (c) of subsection (2) of this section is sufficiently made known to persons in the locality, the Minister may direct the Board to take such further steps for that purpose as may be specified in the direction.
(5) Where in accordance with this section a public inquiry is to be held in respect of an application for the consent or authorisation of the Minister under paragraph (b) of section ten of the Schedule of 1899, and (whether in pursuance of subsection (2) of section (Further provisions as to placing of electric lines) of this Act or otherwise) the Minister is proceeding concurrently as mentioned in subsection (1) of section forty-four of the Electricity (Supply) Act, 1926, the public inquiry shall extend to all the matters arising in those concurrent proceedings, ant any notice of the inquiry (in addition to any other matters required to be stated therein) shall indicate the extent of the inquiry accordingly.
(6) In the case of an application for the consent or authorisation of the Minister under paragraph (b) of the said section ten, where the application relates to land in the areas of two or more local planning authorities,—

(a) in so far as any of those local planning authorities do not object to the application, no public inquiry need (unless the Minister otherwise directs) be held in respect of the application in so far as it relates to land in the area of that local planning authority;

(b) if two or more of the local planning authorities object to the application, the Minister may direct that separate public inquiries shall be held in the area of each of those authorities;

and, where the Minister gives any such directions, the preceding provisions of this section shall apply with the necessary modifications;
Provided that for the purposes of this subsection a local planning authority shall be treated as not having made an objection if the authority have made an objection but the Minister proposes to accede to the application subject to such modifications or conditions as will give effect to the objection.
(7) Subsection (2) of section sixty-six of the principal Act (which relates to inquiries under that Act) shall apply in relation to inquiries held in pursuance of this section as it applies in relation to inquiries held in pursuance of that section.
(8) In the application of this section to Scotland,—

(a) for any reference to the Minister there shall be substituted a reference to the Secretary of State; and

(b) subsections (2) and (3) shall not apply, and for subsection (4) there shall be substituted the following subsection:—

'(4) Where in pursuance of subsection (1) of this section a public inquiry is to be held, and it appears to the Secretary of State that in addition to any public notice of such an inquiry any further notification concerning the inquiry is necessary or expedient (either by way of service of notice upon any person or in any other way), the Secretary of State may direct the Board to take such further steps for this purpose as may be specified in the direction.'")
The Commons agreed to the above Amendment, subject to the following Amendments:—
Subsection (1), line 5, leave out from beginning to ("not") in line 11 and insert (" have notified the Minister that they object to the application, and that objection of the local planning authority has")
After subsection (1), insert the following new subsections—
("( ) In relation to applications for consent under section two of the Electric Lighting Act, 1909, and to applications for consent or authorisation under paragraph (b) of section ten of the Schedule of 1899 in respect of the placing of high voltage lines, the Minister shall make provision by regulations for securing—

(a) that (in addition to any notice required to be given under section two of the said Act of 1909) notice of every such application shall be published in such manner as may be specified in the regulations;

(b) that (in addition to any notice required to be given under the said section two, and to the publication of notices in accordance with the preceding paragraph) notice of any such application shall, where the Minister so directs, be served upon such persons as may be specified in the directions;

(c) that every notice published or served in pursuance of the regulations shall state the time within which, and the manner in which, objections to the application can be made by persons other than those to whom (under the said section two, or under section twenty-one of the Electricity (Supply) Act, 1919) an opportunity of being heard or of stating objections is required to be given, and that the time so stated shall not be less than such minimum period as may be specified in the regulations; and

(d) that, in so far as any such notice requires objections to be sent to any person other than the Minister, copies of the objections shall be sent to the Minister by that person:

Provided that, in relation to applications for consent under the said section two of the extension of generating stations, any regulations made under this subsection may include provision for enabling the Minister to give directions dispensing with the requirements of the regulations, in cases where in accordance with that section the Minister dispenses with the giving of notices thereunder.
( ) Where, in the case of any such application as is mentioned in the last preceding subsection,—

(a) the Minister is not required by virtue of subsection (1) of this section to cause a public inquiry to be held, but

(b) objections or copies of objections have been sent to the Minister in pursuance of regulations made under the last preceding subsection,

the Minister shall consider those objections, together with all other material considerations, with a view to determining whether a public inquiry should be held with respect to the application, and, if he thinks it appropriate to do so, shall cause a public inquiry to be held, either in addition to, or in lieu of, any other hearing or opportunity of stating objections to the application.")
Subsection (2), line 1, leave out ("the preceding subsection") and insert ("any of the preceding provisions of this section")
Leave out subsections (6) and (7), and insert the following new subsection—
("( ) The provisions of the Schedule (Supplementary provisions as to public inquiries) to this Act shall have effect for the purposes of this section.")
Subsection (8), line 6, after ("(1)") insert ("or subsection (3)")
After subsection (8), insert the following new subsection—
("( ) In this section 'high voltage line' means an electric line for conveying or transmitting electricity at or above a voltage of one hundred and thirty-two thousand.")
LORD MILLS: My Lords, I beg to move that your Lordships do now accept the Amendments on the Order Paper which have been made in another place to Clause 34 of the Bill. I should explain that, in view of the length which the clause would otherwise assume, we have thought it best to assign the supplementary matters to the Schedule. I propose, therefore, with the permission of the House, to deal with the Amendments to the clause and with the new Schedule together, and later to move the Schedule formally as a consequential Amendment.
The clause, as your Lordships will remember, was introduced in this House to make special provision for public inquiries. More particularly it was to give effect to my undertaking that whenever
1204
a local planning authority objects to the erection of a power station or an overhead line a public inquiry will be held. On Third Reading your Lordships introduced in subsection (1) of the clause an Amendment which would require the local planning authority to give public notice of these projects, consider objections, and to consult local authorities, the Council for the Preservation of Rural England and other appropriate bodies. If the local planning authority notified the Minister that there were any objections outstanding from whatever quarter the Minister would be bound to hold a public inquiry.
The anxiety which prompted the noble Lord, Lord Lucas of Chilworth, to move that Amendment—an anxiety which was shared by your Lordships' House—was, to quote his words [OFFICIAL REPORT, Vol. 204, col. 248–9]:
"If the planning authority withdraws its objection it does not matter who else has objected, they are all non-suited."
The Government have given this matter a great deal of thought in order to find a practicable way of removing this anxiety. I am afraid that I must say that the clause as it now stands will not work. In the first place, it would require local planning authorities in Scotland and Wales to consult the Council for the Preservation of Rural England, instead of the corresponding Scottish and Welsh bodies, although I am, of course, aware that that was just a matter of drafting. Secondly, it would oblige the Minister to order a public inquiry if there were any outstanding objections. Since my Ministry has to deal with from 9,000 to 10,000 applications from Electricity Boards for overhead lines each year, I am sure that your Lordships will see that this would be an unmanageable commitment. Nevertheless, as I have said, the Government are anxious to go as far as is administratively possible to give effect to the purpose which your Lordships had in mind.
The question is how persons and bodies likely to be affected by a project can be warned of what is afoot, so that if they do not like it they can make their objections known, with a view to a public inquiry being held. I recall that in our earlier debates noble Lords opposite stressed the importance of making neighbouring local authorities aware of a project which, although it does not touch

1205
their area, may nevertheless affect their amenities. They have also stressed—and here again I quote the noble Lord, Lord Lucas of Chilworth—the situation which would arise if the local planning authority did not object. "But," he said [OFFICIAL REPORT, Vol. 204, col. 250]
"the Council for the Preservation of Rural England, a responsible national body, and, if the project happened to be in Oxford, the Oxford Preservation Trust, a highly respectable local body, and a private landowner or occupier—all are non-suited under this clause."
The projects most likely to be controversial are power stations and overhead lines placed on pylons—that is, high voltage lines of 132,000 volts and above. For projects in these classes it is proposed by the new subsection (2) to place upon the Minister a duty to prescribe by regulations how Electricity Boards' applications for consent are to be advertised, and how objections are to be lodged. It is best that these matters should be dealt with in regulations because they will have to be worked out in considerable detail.
The regulations must require time limits to be fixed for the lodging of objections. They will also permit the Minister to direct that individual notices shall be served, where appropriate, on such bodies as the Council for the Preservation of Rural England, the corresponding bodies for Scotland and Wales, or the neighbouring local authority which might be interested although the project was outside its area. The regulations will ensure that copies of any objections sent to local planning authorities are also sent to the Minister. In framing these regulations and regulations under the new Schedule, I propose to consult the County Councils Association, as representing the interests of local planning authorities, and also the Council for the Preservation of Rural England.
Under the new subsection (3) the Minister is enabled to order a public inquiry under the clause in the case of a power station or high voltage line if, after considering objections from other quarters and other material considerations, he thinks that a public inquiry is called for. He can do this even though the local planning authority has not objected. It is quite clear to my mind that in cases of this kind discretion must rest with the Minister. But I can assure your Lordships that when exercising that discretion
1206
I shall have individual interests very much in mind. Noble Lords will probably be aware of a recent case in which consent to a high voltage line has been refused because of representations from objectors other than the planning authority. But not every such case calls for a public inquiry—indeed, it is probable that most objectors would prefer not to have a public inquiry if their grievances can be met without one. But whenever the objections are of such a nature that a public inquiry is obviously the best way of deal-with them, or, if apart from the objections, there are other important considerations of policy arising from the nature of the project which seem to call for a public inquiry, then I can assure your Lordships that I shall order one.
After the most careful thought I am satisfied that our proposals will ensure proper attention to individual rights and interests. I may say also that the proposals have been considered by the Council for the Preservation of Rural England who inform me that, so far as their interest is concerned, they are satisfied with the action which we suggest. I can assure your Lordships that to go further than we have done would be to put excessive strain upon the administrative machine, which might well result in a breakdown and would certainly lead to delays that I could not countenance. For, as I have said, we handle from 9,000 to 10,000 overhead line cases in my Department every year. I hope that the Amendments which I have described, and the others on the Order Paper which are ancillary to; hem, will remove the main anxieties which were expressed by noble Lords at our last debate. I trust that your Lordships will feel that I have gone as far as I can to meet your views and will accept them as a fair and workable solution. I beg to move that the House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said new Amendments.—(Lord Mills.)
6.3 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I should like to thank the noble Lord. I am sure your Lordships, as well as a vast number of interested people outside your Lordships' House, will appreciate the detailed explanation which the noble Lord has given. As he rightly says, your Lordships took a different

1207
view from the Minister and Her Majesty's Government on Third Reading. I sense that your Lordships, quite rightly, were really concerned with the rights of the individual.
As the noble Lord has said, as the Bill came before your Lordships on Third Reading anybody but the planning authority would be non-suited unless the planning authority objected to a proposal by the new Electricity Authority. I felt that that was entirely wrong. I knew in my heart that the noble Lord agreed with me. I also knew the defects of my Amendment, but I took the view then that if one wanted to be a dictator and to non-suit the citizens of this country it was very easy. If one wanted to operate democracy it could be a nuisance, and it could be a lot of trouble. But I formed the opinion that the last person who ever wanted to be a power dictator was the noble Lord. Therefore I persuaded your Lordships to take that view.
I should like to say here how grateful I am to the noble Lord for his unfailing courtesy throughout the passage of this Bill through your Lordships' House. I do not think I am committing any breach of confidence if I say that since your Lordships considered the Bill on Third Reading he and I have discussed this matter at great length, and I am persuaded that the noble Lord has come to a really sensible and workable arrangement. I will not agree, if the noble Lord will pardon me, that the Amendment which went through your Lordships' House was unworkable. What it did was to compel the Minister to hold a public inquiry if there was a single objector. If I may put it in colloquial terms, it mattered not whether the single objector was the "village idiot". I felt, as the noble Lord has rightly said, that that put too heavy a strain upon the administration. What we both sought to do was to find a sieve that could sift the frivolous from the genuine and pay proper regard to the aggrieved parties; and we both came to the conclusion that, in the end, the "sieve" would have to be the Minister.
Let me explain the difficulty. I myself, from my experience of the noble Lord the Minister of Power in this House, would put my whole and complete trust in him in this very vital question of the
1208
preservation of amenity and the preservation of the rights of the individual. But, as we know, Ministers come and Ministers go; Statutes go on for a long time. But he has said this afternoon that it is his intention, and the policy of the Ministry, that if there should be objectors, even after planning authorities have withdrawn, and the Minister is then of the opinion that the objections are genuine and should be ventilated in public, he will order a public inquiry to be held. The gist of the whole thing is contained in the words: "the Minister shall consider these objections." This was not a subject of any controversy; the Minister has said that all the objections must find their way to him, wherever they come from, whether the objection is to the siting of a power station or to the siting of an overhead line. In the earlier new subsections—and let us make this perfectly clear—there is ample provision for advertisement and notification; and if there is an aggrieved party and he does not lodge an objection after that, then I do not think the objection can have great validity. It must go to the Minister. Whatever happens after that with the planning authority, the Minister must then consider the objections that have not been withdrawn.
Then the new subsection (3) goes on to say:
"…the Minister shall consider those objections, together with all other material considerations, with a view to determining whether a public inquiry should be held with respect to the application, and, if he thinks it appropriate to do so, shall cause a public inquiry to be held, either in addition to, or in lieu of, any other hearing or opportunity of stating objections to the application."
I am prepared to accept that—I accept it with thanks—because I think it goes as far as we can to safeguard the individual. There must be a sieve. There must be an arbiter. I had it in mind that the planning authority should be the "sieve." The Minister prefers to be the "sieve" himself. I can imagine no one better than the Minister to hold that responsibility. So I should like to thank the Minister for the way in which he has tried to meet us. There may be others who think that this matter should be spelled out in another way. I do not think the Minister will mind my disclosing that when we discussed this matter we considered whether we should put in

1209
some such phrase as "save if the objections were frivolous"; but the Minister preferred the word "appropriate." I say that, if that is the Minister's intention, I am perfectly happy. I think your Lordships can congratulate yourselves on the Clauses 32, 33 and 34 that have been put into this Bill solely through the efforts of your Lordships' House. I think you have done something that should redound to the benefit of the amenities of this country and also to the position of the individual.
6.12 p.m.
LORD LAWSON: My Lords, I also should like to thank the Minister for the very careful yet broad way in which he has handled this situation. I understand him to say that the Council for the Preservation of Rural England would be one of the organisations that would receive consideration on an occasion when there were likely to be objections I think that this is, on the whole, a happy ending to the incident which took place in the House by reason of the vote. All I wish to do to-day is to draw attention to the fact that I think it is a very good thing that your Lordships' House has been roused to the seriousness of the changes which are likely to be made where stations are erected. These changes, as the Minister knows well, will really be fundamental. He knows what happened to the North, particularly, in the industrial revolution through which we have gone. I am sure that neither he nor anyone else would like to see a repetition in a mass way—possibly not so black but varied in colour—of what took place during the first industrial revolution. As I say, I think it is a very good thing that your Lordships' House was roused to the seriousness of this matter and expressed that view in the vote.
I think that the noble Lord the Minister is quite right in the statement which he has made, to the effect that, in view of the large number of cases of this description that arise each year, there was some likelihood of a mix-up as the result of the Amendment which would have been put upon the Statute Book. But I am not so sure that the country fully realises yet what is happening. If this incident has underlined the seriousness of the change that is taking place, the swiftness (more swift than people realise) of that change and its range, then I think
1210
the incident has been worth while. I think that the noble Lord has been very wise, if I may say so, in the way in which he has met the views expressed.
6.15 p.m.
LORD HURCOMB: My Lords I shall not detain your Lordships for more than a few moments. I am very glad that the noble Lord, Lord Lucas of Chilworth, has expressed himself as content with the Amendments which the Minister now puts forward. There were, I think, some serious administrative objections to the Amendment which your Lordships made at a late stage of the Bill when it was in your Lordships' House. For my part, I would rather leave the choice of the bodies or persons whose representations need consideration to the Minister than leave the matter entirely to the discretion of the local planning authority, which may or may not be fully sensitive to all aspects of these important questions. I feel that the noble Lord, Lord Lucas of Chilworth, has done a great service in forcing the issue to the point at which it has been possible for the Minister himself to shape the proposals into a more practicable form.
In this, and in certain other kindred matters, if I may say so, the Minister has shown a very enlightened approach. He has laid down clearly lines of policy which the Department should follow in these matters. Though he will not remain Minister for ever, I hope that he will remain in his post long enough to give some decisions to show the importance and the reality which are attached by the Government to those wider considerations about the preservation of amenity, the minimum of interference with the landscape, and the protection of the natural heritage of the country in all possible ways. For those are great public interests just as much as the cheap and abundant electricity which it is now his duty, as once it was mine, to promote. I suggest that the real protection for these interests is that the organisations which are concerned with these matters should always be strong enough to be sure that they have enough public opinion behind them, and that they should be vigilant enough—and if necessary vocal enough—to see that the eventual successors of the noble Lord the present Minister are kept up to the level of policy which he has laid down. I am very happy to note that

1211
the Amendments have taken the shape which they now do, and for my part I support them heartily.
On Question, Motion agreed to.
The Commons made the following consequential Amendment to the Bill—
After the First Schedule, insert the following new Schedule—

SECOND SCHEDULE
Supplementary Provisions as to Public-Inquiries
1. In the case of an application for the consent or authorisation of the Minister under paragraph (b) of section ten of the Schedule of 1899, where in accordance with any of the provisions of section (Special provisions as to public inquiries) of this Act a public inquiry is to be held, and the application relates to land in the areas of two or more local planning authorities,—

(a) the application shall not be the subject of a public inquiry in so far as it relates to land in the area of a local planning authority who have not notified the Minister that they object to the application, unless the Minister otherwise directs having regard to objections by other persons of which he has notice;

(b) in so far as the application is to be the subject of a public inquiry in relation to land in the areas of two or more local planning authorities, the Minister may direct that separate public inquiries shall be held in the area of each of those authorities;

and, where the Minister gives any such directions, the provisions of the said section (Special provisions as to public inquiries) shall apply with the necessary modifications:
Provided that for the purposes of sub-paragraph (a) of this paragraph a local planning authority who have notified the Minister that they object to the application shall be treated as not having done so if the Minister proposes to accede to the application subject to such modifications or conditions as will give effect to the objection.
2. Subsection (2) of section sixty-six of the principal Act (which relates to inquiries under that Act) shall apply in relation to inquiries held in pursuance of section (Special provisions as to public inquiries) of this Act as it applies in relation to inquiries held in pursuance of the said section sixty-six.
3. For the purposes of section (Special provisions as to public inquiries) of this Act the
1212
Minister may make regulations limiting the time within which notification of objections may be made to the Minister by local planning authorities, and providing that objections which are not notified within the time so limited may be disregarded for those purposes.
4. Any power to make regulations under section (Special provisions as to public inquiries) of this Act, or under this Schedule, shall be exercisable by statutory instrument, and any instrument containing such regulations shall be subject to annulment in pursuance of a resolution of either House of Parliament; and different provision may be made by any such regulations in relation to different classes of applications or otherwise in relation to different classes of cases.
5. Where any regulations made under section (Special provisions as to public inquiries) of this Act, or under this Schedule, are for the time being in force, any rules made under section thirty-four of the Electricity (Supply) Act, 1919. in so far as they relate to applications to which the regulations apply, shall have effect subject to those regulations.
6. In the application of this Schedule to Scotland, for any reference to the Minister there shall be substituted a reference to the Secretary of State.
7. In this Schedule ' local planning authority ' has the same meaning as in section (Special provisions as to public inquiries) of this Act. ")
6.19 p.m.
LORD MILLS: My Lords, I beg to move that this House doth agree with the consequential Amendment made by the Commons. Perhaps your Lordships will permit me to take this opportunity of acknowledging with gratitude the speeches of noble Lords. I thank the noble Lord, Lord Lawson, for his understanding attitude, and the noble Lord, Lord Hurcomb, for his good wishes. Above all, I should like to thank the noble Lord, Lord Lucas of Chilworth, for the help and guidance which he has given me in this important matter. On my first appearance in your Lordships' House I was left in no doubt as to your view with regard to the amenities of this lovely country. I have found the noble Lord, Lord Lucas of Chilworth, helpful and stimulating, and I wish sincerely to thank him for his part in this matter.
On Question, Motion agreed to.

WINFRITH HEATH BILL
6.20 p.m.
Order of the Day for the Second Reading read.
LORD MILLS: My Lords, I beg to move that the Winfrith Heath Bill be now read a second time. This Bill has two main purposes: first, to extinguish rights of common and similar rights, in so far as any such rights subsist, over an area of heathland comprising about 700 acres, which forms part of a site which has been chosen for a new atomic energy research establishment in Dorset; and secondly, to provide machinery for determining the existence and nature of such rights, and for compensating anyone who is deprived of those rights.
The Bill is not concerned with the question of planning permission for the research establishment. Such permission was given some months ago by my right honourable friend the Minister of Housing and Local Government, after a public local inquiry, and with the support of the local authorities concerned. Nor is the Bill concerned with questions of amenities or of public right of access to the area. No such right exists, although the public has for a long time had access to the area by tacit consent of the owners.
The existence of common rights on this land is indicated in two Enclosure Awards, dated 1771 and 1839. By the first of these, part of what was then common land was enclosed, the remainder being allotted "for the preserving of furze, turf and other fuels" and for the grazing of cattle. The owners of some fifty-five cottages and tenements in Winfrith Newburgh were held to be entitled to share these rights. Unfortunately, the map attached to this award has been lost and cannot be traced. In its absence it is extremely difficult to determine either the area of land to which the rights attached or the identity of persons who may now be entitled to exercise the common rights referred to in the award.
The position under the second award is even more obscure, because no reference was made in the award to the nature of the rights to be exercised over the residue of the commons which was not enclosed. Whatever the rights under the two awards may have been, it seems clear that little or no use of them has
1214
been made for a very long time, and it will be a matter of considerable difficulty to find out what they are and who is entitled to them. I need hardly remind your Lordships that common rights axe preserved and protected very strictly by law. Parliament itself is always extremely vigilant in this matter; and any person entitled to rights of common can apply to the courts for an injunction to restrain any interference with the enjoyment of his rights. No one has yet come forward to tell the Atomic Energy Authority that he owns common rights in this area, but it is always possible that someone might do so. And it is obviously necessary that such common rights as may exist should be extinguished before the Atomic Energy Authority take any physical steps towards setting up their establishment.
The Winfrith Heath Bill provides that anyone who has a valid claim to common rights shall be adequately compensated for his loss. To this end, the Bill looks after the interests of claimants by providing for their claims to be thoroughly investigated without putting them to any expense or to much trouble in proving their title. It may quite possibly be that the procedure prescribed under the Bill will result in the discovery of common rights for persons who have hitherto been unaware of them.
It will be the duty of the valuer, who is to be appointed by the Lord Chancellor under Clause 2 of the Bill, to investigate, as his first task, whether any common or other rights have been extinguished by the Bill. This is likely to involve a good deal of research and inquiry on his part, and to impose a task which would be quite beyond the resources of individual commoners if they had themselves to establish what the rights were. If the valuer finds that there were such rights, it will be his duty to determine what they were and over what part of the heathland they were exercisable. He will then publish his findings so that persons who think they were entitled to any rights may either lodge an appeal against his decision on the existence or nature of rights or put in a claim for compensation for having been deprived of rights found to exist.
If, for example, the valuer were to find that no common rights existed, anyone who wished to dispute this decision could, within three months, give notice in writing to the valuer, requiring him to refer the

1215
decision to the Lands Tribunal for arbitration. Alternatively, anyone who is satisfied with the valuer's decision as to the existence and nature of rights, and Who wishes to make a claim for compensation for having been deprived of such rights, is entitled to put in such a claim within six weeks. The valuer then has to examine the claim and give a decision on it. Once again, if the claimant is dissatisfied with the decision, he may appeal against it and his appeal will be heard by the Lands Tribunal. The same rights of appeal to the Lands Tribunal against decisions of the valuer will be available, of course, to the Atomic Energy Authority, who will be responsible for payment of all compensation arising out of those decisions.
The valuer is given complete independence under this Bill. He will make and publish his decisions without reference to any Government Department, and his findings on any claim for compensation can be questioned only by the parties directly affected—the claimant and the Atomic Energy Authority. As I have said, if either of these parties appeals against the valuer's decision, the appeal will be heard by the Lands Tribunal, a completely independent body.
Your Lordships will see, therefore, that the interests of owners of common rights are very fully protected under this Bill. Claimants will be treated at least as well as if any of the other methods of extinguishing common rights had been selected. The great value of the Bill is that it will permit the Atomic Energy Authority to make an early start with their preparations on the site for setting up the research establishment, leaving questions of rights and compensation for adjudication by the valuer while this work is going on.
By this means the research work which is to be carried on at this new establishment will not be unduly delayed. This is the essential feature of the Bill. Its whole object is to avoid unnecessary delay to scientific work of the highest national importance and urgency. The new establishment is intended to accommodate reactor experiments which cannot be set up at any other of the Atomic Energy Authority's establishments. And the results of those experiments will be of prime importance. I commend the Bill
1216
to your Lordships and beg to move that it be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Mills.)
6.32 p.m.
LORD LUCAS OF CHILWORTH: My Lords, we shall not obstruct the passage of this Bill at all. The Minister has, in his full description of it, adequately covered every point, and, for myself, I am quite satisfied. But I beg to detain your Lordships for a few minutes to focus attention upon the serious question which this Bill pinpoints. If it had not been for the fact that somebody thought that a cow might stray on the heath, and that that cow might be owned by somebody with common rights, this matter would never have come before Parliament. I am not blaming the Minister, but it really focuses attention on the fact that all atomic power stations which are in the programme which the Minister fully described in the debate we had some little time ago, when he was giving us full details of how the Government were going to spend £3,350 million upon the development of power supplies in this country, can be sited and erected, and Parliament does not have to be consulted at all.
The Minister has just said, quite truthfully, that a planning permission and everything else necessary has been given by administrative action. I do not so much object to that, but I am sure I shall carry the Minister with me in the criticism that I intend to make of this principle. Here we have Winfrith Heath, one of the great beauty spots in the Dorset hills. Six hundred and eighty-eight acres of that virgin land is going to be raped—there is no other word for it. Only 400 acres are necessary for the purpose for which the Minister wants it, but, by that happy knack which Government Departments have, they are going to keep in cold storage 288 acres because they might want them in twenty years' time.
In October, 1955, I asked the Government a Question in this House as to how many airfields there were that had been abandoned by the Air Ministry, no longer used for the purpose for which millions of pounds of the taxpayers' money had been expended, and I was told there were approximately 150, of which 47 were going to be sold or handed back or disposed

1217
of. I do not know what the number would be to-day, but I would suggest that there might have been one of the hundred or more airfields that were built, hundreds of thousands of acres covered with building and concrete for which the taxpayer has paid, that might have served the purpose for which Winfrith Heath has now been desecrated. I know the Minister will agree with me that at the present time, when we are faced with a recurring financial crisis, the responsibility resting on his shoulders is not only to provide power, but to provide it with due regard to the taxpayers' money. I know he will agree with me, because he is now a director in (if I may put it that way) John Bull Limited; he has to watch the shareholders' money, and the shareholders in John Bull Limited are the taxpayers
I am apprehensive. It always appears to me that when the Government want land for a project they never go and see what land there is in the possession of another Government Department; they must always have some virgin site. Take the case of the Bradwell Atomic Station: Foulness Island, in the Thames Estuary, within a mile of Bradwell, was taken over by the Government as a gun-site in the 1914–18 war; it has never been used for anything since. But that, for some reason, was not acceptable; they had to acquire something else within a mile. At a time like this, when all of us, irrespective of the political Party to which we belong, are fearful of this thing called inflation—and one of the greatest incentives to inflation is Government expenditure—I wonder whether the noble Lord would think it opportune to review whether some of these other places, upon which, as I say, the taxpayers' money has been expended, could not be used in future.
I know that Winfrith Heath is supposed to have every virtue desired by the Atomic Energy Commission. These places always have. I always suspect that these sites are chosen, and that the reasons for choosing them are then built round the site, after it has been chosen. I understand that one of the reasons why they cannot have a site I have suggested is because they cannot risk water pollution from the effluent. I live not far from Harwell, and Winfrith Heath is supposed to be the twin sister of Harwell. When the local
1218
angler complains that the effluent from Harwell is polluting the river and that he cannot fish properly, all the experts deny that there is any such thing as poisonous effluent coming from Harwell. Harwell is situated in a somewhat populous area—or at least within a mile and a half of it—and so I am not entirely convinced by the arguments that these virgin spots of great beauty are the only spots upon which places like this can be built.
I hope the Minister will find some way to meet this point. In the Electricity Bill, which we have just disposed of and which covers this particular subject, he has gone a long way to meet the desires from the amenity point of view. I want to impress upon him the seriousness of this matter from the taxpayer's point of view. I suppose that a huge amount of money will be sunk into this site; yet there are already hundreds of sites up and down this country, already owned by Government Departments, which are not being used at all and are lying derelict. There are about one hundred aerodromes belonging to the Air Ministry. That was the simple point I wanted to make.
I am quite prepared for the Minister to say: "Well, of course, everything you have said is nothing to do with this Bill." But the point I want to impress again upon your Lordships is that if somebody had not whispered to the Ministry that there might be such a thing as commoner's rights on Winfrith Heath, and that they had better be abolished in case the cow got in the way of the atomic station, Parliament would never have had this matter brought to its notice. Even in the Bill we have just passed, although the Minister may in future have to hold public inquiries on these power station sites, he does not have to consult Parliament. I wonder whether that is wise. I wonder whether it would not be wise for the planning for these atomic power stations to be looked at again. Question and answer at Question Time in your Lordships' House drew an answer from the noble Lord which I welcome very much—that he has it under constant review. I feel certain that the noble Lord does not need prompting on this subject, but perhaps the expression of opinion that I have given in your Lordships' House may help him in future, when he has to tackle this matter with some of his colleagues. I am not going to obstruct the Second

1219
Reading of this Bill. We have no point to raise upon it whatsoever. We agree with the noble Lord. He has covered everything that it is possible and right that he should cover, and we shall have nothing more to say on any of the remaining stages.
6.45 p.m.
LORD MERTHYR: My Lords, I should like to make one point in connection with this Bill. Normally, in enactments of this kind it is customary, though not, I admit, necessary, to compensate in some form or another the public for the loss of the access to the common land which is taken away. I admit straight away that, legally, the public have no rights in the matter. There is no argument about that; and in this particular case they have not. But this is, I am informed, the first Bill of its kind, or at least the first within living memory, which does not provide some form of compensation to the public for the loss of their de facto access which they have enjoyed, as I understand, upon this particular common. I thought it right to point out that fact to your Lordships, which I think is an unfortunate omission from the Bill.
LORD LAWSON: My Lords, I want to ask a question. Did I understand that there had been no protest about this matter? Have the local authorities not raised protests about it? I think it would be rather surprising if they had not, because there have been many public protests about it. I do not know whether I am right or not, but I think this is supposed to be the famous ground covered by Hardy in his Return of the Native. If that is so—I know that that is questioned—then I think the noble Lord can expect that there will be some protests, even if there have not been any already. I should like to know whether the local authority have made any objection, or whether there have been no objections at all.
6.48 p.m.
LORD DIGBY: My Lords, in reply to the last speaker, I might say that I, as chairman of the Dorset County Council, have been thoroughly into all the points about which he has some doubts. We have taken a considerable time in doing so. At our meeting last November we passed a resolution that the Winfrith
1220
Heath scheme should go forward at the earliest possible moment. Unfortunately, this was further delayed by a public inquiry which took place early in the year. The only effect of that public inquiry, so far as we personally are concerned, is that many of the provisoes which the County Council had received from the Atomic Energy Authority were washed out because the Minister took the matter into his own hands. That, of course, was not the Minister of Fuel and Power so much as the Minister of Housing and Local Government. Since then this Bill has been brought forward before your Lordships' House. The Bill was supported by the members of my County Council, at the last quarterly meeting, and those who were most vociferous in its favour were the members of the Party opposite. I am quite certain that this matter should go forward. We have had no protests whatsoever about this locally, and I think that the sooner we get this Bill enacted the better, in order that we can push forward with the research station in Dorset and so carry out the research we so vitally need for the future.
6.50 p.m.
LORD MILLS: My Lords, I am grateful to the noble Lord, Lord Digby, the Chairman of the Dorset County Council. I think he has answered the question raised by the noble Lord, Lord Lawson. I am not going to plead that these questions which noble Lords have put forward have nothing to do with this Bill. That is the last thing that I would do, because I am very interested and keen to assure your Lordships that this site has not been carelessly chosen. The search for a site for a new establishment began in 1955, and more than seventy sites were examined. Many authorities were consulted in the search for a site—I have here a list of twenty-six of them. They included the Ministry of Supply, the Air Ministry, the Admiralty, the Ministry of Agriculture, Fisheries and Food, the Ministry of Housing and Local Government, the Ministry of Health, the War Department, the Ministry of Works and so on.
The essential requirements which had to be satisfied were as follows. It was felt that the establishment must be some distance from any large centre of population. The site must have the right kind of subsoil to permit the erection of the

1221
reactors. There must be a plentiful supply of fresh water for cooling purposes. The site should not be in a main catchment area for drinking water. The site must permit the safe disposal of effluents, preferably into the sea or a tidal estuary. There must be the minimum encroachment on agricultural land and, for operational reasons, the site should not be too far away from Harwell. Winfrith Heath was the site which met these points, and that was the reason for selecting it.
I should like next to say a word or two in answer to the noble Lord, Lord Merthyr, about what is intended to be done with this site. The land in respect of which planning permission has been granted does not comprise the whole of the land which is subject to planning permission. The reactors themselves will be built on isolated sites of about three acres each, which will be fenced off and screened with trees. The land between will be left open, and it is not proposed to have a fence enclosing the whole site. It is not intended to close existing foot-paths or roads, but it cannot be guaranteed that some diversion of footpaths may not be necessary. For a number of years all development will be to the East of the road which crosses the Heath from North to South, and present planning permission is restricted to this area. Trees will be planted at suitable points, in compliance with the wishes of the Dorset County Council. I think your Lordships will see from this that it is intended, so far as is possible, to preserve the amenities of this land and not to interfere unduly with the rights of public access to it. I hope that what I have said will satisfy your Lordships that this site has not been hastily chosen but that it has been chosen with every consideration for the public good.
On Question. Bill read 2a, and referred to the Committee on Unopposed Bills.

PARISH COUNCILS (MISCELLANEOUS PROVISIONS) BILL
6.55 p.m.
House in Committee (according to Order): Bill reported without amendment.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July, 15), Bill read 3a, and passed.

REPRESENTATION OF THE PEOPLE (AMENDMENT) BILL
House in Committee (according to Order): Bill reported without amendment.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 15), Bill read 3a, and passed.

NATIONAL HEALTH SERVICE (AMENDMENT) BILL
House in Committee (according to Order): Bill reported without amendment.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 15), Bill read 3a, and passed.

ARMY (CONDITIONS OF ENLISTMENT) BILL
6.59 p.m.
Order of the Day for the Second Reading read.
LORD MANCROFT: My Lords, the purpose of this short Bill is to enable he Army Council to decide the periods of Colour service and Reserve service which recruits enlisting in the Regular Army on a 22-year engagement shall be called upon to perform. At present, under Sections 4 and 5 of the Army Act, 1955, there are two types of engagement. First, a Regular recruit may be enlisted or any period up to 12 years, consisting partly of Colour service and partly of Reserve service, or consisting entirely of Colour service.
On the other engagement, which will probably be the more normal type in the future, a recruit enlists on a 22-year engagement, but he has a legal right, under Section 5, to be transferred to the Reserve after three years. He then has to serve in the Reserve for four years, or to transfer to the Reserve after six years when he has to serve in the Reserve for three years. In addition, he can terminate his Colour service at the end of nine years without any Reserve service and he may do so at the end of any further three-year periods. That is the law as it now is.
Her Majesty's Government has decided to alter the terms of engagement in the

1223
Regular Army and, under the Bill which is at present before your Lordships' House, the Army Council will have power, by regulations, to decide at what periods a soldier enlisting on a 22-year engagement shall have the option of terminating his Colour service which he shall be called upon to perform. I should make it clear at this stage that a soldier enlisting on a 22-year engagement has a legal right, at present, to terminate his Colour service without any liability to Reserve service at the end of 12 years or any further three-year cycle.
Our intention is that the normal term of engagement in the Regular Army in future will be for 22 years with a probable minimum Colour service of six years instead of three as at present. The main reason for this change is that when we no longer look to National Service men to maintain the strength of the Army, we shall have to look to an all-Regular Army to meet our requirements; we shall be reverting, as your Lordships know, to our ancient tradition of an all-Regular, all-volunteer, Army.
The Army of the future's requirement is for better trained and better equipped men, but as a result of this a smaller number of them. The restoration of stability in an all-Regular Army is an all-important matter and it is the opinion of Her Majesty's Government that a minimum of six years' Colour service, with very few exceptions, will be much more satisfactory than any of the expedients which we have had to call in aid since the war.
I must emphasise that this Bill will not give any authority to alter the conditions of service of a soldier once he has enlisted. At the time of joining, therefore, a soldier will know the periods which he will have to serve and he will know when he will be able to choose to leave the Colours. Again, the Bill gives no authority to alter the terms of service of a soldier who has enlisted under the present terms, even with the soldier's consent. Both these points Her Majesty's Government regard as important, in that the soldier will know exactly where he stands from the time he enlists and will know that his terms of service cannot be altered so long as he is serving.
Her Majesty's Government are anxious to have this legislation placed on the
1224
Statute Book at an early date so that recruitment under the new terms can begin on 1st October next. Your Lordships will realise the reason for this urgency. Changing over to a minimum of six years' Colour service will reduce the strength of the Army when the last men who enlist for three years leave the Colours and there are no new three-year men to take their place. This trough will probably be at its lowest in the fourth year following the change, and we are anxious to get it over before the end of 1962 when the last National Service men will be leaving the Colours.
My Lords, I have been talking about the 22-year engagement. I mentioned earlier that there will be a few exceptions to the six-year minimum engagement. As long as National Service lasts, National Service men will be allowed to enlist on a three-year Regular engagement. The Brigade of Guards will also retain their old right to enlist men for three years with the Colours as they did in pre-war days. Experience showed that this shorter period seems to appeal to a certain type of recruit.
There are also certain specialised, but small, categories to whom a three-year engagement is more suitable. For instance, police cadets will be able to enlist in the Royal Military Police on a three-year engagement: certain G.P.O. employees wishing to serve in the Postal Service will also be taken on for three years. In addition, there are certain men required for the Intelligence Corps and the Army Catering Corps who, whilst willing to enlist for three years, would not be prepared to tie themselves for longer periods. But, apart from the National Service category, the numbers involved are small and are not likely to amount to more than one thousand men a year.
I think I have said enough about the general purpose of this short Bill without troubling your Lordships to consider it clause by clause. Your Lordships are well aware of the great importance Her Majesty's Government attach to the switch over from National Service and the urgent need for achieving this change with speed and with success. It is the hope of Her Majesty's Government that this Bill will produce a Regular Army of stability and an Army which the right men will join with the idea of making it their career, and a fine career too. It is with

1225
these hopes in mind that I commend the Bill to your Lordships. I beg to move that it now be read a second time.
Moved, That the Bill be now read 2a.—(Lord Mancroft.)
7.7 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, this is a very short Bill, but its importance must not be judged by its length, because it is a fundamental Bill. In the Statement on Defence the decision is taken that National Service shall end in 1960, and that in fact there will be no National Service Army or National Service Air Force probably by the end of 1962. This is one piece of reorganisation being carried through, in order, I take it, to assist in two ways: first, by encouraging enlistment; and secondly, by trying to fit the terms of engagement to suit the needs not merely of the country (those needs are important when it comes to fixing terms of training and relating them to possible stations, and to the duties that the men will have to carry out) but also of the men themselves.
I am sure that my noble friend Lord Lawson, who has been Secretary of State for War, is most interested in this matter from the same points of view as myself. It will be most difficult for the ordinary recruit to pick up this Bill and to understand fully what it all means. It will, of course, be supplemented by regulations, and I hope that before enlistment the recruit will be properly apprised of the regulations which will govern the actual terms of service under this statutory authority. Necessarily, however, the Bill contains a large number of references to other Statutes and the like—always difficult for men to understand. I always protest as much as I can against legislation which depends largely on reference. Nevertheless, I am greatly in favour of the general principle of longer terms for the men when you are going in for Regular enlistment, as distinct from National Service.
The use by the Minister in introducing the Bill, of the term "terms of service" raises another point of vast importance to myself, as an ex-First Lord of the Admiralty, about what is likely to arise out of this in subsequent Parliamentary treatment of new circumstances. When you come to depend upon Regular Forces, and have periods of enlistment settled at
1226
different stages of progress or retreat or reaction in your economic circumstances, you may be led into all kinds of difficulties. We ought never to forget the naval trouble at Invergordon. The naval trouble at Invergordon in 1931 was due entirely to the insistence of the Treasury that, when cuts were to be made in the terms; of remuneration to the Naval Service, they were to include cuts in the pre-1925 enlistment men. If there is any one thing a Service man resents more than anything else it is that, for general convenience, there should be a cut in rates of pay or deterioration of his position compared with what he undertook when he signed on. It is absolutely vital that that should be put right, and fast.
We are entering a period of legislation and discussion, in which the Government are going vastly to alter the period of service. When the Minister refers to "terms of service" is he confining himself purely to the period of service, or is he considering, when he goes out to the country to offer to the young man the new career he hopes he will undertake, that there will be no deterioration in rates of pay during that service? If there is to be any reduction in pay rates, will it be applied only to new recruits, and not extend to those who have signed on under these terms? Or shall we be running the danger of having the same kind of actual mutiny as we had in 1931?
It may be said that the position will be vastly different in a period of less inflation; that we have to offer high remuneration now, in times of inflation, to get the voluntary recruits. But if they take on the job under these terms of contract, what most of the men will want to know, I think, is whether these terms will be permanent for the whole of the period of their service. I think that is one of the first bull points the Government have got to make, if that is, in fact, their intention. If we are to get the volunteers required, at a time of high civil employment, high rates of remuneration, and at a period of growing civil superannuation schemes and the like, that will be one of the bull points in inducing men to enter the Services, especially in the skilled trades, and undertake these comparatively long periods of service.
I have heard nothing in the discussions which have taken place so far that has satisfied me that the Government have made up their mind upon this particular

1227
issue. I do not wish to interfere in any way with the general basis of the reorganisation, but, as the Minister who was responsible for introducing National Service in 1947, I would say to the Government: I do most earnestly pray that you do not land yourselves in the sort of position in which you will not have complete and satisfactory voluntary forces at your disposal before you have got rid of your National Service. This particular point is, I think, of fundamental importance.
The other point I would raise is this. I have seen vague references to the suggestion that if, at the end of a given period, our defences are not what they ought to be, because there has not been sufficient response to the invitations to enlistment under the new terms and conditions, the Government are taking care to retain the statutory power to require National Service. Is that so, or is it intended at any time, during these pieces of bit-by-bit legislation by reference, to repeal the 1947 Act and any particular Amendments to the 1947 Act? If the Act is kept on the Statute Book you can go all out for your Regular voluntary forces by all means. But first see that you give the conditions that will make a stable contract for the enlisted man, so that you get the number you require of efficient people; and keep as your reserve the fact that you can always call up again under National Service by existing statutory power if there is not sufficient response.
7.15 p.m.
VISCOUNT BRIDGEMAN: My Lords, I am in agreement with a good deal of what the noble Viscount who has just sat down said, but I hope he will not mind if I do not follow him on the wider issues which are slightly away from this Bill, because I think there may be another opportunity before the House rises of dealing with some of them. I should like to welcome this Bill in general terms as shortly as I can, but before I welcome it completely I would make two minor criticisms, or perhaps suggestions. The first is that this is, I think, the first time since the new Army Act was passed that we have seen the method by which it is proposed to amend it. If we are going to have separate Bills, instead of the old annual amendments to the Army Act, to deal with each amendment of the Army
1228
Act, 1945, we are going to need a breed of orderly sergeants who will need powers far beyond anything I have known. The second point is that I should like, with great respect, to offer a warning to the draftsman who drafted this Explanatory Memorandum. It is becoming as technical as the Bill itself, whereas it was intended, I thought, to explain the substance of the Bill to ordinary people like me.
Having made those two slight criticisms, may I go on to welcome the Bill in general terms? After all, a great deal of the details of this Bill depend on the regulations made under it. I do not complain about that, because I feel that in these fluid times it is necessary for the War Office to have enough freedom to meet the circumstances as they arise and deal with the recruitment problem within the terms of the broad principle which seems to me to be well stated in this Bill: that the standard period of enlistment should be twenty-two years and that the other periods should be variants of it. With that idea I entirely agree. After all, in these days of the modern Army forty years of age is not too old for a man to be still serving. It may have been in the old days, but the old days were different, as many of us know.
The only other comment of a broader nature I would make is to remind your Lordships that if we are going to produce a complete career for the Regular soldier, we have to see that once he is discharged from the Army at forty he gets worthwhile employment for another twenty years. I think that point has to be made every time a discussion of this sort takes place. I am very glad indeed to see, as was the noble Viscount opposite, that in this Bill existing rights are preserved. I am sure it is right. I would add only one comment, and that is that the more we preserve existing rights, the more untidy and complicated terms of service we get. None the less, there is only one way to deal with existing rights, and that is to offer in substitution some right which is better than the one they had before. If you can do that and clear up differentials in terms of service with soldiers serving side by side, so much the better, but that is the only condition on which you can do it.
Lastly, I should like to make one reference to the provision later in the

1229
Bill—I think it is in Clause 15—by which soldiers or officers who go on courses of instruction are to be held to serve for a certain period afterwards. That is, I think, an entirely proper provision from the point of view of the taxpayer. It replaces the old honourable undertaking which was often asked for—I was asked for it. I think this is a better form than the old honourable undertaking. I see no reason why the taxpayer should pay for people to go on expensive courses if they leave the Service directly afterwards before the Government have had the benefit of it. I am not quite clear whether, under the Bill, it is possible to relieve of his obligation an officer or a soldier who went on a course under these conditions, supposing that the circumstances in his private life changed radically from what they were when he accepted the obligation. That is a point which I have no doubt can be, and will be, dealt with in regulations, but I do not see it in the Bill. I would express the hope, with some confidence, that there are arrangements for dealing leniently with those who accepted the obligation in good faith and whose conditions changed. With those words, which at this late hour I have made as few as possible, I would support the Second Reading of the Bill.
7.21 p.m.
LORD LAWSON: My Lords, I wish to say just two or three words. I agree with my noble friend and with the noble Viscount, Lord Bridgeman, that the Bill is a good one. On the point of the restoration of the long service, I must say that I should have been happier if it had been delayed, because there is an indefiniteness about the general policy that is rather disturbing. So far as I car see, it is all dependent upon what happens, to the National Service. Even that, as my noble friend pointed out, is rather indefinite, and if I have a word to say at all to the Government about this matter it is that when they get the Bill, it will be a good thing to have for use when necessary but I certainly would put it into cold storage until the policy of the Government on this matter is much more definite. Upon these matters generally upon conditions of service and what is going to happen, I think it would be much wiser to put this Bill into cold storage until such time as the necessity
1230
arises for some definite action to be taken.
7.23 p.m.
LORD STRATHEDEN AND CAMPBELL: My Lords, there is just one point I should like to put to my noble friend who is in charge of the Bill. It arises from the point made by the noble Viscount, Lord Bridgeman, with regard to those making the Army a life career. It used to be possible for a soldier to continue—I think "continue" is the technical word—his service after twenty-one years, as it was then. I wonder whether under this Bill it will be possible for a soldier to go on serving, as it used to be, year after year, after he has completed his twenty-two years with the Colours: that is to say, he may serve whole time with the Colours and continue serving afterwards. This is a useful advantage for men who want to make the Army their entire career. I join in hoping that your Lordships will give this Bill a Second Reading.
7.24 p.m.
LORD MANCROFT: My Lords, I am grateful to your Lordships for the friendly way in which you have greeted this Bill. With regard to two or three points which have been raised, notably the last point raised by the noble Lord, Lord Stratheden and Campbell, and the point about courses which was raised by the noble Viscount, Lord Bridgeman, I would say that those relate to matters of detail and are of a technical nature. I will look carefully into the possibility of their being dealt with in regulations. Your Lordships have rightly drawn attention to the fact that this Bill really marches with other matters. It is only a "conditions of enlistment" Bill, not a "conditions of service" Bill. That does not alter the fact that points which the noble Viscount, Lord Alexander of Hillsborough, mentioned are points of importance and must be taken into consideration when we are dealing with this Bill. We shall discuss this subject in greater detail on the 31st of this month when we deal with the Army Estimates, so I will not go into detail now, much as I should like to do so.
I do not deny that these matters—conditions of service, pay, recruiting, uniform, separation and all the things which go

1231
with them—must be taken into consideration with this Bill. I should like to reassure the noble Viscount, Lord Alexander of Hillsborough, that the Bill is an encouragement to enlistment and not an encouragement to mutiny. I wholly agree with him that it is not an easy Bill for the recruit to understand, but I can promise the House that by the time that this Bill is in the recruit's hands in the form of recruiting propaganda it will have been translated into good English.
VISCOUNT ALEXANDER OF HILLSBOROUGH: Would the noble Lord give some assurance about keeping powers with regard to National Service for use if the others fail?
LORD MANCROFT: I have made no attempt to deal with that, for I was proposing to deal with it in the debate on the Estimates. It does not really come within the terms of this Bill. I should like to give the noble Viscount an accurate answer rather than one just off the cuff.
VISCOUNT ALEXANDER OF HILLSBOROUGH: I think we should have a Committee stage on this Bill, and I would suggest that the noble Lord might give me an answer then.
LORD MANCROFT: I will consider that.
VISCOUNT ALEXANDER OF HILLSBOROUGH: It is rather fundamental before you make a new structure in place of the old that you make quite sure you are not going to get rid of your old reserve.
LORD MANCROFT: I will certainly look into that matter.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

HOUSING AND TOWN DEVELOP- MENT (SCOTLAND) BILL
7.27 p.m.
Order of the Day for the Third Reading read.
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Strathclyde.)
THE EARL OF DUNDEE: My Lords, last week I moved a new clause in Committee which I withdrew after my noble friend had stated that the improvement grants with which it was concerned would be reviewed. Some of my noble friends who have been unable to stay here to-day have asked me to say that they hope that this review will be an early one and that they intend to raise the matter again at the earliest opportunity. I do not expect that my noble friend will be able to say anything more about this point on Third Reading, but I would remind him that we regard the matter as an urgent one.
As for the Bill in general, in all its stages it has created bitter controversy about rents, but it seems to me that at every stage of discussion, in both Houses of Parliament, far too much has been said about rents and not nearly enough about the time it is going to take to abolish the slums in Glasgow. I cannot let the Bill go through without expressing my disappointment at the very slow rate of progress in the future which seems to be envisaged by all Parties. My noble friend the Minister, in the Second Reading debate, was candid enough to say that he did not think that the problem could be solved within the next generation. The noble Lord, Lord Greenhill (I am sorry he cannot be here to-day), said that in his view the problem was insoluble, and that nothing much could be done about it. I do not think that the Glasgow housing problem would ever have been thought insoluble if people had cared enough about it and had had the will to solve it.
Twenty years ago, the member for Gorbals, Mr. George Buchanan, was kind enough, when I was Under-Secretary of State, to spend a great deal of his time, on more than one occasion, in conducting me around the slums in his constituency, and one thing which he often said to me

1233
(I ask your Lordships to bear in mind that this was twenty years ago) was to this effect: "All the people in Glasgow who used to lead the political agitation against bad housing conditions have now themselves got council houses. They are quite comfortable, and all these people who are left behind in the slums are substandard people who have not enough education or enough intelligence to carry on a really effective agitation against the abominable conditions in which they are compelled to live. So," he said, "you will see that no-one will care enough to do what is needed, and these slums will go on for the rest of our lives."
My Lords, that was twenty years ago. Since then, if we take Scotland as a whole, a great deal of progress has been made, but the progress in Glasgow has never been commensurate with the progress in the rest of Scotland. If the Glasgow Town Council before the war had built anything like the number of houses they ought to have built, and which they could easily have built, the problem now would not be so appalling as it is. Their building record before the war was miserable and derisory; and now, in 1957, a great many of these slums which "Geordie" Buchanan took me round in 1937 are still much the same as they were then. Are we really going to be content that this should go on for yet another twenty years, until 1977 or later?
I would ask the Government whether they cannot review the matter again with the Glasgow Town Council, to see whether a great deal more could not be done than is contemplated at present under Clause 3 of this Bill, which provides for specially large grants to be given for blocks of houses of six storeys or more. I do not believe that a bold and ambitious programme of high building would cost more than the removing of large numbers of people and industries to other parts of the country. I want to make it plain that I entirely support all the other provisions of this Bill. I am entirely in favour of decanting from Glasgow as many people as we can in the shortest possible time, but I do not think that that is good enough in itself.
I should also like to ask the Government whether they could not contemplate a less restricted programme in receiving areas for the Scottish Special Housing
1234
Association, which can do a great deal of building. The Association was formed largely in order to promote new methods of construction—timber, concrete, steel, and so on—which the Scottish local authorities, with few exceptions, have always been far too reluctant to undertake. Our housing needs have always placed too great a strain on the present resources and manpower of the building industry, and we shall never be able to get the building done which ought to be done unless a much greater proportion of our building is done by new methods of construction and not so large a proportion by what is called the traditional method of brick, although in Scotland it is not really traditional. I do not believe that it is beyond the resources of this country to solve the Glasgow slum problem within the next generation. I think that it could be done. I hope that this Bill is not the last word on the subject, and that we are not going to sit back and believe that these horrible housing conditions, which have disgraced Scotland for so long, must go on disgracing our country for the rest of our lives.
7.33 p.m.
LORD MATHERS: My Lords, when this Bill was read a second time, I ventured to give it only a qualified welcome, but now that we have embodied in this Bill the way the Government have chosen to tackle this subject, I hope that it will be used to the full for the good results that I am sure can come from it. I echo a part of what the noble Earl, Lord Dundee, has said with regard to Glasgow, but I would remind him that Glasgow has not always had a Labour local authority. When Labour came into power in Glasgow, they inherited a terrible legacy—
THE EARL OF DUNDEE: Yes, my Lords, but they built only half the number of houses which their Moderate predecessors had built the year before.
LORD MATHERS: —of slums. My noble friend Lord Greenhill would have been able to defend the Glasgow Corporation to a greater extent than I am able to do, and he entered a caveat against the extreme criticism that had been levelled against the Glasgow local authority. There is no getting away from the fact that the Labour majority in Glasgow

1235
was not responsible for the creation of the Glasgow slums.
Those slum tenements have created a revulsion against tenement property. It seems to me that there is no real justification for tenements being slums, and I think that, in working out this programme which the Government have in mind to deal with the present position in Glasgow, more will have to be done in providing bigger and better tenements to take the place of those which are ready for demolition and which should have been demolished long ago. I echo what the noble Earl has said about the desirability of using to the full the varied resources of the Scottish Special Housing Association. I hope that everything that can be done will be done to tackle the terrible housing conditions that still exist. The Government have made this plan but they are not very hopeful about carrying it into effect. I think it is regrettable that we must inevitably look forward to there being a considerable number of years before the slum clearance problem in all its intensity can be dealt with properly. I ventured to say on a previous occasion that I wanted all the good that this Bill can bring. The Government have chosen this as their instrument and I wish them well in their use of it.
7.38 p.m.
LORD STRATHCLYDE: My Lords, the noble Earl, Lord Dundee, opened his remarks by referring to the new clause which he introduced on Committee stage. I told him that it was my right honourable friend's intention to inquire into the whole working of improvement grants, and I can assure him that the work will be prosecuted as expeditiously as possible. As I informed him on that occasion, I cannot foresee what kind of legislative changes will be called for, or when it will be possible to introduce a Bill to give effect to them.
The noble Earl has raised to-day much wider questions. He told us that too much had been said about rents. There has not been a great deal said about rents in your Lordships' House, whatever may have happened in another place. He also said that too little was said about the time taken in removing slums from the city of Glasgow. The whole of Part II of the Bill deals with that problem and with that problem almost alone, although it does make allowance for any
1236
other city in Scotland which may find itself with an overspill problem. I only wish that I could agree with the noble Lords who said on Second Reading that slums could be quickly abolished, but, after all, we have to look at this from a practical point of view. It is no good crying for the moon, because we just cannot get it; but if the Corporation of the city of Glasgow go ahead as fast as possible, very great changes can come about within a reasonable period of time.
As for caring about the removal of slums, I have spent some twenty-seven years of my life dealing with housing conditions in Glasgow, and I care very deeply on that subject. I would remind noble Lords that a great deal is said and published about the tremendous progress of housing in England. Proportionately, the Scottish record since 1951 is superior to the record in English housing. That is something that we should take into account and of which we have every reason to be proud.
I do not know that it is altogether right to blame the Corporation of Glasgow. It may be that some twenty or thirty years ago they might have done better than they did; but we are looking back and judging things from what we know now, not from what we knew twenty or thirty years ago. I would remind the noble Earl that even when the East Kilbride New Towns Bill was introduced, the Corporation of Glasgow were not aware that they had an overspill problem; indeed, it was not, I think, until the year 1953 that they rescinded a resolution which stood in the council records than an overspill problem did not exist. We know full well that it exists to-day, and that is a step forward, at any rate.
Over the period of years since housing became a municipal responsibility, they have built something like 100,000 houses. They have been building during recent years some 6,000 houses a year, certainly with the help of the Scottish Special Housing Association, which is freely granted within the programme laid down; and it is the intention of the Government to endeavour to see that that rate of building of 6,000 houses a year is maintained. That is going to be difficult, because within two years from now there will not be a site for housing left in the city of Glasgow. It is for that

1237
reason that the Government are so anxious that this Bill should get through and that the city of Glasgow should enter as quickly as possible into agreement with the receiving areas. Here I should like to pay a tribute to the Clyde Valley Advisory Planning Committee, which has undertaken tremendous work in investigating the whole of this trouble and loosing into those areas where there could be received not only overspill population but also the industry to go with it.
The noble Earl presses the claim for multi-storey buildings. That is all right, within reason. But you cannot afford to have densities in any city such as have existed in the city of Glasgow over the last fifty or sixty years, with 700 people to the acre over large areas, and 400 people to the acre in other areas. As I have said, no such conditions exist in any other town in a modern civilised country. That is the problem with which we have to deal. If the noble Earl will consider how that is to be dealt with, he will see that, first of all, you have to get the people out of the houses that now stand, and that cannot be done until houses have been built to put them in; then you have to demolish the houses in which they now live, and then erect the high-storey buildings. In fact, the redevelopment plan for the Gorbals and Hutchesontown area provides for high buildings, running up, I think, to twelve or more storeys.
I would say that the Scottish Special Housing Association has done a great job of work, and is continuing to do so; and, as I said earlier, it is the intention of
1238
my right honourable friend the Secretary of State to use it where receiving authorities are in any financial difficulty. The noble Lord, Lord Mathers, expressed the hope—I think it is the hope, too, of the noble Earl, Lord Dundee, and of everyone who has any love for Scotland—that, this Bill will be used to the full. I certainly hope that it will. However, I would say to your Lordships that a great measure of responsibility rests on the local authorities concerned. It is not possible for the Secretary of State to impose conditions on receiving authorities, or to force the Corporation of the City of Glasgow to enter into agreements with them. It is for the receiving authorities and the exporting authority to come to satisfactory arrangements, and to do that as quickly as possible. I know that to-day and during recent days negotiations have, in fact, been going on, and I can only express the hope, with the two noble Lords who have spoken, that these negotiations will quickly be brought to a conclusion so that the work may go ahead. I hope that I have answered the points which have been raised, and I trust that your Lordships will now grant this Bill a Third Reading.
On Question, Bill read 3a, and passed.

HOUSE OF LORDS OFFICES
Fourth Report from the Select Committee; made, and to be printed.
House adjourned at thirteen minutes before eight o'clock.