Sitting of 29 May 1957

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  BARRY CORPORATION BILL
  Read the Third time and passed.
ALIENS AND BRITISH PROTECTED PERSONS (NATURALISATION)
  ADDRESS FOR RETURN
  "showing (1) Particulars of all Aliens and British Protected Persons to whom Certificates of Naturalisation have been issued and whose Oaths of Allegiance have, during the year ended the 31st day of December, 1956, been registered or recorded at the Home Office; and (2) Particulars of cases in which persons previously naturalised have been deprived of their citizenship of the United Kingdom and Colonies during the same period."— [Miss Hornsby-Smith.]
ORAL ANSWERS TO QUESTIONS
  ROYAL AIR FORCE

    Wethersfield Airfield Extensions (Noise)
    Mr. B. Harrisonasked the Secretary of State for Air what action he is taking to prevent quarrying and carting gravel at Bocking and through Finchingfield during the hours of darkness in connection with the extensions to Wethersfield Airfield.
    The Secretary of State for Air (Mr. George Ward): The use of the pit at Bocking will cease with effect from next Sunday, 2nd June. I regret that the need to keep Wethersfield Airfield open for flying during part of the day and the operational need to complete the extension of the runway without delay so that new types of aircraft can be deployed,
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    make it essential for night work to continue, but I am investigating the possibility of selecting routes for the contractors' lorries which will minimise disturbance.
    Mr. Harrison: In view of the intolerable situation which has arisen at Bocking, would my right hon. Friend consider a meeting on the site between representatives of the U.S. Air Force, the contractors, the local authorities, and possibly myself to discuss the re-routing and re-scheduling of these lorries?
    Mr. Ward: Yes, Sir. I will gladly consider that.

  ROADS

    Storey's Gate, London
    Mr. Sharplesasked the Minister of Transport and Civil Aviation what steps he proposes to take in order to relieve traffic congestion by Storey's Gate. S.W.1.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): Congestion has already been considerably relieved by the prohibition of the right turn into Storey's Gate and by the removal of the gates at the entrance of St. James's Park. My right hon. Friend the Minister of Works also proposes to set back the gate pillars from the edge of the carriageway, and this, by providing more space and better visibility, should help the flow of traffic still further.
    Mr. Sharples: While thanking my hon. Friend for that reply, may I ask whether he is aware that it is still possible to be held up there for up to 20 minutes in the morning? Would he consider prohibiting traffic turning right into the Horse Guards approach and stopping cars parking in the narrow part of Great George Street?
    Mr. Nugent: I will certainly consider my hon. Friend's suggestions. There is a very considerable volume of traffic wanting to turn right into the Horse Guards approach. I should need to think twice before stopping that. At that hour of the day there is very little parking in Great George Street which is interfering with the flow of traffic.
    Mr. Lipton: Can the Parliamentary Secretary point to any single practical achievement during recent months by way of reducing London's traffic congestion, apart from the rationing of petrol and the towing away of a few cars? Is not the Minister of Transport himself becoming London's biggest traffic jam?
    Mr. Nugent: If the hon. Member will study the Answer I gave to this Question, he will see that we have made a considerable improvement here.

    West Riding
    Mr. A. Robertsasked the Minister of Transport and Civil Aviation what progress has been made to provide a motor road feeder from the West Riding to the Great North Road.
    The Minister of Transport and Civil Aviation (Mr. Harold Watkinson): The provisional line of the road is included in the county development plan and is, by this means, protected from other forms of development.
    Mr. Roberts: Does the Minister realise that the West Riding is one of the largest industrial areas in the country and that it is receiving very scant attention indeed? Does he propose at least to put something concrete before the West Riding County Council in the very near future?
    Mr. Watkinson: Perhaps the hon. Gentleman will await the answer to his next Question.

    Great North Road
    Mr. A. Robertsasked the Minister of Transport and Civil Aviation when he estimates that the A.1 road will be so far completed as to provide a first-class road link between the north and south.
    Mr. Watkinson: The improvement of A1 between London and Newcastle will on present estimates cost about £40 million. It is one of the first priorities but must obviously be phased over a number of years. Since January, 1955, thirty-three schemes have been authorised at a total cost of £7 million, and of these four have been completed and a further fifteen are in progress.
    Mr. Roberts: Can the Minister give any idea when the complete section will have been fully covered?
    Mr. Watkinson: The answer to that question is that A.1 takes priority over the northern section of the London to Yorkshire motorway, and we shall get on with the complete improvement of A.1 as quickly as we can.
    Mr. Chetwynd: What is the use of enabling motorists to fly more quickly to London, or to 20 miles outside, if they are to be held up for hours when they get there?
    Mr. Watkinson: I agree with the hon. Member. That is why I attach such great importance to the clearance of bottlenecks.

    Central London
    Mr. Russellasked the Minister of Transport and Civil Aviation what plans he has for constructing underpasses to relieve traffic congestion in the central London area.
    Mr. Watkinson: In the central area itself the Knightsbridge-Piccadilly underpass at Hyde Park Corner has been agreed. Fly-overs or fly-unders planned for outside this area will, of course, affect traffic conditions within it.
    Mr. Russell: Has my right hon. Friend considered the Thames Embankment at the end of some of the bridges, particularly in the Chelsea-Vauxhall area? Does he not consider it wide enough for underpasses, and will he do everything possible to see whether they cannot be built there?
    Mr. Watkinson: That is a very helpful suggestion. I know that the London County Council is looking into the possibility of constructing fly-overs or fly-unders at the ends of some of the Thames Bridges, and I will draw my hon. Friend's point to the Council's attention.
    Mr. Strauss: Is the Minister aware of the figures published this morning by the London police showing that there has been a 20 per cent. increase in the traffic using London in the last two years? Would he agree that if this goes on for, say, another four years, unless something far more drastic is done than has been done in the past by means of underpasses and other methods, London will reach a completely chaotic state and traffic will be at a complete standstill?
    Mr. Watkinson: My own view and the view of some of the experts is that traffic

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    in London at the moment is moving rather more freely than before rationing. [Interruption.] Yes, that is so. I quite agree with the right hon. Gentleman that there is this enormous annual increase in traffic in London, which I think he is right in saying will probably continue. That is why I propose to bring forward these very large schemes like, for example, the Hyde Park scheme, which cost very large sums of money.
    Mr. Russellasked the Minister of Transport and Civil Aviation what progress is being made in widening the carriageways of the roads in the Central London area listed in his Answer to a Question on 28th February, 1956.
    Mr. Watkinson: One scheme has been completed; grants have been made for three more; and I understand that a further one is likely to be carried out in the near future.
    Mr. Russell: While thanking my right hon. Friend for that answer, may I ask him to press on with this matter as fast as he can? Would he not agree that a large number of unnecessarily wide pavements could be narrowed for the benefit of the carriageway?
    Mr. Watkinson: Yes, I quite agree.

    Doncaster By-pass
    Mr. T. Williamsasked the Minister of Transport and Civil Aviation (1) how many objections have been made to the Doncaster by-pass road; and when these objections are likely to be dealt with;
    (2) when the preliminary arrangements for the Doncaster by-pass road will be completed; and when he expects physical work to start.
    Mr. Watkinson: Objections to the draft Scheme for the Doncaster by-pass have been received from seven sources. I have considered them all and have decided that the making of the Scheme should proceed. As soon as the Scheme has been made, I shall give a formal invitation to the agent authorities concerned to prepare the necessary detailed land plans, engineering drawings, and contract documents.
    Mr. Williams: Can the right hon. Gentleman say how far this Scheme is behind the original schedule?
    Mr. Watkinson: To my understanding, it is not behind schedule. As I have just told the right hon. Gentleman, we have, in effect, shortened the procedure, because I have overruled some of the objections which have been made.
    Mr. Williams: While welcoming what the Minister has just said, may I ask whether he is not aware that the best North-West road in the world will be useless unless and until this by-pass of the bottleneck of Doncaster is ultimately completed?
    Mr. Watkinson: I quite agree. I want to by-pass Doncaster just as much as the right hon. Gentleman.

    Schemes
    Mr. Jannerasked the Minister of Transport and Civil Aviation whether he is aware that of 102 road schemes listed by him on 30th May, 11 July and 31st October, 1956, for commencement at some specific date, no less than thirty-seven have not been started according to schedule: and whether he will undertake an intensive review of the causes which lead to these delays, with a view to their removal.
    Mr. Watkinson: While I accept that some schemes have not started exactly on schedule for the reason that I gave my hon. Friend the Member for Blackley (Mr. E. Johnson) on 10th April, I do not agree that the figures quoted in the Question correctly reflect the present position.
    Mr. Janner: If not thirty-seven, how many are there? What does the Minister propose to do to expedite action? As he knows, the position is very serious.
    Mr. Watkinson: Yes, but the facts of the case, as I and my predecessors have explained, are that we are faced with a very difficult position. We either have to give full rein to the views of local authorities, private interests and all the other people concerned, in which case we may find that we do not always keep up to schedule, or we must overrule those people and not give them a fair chance to put their case. I have said, quite plainly, that I am not prepared to accept the second course.
    Mr. Ernest Davies: Is the right hon. Gentleman satisfied that this procedure

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    is as speedy as it could be? Would he undertake to review the whole process of procedure and see whether it cannot be speeded up?
    Mr. Watkinson: I have already dealt with this matter twice. I am satisfied that we have already made a slight improvement, and we cannot do any more unless we are to override the rights of individuals.

    Parking Scheme, Westminster
    Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation whether he has yet appointed an independent inspector to hold a public inquiry into the Westminster City Council parking scheme.
    Mr. Watkinson son: No, Sir. As soon as I am able to appoint an inspector I will make an announcement.
    Mr. Davies: Does the right hon. Gentleman appreciate the need for speed in this case? Is it not a fact that, after an inquiry has been held, an Order has to be laid before the House subject to negative procedure? Will the right hon. Gentleman endeavour to speed this matter up so that the House can have an opportunity of considering it before the Summer Recess? Is he aware that it would not be desirable that the scheme should be carried out before the House has an opportunity of discussing it, and that if we cannot discuss it before the Summer Recess it will be held up until late autumn?
    Mr. Watkinson: That may be, but the House should realise that this is the first parking meter scheme in the country. There are bound to be difficulties in getting it going, and I think that on the whole we should go reasonably slowly and try and get it right.
    Mr. Davies: Surely there is no difficulty about finding someone to hold a public inquiry?
    Mr. Watkinson: Perhaps the hon. Gentleman had better find the right man.
    Mr. G. R. Howardasked the Minister of Transport and Civil Aviation whether, in view of the introduction of parking meters in Westminster, he will consider the formation of a corps of traffic wardens in order to release the many members of the Metropolitan Police at present engaged in these duties.
    Mr. Watkinson: The Road Traffic Act, 1956, lays on local authorities the responsibility of providing staff to supervise parking meters. I hope we shall gain some useful experience in this way.
    Mr. Howard: Does not my right hon. Friend agree that the situation is becoming quite ridiculous? We have police standing by traffic lights because traffic does not obey the lights, and we have mobile police directing traffic. Men who are highly trained in crime detection are being used for this stupid and senseless duty which could easily be done by people trained for the purpose. Could we not recruit for these duties men coming out of the Services, like ex-petty officers, and so on, who would be perfectly able to do this work?
    Mr. Watkinson: What my hon. Friend has said carries great force to the extent that when we have parking meters we shall certainly have to have a new force of men to look after them and their associated problems, and I think that the type of man my hon. Friend has mentioned would be very suitable for that purpose.

    Victoria and Alexandra Gates, Hyde Park
    Captain Pilkingtonasked the Minister of Transport and Civil Aviation what proposals he has for relieving traffic congestion at Victoria Gate and Alexandra Gate, Hyde Park.
    Mr. Watkinson: I am discussing with my right hon. Friend the Minister of Works ways of relieving traffic congestion at these gates, and I hope to make an announcement in the near future.
    Captain Pilkington: Whilst appreciating that my right hon. Friend has been doing and is doing a good deal to relieve traffic congestion in London, may I ask whether he would not agree that traffic is again seizing up, particularly in these two places? Will he do what he can to inject a sense of urgency into consideration of this problem?
    Mr. Watkinson: I certainly will, but the facts are that we are dealing with land there which is for the use of the London public as an open space, and my right hon. Friend and I are naturally very reluctant to take large areas of it until we are really satisfied that it is the right suggestion.
    Viscount Hinchingbrooke: Is my right hon. Friend aware that the volume of traffic in these places, the configuration of the ground and the space available, indicate underpasses, which are now being pursued in France and Belgium? Is he aware that the volume of traffic in some places we have seen recently is well below what exists in these places and yet abroad people are doing these things with their limited accommodation?
    Mr. Watkinson: It is also being pursued at Hyde Park Corner at a cost to me of £1 million.

    United Nations (Economic Survey of Europe)
    Captain Pilkingtonasked the Minister of Transport and Civil Aviation whether he will make a statement on that part of the Economic Survey of Europe produced by the Economic Commission of the United Nations which deals with British roads.
    Mr. Watkinson: The Commission's comments were somewhat out of date, being based on the period up to 1955. Since then the rate of expenditure on major road works in this country has increased three times.
    Captain Pilkington: Would my right hon. Friend not agree it is intolerable that we should have the worst traffic problem in Europe, according to this Survey, and yet spend the least amount of money of any European country? Even when the present programme is at its peak only the same amount of work will be done as was done before the war?
    Mr. Watkinson: Perhaps my hon. and gallant Friend will take note of what I said before. This Commission's comments were based on a period up to 1955, when the present programme had not even been stated, and I do not therefore consider its commends in any way representative.
    Mr. Strauss: Is the right hon. Gentleman aware that the Commission said that the amount spent in this country on new roads is less than one-ninth of that spent in most major European countries, taking a proportion on the national income? Is he aware that even if we have improved the amount spent on major roads by three
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    times we are still well below most European countries in proportion to our national income?
    Mr. Watkinson: I do not disagree. We must get on and build more roads, and that is what I propose to do.

    Cross-roads, Fernhurst (Accident)
    Mr. Goughasked the Minister of Transport and Civil Aviation if he is aware of the fatal accident which recently occurred at the cross-roads in Fernhurst. Sussex; and what steps he proposes to take to avert similar accidents in the future.
    Mr. Nugent: I have heard of this fatal accident with great regret. The West Sussex County Council are the highway authority, and any steps to improve the cross-roads would be primarily a matter for them. On the information before me, however, it does not appear that the accident was caused by a defect in the layout or condition of the roads.
    Mr. Gough: Whilst thanking my hon. Friend for that reply, may I ask him if he realises that the main road through the village goes into a bottleneck there, and that consequently there is very little that can be done in that respect? However, would he consider putting up more notices warning motorists that the road suddenly comes into a bottleneck?
    Mr. Nugent: I know the crossroads well, and I agree with my hon. Friend that it presents a difficult traffic problem. I will certainly look into his suggestion and see if we can do anything on those lines to help him.

    Tyne Tunnel
    Dame Irene Wardasked the Minister of Transport and Civil Aviation what was the original estimated cost of the Tyne Tunnel and the estimated cost today.
    Mr. Watkinson: The latest estimate for the road tunnel, including its approach roads, is about £12 million. The original estimated cost pre-war for a somewhat smaller tunnel was £2½ million.
    Dame Irene Ward: In view of the fact that the estimate has increased since before the war, when the controversy as

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    to tunnel and bridge was under consideration, will my right hon. Friend get into action with the building of the tunnel straight away in order that he may save money and improve our communications? Can he, therefore, give me a starting date and save the revenue?
    Mr. Watkinson: That is a fascinating suggestion, and it shows why I was so anxious, if I could, to have a bridge instead of a tunnel, since it would cost a great deal less money.
    Dame Irene Wardasked the Minister of Transport and Civil Aviation whether he will ensure that the Tyne Tunnel retains the original priority it had, namely, following the completion of the Dartford Tunnel.
    Mr. Fernyhoughasked the Minister of Transport and Civil Aviation, now that he has made the decision to link the two banks of the Tyne by a tunnel, if he will give the approximate date when work on the project will commence.
    Mr. Willeyasked the Minister of Transport and Civil Aviation (1) when it is expected that work will commence on the construction of the Tyne Tunnel;
    (2) why he has decided to consider the construction of the Tyne Tunnel in an order of priority related to other tunnel projects.
    Mr. Watkinson: My predecessors gave an undertaking that the Tyne Tunnel would be the next to be authorised after the Dartford-Purfleet Tunnel, and I shall do my best to honour that undertaking. It will be a very costly scheme, however, and I cannot say yet when it will be possible to include it in the road programme.
    Dame Irene Ward: Is my right hon. Friend aware that when that pledge was given the suggestion was that we could not start on the Tyne Tunnel until the machinery was available from the Dartford Tunnel? Can he let us know when the machinery will be available so that we may have an idea when we may exercise our pressure to get on with the job?
    Mr. Watkinson: I will write to my hon. Friend and will let her know when it will be available.
    Mr. Willey: Will the right hon. Gentleman look at this again? Does he not agree that the cost of the shields is a relatively minor part of the total cost, and that there is really no reason why the priority of one tunnel project should depend upon another?
    Mr. Watkinson: That is not quite so, because we are now committed in this country to a very large programme of bridge and tunnel building— very much larger than the detractors of the road programme are prepared to accept— and I cannot overload the economy with too many of these large schemes at any one time.
    Mr. Fernyhough: Does not the right hon. Gentleman realise that the equivocation by himself and previous Ministers of Transport as to when the Tyne Tunnel shall be commenced is breeding cynicism bordering on despair in the North-East, and will he not give a firm date and make it possible for the local authorities to get on with the work in which they will be involved as and when this project is to be started?
    Mr. Watkinson: There has been no equivocation, so I do not think I need say any more in answer to that supplementary question.
    Mr. H. Morrison: Has it occurred to the right hon. Gentleman that his hon. Friend the Member for Tynemouth (Dame Irene Ward) ought to be more grateful to him for the forthcoming way in which he has handled the matter in comparison with the not so forthcoming way in which he has dealt with the Humber Bridge project, with which I have some association, and have had in the past, a project which will also have to be considered in due course? Ought not the hon. Lady to be more appreciative of the generous way in which her right hon. Friend has met her?
    Mr. Watkinson: That is a fair point by the right hon. Gentleman, because he made very powerful representations to me in respect of the Humber crossing, and I had to tell him that I could not see any prospect in the foreseeable future of constructing it.
    Dame Irene Ward: On a point of order, Mr. Speaker. Might I ask whether a Privy Councillor has any precedence over an ordinary back bench Member in matters of this sort?
    Mr. Speaker: In accordance with the practice of the House, when a right hon. Gentleman rises I always call him if I can and if I think he can contribute something to the discussion.

    Marble Arch and Hyde Park Corner
    Captain Pilkingtonasked the Minister of Transport and Civil Aviation when he proposes to introduce legislation to effect the necessary improvements for traffic at Marble Arch, Hyde Park Corner, and along Park Lane.
    Mr. Watkinson: I am doing all I can to have this legislation prepared as quickly as possible, but I cannot say exactly when it will be possible to introduce it.
    Captain Pilkington: Will my right hon. Friend at least say that it will be this year?
    Mr. Watkinson: That is not in my hands, because the agent authority for the work is the London County Council, and it is the London County Council which has to do all the preliminary work for introducing the Measure.
    Mr. Strauss: That is so, of course, but can the Minister give us any idea how long it will take, once the necessary Parliamentary authority is granted, to complete the scheme? Also, will all the preparatory plans be made meanwhile in order to speed up the completion of the scheme as much as possible?
    Mr. Watkinson: With regard to the second part of the right hon. Gentleman's supplementary question, all the preparatory work that can be done is being done in advance of the Bill. As to how long the scheme will take after the plans are passed, perhaps he will table a Question on that point.

    Bridges, Downham Market
    Mr. Dyeasked the Minister of Transport and Civil Aviation what recommendations he has received from the Norfolk County Council regarding the construction of a new bridge over the River Great Ouse at Downham Market to carry the road A.1122; and what recent reply he has sent to them.
    Mr. Nugent: We have received no formal representations from the county
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    council about this scheme since October, 1954. Our divisional road engineer explained then that no funds could be made available towards the cost of a new bridge.
    Mr. Dye: Is the hon. Gentleman aware that the old bridge was condemned nearly twenty-five years ago, that a temporary bridge was erected in its place, and that it is now necessary to use the old bridge again while the temporary one is repaired? Is he aware that a fund for the purpose exists, which is no doubt invested in stocks which are deteriorating, and that it is possible for the firm now constructing many bridges in the area in connection with the flood precautions scheme to build a bridge cheaper than it could be done probably at any other time? Will he look into the matter?
    Mr. Nugent: I am afraid I can give the hon. Gentleman no immediate prospect of a new bridge being built there. The wooden bridge to which he refers, which is now being repaired, will continue to give useful service for many years to come. In the meantime, the old bridge which is being used temporarily during the repairs is safe to use.
    Mr. Dyeasked the Minister of Transport and Civil Aviation what is the condition of the Brandon Creek bridge which carries the trunk road A.10 over the River Little Ouse; what steps are being taken to keep the bridge from falling into the river and to regulate traffic over it; what representations he has received from the Norfolk County Council and the Downham Market Rural District Council regarding this bridge; and what replies he has sent to them.
    Mr. Nugent: Brandon Creek Bridge is structurally sound apart from some corrosion of the main girders. We have received from the local authorities representations about the immediate need for a new bridge on an improved road alignment and our divisional road engineer is discussing the matter with the county council.
    Mr. Dye: Is the hon. Gentleman aware that a lot of piles are being put in the middle of the river to hold the bridge up and prevent it from falling into the river, and that that may be a danger from the flood point of view? Why it is necessary to spend all this money on propping up

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    a very old, very narrow and very imperfect bridge when money will some time have to be spent to build a new one in its place?
    Mr. Nugent: The work in hand is to put an additional pier in the middle of the existing bridge—
    Mr. Dye: A wooden one?
    Mr. Nugent: — which will make it perfectly sound. If the hon. Gentleman is so apprehensive about his safety when crossing the bridge, I suggest that he holds his breath next time he is crossing it, which would be a novel experience for him.
    Major Legge-Bourke: Will my hon. Friend bear in mind that the bridge is of considerable importance not only to South-West Norfolk but to the Isle of Ely? With regard to one holding one's breath when going over the bridge, will he bear in mind that the bridge is highly dangerous, and the sooner it is re-aligned the better?
    Mr. Nugent: When the present consultations have been completed we shall consider what place we can give the bridge in our road programme, but it will have to take its turn.
    Mr. Strauss: While I am aware that the hon. Gentleman was trying to give a whimsical answer to the supplementary question put by my hon. Friend the Member for Norfolk, South-West (Mr. Dye), this is a very serious matter, and the hon. Gentleman really should not answer a matter affecting—[HON. MEMBERS: "Question."] Might I put it like this? That sort of answer is resented— [HON. MEMBERS: "Order."] Is the Minister aware that the answer which he gave to my hon. Friend's supplementary question will be resented not only in the locality but in a large part of the House?
    Mr. Nugent: I do not think so. In view of the supplementary question which was being put to me, I think it was a perfectly fair answer.
    Mr. Dye: In view of the atrociously stupid reply of the Minister, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.
    Mr. Speaker: Order. If the hon. Member wishes to give notice that he
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    desires to raise a matter on the Adjournment, he should confine his adjectives to "unsatisfactory".
    Mr. Dye: But, Mr. Speaker, you will recall that the hon. Gentleman spoke of the action that I might have to take if I crossed the bridge, when he has put traffic lights there to stop me crossing it when others are coming in the opposite direction.

    Fly-Overs and Underpasses
    Mr. Russellasked the Minister of Transport and Civil Avition how many fly-over or fly-under road junctions, for which his authority is required, are being constructed or are planned; and what is their cost.
    Mr. Watkinson: Two fly-overs on trunk roads are in course of construction and two more are authorised. On classified roads I have made grants towards the cost of constructing five flyovers. The cost will range from between £150,000 for the very simplest form of fly-over to £2 million or more in the Metropolitan area. My plans for the next few years on both trunk and classified roads include many more fly-over junctions. In addition, hundreds of bridges will be built to carry new motorways and by-passes over or under existing highways.
    Mr. Russell: While thanking my right hon. Friend for that answer, will he not agree that intersecting traffic is the main cause of congestion and that, therefore, the more fly-overs and underpasses he can build in different parts of the country the sooner we shall solve our traffic problems?
    Mr. Watkinson: I agree that fly-overs must gradually supersede roundabouts, and I think that my hon. Friend is entirely right.

  CIVIL AVIATION

    Air Tourist Services (France)
    Mr. Beswickasked the Minister of Transport and Civil Aviation what representations have been made to him by the Government of France with regard to air tourist services into France: what planned air services have, in consequence. been cut; what action he proposes to take

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    about this new policy introduced by the Government of France; and if he will make a statement.
    Mr. Watkinson: I have received no representations from the Government of France with regard to air tourist services into France. The French Government have continued to be generous in granting permission for a very large number of such services by British airlines. This year they have refused permission only for one proposed service and have placed conditions on their permission for another. I am not aware of the introduction of any new policy on this question by the French Government.
    Mr. Beswick: Is it not a fact that three companies were affected by a recent decision of the French Government? Is the Minister satisfied that his Department is sufficiently active or sufficiently forceful in pressing the traffic rights of this country? In view of the sort of things that happen when senior Ministers go from Holland, does the right hon. Gentleman not think that we could do rather more to protect our rights in this sort of case?
    Mr. Watkinson: I do not see where Holland comes into this. The facts are that British airlines want to make much greater use of French airfields than French airlines, on the whole, want to make of British airfields. Therefore, the force of our representations, which have been very vigorously made, is somewhat limited by the fact that we do not offer France the number of facilities that we want to get from that country. Indeed, I think that the French Government have been quite reasonable in their attitude.

    Dyce Airport (Requisitioned Companies)
    Mr. Spenceasked the Minister of Transport and Civil Aviation on what date Dyce Airport and the interests of E. L. Gandar Dower, Allied Airways (Gandar Dower), Limited, Aberdeen Flying School, Limited, Aberdeen Flying Club, Limited, and Aberdeen Aerodrome Fuel Supplies, Limited, were requisitioned; and if he is aware that no provision has been made for compensation for loss of profit, loss of goodwill and amortisation of leases.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Airey Neave): These requisitions took place on 13th October, 1939. If Mr. Gandar Dower considers that he is entitled to compensation under these or any other heads my Department will, of course, consider any representations he may make. So far, in spite of pressure from my Department, he has failed to state a detailed claim.
    Mr. Spence: Does my hon. Friend appreciate that what he has just said means that his Ministry is continuing to hold, under harsh wartime regulation terms, private property for the benefit of his Ministry and to the detriment of the private individual concerned?
    Mr. Neave: This has been a long and complicated negotiation. I would suggest that if my hon. Friend would bring Mr. Gandar Dower along to discuss this with the Ministry, I am very hopeful that we could come to a settlement.
    Mr. Spenceasked the Minister of Transport and Civil Aviation whether he is aware that compensation is being paid to companies requisitioned at Dyce Airport, under the Compensation (Defence) Act, 1939; and what machinery exists for relating such compensation to the purchasing of the £ sterling at current date compared with the £ sterling in 1939.
    Mr. Neave: Yes, Sir. The compensation rentals being paid to these companies were awarded by the general claims tribunal under the provisions of the Compensation (Defence) Act, 1939. There is no statutory provision for the continuous re-assessment of compensation rentals in relation to the purchasing power of the £ sterling.
    Mr. Spenceasked the Minister of Transport and Civil Aviation whether he is aware that Mr. E. L. Gandar Dower and the directors of Allied Airways (Gandar Dower), Limited, Aberdeen Flying School, Limited, Aberdeen Flying Club, Limited, and Aberdeen Aerodrome Fuel Supplies, Limited, were invited by his Department to discuss problems at St. Andrew's, Scotland, in August, 1949; that a full questionnaire was submitted and answers requested; that no replies have been received; and if he will make a statement.
    Mr. Neave: Mr. Gandar Dower has been in touch with my Department fairly continuously over the past ten years. As far as I know, all Mr. Gandar Dower's questions have been answered during that period.
    My right hon. Friend and his predecessors have been ready for a very long time to acquire Mr. Gandar Dower's interests at Dyce. If only he will either submit a claim himself or appoint agents to negotiate on his behalf, I see no reason why this should not be concluded soon.
    Mr. Spence: Is my hon. Friend aware that the failure on this occasion to reach any finality was due to the Minister's failure to reply to a questionnaire which was prepared on agreed terms of reference? I have seen the letter of invitation and the terms of reference and the questionnaire. Will the Minister now consider looking at the questionnaire and sending a full answer?
    Mr. Neave: I have certainly seen the questionnaire. My understanding is that all those matters have been answered in the interviews that Mr. Gandar Dower has had with my Department. I would suggest, however, that if he were prepared to come along and have a further discussion, there is a good chance of a settlement.

    B.O.A.C. and B.E.A.C. (Aircraft)
    Mr. Beswickasked the Minister of Transport and Civil Aviation if he will now make a statement about the purchase of new British jet aircraft by the British Overseas Airways Corporation and the British European Airways Corporation.
    Mr. Watkinson: As regards British Overseas Airways Corporation, I would refer the hon. Member to the reply I gave on 22nd May to the hon. Members for Govan (Mr. Rankin) and Sunderland, South (Mr. P. Williams). British European Airways have not yet completed their examination of the possibilities.
    Mr. Beswick: Would the right hon. Gentleman not agree that the placing of these orders will be in large part settle the pattern of the British aircraft manufacturing industry for the future? Could he give any indication of the procedure followed in this matter of ordering these
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    aircraft and what principles are considered, apart from the straight commercial deal between the firm and the operator?
    Mr. Watkinson: As the hon. Gentleman knows from his expert knowledge, what has been happening, and the House has been told this several times, is that both Corporations have been engaged in talks with all British aircraft manufacturers with aircraft to offer which seem likely to meet their needs. The talks in the case of B.O.A.C. are concluded and an order has been placed. The B.E.A.C. talks have not been concluded and, therefore, no order has been placed.
    Mr. Beswick: Is the right hon. Gentleman aware that I was concerned not so much with what the Corporations did as with how the Government come into the question, which will be a most important one to the aircraft manufacturing industry? What is happening to the Transport Aircraft Requirements Committee? Is that functioning, and who answers for it in the House?
    Mr. Watkinson: T.A.R.C. is still functioning and gives its advice. I might remind the hon. Gentleman that I said in an Answer last week that no Government money is involved in the order that has been placed. This is a private venture on the part of the firm concerned, and the Corporation has every right to pick the aircraft which it thinks best meets its needs.

    Air Trooping
    Mr. Beswickasked the Minister of Transport and Civil Aviation what proposals have been put to him by the air Corporations for the possible future operation of air trooping; and if he will make a statement.
    Mr. Watkinson: No such proposals have been put to me.
    Mr. Beswick: I am not quite sure how far back the right hon. Gentleman is going. If he goes back further than the last few weeks, would his answer not be in the affirmative? Would he confirm that the Corporations are ready to undertake air trooping if given the opportunity?
    Mr. Watkinson: No, Sir. What I would confirm is that it is my view, as it was the view of my predecessors, that

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    the Corporations should stick to their main field, which is the operation of scheduled services, and should leave trooping to independent operators.
    Mr. Bellenger: Are the Service Departments free and unfettered in making requests to the State airlines to carry troops?
    Mr. Watkinson: The right hon. Gentleman must put that question to the relevant Service Department.

    B.O.A.C. and Central African Airways (Agreement)
    Mr. Gowerasked the Minister of Transport and Civil Aviation what protest he has received about the recent agreement between British Overseas Airways Corporation and Central African Airways regarding the use of certain air routes; and what new applications have been made to the Air Transport Advisory Council in this regard.
    Mr. Watkinson: I have received no direct protests about the recent agreement between British Overseas Airways Corporation and the Central African Airways regarding the use of certain air routes, but representatives of Hunting Clan Air Holdings Ltd. have asked to see me on this subject and I shall be meeting them later today. The agreement raises no question which calls for any application to the Air Transport Advisory Council.
    Mr. Gower: Does my right hon. Friend really consider that this is a sound economic policy for public corporations to pursue? Does he not think it might be a dangerous precedent, which would enable foreign companies in future to get a commanding position in Commonwealth airlines simply by guaranteeing the profits of local companies?
    Mr. Watkinson: My hon. Friend might await my Answer to the next Question; but the fact is that this was the decision of a sovereign Government and had nothing to do with Her Majesty's Government.
    Air Commodore Harveyasked the Minister of Transport and Civil Aviation if he will make a statement on the recent negotiations between Central African Airways and British Overseas Airways Corporation regarding air routes.
    Lieut.-Colonel Bromley-Davenportasked the Minister of Transport and Civil Aviation if he will make a statement as to the terms on which he has approved the take-over by British Overseas Airways Corporation of the Central African Airways Service from London to Rhodesia for ten years under which a guaranteed profit of £175,000 a year has to be given to Central African Airways; if he is aware that this arrangement will operate to the detriment of independent airlines; and if he will take action to give better protection to these airlines in future against competition from the nationalised corporations.
    Mr. Rankinasked the Minister of Transport and Civil Aviation what consultations British Overseas Airways Corporation had with him in regard to the take-over of Central African Airways: and if he will make a statement.
    Mr. Watkinson: The negotiations between Central African Airways and B.O.A.C. were initiated by Central African Airways on a purely commercial basis. Therefore B.O.A.C. did not need to seek my approval for the agreement into which they have entered; no expenditure from public funds is involved. I was, of course, informed by the Chairman of B.O.A.C, that negotiations had been opened by Central African Airways.
    The services of C.A.A. between the Federation of Rhodesia and Nyasaland and the United Kingdom have for some years been operated in pool with B.O.A.C. I understand that, under the new agreement, B.O.A.C. will operate on behalf of C.A.A. the latter's share of the pooled services under financial arrangements which will yield to C.A.A. over the 10-year period of the agreement a total revenue of £.1·75 million. B.O.A.C. have assured me that in their commercial judgment this sum is within the earning capacity of the pooled operation of the route.
    I understand that the civil aviation authorities in the Federation considered both the proposal put to them by C.A.A. for this arrangement with B.O.A.C. and the alternative scheme proposed to them by Hunting Clan Air Holdings Ltd. The choice between them was entirely a matter for the Federal Government, and not in any way for the United Kingdom Government. For reasons which have been

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    stated by the Federal Government they preferred the arrangement between C.A.A. and B.O.A.C.
    Air Commodore Harvey: Is my right hon. Friend aware that there is considerable uneasiness in the way this deal has been brought about? Is he further aware that it is very questionable, under Sections 3 and 8 of the Act, whether the Corporation is within its right in conducting such a deal? Would my right hon. Friend, in order to elucidate the matter, publish a White Paper or at least full details concerning the deal?
    Mr. Watkinson: I am grateful to my hon. and gallant Friend for putting down this Question. It has enabled me to make a clear statement of the position which, I think, when he has studied it, will show that this is not a matter of concern to the Government in the United Kingdom. It is the decision of a Sovereign Government in Africa, one which they are entitled to take, and one which does not concern me.
    Mr. Rankin: Would the Minister not agree that the terms which have been agreed to by B.O.A.C. are somewhat over-generous in view of the fact that this firm was not in a very happy state?
    Mr. Watkinson: No, Sir, I understand that the terms agreed to are a very small proportion of the total revenue which B.O.A.C. will secure by this deal and, as I said in my Answer, in their commercial judgment show them a good profit.
    Mr. Farey-Jones: In view of the public reaction to this, would my right hon. Friend kindly indicate to the House whether there has been a change of attitude or not in his Department to the private enterprise contractors?
    Mr. Watkinson: I am glad to answer that question. There has been no change of attitude on my part or on that of my Department to private enterprise airlines. Indeed, I hope before long to bring to this House proposals which, I think, will be of value to the private enterprise airlines.
    Mr. Beswick: Is it not a strange thing that the criticism of this deal comes from precisely those people who have been criticising the Corporation for not expanding its share of the world traffic?
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    Secondly, ought not this deal to give some satisfaction in that there is to be assurance of continued co-operation between the developing part of Africa and the United Kingdom?
    Mr. Watkinson: May I say—because I think that in this I shall carry both sides of the House with me—that air transport is the travel of the future, and that this country has to lead in it as we have led at sea. This means that in my job I must try to keep a fair balance between the Corporations and private enterprise, and that is what I propose to do.
    Lieut.-Colonel Bromley-Davenport: Is it not rather extraordinary that a company which has been making a loss of £350,000 a year should now be guaranteed a profit over ten years of £175,000 a year, and will this not represent a loss to someone of some £500,000 a year?
    Mr. Watkinson: I do not think my hon. and gallant Friend has quite realised that this deal between B.O.A.C. and C.A.A. is not a take-over of the latter. It is merely that C.A.A. have leased their rights to run international services to the Corporation. The rest of their operations remain in the full control of C.A.A. The price which B.O.A.C. have paid, they tell me, on their best commercial judgment is a favourable one to B.O.A.C.

  TRANSPORT

    River Severn Banks (Erosion)
    Mr. Philips Priceasked the Minister of Transport and Civil Aviation whether he is aware that erosion of the banks of the Severn, between Gloucester and Tewkesbury, continues to the detriment of good agricultural land; and whether, following the conference held at Worcester on 9th February, 1956, he will again consult the British Transport Commission with a view to ensuring that action is taken by that body to prevent this damage by repairing the banks and reducing the speed of barge traffic.
    Mr. Nugent: Consultations between the British Transport Commission and the Severn River Board are continuing.
    Mr. Price: Will the Minister impress upon the Transport Commission the great

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    need to regulate the traffic on the Severn as being probably one of the most important causes of erosion of the banks?
    Mr. Nugent: The Transport Commission is well aware of this complaint, which has been going on for some time. I recollect it from a different position when I was at the Ministry of Agriculture. It is a difficult question to settle, but from the point of view of the River Board, the Transport Commission, the Ministry of Agriculture and my Department. efforts are being made to settle it. Any impetus that I can give personally to reaching a settlement I will certainly give.
    Sir P. Agnew: Is my hon. Friend aware that the erosion of the River Severn is not confined to that portion of the river south of Tewkesbury, and that I have been waiting a long time for the announcement by his right hon. Friend the Minister of Agriculture of a solution of the problem which will lead to remedial action being taken about the erosion?
    Mr. Nugent: The question is a very difficult one.

    Light Motor-cycles (Deputation)
    Mr. Lewisasked the Minister of Transport and Civil Aviation on what date he anticipates meeting a delegation from the British Cycle and Motor-Cycle Industries Association to discuss a change in the legislation about light motor-cycles which fulfil the definition given for Moped in Annex 1 to the 1949 Convention; and when he expects to make a statement arising from these discussions.
    Mr. Nugent: I met a deputation from the Association this morning; a further statement will be made as soon as possible.
    Mr. Lewis: With regard to "as soon as possible", will the Minister say whether if I table a Question for next week he will be able to make a statement by then?
    Mr. Nugent: No, Sir; I am afraid that it will not be possible to make a statement as soon as that. Before making a statement, we must receive a Report from the Departmental Committee on Road Safety and consider that alongside the representations made to me this
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    morning. However, I realise the urgency of the matter, and we will certainly make a statement as soon as we can.

  SHIPPING

    International Regulations (Safety and Crew)
    Mr. Awberyasked the Minister of Transport and Civil Aviation if he is aware that ships carrying flags of convenience are not conforming to international standards of safety and crew agreements and, as a consequence, are causing industrial workers to bring pressure to bear on the owners of such ships to compel them to conform to international regulations, thereby leading to industrial trouble in the ports of this country; and if he will take steps to see that all vessels entering our ports conform to the regulations.
    Mr. Watkinson: So far as I am aware, these ships in general conform to international standards of safety, and I would certainly use my powers to prevent unsafe ships, whatever their flag, from sailing from ports of this country. I have, however, no powers in connection with the crew agreements of foreign ships.
    Mr. Awbery: Is the Minister aware that most of these shipowners adopt a flag of advantage in order to avoid their obligations under the I.L.O. and that there appear to be no legal powers that can prevent them from evading these obligations? Is it his intention to allow the industrial workers to use action in order to force these people to carry out their obligations under the I.L.O.?
    Mr. Watkinson: I have set out my powers in the Answer. Of course, further action can be taken through the I.L.O. itself.
    Mr. Nicholson: Does my right hon. Friend really mean to give the impression, which he did to me, that the Government do not view this position seriously? Does this not only result in a loss of revenue but a great loss of prestige? Does it not also depress the standards of the merchant seamen? Could he, at any rate, leave me with the impression that he takes the matter seriously?
    Mr. Watkinson: If my hon. Friend studies the relations between my Department and the shipping industry, I think

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    he will see that this question of flags of convenience is not only a very grave matter but, one which is under discussion most of the time. What I was asked to do in the Question was to set out my legal powers, and that I have done.
    Mr. Shinwell: Whilst appreciating that the right hon. Gentleman has no power in relation to foreign vessels, does he not realise that it frequently occurs that British vessels registered in the United Kingdom are being transferred to foreign owners and are sailing from foreign ports to this country, and cannot he use his powers in that connection?
    Mr. Watkinson: I will take careful note of what the right hon. Gentleman has said, because there is no disagreement in the House that we ought to do what we can to limit flags of convenience; but it is a very difficult legal problem.

  RAILWAYS

    Finsbury Park—Alexandra Palace Line
    Mr. E. Fletcherasked the Minister of Transport and Civil Aviation if he will now state when the proposed electrification of the line through Finsbury Park to Alexandra Palace will be completed.
    Mr. Nugent: This line has been closed to passenger traffic since 1954, and there is no proposal for electrifying it.
    Mr. Fletcher: is the Minister aware that some scheme is urgently necessary to deal with the increasing traffic congestion in North London?
    Mr. Nugent: That is a little wide of this point. The answer to the hon. Gentleman's Question is that the line has been closed for some time and that there is no such proposal. There is a proposal to electrify the main line up to Alexandra Park, not Alexandra Palace, and that is in the Commission's programme for 1962.

  MINISTRY OF DEFENCE

    British Joint Services Mission (Residence)
    Mr. Hamiltonasked the Minister of Defence what was the cost in dollars of the residence acquired for the chief of
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    the British Joint Services Mission in the United States of America.
    The Minister of Defence (Mr. Duncan Sandys): An offer of $115,000, equivalent to about £40,000, has been made subject to survey and contract.
    Mr. Hamilton: Does not the Minister realise that this figure has given cause for some concern in the Press and elsewhere? Does he not agree, in view of the functions of this individual, that it is rather extravagant?
    Mr. Sandys: As far as I know, this is the first time that the figure has been announced.

    Children (Education)
    Mr. Pitmanasked the Minister of Defence (1) in view of the change in defence policy, what changes he proposes in his policy in respect to frequent postings of officers and men having children of school-age; and whether he will establish standards so that no one be required to move more than, say, five times during the educational life of any of their children:
    (2) whether, in so far as factors of essential mobility of officers and men in the Armed Forces having children of school age will make it impossible for the established standard to be achieved, he will offer to provide the money for boarding school education and not require the local education authority to defray the expense of what is properly a national and not a local burden.
    Mr. Sandys: We shall do our best to reduce the frequency of movements to the minimum; but it would not be possible to introduce rigid standards of the kind my hon. Friend suggests. I do not think it would be appropriate to relieve local education authorities of their responsibilities towards children whose parents live in or are connected with the area.
    Mr. Pitman: Is it possible to have some bogey at which the Ministry should aim as the number of postings affecting these poor children? Is not the Minister aware that for certain local authorities, for instance, Bath, which has a large naval population which is frequently posted, it is a very shameful burden and one which ought to be borne by the national purse?
    Mr. Sandys: The financial question— whether the Exchequer or the local authority should bear the cost—is a different matter, but I am very keenly aware of the importance, in the interests of the well-being of Service families, of reducing the frequency of these movements as far as possible.
    Mr. Strachey: Will not the Minister agree that experience has shown that something on the lines of the suggestion of the hon. Member for Bath (Mr. Pitman) must be done? The cost of this education is not borne by public authorities in many cases, but is one of the great disincentives to Service life. Will the right hon. Gentleman reconsider bearing the cost centrally?
    Mr. Sandys: I am looking not so much into that aspect but into the whole question as part of the task of seeing how we can make conditions in the Services more attractive.
    Mr. Paget: As the present change-over in the defence system will obviously make a lot of movement inevitable in the next few years, will the right hon. Gentleman also consider trying to provide more hoarding school facilities with help from central funds? Would not that make a tremendous difference to the number of people staying in the Forces?

    Admiralty Compass Observatory, Ditton Park
    Mr. Fenner Brockwayasked the Minister of Defence how far the joint requirements of the three Services are met by research, development and repair work of the Admiralty Compass Observatory and the experimental stations at Ditton Park.
    Mr. Sandys: The Admiralty Compass Observatory meets most of the requirements of the Royal Navy for the design, development, inspection, testing and repair of compasses and certain other instruments. It also meets those requirements of the other Services that it can suitably undertake. The Radio Research Station of the Department of Scientific and Industrial Research at Ditton Park provides basic information in this field.
    Mr. Brockway: While thanking the right hon. Gentleman for that valuable information, in view of the plea in the Defence White Paper that there should
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    be co-ordination for the Services, will he oppose any proposal that the Admiralty Compass Observatory should be closed?
    Mr. Sandys: I do not quite understand the connection between those remarks. There is no present intention to close the establishment.
    Mr. Brockway: Thank you.

  HYDROGEN BOMB TESTS
  Mr. Lewisasked the Prime Minister what information he gave to the Prime Ministers of the Commonwealth countries regarding the dates of Great Britain's hydrogen bomb tests; and whether in the future he will ensure that on matters of such importance he will keep the Commonwealth Prime Ministers fully informed of Great Britain's actions and intentions.
  Mr. Sandys: I have been asked to reply.
  All Commonwealth Governments have been fully aware of our intention to carry out these tests. Those most closely concerned, namely Canada, Australia and New Zealand, were given information as to the approximate date of the first test and they sent observers to witness it.
  Mr. Lewis: If that is the case, why did the New Zealand Prime Minister claim that he did not know about the tests or the date of the tests? Why did the Prime Minister send the Prime Minister of New Zealand an apology after this Question appeared on the Order Paper? Why did the Prime Minister apologise if all the Commonwealth Prime Ministers knew?
  Mr. Sandys: The hon. Member has failed to notice that he himself has a Question on that very subject, the next one on the Order Paper.
  Mr. Lewisasked the Prime Minister if he is aware of the concern expressed by the Prime Minister of New Zealand at the failure of Her Majesty's Government to inform the Government of New Zealand of the dates of Great Britain's hydrogen bomb tests; and whether he will give an assurance that closer contact will be maintained in the future.
  Mr. Sandys: I have been asked to reply.

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  I would refer the hon. Member to the statement made on this subject by my right hon. Friend the Prime Minister on 21st May.
  Mr. Lewis: Being aware of that statement, being aware that I have put down a Question, and being aware that an apology was delivered after I put down the Question, may I now ask the acting Prime Minister whether he will answer the Question? Why did the New Zealand and other Commonwealth Prime Ministers complain that they were not informed and knew nothing about it? If they were informed, why has the Prime Minister sent an apology to the Prime Minister of New Zealand?
  Mr. Sandys: I think that the last part of that supplementary question referred to an earlier Question— [Laughter.] The subject matter of Question No. 46 is New Zealand. I draw the hon. Member's attention to the statement made by the New Zealand Prime Minister. Mr. Holland, who said:
  " So far as I am concerned, the whole matter is satisfactorily settled."
  There was undoubtedly a misundertanding. The information given to the New Zealand Prime Minister was exactly the same as the information given to the Australian Government, and Mr. Menzies, in a reply in Parliament in Canberra, said that the United Kingdom Government had been meticulous in keeping Australia informed of the Christmas Island hydrogen bomb explosion.

  WEST GERMAN DEFENCE MINISTER (UNITED KINGDOM VISIT)
  Mr. Shinwellasked the Minister of Defence whether he will now make a statement on his negotiations with the West German Minister of Defence on the number of British troops to be retained in Germany.
  Mr. Chetwyndasked the Minister of Defence whether he will make a statement on his discussion with the Federal German Minister of Defence.
  Mr. Sandys: The German Defence Minister came over here last week to discuss defence matters of mutual interest. We had a very frank and valuable exchange of views. This showed that
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  there was complete agreement on the principles on which the collective defence of Western Europe must be based. We also decided to set up machinery for closer co-operation between our two countries in military research and development.
  There were no negotiations of any kind about the number of British troops to be stationed in Germany. That would be a matter for discussion with all our allies collectively.
  I am circulating in the OFFICIAL REPORT the text of the communiqué issued at the end of the talks.
  Mr. Shinwell: Was there not some previous discussion with our allies about the number of British troops to be retained in Germany? Has the right hon. Gentleman seen the report, credited to Herr Strauss, that a decision has now been reached to retain a larger number of British troops in Germany than was originally intended? Would he clear up this confusion?
  Mr. Sandys: I have certainly seen no statement to the effect that it had been agreed that a larger number of British troops should be stationed in Germany. Anyhow, I think I cleared up that matter in my Answer when I said that there were no negotiations and that no commitments of any kind were entered into in those talks in regard to the number of British troops to be retained in Germany. So far as the first part of the right hon. Gentleman's supplementary question is concerned, those discussions took place at an earlier date, within the framework of the Western European Union and the N.A.T.O. Council, and statements have been made in this House about them.
  Mr. Chetwynd: Are we to understand that there was no discussion about the level of our forces in Germany at these talks? Is not that rather an incredible thing to ask us to believe?
  Mr. Sandys: I said that there were no negotiations and no commitments. Of course, that question was one of the matters which was discussed. That is quite obvious. What I wanted to make quite clear, as I thought I had done in my Answer, was that there was no question of negotiating or entering into any commitment in regard to the number of British troops to be retained in Germany on a bilateral basis between the two Governments. That would have been wholly improper.
  Mr. Bellenger: Can the right hon. Gentleman state whether these joint research investigations between the two countries included atomic weapons?
  Mr. Sandys: No, certainly not.
  Mr. Shinwell: Will the right hon. Gentleman clarify one point, which I think is of some substance? Originally it was intended to withdraw a certain number of British troops from Germany, and that is what we understood from the White Paper and the proceedings during the defence debate. Now it appears that we do not intend to proceed with the application of that original decision. Will the right hon. Gentleman state how many troops we are going to withdraw from Germany? Is it the number originally suggested, or the number mentioned by Herr Strauss, who said that it was intended now to retain at least 50,000 of our forces in Germany?
  Mr. Sandys: The number of troops or, rather, the number of divisions and equivalent fighting power to be retained in Germany is a matter on which an agreement was reached with our allies in the Western European Union. The first thing I want to make clear is that we had discussions both in the North Atlantic Council and also the Council of the Western European Union some months ago at which it was agreed that, as a first step, 13,500 troops should be withdrawn. We also said that it was our desire to withdraw another 13,500 in addition, and it was agreed that that matter should be further discussed in the autumn of this year. That remains the position. There has been no change whatsoever. I should, however, be grateful if the right hon. Gentleman would send me the Press cutting which states that an agreement was reached to station a larger number of troops in Germany. I have seen no such statement attributed either to myself or to Herr Strauss, and if it has been made I should like to see that it is denied.
  Mr. Gaitskell: Are special arrangements to be made for the exchange of information on defence matters with Germany alone, or do these arrangements also apply to other members of N.A.T.O.? Would the right hon. Gentleman explain why there should be a special bilateral arrangement with Germany?
  Mr. Sandys: As will be seen from the context of the communiqué which I shall
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  circulate in the OFFICIAL REPORT, these arrangements are made strictly within the framework of Western European Union. I had similar talks with the French Defence Minister a month or two ago, and there again we set up this kind of machinery—again within the framework of Western European Union. I have no doubt that when a few of these bilateral talks have taken place it will be decided whether we should consider the possibility of doing it on a Western European Union basis, but there are certain reasons which make it more convenient in the first place to have direct talks with Governments which are specially active in these fields.
  Mr. P. Noel-Baker: When the right hon. Gentleman says that there was complete agreement with Herr Strauss on all principles of defence, does he mean that there was also agreement about the use of nuclear weapons?
  Mr. Sandys: I think that I had better ask the right hon. Gentleman to look at the communiqué— which is a very balanced statement—which makes it quite clear that the central aim was the prevention of war and that,
  "pending the conclusion of a satisfactory disarmament agreement this purpose can be achieved only through the deterrent power of the strategic weapons which are possessed by the United States and the United Kingdom and by the maintenance of strong shield forces on the Continent of Europe."
  I think that that answers the right hon. Gentleman.
  Following is the text:

  ANGLO-GERMAN DEFENCE TALKS
  Official Communiqué
  The Federal German Defence Minister, Herr Strauss, visited London on 23rd May for talks with the British Minister of Defence, Mr. Duncan Sandys, at the latter's invitation.
  In the course of their discussions, the two Ministers reviewed a number of problems of special importance to the security of Europe. They found themselves in full agreement on, the principles of collective defence, the central aim of which is and remains the prevention of war. They agreed that pending the conclusion of a satisfactory disarmament agreement this purpose can be achieved only through the deterrent power of the strategic weapons which are possessed by the United States and the United Kingdom and by the maintenance of strong shield forces on the Continent of Europe. Herr Strauss emphasised the importance to the Federal Republic of these shield forces Mr. Sandys made it clear that

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  it was the firm intention of the British Government to continue to make a substantial contribution to these shield forces, in addition to making a British contribution to the strategic deterrent. The two Ministers expressed the conviction that close and friendly co-operation between Great Britain and Germany within the framework of NA.T.O. and the Western European Union constituted an important element in the collective defence of Europe.
  The two Ministers were joined for part of the discussions by the British Minister of Supply, Mr. Aubrey Jones. The Ministers considered how, in the interests of greater efficiency and economy, closer co-operation between the two countries could be achieved in the sphere of defence research and development. They set up a joint Committee of officials to determine the particular fields of activity in which such co-operation could be most fruitfully developed, within the framework of Western European Union.
  In addition to the Ministers, those taking part in the discussions included on the German side, Herr von Herwarth, the German Ambassador and General Heusinger. Inspector-General of the German Armed Forces, and on the British side, Field Marshal Sir Gerald Templer, Chief of the Imperial General Staff. Air Chief Marshal Sir Dermot Boyle. Chief of the Air Staff, and senior officials of the Ministry of Defence and Ministry of Supply.
  On Friday morning, 24th May, Herr Strauss and Mr. Sandys paid a visit to the R.A.F. Bomber Station at Marham, Norfolk.

BILL PRESENTED
  TANGANYIKA AGRICULTURAL CORPORATION
  Bill to provide for the making of grants to the Governor of Tanganyika for the purpose of providing funds for the Tanganyika Agricultural Corporation; and for purposes connected with the matter aforesaid, presented by Mr. Lennox-Boyd; supported by Mr. Powell and Mr. Profumo; read the First time; to be read a Second time To-morrow and to be printed. [Bill 95.]
ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee. [Progress. 28th May.]
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    Clause 10.—(INCREASE OF PERSONAL RELIEFS.)
    3.32 p.m.
    Mr. Douglas Houghton: I beg to move, in page 7, line 29, to leave out "four thousand and five" and to insert "three thousand and six".
    The Chairman: It might be for the convenience of the Committee if this Amendment were taken with the Amendments in page 7, line 31, leave out from "income" to end of line 35; in line 32, leave out from second "of" to "pounds" in line 33 and insert "three thousand five hundred and one"; and in line 34, leave out "four thousand and five" and insert "three thousand and six".
    Mr. Houghton: Yes, Sir Charles. That will be very convenient.
    The Committee will be familiar with the Chancellor's proposal in this subsection to extend very considerably the earned income relief. The Chancellor proposes to remove the present restriction on earned income relief, which does not extend beyond earned income of £2,025 and to carry it at the rate of two-ninths relief to approximately £4,000 and then to introduce a modified earned income relief beyond £4,000 a year, finishing finally at £9,945. That is a very radical extension of this relief.
    The principle of the matter was dealt with in the Radcliffe Commission on the Taxation of Profits and Income, a Commission which itself suggested that something should be done to remove the "kink" in the sharp rise in the effective rate of taxation due to the cessation of earned income relief at its present point. In the Chancellor's Budget statement, he said:
    "I agree with the idea underlying the Royal Commission's proposal, but I am disposed to carry it a good deal further."— [OFFICIAL REPORT, 9th April, 1957, Vol. 568, c. 999.]
    My hon. Friends also agreed with that underlying idea of the Royal Commission, but we think that the Chancellor

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    has carried it too far. That is the point at issue between us. It is not one of principle but of degree.
    The Amendment and the three associated Amendments propose to restrict the Chancellor's proposal and, instead of lifting the limit of the two-ninths relief from £2,000 to £4,000 a year—I am using round figures to avoid introducing small fractions—as the Chancellor proposes, to stop the two-ninths relief at £3,000. That means the extension from £2,000 to £3,000 of the present limit of two-ninths relief. As to the one-ninth relief, we propose that that should extend from £3,000 a year to £3,500 and stop there, and not rise, as the Chancellor's proposal would let it, to nearly £10,000 a year.
    The effect of our Amendment, it is plain, will be to reduce the amount of tax relief which the Chancellor proposes to give. I have worked out some figures, which, I hope, are roughly accurate, to show what that reduction will be. Up to £3,000 a year of earned income, clearly the taxpayer would get the two-ninths relief proposed in full. At £3,500, however, the taxpayer would get £23 10s. less in tax relief than the Chancellor proposes. He would get that relief of £113 instead of £136 10s. At £4,000 a year of earned income the taxpayer would get £70 less in tax relief; that is, £116 instead of £186. At £5,000 a year he would get £165 less in tax relief; that is, £69 instead of £234. At the limit, approaching £10.000, the taxpayer would get £320 a year less in tax relief than the Chancellor proposes, £95 instead of £415.
    I ought to mention, in passing, that the earned income relief is a relief against Income Tax and not against Surtax. There was a good deal of misunderstanding about this in the earlier stages of public discussion of the Chancellor's proposals, and even one reputable financial journal referred to relief from Surtax. The earned income relief in the Chancellor's proposals is a relief against Income Tax and does not affect Surtax at all. In Clause 12, however, the Chancellor does propose to allow a set-off against Surtax of certain personal reliefs over a certain minimum. The figures I have given of the curtailment of tax relief relate to Income Tax only and ignore the additional benefits which the Chancellor proposes in Clause 12 in relief from Surtax.
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    Our Amendment, therefore, deals with the question, the very old question, of how far up the scale earned income relief should go. Earned income relief goes back to 1907, which was two years before Surtax was introduced. At that time, earned income relief was given by way of a differential rate of tax. I well remember, when I first entered the Inland Revenue during the First World War, the nightmare of odd rates of tax, going into fractions of a penny, due to the differential rate of tax for earned income. Then, the differential rate of tax for earned income was restricted to total incomes not exceeding £2,500 a year.
    The Royal Commission of 1920 thought that that was a very cumbersome way of giving relief, and there were other disadvantages and anomalies in it, and it proposed the new idea of allowing a reduction from taxable income as a measure of relief for earned income, and that is the principle which we have followed ever since. It began at one-tenth, Then it varied, and is now two-ninths.
    3.45 p.m.
    The question, in looking at the limit to which earned income relief should go, is always: what is fair having regard to the progressive nature of our taxation and what is just having regard to the special considerations which apply to some persons with large incomes, especially those engaged in trade or the professions? There was a very lively and even racy minority report in the Report of the Royal Commission of 1920. It dismissed as indefensible any relief for earned income at all. I suspect that the minority Report was drafted by a famous Irishman, Mr. Nicholas Synnott, Governor of the Bank of Ireland. I think that Royal Commissions have lost something since they have not had Irishmen on them.
    Racily, the minority argued that the source of income was no more relevant to the principle of assumed ability to pay than the length of time or the physical exertion it took to earn it, and they asked, if the principle of progressive taxation is based on assumed ability to pay, what has the source of income to do with that principle? That, as I have said, was a minority Report, although signed by five members of the Royal Commission. Then and since, the general principle of relief for earned income has been accepted and

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    there has also been weighty opinion in favour of limiting the Income Tax range of this relief.
    The Royal Commission of more recent date, presided over by Lord Radcliffe, the Royal Commission on the Taxation of Profits and Income, suggested that there was a case for giving earned income relief somewhat higher up the scale than £2,025. It said, in paragraph 218 of its Report:
    "There is, therefore, no valid principle that supports the £2,000 limit today. The owner of the unincorporated business can hardly be the typical recipient of the large earned income. There must be a great many of the larger incomes, such as those received by professional men and business executives, in which no element of return on capital can be discerned in any sense which is relevant to the origin of this rule."
    That has reference to the remarks made by the earlier Royal Commission in justification of a limit on earned income relief. It said that in the higher ranges of income, especially in those cases where taxpayers were engaged in trade, business, or a vocation of some kind, there was usually an element of reward of capital in their earned income. It did consider distinguishing between the element of reward of capital and rewards given for physical or mental exertion, but found no satisfactory way of doing it.
    The Radcliffe Commission referred to the classic argument in favour of the limitation of earned income relief, that in the higher income range, especially incomes assessed under Schedule D, there was an element of reward of capital. The Commission, in paragraph 219 of its Report, said:
    "We do not draw the deduction from this"—
    that is, from the earlier comment—
    "that owners of large earned incomes have any particular claim to have the limit removed to the whole extent of their incomes. If we were to recommend that we should be recommending a very considerable lightening of the burden of tax on these upper ranges of income and the consequent adjustment of the distribution of tax. It is not to that that the argument leads us. Earned income relief is one of the various instruments of graduation. Judging by the way that it was employed from the first, we should suppose that it always has been. If this be accepted, the relief could only be extended so far as the extension can be seen to promote a better scale of progression in the graduation of the tax."
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    That is the principle upon which we rest our Amendment. The Radcliffe Commission said:
    "In our view, the limit of relief ought to be raised, but not so as to terminate at a single figure, in order to smooth out the scale of graduation. We therefore recommend that the limit of relief should be raised from £2,025, the existing fraction of 2/9ths being given up to £2,500 and a fraction of 1/9th on £2,500 to £3,000."
    We want to be reasonable about this, and we have written up the Royal Commission's figures to reflect the change in the value of money, perhaps on a somewhat generous basis, since 1955.
    Mr. Geoffrey Stevens: The hon. Gentleman has quoted very fully and fairly from the Royal Commission's Report, but would he not agree that the Commission's view and, indeed, the recommendations, would be influenced by its terms of reference, which specifically estopped it from making recommendations which would result in a lowering of the yield of tax?
    Mr. Houghton: No, I do not think so, because in other parts of the Report—and one I recall especially—the Royal Commission made recommendations which would have led to a reduction in the yield of revenue and made compensating recommendations to offset that reduction.
    I think that had the Royal Commission thought that justice demanded that these limits should be raised beyond those proposed, it could have made other recommendations which would have recovered the amount of tax that might otherwise have been lost. I think that the Royal Commission felt that these were equitable new limits to a reconstructed earned income relief, and we, I think, have been quite liberal in writing them up to the figures we have given.
    The Radcliffe Commission did say that, perhaps, there was not in present circumstances as much importance to be attached to the element of reward of capital in the case of higher incomes. But it is interesting to see from the table given opposite to page 66 of the 99th Report of the Commissioners of Inland Revenue for 1956 that in the Surtax range—incomes above £2,000 a year—there is a fairly even balance between the higher executives who are assessed under

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    Schedule E and those engaged in profession, trade or vocation who are assessed under Schedule D.
    Not only are the numbers of cases in broad equivalence, but the total amount of income from both groups is much the same, which rather suggests that, at all events between incomes of £2,500 a year and £6,000 a year, there are almost equal numbers of people who are assessed on their profits under Schedule D and who are assessed on their earnings under Schedule E. This means that in the range which the Chancellor proposes to bring within this very substantial additional earned income relief are many traders and those in business on their own account as well as professional men.
    I am not going to make any sweeping allegations about the "fiddles" of traders and others who have greater freedom to arrange their Income Tax affairs to their advantage than those who are assessed under Schedule E. I will content myself by saying that it is common knowledge that those assessed on their profits have greater freedom of manœuvre than those assessed on their earnings.
    The cynics have said that there are two Income Taxes in Britain today—Pay as You Earn and "Pay if you like". That is an exaggeration, but the fact is that, apart from the reward of capital, those in business on their own account are able to take advantage of business expenses more freely than those under the tighter rule of Schedule E. I do not think that any hon. Gentleman opposite, least of all the Chancellor, would deny that.
    Sir Herbert Butcher: Is it not a fact that the recommendation of the Royal Commission is that the more flexible range permitted those assessed under Schedule D should be extended to those assessed under Schedule E?
    Mr. Houghton: The hon. Gentleman will probably have noticed that on the Notice Paper there is an Amendment which deals with that matter. However, at the moment, those who are assessed under Schedule D—people who are in business on their own account, professional men, and so forth—will get the full advantage of the Chancellor's additional earned income relief as well as the other advantages of being assessed under Schedule D.
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    When salaried journalists turn freelance, as many of them do, it is frequently because they feel that they will be in a more favourable tax position if they are assessed under Schedule D than if they continue to be assessed under Schedule E. Anyhow, the point that I am making here is that the two elements related to assessments under Schedule D cannot be entirely ignored in this connection. The first is reward of capital, which is a factor in a number of cases, and the second is the somewhat more favourable terms under which they are dealt with for Income Tax purposes.
    Why has the Chancellor done this and why has he gone so far? Why has he given earned income relief which is equivalent to a reduction in the effective rate of tax of Is. in the £ for incomes between £4,000 and £10,000 a year? Why has the Chancellor done it at a time when he could only reduce by half the Purchase Tax on pots and pans which was so recklessly imposed by one of his predecessors in the autumn Budget of 1955?
    We heard yesterday, when requests were being made for further concessions in regard to Purchase Tax on household utensils, that the Chancellor had gone as far as he was free to move within the limits set by his Budget strategy. It seems strange to us that the right hon. Gentleman should have got his tax reliefs so badly out of proportion. One quarter, approximately, of the total reliefs are going to those on the higher incomes, and, from our point of view, that is unnecessary, unjustified and unfair.
    Of course, the magic about this, if one is to believe what one reads in many Conservative newspapers, is incentives. I believe that more claptrap is talked about incentives than about almost anything else in our economy today.
    "Man does not live by bread alone.…"
    and we all know it. I have said more than once that the great attraction of posts of higher responsibility which carry higher incomes is that they give interesting occupations; they give scope for the satisfaction of creative ability, initiative and enterprise. I do not know of anyone who has ever refused advancement on account of the poor economic return on a higher income.
    Commander J. W. Maitland: What about Parliamentary Secretaries?
    Mr. Houghton: I am saying that I do not know of anyone, and I am in a position, at all events, to know what is happening in a very large field of public service. Certainly, in that sphere, where, admittedly, a sense of public duty may be somewhat higher than outside, I do not know of anyone who has refused promotion because of the higher incidence of taxation on higher remuneration.
    4.0 p.m.
    Mr. Gerald Nabarro: Surely the hon. Gentleman's criticism is a little misplaced when he talks of the public service. It is, of course, notorious that public service does not command such high remuneration in the senior executive grades as is to be found in commerce and industry.
    Mr. Houghton: That may be one of the additional grievances of people in the public service. But fortunately, as the result of the Priestley Commission's recommendations about remuneration in the Civil Service, the top posts are more highly remunerated than they were.
    Mr. Nabarro: They are still well below industry and commerce.
    Mr. Houghton: I know that to the hon. Gentleman £6,000 a year may be "chicken feed." It is conceivable that to him it is, or that £2,000 or £3,000 a year is just a low rate of pay. That shows how different are the rewards in industry from those in public service of one kind or another.
    I assert again that a good deal of "twaddle" is being talked about incentives in this range of incomes. Those of us who have interesting jobs cannot stop working if we want to. That is really the truth about the matter. There is something that drives men on to the realisation of their ambitions and their desire for satisfaction. If there are large numbers in industry and commerce who are prepared to look only at their personal gains in connection with their contribution to the national wealth and the expansion of our economy, then it shows that our social education has gone nothing like far enough.
    I do not believe that many of them would be driven on to greater activity
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    by higher proportionate rewards. In any case, if we are to have a civilised Britain which has a sense of social justice; if we are to take care of the sick and the aged and provide an efficient medical and health service for the people; if we are to hold ourselves out as a model to the civilised world; if we are to represent ourselves as a model of Western democracy and the British way of life, surely we must be prepared to give up something from our personal income and from the profits of our businesses in order that these social improvements may be brought about?
    Nabarro: We give up 50 per cent. now.
    Mr. Houghton: I know that, and perhaps to some right hon. and hon. Gentlemen opposite this may sound to be idealism. But this is the basis of our Socialist faith, and if we do not hold to that, there is nothing left to hold on to. We might just as well become Tories, and join an acquisitive society with "pull devil, pull baker" and the weakest going to the wall. That is what we resolutely refuse to do, and the Chancellor, indeed—
    Colonel Sir Leonard Ropner: It is absolute nonsense for the hon. Gentleman to talk about that sounding like idealism. He appears to have forgotten that there are people today who are paying up to 19s. in the £ for all the objects which he represents as being idealistic. We are very ready to pay a fair share of our incomes for the social services. Is not the hon. Gentleman misplacing his emphasis when he says that people refuse jobs at higher incomes because so much is taken from them? Surely the point is that men and women are disinclined to qualify themselves for highly paid jobs if they know that after a life's work their income will be taken from them.
    Mr. Houghton: The hon. and gallant Gentleman, by way of intervention, has made a somewhat longer speech than we usually enjoy from him in this Chamber There is no evidence in support of this belief that is so frequently put out as though it were a scientific fact, as if there was some evidence to support it. There is none at all.

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    It used to be said, it is well within the recollection of the Committee, that the workers were slack, that they would not work, because of the incidence of taxation on their earnings. But when a social survey was made under the auspices of the Radcliffe Commission a good deal of that belief was exploded. It was proved not to be so. In fact, there was a careful inquiry over a wide range of workers of different kinds and in different industries. Right hon. and hon. Gentlemen opposite will have full opportunity this afternoon of proving to our satisfaction that there is evidence in support of this prevailing belief that high taxation is a disincentive in the salary range of higher executives and others in responsible positions. I say that there is no such evidence, and I challenge hon. Gentlemen opposite to produce any from their own experience.
    No doubt the hon. and gallant Member for Barkston Ash (Sir L. Ropner) is in a position to tell the Committee of actual cases within his own knowledge of people who have said, "I am not going to bother with striving to develop my skill and technique. I am not having this higher job which you are offering me because the game is not worth the candle." If there are cases of that kind, I think that we should know about them. In our experience such cases do not exist.
    Sir Beverley Baxter: The hon. Gentleman has asked for examples of people doing that. What about the example of Mr. Noel Coward, which is exactly on that basis—[HON. MEMBERS: "Oh."] I am not in any way defending Mr. Noel Coward, but the hon. Gentleman asked for examples. Mr. Noel Coward went away because he could no longer keep some of his winnings in the battle of life. There is an example. I am not defending Mr. Noel Coward, but it proves that such men exist in large numbers.
    Mr. Houghton: That is not the type of case to which we are referring. One can write cynical plays in Jamaica just as easily as in Barnes or in Wimbledon. Mr. Noel Coward has gone overseas because, presumably, he could carry on his trade there. I am dealing with those people who are tied to jobs here, unless they join the queue for Canada.
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    Will any hon. Gentleman opposite tell the Committee how many people have been pulled out of the queue for Canada because of the proposals in this Budget? Does any hon. Member know of a person who was standing in the long queue outside the office of the High Commissioner for Canada and who, on reading the Chancellor's Budget proposals, said, "That settles it. I am turning back. I am staying here "?
    Mr. Nabarro: We should make the concessions bigger and then they would all stay.
    Mr. Houghton: I have reached the conclusion that there is no evidence that a high rate of taxation is a disincentive in this or any other range of salary.
    If hon. Gentlemen ask the question: "When is taxation too high?" I think the answer is, when people are out of sympathy with the objects for which they are being taxed. Right hon. and hon. Gentlemen opposite are never out of sympathy with being taxed for defence. Many people in the country are not out of sympathy with being taxed for defence. Many of us have different opinions on taxation for social purposes, but, on the whole, I think it is quite clear that the people of Britain are willing to sustain this level of taxation for the purposes to which the taxes are being devoted. They hope, however, that our expenditure on defence may be substantially reduced without weakening our defensive position in order that some part of the money saved by a reduction in the expenditure can be devoted to peaceful and more profitable ends.
    I have come to the end of my discourse on the Amendment, which raises very wide issues. We believe that the Chancellor has gone too far with these reliefs and that he need not have gone as far to satisfy any desire for greater incentives. He certainly had other purposes to which he could have given tax reliefs which would have met with wider approval than these. This is a very substantial concession to make to a very limited number of taxpayers, many of whom are in the very high range of incomes and enjoy a very spacious standard of living.
    Mr. Stevens: The hon. Member for Sowerby (Mr. Houghton) has moved his Amendment with his customary objectivity. On the last occasion on which I

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    followed him I had the pleasure of being able to say that I agreed with nearly every word he said. On this occasion, I disagreed with nearly every word he said, much as I admired the moderate way in which he put his case.
    The hon. Member was off the beat a little when he quoted from the Report of the Royal Commission. He spent some time telling the Committee that nowhere at any level was there any serious evidence that Income Tax or taxation was a deterrent to productive effort. Had he turned to page 91 of the Report, which I see just in front of him, he would have seen conclusions based upon data
    "collected for the Royal Commission on the Taxation of Profits and Income by the Social Survey."
    It was carried out among productive workers and supervisory grades At the top of page 92 we see:
    "As a matter of public opinion, about three-quarters of the sample said that income tax was a deterrent to productive effort. But even on this level it was not regarded as the worst factor."
    We read, later:
    "At this level of general public opinion, income tax ranked with fear of unemployment as a deterrent to productive effort."
    Again, a little lower down, are these words:
    "It seems then that whilst workers consider tax to be a deterrent and nearly all grumble about it in general discussion, it is not regarded as the most important deterrent."
    There is ample evidence in all income groups that too-high taxation for too long in peacetime is a hamper upon productive effort.
    Mr. G. R. Mitchison: The hon. Gentleman omitted to finish the last sentence, which runs like this:
    … it is not regarded as the most important deterrent "—
    That is as far as the hon. Gentleman went, but the sentence continues—
    "and few carry the grumbling to the point of letting it affect their productive behaviour."
    Mr. Stevens: I entirely disagree with the hon. and learned Gentleman. He looks upon those few words as contradicting the three previous occasions upon which the sample clearly said that taxation did affect their productive capacity. There is not the slightest doubt about it at any level of Income Tax.
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    The hon. Member for Sowerby overlooked one point, which is that we are the greatest trading nation in the world and depend more than any other country upon meeting the competition of foreign competitors. When people engaged in overseas trade visit other countries in the hope of getting business they are lavishly entertained. When those prospective customers come here they expect the same kind of hospitality from their hosts. Unless, after taxation, these people have left to them a sufficient income they cannot maintain reasonable standards and will undoubtedly lose face with potential foreign customers, and so the trade of the country will suffer.
    4.15 p.m.
    When we try to get round that difficulty by so arranging our taxation factors that our business executives have a reasonable expenses allowance, right hon. and hon. Gentlemen opposite complain about directors' expenses. They should remember that we are dealing with international competition and that our senior executives of business must maintain a proper standard.
    The hon. Gentleman spoke about the spirit of service which kept so many people going. I could not agree with him more, but there is no sole right to that feeling in any income group. My personal experience, and I am sure that this must be also his experience, is that many people, particularly younger people in senior positions, are kept going not only by the spirit of service which burns very strongly in them, but by the hope that taxation will be lower in this country than it has been in the past.
    Mr. Nabarro: Hear, hear.
    Mr. Stevens: I congratulate the Chancellor of the Exchequer. I do not think that he has done too much. I would like to see the ceiling taken right off and no limit at all. The loss of taxation to the Treasury by this concession would be more than made up by the taxation upon the increased profits brought about by increased enthusiasm.
    Mr. Donald Wade: I do not intend to repeat arguments which I have used earlier on this matter, but to say a few words on taxation reliefs in the £4,000— £10,000 category which is referred to in the Amendment tabled by my hon. Friends and myself.

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    I am not opposed to reductions in taxation. I welcome them most heartily in all ranges, but where the Chancellor is not in a position to make any substantial reductions one has to give very serious consideration to priorities. Even within the limits of the objective set by the Chancellor, namely, the creation of incentives, it is difficult to justify the proportion of relief granted to people in that £4,000—£10,000 category. I should have thought there was a very strong case for more relief for people in the £1,000—£2,500 category, or, at any rate, up to the £4,000 level. For that reason alone, the Chancellor seems to have got his proportions somewhat out of place.
    Secondly, my hon. Friends and myself are asking for relief in a number of other ways. We have tabled certain Amendments and new Clauses, and we recognise that they may involve some loss of revenue to the Chancellor. It is only right, when one suggests Amendments involving loss, to point to methods whereby the Chancellor may make up some of that loss.
    I do not commit myself to the view that there must be no departure from the Chancellor's Budget figures. For example, I think there is rather more compulsory saving than is necessary, which accounts for the large Budget surplus, but I accept the general proposition that when one is asking for relief in a number of ways it is reasonable to suggest a method whereby those reliefs will be offset. On this occasion, this year, it would have been reasonable to defer the granting of such substantial reliefs to those in the £4,000 to £10,000 brackets.
    I hope that when we reach later discussions, when various requests will be made to the Chancellor for relief, the Chancellor will not argue that he cannot afford to give it, because it seems to me that that would be rather inconsistent. I do not see how he could have it both ways. It may seem rather presumptuous, but on my argument it is almost a case of being able to say to the Chancellor, "Heads I win, tails you lose". If he accepts this proposal, according to my calculations, there would be saved about £10 million to £20 million. It would be unreasonable then for him to say that there was no money available for the other reliefs for which we shall ask.
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    On the other hand, if the right hon. Gentleman takes the view that he cannot accept the Amendments that we are discussing and that it is right and proper that these reliefs should be granted, it seems to me that he cannot properly argue, at a later stage, that he has no money available to grant any further reliefs. I hope that the Chancellor will follow the logic of this argument. I do not propose to repeat the views which I put forward on Second Reading. This measure of relief to those in the £4,000 to £10,000 brackets has not been justified having regard to the very great need for other reliefs, particularly in the lower reaches of Income Tax.
    I hope, therefore, that the Chancellor will seriously consider reallocating his reliefs in this Finance Bill.
    Mr. John McKay: I am glad to have the opportunity to enter this discussion and to congratulate my hon. Friend the Member for Sowerby (Mr. Houghton) on his opening speech. He emphasised strongly his social views about incentives and how workers could be encouraged.
    What has surprised me more than anything else has been the peculiar time at which this suggestion is made by the Government. We have had a series of discussions about inflation and the desire for stability in the industrial world. One naturally expected that when the Government brought in this Bill they would be considering these things. One would expect when they thought about them—never mind about actually doing anything —they would consider and reflect on what the ultimate result of giving reliefs was likely to be.
    What was the effect likely to be on industry and the mass of the workers? If we want stability in industry—and we are pleading very seriously throughout the country for stability in wages, and so forth—one naturally expects the Government to give a lead in showing how anxious they are to do all the things which would tend towards stability and satisfaction for the workers so that there could be the right psychology and conditions of such a character that the industrial world could be influenced to seek stability.
    My principal objection to this Bill and to this Clause, and especially the effects deriving from it, is that if the people

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    understand what is happening the tendency will not be towards stability but absolutely in the other direction. A rise in wages can be given to producers as an incentive, or some satisfaction can be given to administrators and executives, but when we search for and select a particular class of the community for special benefits by means of Income Tax relief there is nothing we have to be more careful about than to see that what we are doing will tend to that stability for which the Government are always crying out.
    What are the factors in relation to that? We have had tremendous agitation among industrial workers for increased wages. In a sense, we almost had a general strike in order to get a few shillings a week more for people who had very small incomes. Of the I Is. a week increase which the engineers are to get, about 3s. 9d. will be taken for Income Tax, so that actually they will get less than 8s.
    On the other hand, when a special class who to all intents and purposes are rich people are selected for an increase of income, whereas the wage worker has more than one-third of his increase taken away in tax, they get a net increase. There is no question of something being taken off their increase. Therefore, the increase for these people is one and a half times that for those receiving wages.
    4.30 p.m.
    I know that hon. Members do not like figures, but sometimes figures have to be given.
    Mr. Nabarro: I love figures.
    Mr. McKay: That is some satisfaction. The hon. Member at least will get some satisfaction out of the figures which I shall give.
    Mr. Nabarro: if they are right.
    Mr. McKay: Exactly what relief will be obtained? We say that we are giving relief in respect of earned incomes, but when we are dealing with the sections of people concerned, does their earned income really indicate their total income? If I understand the position correctly, it does not. The earned income of many people in the section of the community
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    to which we are referring is only half their total income. We get the impression that only incomes in the £4,000 to £10,000 range will receive relief. As I understand, there are people with total incomes of £15,000 to £20,000 a year, but only £7,000 or £8,000 of that is earned income, the rest being from investment. Is that not correct? I thought the Chancellor was laughing because it was not correct.
    According to the revenue returns for 1954–55, many people in the section with a total income of £15,000 to £20,000 a year have an earned income of about £7,300 and an investment income of about £10,000. That supports my contention that a man with a total income of £20,000 a year may have only £8,000 of it as earned income. Yet he will get the full advantage of the relief in respect of earned income.
    From that it follows that a married couple with no children with an income of £5,000 to £6,000 a year will have a benefit of £3 a week net. A couple in the £12,000 to £15,000 range, £7,000 earned, will gain an advantage of £6 a week, and a couple in the £15,000 to £20,000 range, with £7,300 of that as earned income, will gain an advantage of about £7 6s. per week. A married couple with two children above 11 years old with an earned income of £10,000 a year and an investment income of £10,000 and they will receive relief of about £11 10s. a week. Will it tend to pacify millions of British people who are working hard to get £10 a week when the proposition is that people with such mighty incomes should be given a relief of £10 a week by this provision?
    This is a serious proposition. At such a time the Government are crying out about inflation and pleading with trade union leaders and workers to do something for the sake of the country's welfare and stem the continual demand for higher wages. I wonder whether the mass of the people really understand what the Conservative Government are doing in this respect. I do not think the Government could do anything worse to upset the psychology of the country. The Government say the need is to create stability and that we should try to get the country through the present inflationary period and establish it on a solid foundation. Yet they choose this time to deviate from

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    policy which has been followed for years, giving the richest sections of the community an advance in salary of £5 to £10 per week net. In the circumstances, it is ridiculous.
    If we are to have a policy of incentives, it must not be merely temporary. We must have a policy which is permanent. Do the Government's proposals deal with that aspect? They do not. What is proposed is merely temporary relief. Afterwards, we shall revert to the old position. People with different incomes in different grades will still require the incentives that they have sought in the past. What the Government propose simply changes the position at the moment and does not deal with the overall question of providing incentives.
    Reference has been made to people earning big incomes and paying so much Income Tax that they are left with very little in the £. The Government's proposals do not change that. There will still be people with big incomes paying a great deal of taxation. What is important is not the question of taxation as a whole, but the question of those people desiring an incentive to earn more money. The higher the income they make, the less return they will get in respect of the increased amount. If there is a weakness in the system, the same weakness will exist in the future.
    The question still remains whether there is in reality any great necessity to give such a big relief to this class of the community. Are the men now earning £6,000, £7.000, £8,000 or £10,000 a year so greedy for money that they need such a relief as this? They are skilled people with power to use their abilities. Most of them are men who have been well educated and have been able to take high positions. Others may not be so well educated, but they may have had certain influences behind them or they may have had some outstanding ability which has enabled them to rise and take positions of power and responsibility.
    Is the mind and calibre of men in outstanding positions, commanding big returns, such that they are not prepared to take other positions carrying more influence, honour and power? Are they not prepared to use their skill and ability for the good of the country because they cannot get an additional £10 or more a week? Is their economic position such as to necessitate that?
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    I do not know how other people look upon it. Perhaps there is something in the statement that the more you get, the more you want, and that honour, loyalty to one's fellow men and country have no influence—"I have a big income. I have a special ability, but I am not prepared to use it unless you hand me another £1 or two." [HON. MEMBERS: "Shame."] I did not mean that literally. I referred to Members opposite. [Laughter.]
    I do not think that that is true. I have a high opinion of hon. Gentlemen opposite who are in administrative positions, and, indeed, of all men in general. I have a profound respect for people with education and ability. I do not believe that this section of the community is so morally bad. Yet we are asked to believe that men of high ability, with large incomes, are so morally bad that they will not take on extra responsibility because they cannot get a few extra pounds. I cannot understand the outlook of the Conservative Party which has faith in that idea and no faith in the good will or sense or loyalty of the leaders of the community.
    The Government have made a mistake. Their desire to do something for their own supporters has betrayed them on this occasion. Their desire to gain ground in the Election, to hearten their supporters, to give them some satisfaction, has led them into a position which, when it is understood, instead of strengthening the Conservative Party will have the opposite effect, particularly upon those who have not got £5,000 or £10,000 a year. Justice did not demand it. It will have no effect on production. It is not a policy that will help the community or the nation. It solves no problem. It is simply a hand-out to a section of the Government's supporters, which will not help the Government and which is to the detriment of the country.
    4.45 p.m.
    Mr. F. M. Bennett: I am afraid that most of the remarks of the hon. Member for Wallsend (Mr. McKay), probably due to my own stupidity, were a little too abstruse for me to follow. Perhaps, therefore, I may be forgiven for adverting to the speech of the hon. Member for Sowerby (Mr. Houghton), who opened the debate with his accustomed flair.

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    We have far too great an admiration for the hon. Member for Sowerby to believe that he really believed everything he said this afternoon. On several occasions he used the word "twaddle". I could not help feeling that there was an element of unconscious, spontaneous self-description about some of his remarks, especially when he kept repeating that word. He made a number of assertions to the effect that the reductions in the higher levels of taxation which follow from these Budget proposals do not make any contribution to the community as a whole, as, in relation to incentive, he said, that is not how people's minds work.
    I have first in mind his argument—and most of my Conservative colleagues have heard it before—about how wrong it is to make tax changes which give £10 a week to that almost mythical gentleman, the bachelor with an income of £10,000 per annum. I do not know whether it was by accident, or whether the hon. Gentleman was not in the House at the time to vote against his own Chancellor of the Exchequer, but it so happens that the £464 10s. now gained by the bachelor earning £10,000 a year is almost exactly the same as the sum which flowed from the Budget of the right hon. Member for Bishop Auckland (Mr. Dalton) in 1946, when he saved the bachelor earning £10,000 a year £499.
    Mr. Gordon Walker: That was the year after the war.
    Mr. Bennett: In that case I should have thought it was even harder at that time to make such a concession than in normal time of peace. It is odd, however, that we did not hear complaints at that time from those who now occupy the benches opposite.
    Moreover, if we are to talk about the moral aspect of reductions of taxation on high incomes, it is worth recalling that this year the Chancellor of the Exchequer, not with the concurrence of all his colleagues, who felt that this concession ought to extend to unearned and earned income alike, limited it to earned income, with the result that the man who has an investment income of £10,000 a year gets no relief from this Budget.
    Mr. Roy Jenkins: Could the hon. Gentleman tell us who were the colleagues of the Chancellor
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    who were opposed to the Budget proposals?
    Mr. Bennett: I said "not with the concurrence of all his colleagues." The hon. Gentleman knows that it is not the duty of any speaker to specify hon. Members' private views in this House.
    Mr. Jenkins: But surely—
    Mr. Bennett: I am sorry, I cannot give way again. As I was saying, it is well known in this Committee that one talks in general terms about the attitude of a party to a Budget. If we asked hon. Gentlemen opposite what individual views they express outside this Chamber to their various leaders, we should indeed hear some amazing confessions here.
    I was interrupted at the point when I was stressing that in the 1946 Budget the bachelor even with a wholly investment income of £10,000 a year, who now gets no relief from the present Chancellor, received a gift, as it was then called, from the right hon. Member for Bishop Auckland of £506 10s. a year. If the hon. Member for Wallsend is so virulent about the figure of £10 a week, he might find it fruitful to consider why he went into the Lobby in support of the Budget at that time.
    Mr. Gordon Walker: That was in 1946.
    Mr. Bennett: Yes.
    I was intrigued to hear what the hon. Member for Sowerby regarded as the incentive that drove different sections of the community to greater effort. Apparently, at a certain point—the hon. Member did not specify it the wish to earn more money is surplanted by an over-riding need to serve the community. The hon. Member did not specify a figure at which that changeover comes about. I presume it must be above £1,280 a year, because, judging from recent Press reports, there are hon. Members who feel that at least up to that figure there is need for financial inducement to continue in their work, apart from the over-riding need to serve the community. Therefore, I suppose we come to the conclusion that whatever the figure at which the desire to get more wages and money ceases, it certainly is not below £1,280 a year.
    Mr. Houghton: It should be made clear that hon. Members have no feelings

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    about higher remuneration as additional incentive. They are concerned with the necessary expenses connected with their job.
    Mr. Bennett: Members of Parliament are not alone in those feelings. Other sections of the community have their commitments and responsibilities, and desire extra remuneration for exactly the same reasons. We are not in an ivory tower, seeking money for a specially altruistic purpose compared with all other sections of the community.
    We all know quite well that whether the wage earner is getting £10 or £20 a week, he thinks not only of the sheer necessity of the cost of living, but when he believes that the industry in which he is working is doing well, he wants a bigger share of the cake. Scarcely a day passes without our reading in the Press of some section of the community saying, "Our industry is doing well. Therefore, as members of it, we ought to get a bigger share of the cake." There is nothing extraordinary about the fact that those who just overtop £2,000 a year should want extra remuneration, unless the hon. Member for Sowerby can give a figure at which it becomes sinful to work for money and one has to transfer one's entire allegiance to working for the community.
    Considerable stress has been laid on the incentive aspect. What I understand to be one of the Chancellor's main purposes in these reliefs is the aspect of providing more money for savings. It is not only a question of greater incentive for Surtax payers; there is also the aspect that the extra money which can be saved can be put back into industry and enterprise and provide the extra funds for all the many commitments that the country now has to have, both here and abroad.
    It is not right for hon. Members opposite, on the one hand, constantly to urge the need of greater savings and at the same time to attack as being almost immoral those who want extra money and who are prepared to put it by as savings—unless, once again, they are prepared to say at what figure the praiseworthy saver becomes a wicked capitalist. I have never yet heard a figure at which suddenly creditable savings become loot of the capitalist.
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    Another aspect of this attack on our direct taxation proposals is that we on this side of the Committee are doing our best not for the country, but to help our friends, and that the reason for this Budget is because the Tories are under pressure and therefore we are going out to try to meet the needs of our voters. At the same time, Socialist speakers say that the Budget is aimed at helping only a handful of people in the rich income brackets between £4,000 and £10,000 a year. Hon. Members opposite cannot have it both ways. Are we going out to get votes, or are we helping only the men who are receiving between £4,000 and £10,000 a year? There really are not many votes to be picked up in any constituency just by helping the man who is getting between £4,000 and £10,000 a year.
    Mr. Harold Wilson (Huyton): In the Budget debate, I for one hour specifically exonerated the Chancellor from any charges that it was a vote-catching Budget in that respect. I said that what he was aiming at was the small number of waverers who held key positions in Tory constituency parties, who have recently abstained from giving their support and who might by this means be brought back into the fold.
    Mr. Bennett: The right hon. Gentleman may know how his own constituency is run, but if he believes that the average Tory organisation is kept in being by a few men in key positions who earn between £4,000 and £10,000 a year, he certainly does not know how our constituencies are run. I was any way exonerating the right hon. Gentleman from this particular charge, because we know that he has particular experience of higher income rates which might not be granted to all of us. I was, naturally, talking more of some of the less fortunate back-benchers opposite.
    We have heard comments about the incentive effect and whether we are not exaggerating in our belief that people go abroad to escape taxation. It is interesting to see fiscal figures throughout the Commonwealth. In these illustrations. I am taking the position of the married man with two children on an earned income of £5,000 per annum. In the last Budget, 44 per cent. of his income here went in direct taxation. If he goes to

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    Canada, the figure is halved to 20·6 per cent. I have chosen percentage figures so that I cannot be told that there are differences abroad in the cost of living. If we look to Australia, which has the next highest level to Britain, the last Budget there would take 39·2 per cent. of that man's earnings in direct taxation. In New Zealand, the figure falls immediately to 29·3 per cent. as compared with our 44 per cent., whilst in the new Central African Federation it is 21·2 per cent.
    I have specifically chosen those countries because they are the ones to which people are emigrating. The hon. Member for Sowerby lightheartedly suggested that somebody could not be dragged from the emigration queue and persuaded, because of our proposals, suddenly to turn back. But of course people do not emigrate or decide not to do so because of a particular proposal in a Budget, but because of a whole social and fiscal trend sustained over a period of years.
    Is there any hon. Member opposite who imagines that these facts do not weigh with the married man who has two children—or, indeed, with any member of the community—in deciding whether to remain here or to go abroad?
    Mr. Gordon Walker: Has the hon. Member not noticed the tens of thousands of people who migrate from other Commonwealth countries to this country?
    Mr. Bennett: I think the right hon. Gentleman will find that the countries from which people emigrate in those large numbers have a lower standard of living than obtains here. Almost without exception, the only people who come here from Canada, for example, are those who come to do a special job or who have a large income and wish to spend their declining years in the mother country. The young men and women in Canada, Canadian born, who come to this country because they think they will get a break economically and taxation-wise compared with conditions at home simply do not exist.
    5.0 p.m.
    Mr. Sydney Silverman: I should like to say a word in support of the Amendment. May I begin by saying a word about the last point made by the hon. Member for Torquay (Mr. F. M. Bennett). This country is spending at this moment £4 million a
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    day, or thereabouts, on defence expenditure.
    The Chancellor of the Exchequer (Mr. Peter Thorneycroft): Five million pounds.
    Mr. Silverman: It is also spending in addition about £2 million a day on the funding service of the war debt incurred during the Second World War. If the proportion of a man's income, at any level, taken in taxation is higher than it would be in Canada, Australia or New Zealand, that is the explanation. The hon. Member for Torquay looks doubtful about it, but I think that he will find on inquiry that no other part of the Commonwealth is bearing a defence burden of that kind.
    Mr. F. M. Bennett: This part of the hon. Gentleman's argument, although interesting, does not affect what I was saying—I do not think that the hon. Gentleman was in the Chamber at the time—about the impelling circumstances that are or are not driving people to go abroad and emigrate at this time. The reasons why these conditions exist were no part of my argument.
    Mr. Silverman: But they are part of mine and I am inviting the hon. Member to pay some attention to them. I appreciate the point that he made. It was that people might well leave this country and go to other parts of the Commonwealth if thereby their taxation were less. I submit to him, with all respect, that no responsible hon. Member of this House would regard the factors in the comparison to which I have drawn attention to be irrelevant.
    If a man goes away from this country on the ground suggested by the hon. Member, he is really going away not so much to avoid taxation, or at any rate that is not the way that I should like to put it, but to avoid his share of the burden which all of us had to undertake and have still to sustain in order to discharge our responsibilities incurred during the Second World War. That is not an irrelevant consideration. That is all I am saying to the hon. Member.
    Mr. Bennett: I agree with that and I see the relevance of the argument. What I cannot see is the reason, in view of the discrepancy which the hon. Gentleman has described, why he should oppose a Budget which seeks to make it smaller
    Mr. Silverman: I cannot deal with all parts of my speech at one time. I hope to come to those parts of it in a moment or two. But I thought that it was worth while to point out, when the hon. Member was defending this proposal, because high taxation may induce irresponsible people to run away in order to avoid their share of a common obligation, that that would not be regarded on this side of the Committee—and I would say in all fairness would not be regarded by many hon. Members opposite—as a particularly good reason for supporting the Government's proposal.
    I concede that there may be other grounds on which the Government's proposal can be supported, but I think that hon. Members should find better grounds on which to support it and not have to rely on such patently bad ones. It is a bad example to follow. People like that ought not to be encouraged, and if the Chancellor's only aim were to encourage people in that way, that would be an additional reason for opposing the proposal and not an additional reason for supporting it. In passing, may I refer to the intervention of the hon. Member for Southgate (Sir B. Baxter). He also at one moment seemed to be inviting us to support the Government's proposal because otherwise Mr. Noel Coward might remain in Jamaica instead of coming home. I think that that was a most unfortunate intervention.
    What shocks me about the Government's proposal is its patent inequity. I am not arguing now, although I hope to do so in a few moments, without speaking for too long, about the incentive effect, or the balance, or the effect on production, or the willingness to assume responsibility and all that kind of thing. That is a separate part of the argument. I am dealing now with the sheer inequity of the proposal. We have to consider the Government's financial proposals as a whole and not all of them are to be found in the Budget. We cannot deal with the others—I am not proposing to do so—and if I cite them it is only to make my point that the Committee ought to support my hon. Friend's Amendment and oppose the Government's proposal because it is so manifestly unfair as between citizen and citizen.
    It is only a few months since the Government were explaining to the
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    House how necessary it was to raise the price of babies' milk by withdrawing part of the subsidy. At the same time, they were explaining the dire financial necessity which they could not avoid—the ineluctable result of which was that they had to raise the price of school children's dinners. It was part of the same argument that they had to charge separately for every item on the prescription of a sick person's medicine and that they had to raise the contribution that a man pays towards our general social security scheme—and all those were defended on the grounds that the Chancellor needed the money.
    How much money did he tell us that he would get out of it? He said that he would get £57 million in a full year—as though £57 million had any real bearing or relevance on an expenditure of £5,000 million a year. But suppose that it had suppose that it was like Mr. Micawber's sixpence—6d. above 20s. which made him happy or 6d. below it which made him miserable—or was it the other way round? That depends on the way we put the argument, whether he had 6d. less or spent 6d. more. We may think that 6d. in the £ represents a small proportion, but in marginal circumstances it may make all the difference in the world between bankruptcy and solvency and, as Mr. Micawber said, between happiness and unhappiness. The Chancellor would be entitled to use that kind of argument, even in a cheese-paring argument, on figures like £5,000 million a year and £57 million, provided that he really needed the money and that the circumstances were marginal in the way I have mentioned.
    But what is the Chancellor doing by this proposal? What enables him to give this concession except the £57 million which he has taken out of the babies' milk and the school children's dinners? If he gives anything away it can only be out of what he takes from the taxpayers in some other way. It is part of that £57 million. If he had not taken that sum he would have had so much less and, therefore, one is entitled to say that the £37 million which he is giving in this proposal is taken at least in part out of the babies' milk and the school children's dinner. It is all very well for the noble Lord to groan. I can only hope that he is groaning at the enormity of the Chancellor's action and is not

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    protesting against any inaccuracy of my argument, which is, I think, reasonably impeccable.
    Viscount Hinchingbrooke: No.
    Mr. Silverman: But it is. The Chancellor has scrapped up £57 million in this way. He is giving £37 million back to the Surtax payer. The noble Lord may not like this method of putting those two figures in opposition to one another, but does he dislike it because he does not like the facts to be known, or does he dislike it because he wishes that the facts were not facts?
    Viscount Hinchingbrooke: The hon. Member has been away at various times and I do not think that he was here during the Budget statement, so he does not recall that my right hon. Friend has made it clear on more than one occasion that what he has been doing was to return tax to those from whom it was previously necessary to take it, and not to take it from someone else and "give it away" as the hon. Member says.
    Mr. Silverman: The noble Lord may, like Hamlet, lay some flattering unction to his soul by putting that kind of gloss on it, and if he can draw comfort from that, then he is entitled to draw what kind of comfort he can. If he can satisfy his conscience, I cannot grumble, although I cannot help wondering what kind of conscience it may be. Whatever kind of gloss the noble Lord may put on it, what the Chancellor is doing is taking £57 million from those who need it most and giving £37 million to those who need it least. If that is not a monstrous inequity, then we shall have to write a new English dictionary.
    It is all very well to say that the Government are merely not taking it from some people, that they are not really giving anything away, but only refraining from taking it from those from whom they have previously taken it.
    Viscount Hinchingbrooke Viscount Hinchingbrooke indicated assent.
    Mr. Silverman: The noble Lord does not need to indicate elementary points to me. I know that in a way all taxation is confiscation. That was said long ago, and we all know it.
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    Nobody likes taxation, and if it were possible in this Committee to abolish it, we should all unanimously and readily vote for that. But if the Revenue needs taxation to be raised, and we all can see that it does need it to be raised, then it is merely playing with words to say that when the Government remit taxation they are not giving anybody anything. Of course they are giving people things, and all this argument about incentives would mean nothing unless it were that we were giving people things which they had not got before. That is the incentive on which the Government are relying to justify the remission.
    What the Government are doing is applying to Surtax payers a new kind of national assistance without the operation of a National Assistance Board.
    Mr. Ellis Smith: National assistance?
    Mr. Silverman: National assistance. In doing so, they are applying a means test in reverse. Just as, under the existing system, to get National Assistance one has to show that one's means are small, under this financial dispensation in order to get "national assistance" one has to prove that one's means are already high. Under this proposal, one is not entitled to relief unless one can show that one's income already exceeds £2,000 a year. One must have that minimum income before the Government will do anything for one.
    5.15 p.m.
    That is the proposal. Of course it is comic, but I am not sure whether the noble Lord is laughing at the right joke. I am almost sure that he is not. In spite of all the good humour with which one likes to infuse an argument where possible, I repeat that this is a most monstrous inequity. No one can claim that people whose income is £2,025 or more, up to £10,000, are in dire, immediate need of national assistance. They are not. If the Government give relief to them to satisfy some other social purpose, which may conceivably be a good one—I am not saying that it is not—they cannot say that those people are in any need.
    If the Government were giving it to them out of a surplus, there would be much less to be said against the proposal.

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    If the Chancellor were saying, "Last year I took too much from the people, and all I have to do now is to consider what proportion I shall refrain from taking next year; I have this extra money at my disposal and I will distribute it in this way," that would be one argument, but that is not the right hon. Gentleman's position. He has to begin with the argument which he presented to the House of Commons only a few months ago, which was that it was necessary to take £57 million, from people who were admittedly in dire need, because the Government finances were in such a state that they could not possibly do without that £57 million.
    What I am saying to the right hon. Gentleman is that the two halves of that argument will not fit, and that if he does both things in the same year as part of his financial dispensations in that year, he must not complain if people say that it is a monstrous injustice and a monstrous inequity, and that it is done for some reason other than the natural justice of the case.
    I want, very shortly, to deal with one other argument. That is the incentive argument, which I confess I do not understand. I suppose that it is an elementary proposition that what matters most about taxation is not what the Government take from one, but what one has left after they have taken it. That is the important consideration. I have never heard of and do not believe that there exists any man who has refused promotion only because of the extra Income Tax he would thereby have to pay. There is no such person. A man may refuse because he thinks that the additional pay is too little compared with the additional responsibility. That is a possible argument, but that is not the way in which the matter has been put.
    It is being said that incentive and initiative are being stifled and ambitions are being frustrated and that people are refusing to do their best in their jobs because of the rate of taxation and that if this relief is given to Surtax payers in this way, the situation will in some way be improved. Frankly, I do not believe a word of it.
    If we were to reduce the proposition to the simplest possible example, I suggest that there are not likely to be many by-elections caused by the resignation
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    of hon. Members who refused any increased salary, which may ultimately be offered to them, on the ground that they would have to pay more Income Tax on it when they got it. That will not happen. Their incentives will not be affected, because, in the end, Members do not accept the responsibilities of membership of the House because of the financial rewards they get. The financial rewards, whatever is done about this matter, will certainly never compare with what most people who succeed in coming here can earn elsewhere.
    The financial rewards of a job are important, in the House of Commons or in any other sphere of life. Of course they are, but they have never been the only important thing and they have never been the most important thing. If there were ever found a man who refused promotion on that ground, he would be a man who would not deserve promotion in any case, because with that attitude to his job he would not have the initiative, the ambition or the sense of responsibility which alone would justify the promotion.
    For all those reasons I support the Amendment.
    Mr. P. Thorneycroft: The debate has covered a fairly wide field, and it might be helpful if I called the Committee to the terms of the Amendment. The purpose of the Government in this Clause is to give two-ninths earned income relief up to £4,005 and then one-ninth on an excess above that figure of £5,940, bringing the total range covered by earned income relief up to £9,945.
    The effect of the Amendment is to give two-ninths earned income relief up to £3,006 and then to give a further one-ninth on £3,501 above that, making a total range for earned income relief of up to £6,507. That is the effect of the Amendment as compared with the proposition in the Bill. All I would say about it is that whatever else we are discussing, we are not discussing an issue of principle. There is really no issue of principle in that.
    Various figures have been mentioned. Some have been put down in Amendments and withdrawn, and I am happy to say that they must surely be out of order, so I should not refer to them—but they mentioned figures different from

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    these. Other figures were mentioned in the course of the Budget debate or during the Second Reading of the Finance Bill. The right hon. Member for Huyton (Mr. H. Wilson) thought that it would be all right up to £2,500. The right hon. Member for Smethwick (Mr. Gordon Walker) thought that it would be all right up to about £4,000. The hon. Member for Stechford (Mr. Roy Jenkins) thought that the figure should be between £4,000 and £5,000, and the upper limit is now about £6,000.
    There is a general recognition— a recognition admitted by the hon. Member for Sowerby (Mr. Houghton) in his speech, that it was time that something was done. I thought that the hon. Member for Nelson and Colne (Mr. S. Silverman) sought to prove far too much. If there was any element of truth in what he said—I mean truth in the Parliamentary sense—if there was any element of truth in the argument which he addressed to the Committee—it was as much an attack, or six-ninths of an attack, on his hon. and right hon. Friends above the Gangway as it was on hon. Members on this side of the Committee.
    I have been impressed during the debate to see the atmosphere in which it has been conducted. There were some who said that this matter raised great, passionate, political issues. The truth is that the great majority of people knew that not only had the time come but that it was long past for somebody to do something about the savage upward impact of taxation which takes place at £2,000 a year. There was no sense whatever in having an arrangement whereby a man paid 6s. 7d. in the £ at about £2,000 a year and then jumped to 10s. 6d. in the £ at £2,025. There was no justice in that and no economic sense in it, and nobody would really wish to sustain it.
    It is true that the Royal Commission made various proposals, mostly of a self-balancing character—my hon. Friend the Member for Langstone (Mr. Stevens) was quite right to point that out— to try to smooth out that particular kink. I say frankly that my purpose went further than smoothing out the kink. I hold the view that it is not unreasonable that men who earn incomes of more than £2,000 should keep rather more of what they earn. I do not think that that is a revo-
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    lutionary sentiment or a retrogressive sentiment. In a highly competitive industrial nation, it is just plain common sense.
    The method which I have adopted is not a very revolutionary method. As a matter of fact, this debate is not about Surtax at all. It has nothing to do with Surtax. It is about whether we extend the principle applied to earned income in the lower ranges—and accepted now as the most respectable and sensible arrangement—a little higher up in the income ranges. It is not new, because this arrangement has been going on for a long time in respect of incomes below £2,000 a year. It is certainly not a present to anybody. The idea that, somehow or another, tax relief is a gift by the Treasury to the taxpayer is a proposition which I really do not think can he sustained.
    Do not let us exaggerate what we are doing here. I agree that these arrangements are of such a character and scale that one would not expect a sudden inrush of people from Canada in order to take full advantage of them. I think that there was purpose in what the hon. Member for Sowerby said. We must bear in mind his argument for another year. On £4,000 a year earned income before the Budget a single man paid £1,676 15s., and after the Budget he will pay £1,490. We in the Treasury are not ignoring his activities. We are taking quite a bit from him. A man earning £9,000 paid, before the Budget, no less than £5,326 15s., and today he will pay £4,903 17s. 6d. We have heard talk about National Assistance, but that figure represents quite a sizeable removal of his earnings.
    My feeling about this matter can be summed up as follows. I accept the view —I think that the hon. Member for Nelson and Colne was on a good point here—that in a country which has been through what this country has been through in two world wars, we shall have a high level of taxation anyway. It will be a high level of taxation in every field. Purchase Tax is high, much too high. The taxes on industry are too high if we are to expect industry to be fully competitive. The taxes on families are too high, and the taxes on the young executives and the men who are getting up to the top positions, and on our scientists and nuclear research workers are too high.

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    In this Budget, I am happy to say, we reduced the tax on all those people. It may be that we did not reduce it enough, but at any rate it was a useful start. I do not accept the view about "this claptrap about incentives". It is true that man does not live by bread alone.
    Mr. H. Wilson Mr. H. Wilson rose—
    Mr. Thorneycroft: No. Let me finish this phrase, then the right hon. Gentleman can intervene. It is true that men do not live by bread alone, but also they do not jump out of bed every morning and go rushing off to work just for fun. We must be practical and realistic about this. The majority of men in this world work for a living, and when they have worked very hard and very long it is not unreasonable that they should expect to keep a fair proportion, and if possible a slowly increasing proportion, of that which they have earned.
    Mr. Wilson: I am glad that I did not interrupt earlier because we should not have liked to miss that great contribution to our national philosophy; but, to go back to the point just before that, would the right hon. Gentleman tell the Committee, for our benefit, in view of his claims of what this Budget has done, exactly what he has done for the young scientists, executives, designers, craftsmen, etc., if they are earning less than £2,000 a year and have no children over the age of 11?
    Mr. Thorneycroft: That is a perfectly fair point. I am happy to say that ever since a Conservative Government came to power they have steadily reduced taxes and as long, as they remain in power the country can look forward to their reduction.
    The hon. Member for Sowerby, speaking about maintaining these taxes, said that it would be a dreadful thing if we abandoned this level of taxation. He said, "This is the basis of our Socialist faith. If this goes, we have nothing else to hold on to." That may be true, but what a faith to have. Really there must be something else that a party stands for in this country other than maintaining high and penal levels of taxation on those who, by their efforts, initiative or wit, manage to attain some level of success in this world.
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    5.30 p.m.
    My hon. Friend the Member for Langstone, in a pertinent speech upon this matter, dealt with the question of incentive. Other Members also have done so. I do not mind what was said in a Report of a Royal Commission on this matter or what was said in the minority Report in 1920 by an Irishman who thought that earned income did not really matter. I do not mind what has been said on that or on any other occasion. I need no advice about this: I am quite confident about it from my own point of view. Taxation is a disincentive; there is no question about it.
    Look at the arguments that we always hear about the effect of taxation on overtime earnings. Does anybody suggest that taxation on overtime earnings is not a disincentive? Of course, it is a disincentive. We all know that it is. We know that so far as we can in this country steadily reduce the amount that is taken away from men, so at the same time we encourage them to go out, take the extra responsibilities, and do a little more work. Men do not change when their income reaches £2,000 a year. It might be very convenient if they did, but they do not. They remain precisely the same sort of men, with the same sort of ambitions, the same desire to keep up with the Joneses and everything else as when they earned £1,900 a year. It will always remain so.
    The hon. Member for Wallsend (Mr. McKay) told us that any tax relief at £2,000 a year or indeed at any level, so far as I could understand, must be treated in the same way as a wage or salary increase. If one accepts that, one must assume that the State owns all the money in the country. I do not accept that. I do not accept that tax relief is a gift from the Exchequer. I think tax relief is a duty to be earnestly pursued not only by Governments, but by the House of Commons. I think that it should be constantly pursued at all levels.
    Finally we had the speech from the hon. Member for Nelson and Colne. He rather fell into the same error. He too thought that somehow or another we were giving something away, and he took the view that any curtailment of the growing costs of social services must somehow be hypothecated to any relief of taxation which was ever given. That is not a very sensible

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    approach; nor is it one which could be very consistently argued by any good member of the Socialist Party.
    Sir Stafford Cripps, when Chancellor of the Exchequer, spent a great deal of his time and energy in seeing how by one means or another one could set a limit to the growth of the expenditure on social services. He was quite right. In those days an attempt was made to set a limit of about £400 million on the size of the National Health Service. It was a tough and unpopular political decision which Sir Stafford Cripps had to make at that time. But to say that any tax relief that he or any subsequent Chancellor made was somehow given at the expense of those who might have benefited from the Health Service is not a worthy argument to address to the Committee.
    Mr. S. Silverman: I think that the right hon. Gentleman, when his eloquence and fervour cool down, may realise that that is not quite the argument that I addressed. It may well be an argument as to how far in their own interests the social services should be self-supporting or limited.
    The two points which I want to make are these. First, the £57 million which the right hon. Gentleman is getting out of the particular reductions to which I called attention were defended by the right hon. Gentleman himself, not so much—and, indeed, in the case of some of them not at all—on their own merits as a contribution to the theory of social services, but because he needed the money generally, in view of the financial situation of the country.
    The other thing that I wanted to say was, as the right hon. Gentleman referred to Sir Stafford Cripps, that Sir Stafford Cripps, when he imposed these limits, did not at the same time make what I still consider to be large and generous gifts to people who did not need the money.
    Mr. Thorneycroft: I heard what the hon. Gentleman alleged was the purpose of these arrangements with reference to the Health Service, but he was quite wrong in what he said. The truth is—and I share this view with Sir Stafford Cripps—that there must be a limit to the costs which can be incurred on social services of that character. I believe that
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    the Committee would be well served if the hon. Gentleman paid attention to the necessity for Chancellors of all parties to set some limits upon expenditure of that character, however worthy it may be, and not to taunt them if subsequently they make some form of tax relief.
    I believe that in approaching a matter of this kind we have to look at what other countries are doing. May be we have some special difficulties of our own. Of course we have, but so have other countries. Look where one will, it is hard to find any country in the world which penalises success to the extent that we have been penalising it in this country. The hon. Gentleman and others talk about the social services. The social services can only be sustained on the growing productivity and wealth of the people who produce things in this country. If we are to encourage that and build it up, we must be prepared to reward success.
    If we look at the capitalist system in the United States of America, we see there that they have the courage to reward success. Success there is not a matter for envy. It is an incentive to someone else to achieve the same success also. If hon. Members opposite do not like the example of the United States, they have only to look at Russia. Russia has a system which at all events also has the courage to reward success; however that success is achieved is another matter, but if a person, by some means or another, gets into a position in which he is doing one of those top-level jobs, he certainly keeps a great deal more of his earnings than one does in this country.
    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.
    Mr. H. Wilson: 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. I did not realise that he had succeeded in convincing the Chancellor of the Exchequer so quickly.
    One result of the passionate eloquence of the Chancellor of the Exchequer, which we always like to hear, is that it somehow generates in the Committee a sense of

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    forgetfulness of very many things. He told us only a moment ago, for example, that our social services, of which this country is rightly proud, can only be maintained, let alone improved, if we have annually rising productivity in this country. That was said so eloquently that I for one almost forgot for a moment that we had a stagnant economy last year and that production fell for almost the first time since the end of the war.
    I apologise to the Committee for rising at this stage. I do not intend to imply that I think the debate on this and the other Amendments which are being taken with it is in any way yet over. I know that several of my hon. Friends wish to speak, but I thought it only courteous to follow the Chancellor. If I make any observations which seem to the Committee to call for a reply and I am not in my place to hear it, I hope that the Committee will acquit me of any discourtesy. I have an engagement, made some time ago, in East Ham this evening, though I hope to be back to take part in the debate later on.
    The debate has shown only too clearly how deep are the differences between the two main parties in the Committee. The words that I thought I heard come from the noble Lord the Member for Dorset. South (Viscount Hinchingbrooke)— not that he is a member of either major party —were to the effect that the Chancellor's speech was the best speech made by a Chancellor of the Exchequer for ten years.
    Viscount Hinehingbrooke: No. I said that it was the first time that we had heard a statement of that kind from the Treasury Box for ten years.
    Mr. Wilson: I do not think that I have misrepresented the noble Lord. The fact that he was able to applaud the Chancellor so completely underlines my statement that the debate has shown the deep difference between the two parties.
    Mr. Ede: The noble Lord is the umpire.
    Mr. Wilson: With great respect to my right hon. Friend the Member for South Shields (Mr. Ede), I would not call the noble Lord the umpire. [An HON. MEMBER: "The vampire."] All this came to a head in the speech of my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) and the exchanges which
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    followed when he referred to the Chancellor as giving away tax concessions. The noble Lord the Member for Dorset. South interrupted to make a point, which he has made more than once in the past—he is nothing if not consistent—and said that this is not a case of the Treasury giving something away but a case of merely returning something taken away from the taxpayer. The taxpayer had been making too big a contribution, which was now being remitted. The Chancellor made the same point in rather different words.
    This is one of the big differences between the two parties. The Conservative Party thinks of any tax remission as simply giving back to the taxpayer something which is truly his own and which the State has taken away. [HON. MEMBERS: "Not giving back."] Well then, ceasing to take away. We on this side of the Committee do not regard the function of the Treasury in that way. We regard the Budget and the taxation system as part of the wider system of economic society. We regard the duty of the Chancellor and the function of the Budget as in part to remedy the gross distortions and the social and economic inequalities that arise from the working of our economic system. That is one of the big differences between us.
    The other argument, that also showed the difference, again arose from something said by my hon. Friend the Member for Nelson and Colne, when he suggested that these tax concessions to the Surtax payers were made possible because the Chancellor, within his general Budget strategy, found himself able to make reductions in total taxation, having previously, in introducing the Estimates to the House of Commons, cut certain items of expenditure. It was only because the right hon. Gentleman did that, that he had this money to give away, remit, or cease to take away in taxation—whichever way the Committee prefers. The Chancellor cannot object to the phrase. He dealt with the matter at some length.
    I should like to remind the Committee of the figures given by my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) in the debate on 11th April when he said:
    "The cancellation of the bread subsidy, for instance, saves the Exchequer £45 million in this coming financial year. The cutting of the

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    milk subsidy saves the Revenue this year £26 million, the prescription charges of 1s. save the Revenue £5 million, the increase in health contributions saves the Revenue this financial year £40 million, and the increase in welfare foods payments save the Revenue £14 million. That all adds up to £130 million, which is just about equal to—in fact more than—the whole cost of all the concessions."—[OFFICIAL REPORT, 11th April, 1957; Vol. 568, c. 1328.]
    Therefore, it can be said that the concessions made to the Surtax range of incomes had been made possible by these reductions in expenditure.
    5.45 p.m.
    I do not want to pursue that point. I should like to go back to the case deployed by my hon. Friend the Member for Sowerby (Mr. Houghton). He put the whole case for the Amendment. There are two points before the Committee. First, should there be any earned income allowance at all, and any differentiation between earned and unearned income? My hon. Friend the Member for Sowerby showed how, as recently as 1920, a significant proportion of the Royal Commission on the Taxation of Profits and Income was against any differentiation at all. I do not think that anyone today takes that view, that is any hon. Member who is present—the noble Lord the Member for Dorset, South has just gone out. I do not think that anyone here believes that it is wrong to differentiate between earned and unearned income.
    Certainly, the social climate has now changed so much that I do not think that anyone would seriously take the view of the Irish banker to whom my hon. Friend the Member for Sowerby referred. The incentive argument is certainly in favour of differentiation. There is also the question of security of income. Earned income can and does stop immediately after anything happens to the earner, whereas unearned income usually continues, although we know that there can be catastrophic events affecting investment which might stop an unearned income continuing. In any event, it is usually possible for the recipient of an unearned income to use capital. The fact that he has an unearned income implies that he has capital. But the earned-income taxpayer may very well be in the position of not having anything to fall back upon. It is for these and other reasons that the country accepts it
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    as right that there should be differentiation between earned and unearned income.
    The other question is how far it should extend up the scale, whether it should extend at all to the Surtax range, which it has not done so far, and, if it is to extend, how far? Everyone expected the Chancellor in his Budget to do something for the Surtax payer. I committed myself, perhaps rather rashly, to forecasts of his Budget in more than one newspaper and I think that I was fairly close to the mark. Long before I was writing, the Chancellor had had a buildup that he would do something in the Budget. There were his speeches about the Opportunity State and the comments in the Press.
    It is generally realised that every Budget has a motif, or alleged motif, and when there is not one a Chancellor creates one specially for the purpose of presenting his Budget speech. The Lord Privy Seal when he was Chancellor in 1954 had as his motif incentives to increase investment. In 1955, the motif was incentives to win the forthcoming General Election. In 1956 the late Chancellor's motif was an incentive to savings in the private purse, and in 1957 everyone expected the right hon. Gentleman to base his Budget on a system of incentives to the middle classes, defining the middle classes, as he obviously does in this context, almost exclusively as those living within the Surtax range.
    There had been rumours that the right hon. Gentleman would raise the Surtax starting point from the figure at which it has been for many years. I never thought that he would do that. It would have been a little too obvious. In my own published forecasts I said that he was likely to increase personal reliefs to Surtax payers and increase earned income allowances.
    The right hon. Gentleman certainly had compelling reasons driving him to do something for the Surtax payer. He had to bring the wavering Tory voters back to the fold, because the Budget followed the widespread Tory abstentions in Melton Mowbray, Chester, Warwick and Leamington, Beckenham, Bristol, West and Newcastle-upon-Tyne, North not to mention Lewisham, North. He felt that within the amount of money that he was able to afford the thing was to go for

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    those who had been in the past his most loyal supporters, those never expected to vote Labour in any circumstances, but who, unfortunately, in the by-elections had not been voting at all, so he reduced, not the Surtax commitments, but the Income Tax liabilities of Surtax payers.
    I will be quite frank about it—the right hon. Gentleman has quoted me quite fairly in this context from what I said on the day after the Budget. We were prepared to recognise a case for some change in the £2,025 earned income allowance limit which has been with us for a generation. We were prepared to recognise that case as part of a socially just, fair, balanced Budget, as this one certainly cannot be described. We were prepared, as part of such a Budget, to accept the recommendations of the Royal Commission based on an extension of the earned income relief to an income of £2,500, with a half-rate relief—that is, one-ninth instead of two-ninths—in the range between £2,500 and £3,000.
    The Chancellor referred to certain Amendments that were put down and then withdrawn. The Amendments put down were designed to give effect directly to the Royal Commission's recommendations but, on consideration, we have not limited our Amendments to its precise figures. We have gone beyond them. As my hon. Friend the Member for Sowerby said, we took the Commission's recommendations, which were made some three or four years ago, and scaled them up so as to take account of the increased cost of living since it presented its second Report in which these recommendations were made.
    Therefore, our Amendment now contains a figure of £3,000—not the £2,500 recommended by the Royal Commission, but £3,000—instead of the £4,000 proposed in the Bill. It also goes beyond the Royal Commission's recommendation —again because of scaling-up for the increased cost of living which has taken place under the right hon. Gentleman and his predecessors—and takes the limit for the half-relief of one-ninth to £3,500. Again, like my hon. Friend, I am not bothering about odd digits. In broad terms, our Amendment proposes to reduce the Chancellor's £4,000 minimum to £3,000, and his nearly £10,000 to £3,500.
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    What we must ask is this. Why did the Chancellor in this Budget go a long way beyond the Royal Commission's Report? We could have understood him going as far as the Report, as we have done, and scaling up for the increased cost of living—
    P. Thorneycroft: I am sorry to interrupt the right hon. Gentleman, but perhaps I may be permitted to clear up something which may look very confusing in the OFFICIAL REPORT. The effect of the Amendment really is to put it at two-ninths up to £3,000, and then have it at one-ninth on an excess of £3,500 beyond that, bringing the one-ninth relief figure up to over £6,000. That is what the Amendment does. I make this point only because the right hon. Gentleman is talking about different figures, but I assume that what he wanted was to give two-ninths up to £3,000 and one-ninth on £3,500?
    Mr. Wilson: I am grateful to the Chancellor of the Exchequer. He has certainly correctly described what we had intended to do. We have the advice of distinguished lawyers on this matter, though not, perhaps, as distinguished as the Attorney-General. We could not call on the Attorney-General for assistance, as could the Chancellor, but if, indeed, that is the effect, we should be very glad, if the Chancellor accepts the Amendment, to put it right on Report.
    I must ask again; why has he gone beyond the Royal Commission Report? I have mentioned the political motives, and I shall not pursue that argument any further. I think that it is only too obvious to the House. But he has dressed this up as incentives. He has spoken in terms of incentives. First of all, we have heard from him about emigration. He has said that this is designed to stop the technicians, the draughtsmen, the miners, scientists, business executives, salesmen and so on, from emigrating. The fact is that the result of this Budget is to increase their frustration and to increase their desire to emigrate. I do not think that we can doubt that. Very many of us have heard of people who are even more fed up after the Budget than they were.
    Of course, the trouble is this. I agree with the hon. Member for Kidderminster (Mr. Nabarro), or the hon. Member for Langstone (Mr. Stevens)—I am not sure

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    which—who said that the desire to emigrate is not the result of one single specific act but of a growing sense of frustration and a feeling that there is a land of greater opportunity somewhere else—
    Mr. Nabarro: All I did was to draw attention to the very much more favourable tax treatment accorded to the higher earned income and executive groups in industry, and the effect it had on competitiveness for first-class brains.
    Mr. Wilson: I am sorry if I misrepresented the hon. Member. When he emigrates to Russia, I hope that he will take our very best wishes with him. However, I am sorry, because I recall now that it was the hon. Member for Torquay (Mr. F. M. Bennett) who used the argument—as, I think, the Chancellor did, also.
    There are very many of these young executives, designers, scientists, draughtsmen and the rest who are already frustrated; fed up because of Suez, and fed up with six years of Tory administration —[Interruption.] Oh, yes, we have only to look at the emigration figures, and we have not had a Labour Government for six years. Very many of those people, finding the Tory Party really reverting to type in this Budget, have said, "This is the last straw—I am going."
    When the Chancellor comes down to it, he will realise that he has done nothing in this Budget for that class. Apart from those who have children over the age of eleven or twelve, he has done nothing at all for any of these vitally important people—the executives, the scientists and so on—unless they are getting more than £2,000 a year. He did claim, in one of the more impassioned parts of his speech, that he had done something for every one of them, and when I challenged him, he slid right out of it in a way not typical of him. I think that when he looks at HANSARD tomorrow, he will see that he inadvertently claimed to give something in this Budget to that group.
    It may be his argument that even if he is not doing anything for them now, there is, at any rate, something for which they can strive. He used the same argument himself in his Budget broadcast. When twitted about the £10,000-a-year man, he said, "Well, I am not getting £10,000 a year—that gives me something to strive
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    for." That is something which must create a little anxiety in the Prime Minister, and be extremely disappointing for the Lord Privy Seal.
    Whereas we realise that what may well be in the right hon. Gentleman's mind, I want to recall to him the position of scientists, executives and the rest earning under £2,000 a year. The typical research establishment, or the typical office, or the typical laboratory is one where there are a considerable number of people earning under £2,000. In fact, there is generally only one top job—or two top jobs—over the £2,000 level. That job is occupied, perhaps, today by a man of 45, 50 or 55, and the only way in which these young people can hope to earn over £2,000 is by waiting for a vacancy created by the death, or removal in some other way of the top man. I have heard of very many people in this category who have said that they have not a hope of earning £2,000 a year, although doing work vital to their firm, until vacancies are created by the hand of death.
    We have had some argument about how far this will affect the incentives for people to train themselves so that they can take greater responsiblity, or incentives to work harder. There have been a number of speeches from hon. Gentlemen opposite, and there have been some quotations from the Royal Commission's Report. I will content myself with only one, in addition to that used by my hon. Friend.
    This is what is said on page 45 of the Second Report:
    "But in the meantime we should not conclude, either from our own observations or from such evidence as we could extract, that the high managerial post, for instance, is declined because its rewards are not thought worth obtaining or that the artist or the professional man abates his energies because tax has made it not worth while that he should exercise them to the full. What influence"—
    and unlike the hon. Member for Lang-stone, I will continue the quotation—
    "high taxation has, on this sort of activity seems to us to lie mainly in making a man disinclined to take on a casual engagement or something out of his usual course and less in affecting the vigour with which he pursues his ordinary calling."
    6.0 p.m.
    Mr. Stevens: Would the right hon. Member be good enough to look at paragraph 149, where he will read:
    "Probably it is still too early in the history of our social development to form a just

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    appreciation of the effects of very high taxation on the activity of the professional man, the salary earner and the individual producer."
    Mr. Wilson: Whereas the Royal Commission, with its expert advice and information, found it too early to reach any final conclusion, the hon. Member this afternoon was not so modest. I am myself making no ex cathedra pronouncement but quoting the Royal Commission. I was, in fact, quoting paragraph 149, and I need not take the hon. Member much further back in the paragraph to find more quotations even more damaging to his case than those which I have quoted. Similarly, if one were to go through the appendix, with all the various conclusions, one could find much more evidence. Were I to do that, however, I am sure it would weary the Committee.
    Do people refuse higher-paid jobs because of taxation? I agree with my hon. Friend the Member for Nelson and Colne that there may be some who do. if the differential in income is not big enough to make them feel that the extra responsibility justifies taking the job, especially if the differential after tax is not enough to justify the cost of removal of the family. Far more people refuse promotion because of geographical immobility than because of the tax disincentive. That is a much more serious problem, but I will not pursue it.
    We are only too familiar with the argument about incentives used by the Chancellor. As we have said many times, it is the last refuge of a Chancellor. We have had incentives quoted in every Tory Budget since 1951 as the main reason for that Budget and yet, as I have said, production fell last year almost for the first time since the war.
    The Chancellor had another argument. This afternoon he used the words "the time was long overdue for a reform of this kind". In his Budget broadcast he used the phrase "belated justice", referring to the Surtax payer. He speaks as if nothing has been done for the Surtax payer since 1951. Let me give the Committee two sets of figures, in each case for a man with two children. The £5,000a-year man had already gained £283 in tax remissions before this Budget. He had already gained £283 as an addition to his spendable income. Now he is to have another £223 from the Chancellor in the Budget. The £10,000-a-year man had
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    already received £535 in tax remissions from the right hon. Gentleman's two predecessors, and by this Clause his £535 is to be brought up to £1,137. Hon. Members opposite do not seem to doubt the wisdom of the Chancellor in doing that or his sense of social justice.
    It is a fact that the Chancellor feels that the whole Surtax system needs some radical amendment. He says it is long overdue. I agree with him, but I do not think he has done it in the right way. One of my hon. Friends used a phrase about P.A.Y.E. and Surtax as being "Pay as you like," and it is certainly true that taxation on the range of incomes covered by this Amendment is not bringing in the full yield to which the Chancellor is entitled. In the Budget debate last year I gave the House figures which I understand caused considerable perturbation in the Treasury. They have not been denied. Since before the war these Surtax rates have risen by 46 per cent. while the net national money income has increased by more than threefold, and yet the Surtax revenue has increased only from £59 million in 1938 to £130 million, rather more than double, over that period.
    This suggests that there is reason for the Chancellor to look at the matter on rather a wider basis. I am not suggesting that it is entirely a voluntary tax; Schedule E taxpayers cannot avoid paying it and there is some contribution, I think my hon. Friend the Member for Sowerby will confirm, even from Schedule D, but to a considerable extent it is voluntary.
    I should be out of order if I were to develop this matter further or to refer to some evidence which I produced on this subject a year ago. Nevertheless, I suggest to the Chancellor that it might add far more to the Treasury, or might be more socially just and better for the provision of incentives, certainly better for keeping up with the Jones's, as he put it, if he were to replace this Clause by another variant. Since this tax is now largely voluntary, why not make the Surtax entirely voluntary? Why not set up a Surtax voluntary contributions scheme, with the proviso that all voluntary contributions be recorded in the Court and personal page of The Times? If he were to do that and if Surtax became a matter for competitive social emulation, a matter for competitive prestige, Surtax payers would be competing with each

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    other in how much they could pay to the Treasury instead of thinking that their prestige lay in avoiding taxation. Then I think the revenue yield of Surtax, even on a voluntary basis, would greatly exceed what is received from Surtax at the present time.
    I am not putting that suggestion forward officially on behalf of the Opposition, but it is an interesting suggestion which has been put to me. I should like to think more about it, and I thought I should like to share this idea with other hon. Members, because it may be that in some future years this will be the basis on which the problem is settled. If we had the greatly increased yield of revenue which I am sure would accrue, in comparison with that of the semi-voluntary Surtax system of today, we should not need to spend as much time in debating these detailed proposals of the Chancellor and the detailed Amendments which have occupied the Committee for some little time.
    There is one last point of great importance, about which little has been said this afternoon. I will not develop it, because I should be out of order if I were to develop it too far, but I do not think we can take a decision on the Amendments without reference to it. In the Budget debate many speakers from this side of the Committee drew attention to the fact that, while the Chancellor could find £34 million for Surtax payers, he was unable to find a penny for old-age pensioners. When the Chancellor was asked about this in his Budget broadcast he gave a remarkable answer. He said that if the national cake increased—and this is a wonderful Chancellor for coining a phrase—as a result of this concession and with the incentive of opportunity, then the old-age pensioners themselves would gain from the increase in the national cake. In fact they would not, especially if one of the conditions of this gain was that prices continued to rise.
    I do not feel that we on this side of the Committee, in deciding our attitude to this series of Amendments, can entirely disregard the fact that in framing his Budget the Chancellor, having money to dispose of—if hon. Members opposite will let me use that phrase—and having concessions to make, for what-
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    ever reason—I will not go into them now—had a choice to make: whether to give it to the Surtax payers or to give it to the old-age pensioners. He made his decision. It seems to be very widely applauded on the other side of the Committee, and it was certainly applauded even from below the Gangway by the leader of the independent Conservatives. But we on this side of the Committee are in no doubt that he made the wrong choice and took the wrong course and that economically what he has proposed will not help us to balance our payments and to improve our national economic position. Socially it was a most unjust decision. In the absence of any further and more convincing argument from the Chancellor, we shall wish to register our disapproval in the Lobby tonight.
    Mr. M. Philips Price: A good deal has been said about incentives, and I should like to tell the Committee of an experience which I had yesterday when I went with the Parliamentary and Scientific Committee to visit certain works in the neighbourhood of London manufacturing very important scientific and chemical appliances principally for export. I saw there a business which is being built up entirely on the application of science to industry, which seems to be succeeding. I never heard a word during the whole time I was there about any incentives as a result of tax relief. Not only that, but I heard nothing about men leaving that industry and going to Canada. On the contrary. I heard of Canadians coming here to study the processes going on there, and, moreover, Canada and the other Dominions are giving a large number of orders to that industry.
    I feel that unnecessary stress has been laid upon the value of incentives. I do not say that tax reliefs may not be desirable as an encouragement or incentive, but, in the main, I agree with the view expressed by my hon. Friend the Member for Sowerby (Mr. Houghton) in his most moderate but, at the same time, very firm speech in moving the Amendment, which we now intend to press.
    I notice that the Chancellor remarked that our Amendment does not indicate that we are against some kind of relief for incomes over £2,000 a year. There is a difference between the two sides of

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    the Committee largely on the extent and scope of the relief, not so much on the principle. We all agreed that some relief would be desirable, for more than one reason. For one thing, of course, inflation has made an inroad upon the real value of incomes over £2,000 a year, which has not been taken into consideration in the scale of taxation and reliefs. This proposal of the Chancellor goes some way to recognise that, and our Amendment does the same. There is really no difference between us about that.
    The effect or value of incentives very much depends on the temperament of the person. Some people do not live by bread alone—
    Mr. Nabarro: Hear, hear.
    Mr. Price: —while others are more inclined to do so. Perhaps the hon. Member for Kidderminster (Mr. Nabarro) is in this last category.
    Mr. Nabarro: No. I was thinking of the right hon. and learned Member for St. Helens (Sir H. Shawcross).
    Mr. Arthur Lewis: Who is he?
    Mr. Price: I apologise to the hon. Member for Kidderminster. My hon. Friend the Member for Sowerby emphasised that most people are proud of their jobs and that monetary factors are a smaller consideration for them. On the whole, I think that that is so, and particularly is it true among civil servants and those in similar occupations, though less so, perhaps, among those in managerial, administrative or technical jobs. One of the reasons may be that those who have undergone scientific or highly technical training have had to follow a long and expensive course of training, and they feel a grievance if their earned income is treated in the same way as a similar income which is unearned. It is, therefore, important that we should make some difference, and I am glad that the Chancellor has done that. Our Amendment, of course, recognises it, too.
    6.15 p.m.
    If we are to succeed in our balance of payments and be strong and sound financially, industries such as the one I saw yesterday must be in the forefront of our economy. We must have
    462
    technicians and scientists who have been through expensive training and are given every incentive possible to carry on at their job. For that reason, we are right to move our Amendment. It does not go contrary to the Chancellor's main proposition, but we join issue with him about the level; we do not agree that to bring the incentive to incomes as high as £10,000 or £9,900 a year is really justified at all. The limit should be much lower than that, and we suggest a figure of £3,500. I can see no justification at all for what the Chancellor suggests. Those who get beyond the level we suggest are, surely, in a different category. One might scale it up a little, perhaps, about £3,500, giving some more relief, less than one-ninth, though whether it is worth doing that I am not sure. At any rate, there should be a limit much below the level proposed by the Chancellor, and we shall accordingly press our Amendment.
    Mr. J. Grimond: It is now apparent that there is no great difference in principle. If one looks at the matter in pre-war terms, it means giving some concession to a man who would be earning, if money had retained its value, £700 or £800 a year. No one would have thought that to allow him some relief in taxation would be a very serious step.
    On the other hand, I did not think that the Chancellor made out any case for carrying the relief up to £10,000 a year, as against the alternatives which would have been open to him had he chosen to give reliefs in other ways. He did not, even on his own argument about the need to offer incentives, make out a convincing case. He told us that, since the Conservatives took office, people earning under £2,000 have received progressive reductions in taxation. I do not think that that is true—again, like him, using the word "true" entirely in a Parliamentary sense. As inflation goes on, it is notorious that more and more people are carried up the scale of taxation, with the result today that, in real terms, the weight of taxation falling upon people earning between, let us say, £1,000 and £3,000 a year is probably heavier than it ever was. Like other hon. Members who have spoken, I feel that there is a great need to do more for people earning

    463
    between, let us say, £700 and £3,000 a year.
    The hon. Member for Gloucestershire, West (Mr. Philips Price) told us of scientists who do not feel any need for monetary incentive. I agree with those who feel, like the hon. Member for Sowerby (Mr. Houghton) who spoke of the opinion expressed by the Royal Commission, that monetary incentives are much less important than many people might think. I cannot, however, believe that monetary incentives are entirely unimportant, though I am willing to believe that their importance varies greatly between profession and profession. Scientists, who have an extremely interesting job may well not pay so much regard to monetary rewards as those who have dull or boring jobs.
    It seems to me that the most serious aspect of heavy rates of taxation is not in their disincentive effect but in the distortion they give to the economy. I lived in a mining village, and I know that the tendency is for miners to take other jobs. They go out and work on farms and in nursery gardens at weekends, because by that means they manage to avoid a certain amount of taxation. Anyone who lives in the country knows that even farmers, who are admirable people, take certain steps to avoid maximising the taxation to which they are liable. It is not only the Surtax payers who do a certain amount of tax evasion; the whole country is riddled with people who give up a considerable amount of their time to thinking of ways in which to avoid taxation. It is a serious matter that expense accounts and inherited capital should weigh so heavily against straightforward earnings. It is far more profitable to have a big expense account or to inherit a certain amount of capital than it is to earn money by skill.
    We hear a lot about the weight of the burden which is now placed upon Ministers, and we are to have an official investigation into ways in which this can be lessened. I should like to make one humble recommendation. I suggest that there should be less sumptuary eating by Ministers. Apparently no one can do any business unless he has enormous meals and a great deal to drink.
    Mr. Nabarro: Rubbish.
    Mr. Grimond: It is not rubbish. I agree that that is an exaggeration, but this situation exists and it arises out of the expense allowance and is the sort of situation which people in industry themselves do not want. The amount of decoration of premises and boardrooms which goes on would not be done if taxation rates were not so high. We are distorting a great deal of the economic system of the country by these high rates of taxation. That point should be stressed as much as the question of direct disincentives.
    I hope that in forthcoming Budgets the Government will consider the whole structure of Income Tax, Surtax and tax reliefs. I welcome the fact that the Government have straightened out the kink at the £2,000 a year level. That was quite indefensible. But they have left the main structure of Income Tax and Surtax unaltered in spite of inflation and all the anomalies which now exist. It would be out of order to go into that matter in detail, or to put forward suggestions for broadening the tax basis, but it is notorious that it is becoming distorted and that taxation falls far too heavily upon earnings. I regret that the Chancellor has carried this relief as high as £10,000 and did not make other kinds of concessions. I believe that he could have used the money in ways which would have provided just as much incentive to the younger people, the rising technicians, and the people who are employed in the rather duller and more boring jobs, to whom we want to give some incentives.
    The last matter I wish to refer to, about which the Chancellor said nothing, is the question of savings. I concede that some of the extra money may be saved. I do not know whether the Chancellor attaches any importance to that aspect of the matter, but savings are extremely important to us, and if we have now accepted the principle of taxing unearned income at a higher rate than earned income we should consider the possibility of giving a tax inducement to savings. I cannot pursue that matter further on this Amendment, but it is almost as important for savings to be relieved of taxation to some extent as it is for earnings.
    The Surtax payers cannot be said to be a race which should be taxed out of

    465
    existence. We cannot say that a man earning £5,000 or £6,000 a year today can pay indefinitely out of his income, but I feel that in the circumstances which exist in this year there are so many other things which could be done that it is a
    pity that the Chancellor saw fit to carry his reliefs so far up the scale.
    Question put, That "four thousand and six" stand part of the Clause:—
    The Committee divided: Ayes 249, Noes 209.

    Division No. 123.]

    AYES

    [6.25 p.m.

    Agnew, Sir Peter

    George, J. C. (Pollok)

    Mackie, J. H. (Galloway)

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

    Gibson-Watt, D.

    McLaughlin, Mrs. P.

    Alport, C. J. M.

    Glover, D.

    Maclean, Fitzroy (Lancaster)

    Amery, Julian (Preston, N.)

    Godber, J. B.

    McLean, Neil (Inverness)

    Anstruther-Gray, Major Sir William

    Gomme-Duncan, Col. Sir Alan

    MacLeod, John (Ross & Cromarty)

    Arbuthnot, John

    Goodhart, Philip

    Macmillan, Rt. Hn. Harold (Bromley)

    Armstrong, C. W.

    Gower, H. R.

    Macmillan, Maurice (Halifax)

    Ashton, H.

    Graham, Sir Fergus

    Macpherson, Niall (Dumfries)

    Astor, Hon. J. J.

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

    Maddan, Martin

    Atkins, H. E.

    Green, A.

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

    Baldock, Lt.-Cmdr. J. M.

    Grimston, Hon. John (St. Albans)

    Maitland, Hon. Patrick (Lanark)

    Baldwin, A. E.

    Grimston, Sir Robert (Westbury)

    Manningham-Buller, Rt. Hn. Sir R.

    Balniel, Lord

    Grosvenor, Lt.-Col. R. G.

    Markham, Major Sir Frank

    Barlow, Sir John

    Gurden, Harold

    Marples, Rt. Hon. A. E.

    Barter, John

    Hare, Rt. Hon. J. H.

    Mathew, R.

    Baxter, Sir Beverley

    Harris, Reader (Heston)

    Maude, Angus

    Beamish, Maj. Tufton

    Harrison, Col. J. H. (Eye)

    Maudling, Rt. Hon. R.

    Bell, Philip (Bolton, E.)

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

    Medlicott, Sir Frank

    Bennett, F. M. (Torquay)

    Harvey, Ian (Harrow, E.)

    Milligan, Rt. Hon. W. R.

    Bevins, J. R. (Toxteth)

    Harvie-Watt, Sir George

    Molson, Rt. Hon. Hugh

    Bidgood, J. C.

    Hay, John

    Morrison, John (Salisbury)

    Biggs-Davison, J. A.

    Heald, Rt. Hon. Sir Lionel

    Mott-Radclyffe, Sir Charles

    Birch, Rt. Hon. Nigel

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

    Nabarro, G. D. N.

    Black, C. W.

    Henderson, John (Cathcart)

    Nairn, D. L. S.

    Body, R. F,

    Hesketh, R. F.

    Neave, Airey

    Boyle, Sir Edward

    Hill, Rt. Hon. Charles (Luton)

    Nicholls, Harmar

    Braine, B. R.

    Hill, Mrs. E. (Wythenshawe)

    Nicholson, Godfrey (Farnham)

    Braithwaite, Sir Albert (Harrow, W.)

    Hill, John (S. Norfolk)

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

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

    Hinchingbrooke, Viscount

    Nugent, G. R. H.

    Brooke, Rt. Hon. Henry

    Holland-Martin, C. J.

    Oakshott, H. D.

    Brooman-White, R. C.

    Hornby, R. P.

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

    Browne, J. Nixon (Craigton)

    Hornsby-Smith, Miss M. P.

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

    Bryan, P.

    Horobin, Sir Ian

    Orr, Capt. L. P. S.

    Bullus, Wing Commander E. E.

    Horsbrugh, Rt. Hon. Dame Florence

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

    Burden, F. F. A.

    Howard, Hon. Greville (St. Ives)

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

    Butcher, Sir Herbert

    Howard, John (Test)

    Page, R. G.

    Campbell, Sir David

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

    Pannell, N. A. (Kirkdale)

    Cary, Sir Robert

    Hughes Hallett, Vice-Admiral J.

    Partridge, E.

    Channon, Sir Henry

    Hughes-Young, M. H. C.

    Peyton, J. W. W.

    Chichester-Clark, R.

    Hurd, A. R.

    Pickthorn, K. W. M.

    Clarke, Brig. Terence (Portsmth, W.)

    Hutohison, Sir James (Scotstoun)

    Pike, Miss Mervyn

    Cole, Norman

    Hylton-Foster, Rt. Hon. Sir Harry

    Pilkington, Capt. R. A.

    Conant, Maj. Sir Roger

    Iremonger, T. L.

    Pitt, Miss E. M.

    Cordeaux, Lt.-Col. J. K.

    Irvine, Bryant Godman (Rye)

    Powell, J. Enoch

    Corfield, Capt. F. V.

    Jenkins, Robert (Dulwich)

    Price, Henry (Lewisham, W.)

    Craddook, Beresford (Spelthorne)

    Jennings, J. C. (Burton)

    Prior-Palmer, Brig. O. L.

    Crosthwaite-Eyre, Col. O. E.

    Joseph, Sir Keith

    Profumo, J. D.

    Crowder, Sir John (Finchley)

    Joynson-Hicks, Hon. Sir Lancelot

    Raikes, Sir Victor

    Cunningham, Knox

    Keegan, D.

    Ramsden, J. E.

    Currie, G. B. H.

    Kerby, Capt. H. B.

    Rawlinson, Peter

    Dance, J. C. G.

    Kerr, H. W.

    Rees-Davies, W. R.

    D'Avigdor-Goldsmid, Sir Henry

    Kershaw, J. A.

    Renton, D. L. M.

    Deedes, W. F.

    Kimball, M.

    Ridsdale, J. E.

    Digby, Simon Wingfield

    Kirk, P. M.

    Rippon, A. G. F.

    Dodds-Parker, A. D.

    Lagden, G. W.

    Robertson, Sir David

    Donaldson, Cmdr. C. E. McA.

    Langford-Holt, J. A.

    Robinson, Sir Roland (Blackpool, S.)

    Doughty, C. J. A.

    Leather, E. H. C.

    Rodgers, John (Sevenoaks)

    Drayson, G. B.

    Leburn, W. G.

    Roper, Sir Harold

    du Cann, E. D. L.

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

    Ropner, Col, Sir Leonard

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

    Legh, Hon. Peter (Petersfield)

    Russell, R. S.

    Duthie, W. S.

    Lindsay, Hon. James (Devon, N.)

    Sandys, Rt. Hon. D.

    Eden, J. B. (Bournemouth, West)

    Linstead, Sir H. N.

    Schofleld, Lt.-Col. W.

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

    Lloyd, Rt. Hon. G. (Sutton Coldfield)

    Scott Miller, Cmdr. R.

    Errington, Sir Eric

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

    Sharpies, R. C.

    Farey-Jones, F. W.

    Longden, Gilbert

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

    Fell, A.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Smithers, Peter (Winchester)

    Fisher, Nigel

    Lucas, P. B. (Brentford & Chiswick)

    Smyth, Brig. Sir John (Norwood)

    Fletcher-Cooke, C.

    Lucas-Tooth, Sir Hugh

    Spearman, Sir Alexander

    Foster, John

    McAdden, S. J.

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

    Fraser, Hon. Hugh (Stone)

    Macdonald, Sir Peter

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

    Garner-Evans, E. H.

    McKibbin, A. J.

    Stanley, Capt. Hon. Richard

    Stevens, Geoffrey

    Thompson, Kenneth (Walton)

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

    Steward, Harold (Stockport, S.)

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

    Ward, Dame Irene (Tynemouth)

    Steward, Sir William (Woolwich, W.)

    Thorneycroft, Rt. Hon. P.

    Watkinson, Rt. Hon. Harold

    Stoddart-Scott, Col. M.

    Thornton-Kemsley, C. N.

    Webbe, Sir H.

    Storey, S.

    Tiley, A. (Bradford, W.)

    Whitelaw, W. S. I.

    Studholme, Sir Henry

    Tilney, John (Wavertree)

    Williams, Paul (Sunderland, S.)

    Summers, Sir Spencer

    Turton, Rt. Hon. R. H.

    Wills, G. (Bridgwater)

    Sumner, W. D. M. (Orpington)

    Vane, W. M. F.

    Wood, Hon. R.

    Taylor, William (Bradford, N.)

    Vaughan-Morgan, J. K.

    Woollam, John Victor

    Teeling, W.

    Vickers, Miss Joan

    Yates, William (The Wrekin)

    Temple, John M.

    Wakefield, Edward (Derbyshire, W.)

    Thomas, Leslie (Canterbury)

    Wakefield, Sir Wavell (St. M'Iebone)

    TELLERS FOR THE AYES:

    Thomas, P. J. M. (Conway)

    Walker-Smith, Rt. Hon. Derek

    Mr. Barber and Mr. Finlay.

    NOES

    Ainsley, J. W.

    Griffiths, Rt. Hon. James (Llanelly)

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

    Albu, A. H.

    Griffiths, William (Exchange)

    Oliver, G. H.

    Allaun, Frank (Salford, E.)

    Grimond, J.

    Oram, A. E.

    Allen, Scholefield (Crewe)

    Hale, Leslie

    Orbach, M.

    Awbery, S. S.

    Hamilton, W. W.

    Owen, W. J.

    Bacon, Mist Alice

    Hannan, W.

    Padley, W. E.

    Baird, J.

    Harrison, J. (Nottingham, N.)

    Paget, R. T.

    Balfour, A.

    Hastings, S.

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

    Bellenger, Rt. Hon. F. J.

    Hayman, F. H.

    Paling, Will T. (Dewsbury)

    Benn, Hn. Wedgwood (Bristol, S.E.)

    Healey, Denis

    Pargiter, G. A.

    Benson, G.

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

    Parker, J.

    Beswick, Frank

    Herbison, Miss M.

    Parkin, B. T.

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

    Hewitson, Capt. M,

    Paton, John

    Blackburn, F.

    Hobson, C. R. (Keighley)

    Pearson, A.

    Blenkinsop, A.

    Holmes, Horace

    Pentland, N.

    Blyton, W. R.

    Holt, A. F.

    Price, Philips (Gloucestershire, W.)

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

    Houghton, Douglas

    Probert, A. R.

    Bowen, E. R. (Cardigan)

    Howell Charles (Perry Barr)

    Proctor, W. T.

    Bowles, F. G.

    Howell, Denis (All Saints)

    Randall, H. E.

    Boyd, T. C.

    Hubbard, T. F.

    Rankin, John

    Braddock, Mrs. Elizabeth

    Hughes, Cledwyn (Anglesey)

    Reeves, J.

    Brockway, A. F.

    Hughes, Emrys (S. Ayrshire)

    Reid, William

    Brown, Thomas (Ince)

    Hughes, Hector (Aberdeen, N.)

    Robens, Rt. Hon. A.

    Burke, W. A.

    Hunter, A. E.

    Roberts, Albert (Normanton)

    Burton, Miss F. E.

    Hynd, J. B. (Attercliffe)

    Roberts, Goronwy (Caernarvon)

    Butler, Herbert (Hackney, C.)

    Irvine, A. J. (Edge Hill)

    Robinson, Kenneth (St. Pancras, N.)

    Butler, Mrs. Joyce (Wood Green)

    Irving, Sydney (Dartford)

    Ross, William

    Carmichael, J.

    Isaacs, Rt. Hon. G. A.

    Royle, C.

    Castle, Mrs. B. A.

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

    Shinwell, Rt. Hon. E.

    Champion, A. J.

    Jenkins, Roy (Stechford)

    Silverman, Julius (Aston)

    Chetwynd, G. R.

    Johnson, James (Rugby)

    Silverman, Sydney (Nelson)

    Clunie, J.

    Jones, Rt. Hon. A. Creech(Wakefield)

    Simmons, C. J. (Brierley Hill)

    Coldrick, W.

    Jones, David (The Hartlepools)

    Skeffington, A. M.

    Collins, V. J. (Shoreditch & Finsbury)

    Jones, Elwyn (W. Ham, S.)

    Slater, J. (Sedgefield)

    Craddock, George (Bradford, S.)

    Kenyon, C.

    Smith, Ellis (Stoke, S.)

    Cronin, J. D.

    Key, Rt. Hon. C. W.

    Sorensen, R. W.

    Cullen, Mrs. A.

    King, Dr. H. M.

    Soskice, Rt. Hon. Sir Frank

    Dalton, Rt. Hon. H.

    Lawson, G. M.

    Sparks, J. A.

    Darling, George (Hillsborough)

    Ledger, R. J.

    Steele, T.

    Davies, Rt. Hon. Clement (Montgomery)

    Lee, Miss Jennie (Cannock)

    Stewart, Michael (Fulham)

    Davies, Ernest (Enfield, E.)

    Lewis, Arthur

    Stones, W. (Consett)

    Davies, Stephen (Merthyr)

    Lindgren, G. S.

    Strauss, Rt. Hon. George (Vauxhall)

    Dodds, N. N.

    Lipton, Marcus

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

    Donnelly, D. L.

    Logan, D. G.

    Summerskill, Rt. Hon. E.

    Dugdale, Rt. Hn. John(W. Brmwch)

    MacDermot, Niall

    Swingler, S. T.

    Dye, S.

    McGhee, H. G.

    Sylvester, G. O.

    Ede, Rt. Hon. J. C.

    McInnes, J.

    Taylor, Bernard (Mansfield)

    Edwards, Rt. Hon. John (Brighouse)

    McKay, John (Wallsend)

    Taylor, John (West Lothian)

    Edwards, Rt. Hon. Ness (Caerphilly)

    MacMillan, M. K. (Western Isles)

    Thomas, George (Cardiff)

    Edwards, W. J. (Stepney)

    Mahon, Simon

    Thomas, Iorwerth (Rhondda, W.)

    Evans, Albert (Islington, S.W.)

    Mainwaring, W. H.

    Tomney, F.

    Evans, Edward (Lowestoft)

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

    Ungoed-Thomas, Sir Lynn

    Fernyhough, E.

    Mann, Mrs. Jean

    Viant, S. P.

    Fienburgh, W.

    Marquand, Rt. Hon. H. A.

    Wade, D. W.

    Finch, H. J.

    Mason, Roy

    Weitzman, D.

    Fletcher, Eric

    Mayhew, C. P.

    Wells, Percy (Faversham)

    Forman, J. C.

    Mellish, R. J.

    West, D. G.

    Fraser, Thomas (Hamilton)

    Messer, Sir F.

    Wheeldon, W. E.

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

    Mikardo, Ian

    Wigg, George

    George, Lady Megan Lloyd(Car'then)

    Mitchison, G. R.

    Wilkins, W. A.

    Gibson, C. W.

    Monslow, W.

    Willey, Frederick

    Gooch, E. G.

    Moody, A. S.

    Williams, David (Neath)

    Gordon Walker, Rt. Hon. P. C.

    Morris, Percy (Swansea, W.)

    Williams, Rev. Llywelyn (Ab'tlllery)

    Greenwood, Anthony

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

    Williams, Ronald (Wigan)

    Grenfell, Rt. Hon. D. R.

    Mort, D. L.

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

    Grey, C. F.

    Mutley, F. W.

    Williams, W. R. (Openshaw)

    Griffiths, David (Rother Valley)

    Neal, Harold (Bolsover)

    Williams, W. T. (Barons Court)

    468

    469

    Wilson, Rt. Hon. Harold (Hyton)

    Woof, R. E.

    Zilliacus, K.

    Winterbottom, Richard

    Yattes, V. (Ladywood)

    Woodburn, Rt. Hon. A.

    Younger, Rt. Hon. K.

    TELLERS FOR THE NOES:

    Mr. Rogers and Mr. Deer.

    Mr. Mitchison: I beg to move, in page 7, line 32, to leave out from "amount" to the end of the subsection and to insert:
    "of the claimant's earned income in excess of the last-mentioned sum, being income assessed under Schedule E or income assessed under Case H of Schedule D in relation to which the claimant elects to have no further or other deduction made for expenses than would be allowed if that income were assessed under Schedule E."
    The Labour Party, to which 1 belong, has always been said to be the party of all workers by hand and by brain. We are also essentially reasonable people, and we recognise merit, and while we would riot agree that even by personal remuneration or personal earnings merit could always be measured in terms of income, there is, I think, a rough correlation between the two.
    The object of this Amendment is to do two things. One is to remove the limit on earned income for the one-ninth relief. The other is to confine that relief to certain cases. Those cases are those of two classes of people. The first is the person who is assessed under Schedule E because he derives this taxable income from an employment or office and, accordingly, is allowed to deduct only such expenses as are wholly, exclusively and necessarily incurred in the performance of his office. I am sure we ought all of us to know that rule, since it is the one which applies to the somewhat insufficient salaries of Members of Parliament.
    The second type of person to whom it applies is someone who is engaged in a profession or vocation, not in a trade, and is, therefore, assessed under Case II of Schedule D, and it applies to him only if he is willing to accept in relation to his expenses the Schedule E rule for deduction; that is to say, if he is not going to claim to deduct certain expenses which he could deduct under Schedule D because they were wholly and exclusively incurred, but could not deduct under Schedule E because they were not also necessarily incurred.
    That would make a very considerable difference to many persons at present engaged in a profession or vocation, and would confer on the Chancellor a benefit the amount of which I do not know and which has not, I think, been accurately
    470
    estimated in any of the reports on this matter.
    I want to make it perfectly clear at once that what we are putting forward is most but not quite all of the recommendation of the minority in the Final Report of the Royal Commission on the Taxation of Profits and Income, which constitutes Cmd. 9474. This recommendation occurs after considerable discussion of the matter in paragraph 129 on page 395 of the document. It consists really of the two cases I have mentioned, which appear there as two sub-paragraphs, (i) and (ii). We have not thought it necessary or advisable to deal, for the purpose of the case I am putting forward now, with the third, rather minor, recommendation in that part of the Report.
    I want to make it clear why we do this and why we adopt and agree with the reason that led the minority to give this second recommendation, after, I think it is fairly clear, some detailed consideration, and, no doubt, after some perfectly proper hesitation. They, like their colleagues, signed in the Second Report the type of recommendation—I am not on figures for the minute—that forms the basis of the Clause in the Bill, but they did so expressly and only as an interim measure and for purposes into which I need not go particularly now. The recommendation which I am now putting forward represents their final and considered opinion.
    It was really based. I think, on the fact that they were trying to draw a line as they themselves put it in paragraph 130, between incomes from work and incomes from property. This type of income, whether from an office or employment or from a profession or vocation, they regarded, broadly, as income from work. Trading income would, in most cases, be said to be income from property, not because it did not involve work to obtain, but because it depended on the existence and possession of a certain amount of property in whatever form it might be—stock in trade or a shop, or whatever was the centre of the trade generally.
    The members of the minority group came to the conclusion—and I must say that I agree with them—that there is a

    471
    broad distinction to be drawn tolerably easily and fairly within the limits of Schedule E and Case II of Schedule D, on the one hand, and the other arrangements for taxation under Schedule D.
    I propose to give one or two obvious instances, and the one I should like to take first is the case of doctors. I am thinking of skilled doctors working in the National Health Service. The present provision is that if a doctor is wholly employed in the National Health Service he is, of course, assessable under Schedule E and is only entitled to deduct expenses on the narrow, strict rule that applies to Schedule E. If, on the other hand, he is partly employed in the National Health Service and partly in some other aspect of his profession which does not involve an office or employment, he then has in that latter part of his employment something against which he can set more expenses than he would be allowed to deduct if he were simply employed full time in the National Health Service.
    The result of this is, I understand, that many doctors who would, if they had an entirely free choice in the matter, be willing to be employed full time in the National Health Service find the question of expenses so important to them that, for that reason and for the financial benefit they will get in that way, they must also take up some other employment.
    It seems to me that whatever the reasons may be for a person choosing to be employed part-time or full-time in a very valuable public service, they ought not really to include the question of taxation to the extent that, I understand, they do include it in a case of that sort. I would say, too, that the distinction between Schedule E and Schedule D and deductable expenses does at times, like most distinctions, become a little obscure and difficult to understand.
    To take a wholly different instance, I would tell the Committee that I happen to live in Scotland among a number of fishermen who have been held at one time to be partners and at another to be employees and whose position as between Schedule E and Schedule D has caused them to be occasionally assessed under the one Schedule and occasionally under the other. What sort of tossing up went
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    on in the office of the inspector of taxes to decide that question, I have never yet understood, but I know that in fact it happened—not the tossing up of the coin, but the double falls of taxation.
    6.45 p.m.
    It is not, therefore, an absolutely clear and certain line, but the line between Case II of Schedule D and the first case which deals with trade seems to me, on the whole, to be more certain, though there, too, the incidence of Profits Tax has shown us that there are quite a number of doubtful cases between what is a professional vocation and what is a trade. However, it is at least as workable a line as the one that at present exists between the two Schedules.
    Having stated to the best of my ability what it is that we want to do and having tried to adduce one or two instances, I propose to say a few words on what seem to us to be the good public reasons for this change. I repeat that, being a reasonable party and appreciating the value of the work of those who work by brain, we did while we were in office make arrangements for what, I hope, was an adequate payment—certainly a substantial payment—to persons holding highly responsible public employments.
    I need not go into the exact figures of salaries and the like, and I need not cross swords with anyone who is prepared to say that such people might have earned more in the employment of a company. I quite agree that that may well be the case, but, apart from that question, I should have said that we would all agree that those who were performing highly responsible work such as the chairman of a public board—one can think of many other cases, too—ought to receive a substantial salary. There can be no doubt about that. Indeed, we should regard employment of that type as far more likely to merit some concession in the field of taxation than money which arises, in the words of the minority Report, as income from property. I am not saying that because we are in this case dealing with wholly unearned income. I am merely saying that there is a distinction between those whose only stock in trade is their knowledge, their experience and their skill and those whose earnings will be conditioned to a considerable extent by the possession of other property.

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    I wish to make one other point. A man who carries on a successful business may well carry it on for quite a long time. If he has the place in which to carry on a business and the wherewithal to do so, the fact that he himself becomes a little less skilled or a little less expert will not really affect the extent of the income which he derives from it, or, at any rate, may not do so. But that is not so with those who are engaged in some professions or vocations.
    My hon. Friend the Member for Loughborough (Mr. Cronin) is, I understand, a surgeon, and I venture to say in his presence that the professional life of a skilled surgeon—I need hardly say that I mean only his professional life — is not as long as one would wish from the surgeon's point of view. He attains the requisite skill and experience only after some time and he does not remain in full possession of them for as long as a successful shopkeeper or trader may remain in possession of a substantial income from his shop. There is, therefore, a case not only in relation to employment, but also in relation to professional people, those engaged in a profession or vocation, for giving them the particular relief which this subsection seeks to give.
    The proposal of the Government is to limit the amount of one-ninth relief entirely by the amount of income. The Amendment seeks to substitute for that a limitation not by amount but by the character of the work done by the person. If, as we are told by the Government, the object of this whole provision is to encourage the man of intelligence and skill to remain in this country, and so on, I can only say that the Amendment seems much better calculated to do that than does the Government proposal.
    I am not now going into the general merits of the Clause, I am merely considering the two alternatives before us. Not only is the Amendment better calculated for that purpose, but, if one may venture to express an opinion on merit, I would say that the lad of parts who makes his own way and, without anything with which to start and having acquired little of substance in the world, continues to progress and exercise his skill and knowledge for the benefit of the community, is surely more deserving of particular relief even than the
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    successful trader. I feel that if the successful trader got Case I of Schedule D, if he got the earlier relief of two-ninths, from any point of view he would have had all he deserves. But there are professional people and highly skilled employed people who may fairly claim that they ought to get rather more.
    Mr. John Cronin: I wish to support my hon. and learned Friend the Member for Kettering (Mr. Mitchison) in drawing the attention of the Committee to the desirability of this Amendment. I do not propose to elaborate the example of the consulting surgeon, which was used by my hon. and learned Friend, because, as I am sure the Committee will realise, to do so might be somewhat embarrassing.
    I wish first to make it quite clear that the Amendment divides the prospective recipients of the Chancellor's benefit above an income of £4,005 a year into two groups. Those who receive the benefits are those who pay Surtax and are taxed under Schedule E and Case 11 of Schedule D, and those who will not receive benefit, those taxed under other Cases of Schedule D and other Schedules. In other words, this Amendment is intended to benefit the holder of a salaried office, or a person who holds a position whereby he derives his income from a vocation or a profession.
    The general purpose of the Amendment is to show the distinction between the person who earns an income from work alone, and those who gain an income from work and the ownership of property. Those people in the higher income groups who derive their income from work alone are a very deserving category. Among them are civil servants, officers of the Armed Forces, higher officers engaged in public administration, higher officers on the boards of nationalised industries, and even Ministers of the Crown. It is notorious that, compared, shall we say, with persons who derive their incomes to a greater extent from property, the people in this category receive incomes which are low.
    The Amendment would also benefit higher business executives and that is desirable because they play a tremendous part in advancing the economic welfare of the country. It puts a emphasis on work as opposed to part-work and part-ownership of property as the source of

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    income. It gives an advantage to a person who works under strain and difficulty. It recognises the merit of a person who can sing his way through the whole of a Wagner opera, or a lawyer who can conduct a difficult and intricate case which might last for several days in the courts.
    The Amendment also puts a premium on acquiring knowledge. As a rule the people who receive their income from the ownership of property, or from work and the ownership of property, do not have to spend much time and money acquiring knowledge, as do people taxed under Schedule D and Case I of Schedule E. The Amendment also emphasises that people taxed under Schedule E and Case II of Schedule D have incomes which are of a somewhat precarious nature. As my hon. and learned Friend pointed out, their income may be terminated because of ill-health, or a change of policy, or at the whim of some powerful superior. An example of such a precarious income would be that of Ministers in the present Government. There is an element of uncertainty about their future. I am sure that the Economic Secretary would agree because there has been a high turnover in his office during the last year or two. It is precarious also to the livelihood of dependants of such a person.
    The ownership of property is not nearly such a precarious matter. Generally speaking, property tends to depreciate in value only as a result of ill-management on the part of the owner. There are certain exceptions. An apposite example would be that of those unfortunate holders of Government securities who have seen the value of their securities drop enormously during recent times as a result of ill-advised market operations by the Government. There is a distinction between what happened to Government securities in the time of my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) and now—
    The Temporary Chairman (Sir Norman Hulbert): The hon. Gentleman must not go into that matter now.
    7.0 p.m.
    Mr. Cronin: I will not argue that further. Property may, and frequently does, increase in value, whereas those people taxed under Case II of Schedule D have no such source of substantial increase.
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    The Amendment also draws an important distinction. On the one side are those who deduct expenses from their income under Schedule E, in other words those who live under the unhappy phrase "wholly, necessarily and exclusively". and thereby suffer considerable hardship. It is understood to be impossible to give any general relaxation of the rules for expenses under Schedule E because that would open an enormous field for tax avoidance. On the other hand are the Surtax payers under Schedule D. They live in an entirely different world, in relation to expenses. They are bound only by Section 137 of the Income Tax Act, 1952, which declares that in computing profits or gains under Case I or Case II of Schedule D, no sum shall be deducted in respect of
    "any disbursements or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade, profession or vocation."
    In other words, there is no necessity to prove that the expense is necessary.
    That puts the fortunate claimant in an entirely different world. He can claim meals and drinks as expenses; he can entertain his friends, have an expensive car with a chauffeur, have servants and put in the costs of his home, as expenses; he can have holidays at home or abroad and entertainments at theatres or operas; he can even have a yacht, providing he says that the yacht is used for testing paints or wireless reception, and he can put it all down as expenses. He is in an entirely different and aristocratic world.
    The Amendment aims at redressing that rather heavy unbalance. It would seem that a better way to cope with the situation would be to narrow the confines of expenses allowed under Case I, Schedule D, but that is not practical politics because the same system applies, unfortunately, in many other countries. Traders in this country would be at a competitive disadvantage against traders abroad if we did that. Short of some form of international agreement it would be difficult to confine expenses under Case I, Schedule D.
    If this system cannot be stopped by narrowing the balance of expenses, the only effective answer is to give compensating advantages to other payers of Surtax who do not have the privilege

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    of the enormous accretion to their standard of living represented by expenses. It must be borne in mind that these expenses are not merely gifts to the taxpayer but produce distortions of the national economy, and for all practical purposes they are heavily subsidised by the Treasury. These various forms of luxurious and even voluptuous living are greatly subsidised by the Exchequer.
    The purpose of the Amendment is to bring about a differentiation to ease that very unfavourable position. The Chancellor has objected to numerous Amendments on the ground that they would cost the Treasury money. Here is an Amendment which would save him very substantial sums as well as secure the approbation of a very large part of this Committee. Whatever objection he may have to it he cannot possibly speak of its cost to public funds, The Amendment would bring about relief to some of the most hard-pressed members of the community in the upper income-groups as distinct from those who are less hard pressed. It would minimise a widespread injustice and smooth out a very unfortunate distortion in the economy.
    Mr. Roy Jenkins: The principle behind the Amendment is extremely simple but very important. I doubt whether any hon. Member would deny that there is inequity of. treatment between those who happen to be taxed under Schedule E and those who pay under Schedule D. There is no doubt that those under Schedule D are enormously more fortunately placed because of the difference in the expenses rule to which my hon. and learned Friend the Member for Kettering (Mr. Mitchison) and my hon. Friend the Member for Loughborough (Mr. Cronin) have referred.
    The difference is very substantial. Taking an income of £5,000 a year, the difference in net living standards between being assessed under one Schedule and being assessed under the other is not much less than £1,000 a year. That is a very big difference and is a very substantial cause of the widespread feeling of injustice. How can one deal with this manifest inequity?
    It could be suggested, as I think the majority Report of the Royal Commis-
    478
    sion did, that one should treat Schedule E payers as favourably in some respects as Schedule D payers are treated. The natural tendency of many hon. Members would be to be a little more generous to taxpayers generally rather than to be a little hard on some taxpayers. That is no doubt a worthy approach, but it is very dangerous and fundamentally undesirable. I hope that I shall carry the Chancellor of the Exchequer with me on this point.
    One of our major difficulties in this country is the erosion of the tax base. We have extremely high rates of direct taxation erected on a comparatively narrow base, and the taxation bears very heavily upon the unlucky members of the community, who are no doubt the majority, in all Income Tax ranges. Others have spending power altogether outside the range of taxation, which bears very much less heavily upon them.
    There is something almost dishonest about our present taxation system. We pretend that as a nation we are bearing rates of taxation very much higher than those which in fact apply. It is possible that if we had real rates of tax applying to the whole of the spending power in the country that were as high as they nominally are, a very serious situation of disincentive to working our capitalist or semi-capitalist economy would arise.
    In fact, we have nothing of the sort. We have a vast amount of incentive and it would be unwise to extend these exemptions further, narrow the tax base, and so still further go on with this rather dangerous self-deception by which we have high nominal rates but not real rates of tax so far as some people are concerned.
    Confronted with this undeniable inequity between those who pay taxes under one Schedule and those who pay under another, the correct approach may be to encourage so far as possible those who are under the lucky Schedule D to come under Schedule E for expenses; in other words, to broaden the tax basis. As an incentive to them to do so we could give an increased earned income allowance. There is much to be said in detail as well as in principle for that suggestion.
    No doubt the Government will find reasons for not accepting the Amendment in its present form, but I hope the Economic

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    Secretary can apply his mind to the inequity, tell us that the Government recognise that it exists and indicate how they propose to deal with it.
    Mr. Mall MacDermot: I wish to detain the Committee for only a short period to comment briefly on what strikes me as a remarkable fact about this Amendment. That is the complete silence of hon. Members on the back benches opposite. They have not spoken about it at all, yet, as I understand the Amendment, it is one which ought to appeal very dearly to their hearts.
    We have been hearing that the whole principle underlying this Clause is that there should be more room at the top and incentive for those people on whom the future of this nation is said to depend, those who by their exertions can get to the top and earn substantial sums by their own exertions. We hear of the higher executives, of the skilled scientists, inventors, etc., on whom our fate, it is said, depends. Those are precisely the people who would be covered by this Amendment.
    The Amendment proposes greater relief for them than has been proposed in the Budget. What is proposed is that above the limit of£4,000 a year the earned income of one-ninth should not be limited, as the Chancellor proposed, to roughly £10,000, but without limit provided—and provided only, of course—that it is related to income which is assessed under Schedule D, Case II, or under Schedule E, in other words, genuinely and solely earned income.
    What the Chancellor proposes—this is the reason for the silence of Members opposite on this Amendment—is that the concession, the relief, shall, although we are not allowed to say that he is giving anything away, be granted not merely to people who, it could be said, needed greater incentives, but to people deriving very large incomes from property. It is that which the right hon. Gentleman is called upon to justify in opposing this Amendment. He has to justify giving that relief to people who have unearned income, or earned income partly from property, to a very high figure indeed.
    While the Chancellor was making his intervention during discussion of the last Amendment, a vigorous and entertaining
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    intervention, I listened eagerly to hear what the answer was to be to the argument put forward by my hon. Friend the Member for Sowerby (Mr. Houghton), who asked why, when planning the whole structure of this Budget, the Chancellor chose to go beyond what the Royal Commission had proposed in terms of the extension of relief to earned income, bearing in mind that he did not see his way to being able to remove completely the pots and pans "Purchase Tax impositions put on in the autumn Budget of 1955? If the general economic situation and the need to restrain inflationary pressures did not permit of the removal of Purchase Tax from those items, why can an equivalent sum be granted to those in the range of income covered by the Chancellor's proposal?
    That point remains completely unanswered. The point remains, and is a valid one when we are considering this Amendment. Perhaps the Economic Secretary will give us the answer. The Amendment could be justified on the incentive argument and would limit this concession in the upper ranges to the spheres where the incentive argument, and the incentive argument alone, would apply. I hope that, in his reply, the Economic Secretary will give us, on that point, the answer which we have not yet received.
    7.15 p.m.
    The Economic Secretary to the Treasury (Mr. Nigel Birch): If he will forgive my saying so, I thought the hon. and learned Member for Kettering (Mr. Mitchison) was slightly below his usual high form in moving this Amendment. because he devoted a great deal of his speech to complaining about the rules under Schedule E, which are precisely the rules under which, by this Amendment, he proposes to put a large number of people. Towards the end of his speech he said he did not wish to discuss the merits of the Clause. The merits of the Clause are rather remarkable. Only the hon. Member for Lewisham, North (Mr. MacDermot) has pointed out the effect of the Clause.
    If one is under Schedule E, or Case II of Schedule D, one can get one-ninth of earned income relief up to£100,000, or£200,000, or£1 million if you happen to have it. That is rather a startling contribution from the Socialist Party to

    481
    mitigating the gross inequality we are constantly hearing that we suffer from. It would benefit the people we are not benefiting. We are not benefiting anyone with an earned income beyond £10,000 a year. The number of people in this class to be benefited is quite small. I understand that there are only 4,500 with an earned income of more than £10,000 a year.
    Mr. Mitchison: I rise to correct the right hon. Gentleman on one point. Valuable as the contribution from my hon. Friend the Member for Lewisham, North (Mr. MacDermot) was, I also said exactly the same. I think the right hon. Gentleman was a little below his usual standard of listening at that point.
    Mr. Birch: The hon. and learned Member certainly hid it under a bushel. It is quite a remarkable thing. I thought it was a tribute to the romantic figure of fiction invented by the Leader of the Opposition, the bachelor with £100,000 a year. I thought he was to come into his own again.
    This Amendment is unacceptable for two reasons. The first is that there is no sufficient reason for drawing this distinction between income under Schedule D, Case I. and income under Schedule D, Case II, and under Schedule E. I shall give my reasons for saying that. The hon. Member for Loughborough (Mr. Cronin) produced the argument, which is a common one in this context, that under Schedule E and Schedule D, Case II, one is paid for work, whereas in other cases there may be some contribution of capital. I do not think that is altogether valid. Take the case of Schedule D, Case II. Quite often there is a considerable element of capital in the income earned. For example, a solicitor, an accountant, or a surveyor can buy a share in a practice. In fact, they very often do. Doctors, we know, do not do so any longer, but it is in the case of the solicitors and accountants that the big money arises under Schedule D, Case II.
    Mr. Cronin: Let us get this right for the record. There is a very small proportion of the total number of prospective beneficiaries who would come under this Amendment, I said "in general", not "exclusively".
    Mr. Birch: All I was saying is that I do not think it is possible to determine how many there are, but very often there is a capital element under Schedule D, Case II. Under Schedule E a director of a private company may have a salary of £50,000 a year. The reason he has that salary is because he is a large shareholder in the company. Under this proposition he would get one-ninth earned income relief on the whole £50,000 and, in fact, have his income increased by £1,892 10s. over what he would get under the provisions proposed by the Chancellor.
    Is that man, are these people, in a more moral position than the man who is trading? Consider the man trying to start a business, perhaps working fourteen hours a day in a greengrocer's shop, or trying to start some engineering business—working and slaving away. I do not think the hon. Member for Loughborough is fair in suggesting that because such a man receives certain allowances he is living voluptuously.
    The first reason why we wish to reject the Amendment is that we think it seeks to draw an unreal distinction. The second reason is that we think it goes too far. It contributes too much to inequality. My right hon. Friend thought very carefully when he fixed the limits of his earned income concession, and he thought that what he was doing was reasonable, particularly reasonable for someone who follows the Prime Minister, who believes in the middle way. We feel that these extreme measures suggested by the Opposition go rather too far.
    I turn to the question of expense allowances. There must be some misconception about the differences between Schedule D, Case I, and Schedule E. Expense allowances under Schedule D, Case I, are not a special relief to those assessed under that Schedule. They are some compensation for them for what they have to do. Someone in that position has to go out, get the business and earn the profits. He can get these expense allowances only if the expenses are wholly and exclusively devoted to that purpose.
    Hon. Members have pointed out that the difference between the two rules is simply the word "necessarily". If a trader, or someone in a business position, under either Case of Schedule D, were

    483
    assessed under Schedule E, it is extremely probable that he would get most, if not all, of his expenses allowed to him as necessary.
    The reason the Revenue is so nervous about this is that if the Revenue had to decide in every case whether an expense was necessary, it would reach the stage of having to run somebody's business for him. If this arrangement were arrived at, we should have to wait some years before we knew what was to happen while case law was being built up both in the courts and in the practice of the Revenue.
    Very clearly, there are expenses under Schedule D which are necessary to a man which would not be necessary to an employee whose employer paid that sort of expense for him. It is therefore not as easy as hon. Members have suggested. There is this distinction which we cannot avoid.
    By definition, these expenses have to be justifiable under both business and accountancy principles. The system which is pursued about expenses is the same as it was under right hon. and hon. Members opposite. I have no doubt that it is the same as it was under the right hon. Member for Battersea, North (Mr. Jay), who is very anxious that people should not be able to get away with unnecessary expenses. The Revenue is extremely strict in these matters. It is a pity that people sometimes talk about Surtax and other taxes as being voluntary. I am bound to say that I myself have never found them voluntary. There must be some very clever people about if they find these taxes voluntary and, they must be on the other side of the Committee, because I have never heard of anyone on these benches who has got away with these things.
    Although the Amendment is a bold conception, although it does much credit to the forward-looking thoughts of right hon. and hon. Members opposite, and although my right hon. Friend will undoubtedly meditate upon their proposal—indeed, he has assured me that he will—we cannot accept it for the two reasons which I have given: we think it draws an unreal distinction and we think it is overbold and gives too much away too quickly.
    Mr. Gordon Walker: The Economic Secretary grotesquely misrepresented our Amendment and made some jokes about it. It is perfectly true, and it is the intention, that for people who have an employer and are taxed under Schedule E we propose to remove the upper limit of the earned income relief at one-ninth, but what the right hon. Gentleman did not say was that our Amendment would also reduce, indeed, destroy, the earned income relief which the Chancellor intends to give to people under Schedule D, Case 1. The right hon. Gentleman spoke as though we were merely giving huge concessions to all Surtax payers without distinction, when we are, in fact, making a very important distinction for Surtax and all Income Tax payers between Schedule D, Case 1, and Schedule E. Those who come under Schedule D, Case 2, would have an option, under our Amendment.
    This Amendment rests upon a distinction between two sorts of income, one of which is derived from work and the other of which is derived, in the main, from property. That is a distinction which the right hon. Gentleman can laugh at much as he wishes, but it has been very clearly argued in the minority Report of the Royal Commission. I presume that he has forgotten that he read it. That Report clearly says that that is the distinction which lies between those two sorts of income.
    The right hon. Gentleman did not deal with the main intent and purpose of our Amendment, which is to cope with what is admittedly one of the great blots upon our taxation system—the distinction between the treatment of expenses according to whether the income is earned as an employee or in a trade or profession. If a man is in a trade and is employed by a company, not as a director, in effect he receives very generous expenses. We have heard a great deal about them. If he is an employee or a professional person, however, he does not get them at all. This is a great cause of injustice.
    The right hon. Gentleman was excessively complacent about that, when we remember that both the majority and the minority of the Royal Commission condemned it and tried to find a way round that grave blot, that injustice, in our taxation system. He was far less than just to the purpose of our Amendment.

    485
    It is indeed bold, in that it tries to tackle that very grave injustice which rankles amongst Surtax and Income Tax payers.
    It is very bad indeed that Income Tax payers and Surtax payers who, in effect, can get no expense allowance at all to keep themselves up to date and to buy books to keep themselves going in their profession, should see business people able to indulge themselves in big dinners and entertainment because they are allowed to charge those expenses against Income Tax.
    The Royal Commission stated that that is a great source of injustice. The majority Report made one proposal for getting round it. which we do not think is a very good proposal; it would not remove the cause of injustice, and it would open the door to avoidance. A second proposal was put forward in the minority Report, and we are, in this Amendment, taking over the proposal in the minority Report, Incidentally, from its whole tone it was not the kind of Report which went out of its way to be tender to the better-off people in the country as against the less-well-off.
    The purpose of the Amendment is to remove a very serious blot upon our taxation system. The right hon. Gentleman did nothing at all to meet the criticisms which have been poured upon this anomaly in our taxation system by the courts, by the Royal Commission, and by almost everyone else who has commented on it. He seems to be ignorant of the fact that this is widely regarded by all observers and by many Income Tax payers as a very grave anomaly which can be removed only by the approach made in the Amendment. It would benefit some Surtax payers more than the Chancellor wishes but, of course, it would give far fewer benefits to very many more Surtax payers than he desires.
    7.30 p.m.
    We feel that this is an important matter. We are sorry that the Government treat it so complacently. It looks as though they do not intend to do anything at all to try to remedy this injustice, which springs from the way in which expenses are treated according to how the income is earned.
    We should like to know what the proposal would cost. We know what the minority Report said it would cost, but the proposal in that Report was wider
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    than is ours. It estimated the cost at something over£25 million and up to about £40 million. Our proposal does not go as far as that and, as I say, we should like to know, if the right hon. Gentleman can tell us, what this Amendment would cost. Even if it is a fairly high figure, we feel that this matter has a very high priority and that something should be done, because it is a bad thing when Income Tax payers have a sense of injustice; of being treated differently although they are apparently in the same position as the others. We admit that that normally results from the fact that there are two sorts of Income Tax fixed under these Schedules, and that the injustice cannot be abolished in such a simple way as by extending the definition under Schedule D.
    This Amendment is a bold way of dealing with the matter, I agree. Apparently, there is no other way of doing it. The right hon. Gentleman suggested that there was no other way of coping with this very grave anomaly. but unless he can give us a rather more forthcoming reply, showing greater recognition of the great injustice that there is in the existing situation—and if he does not like this way of dealing with it there may be some other way of overcoming the injustice—we feel that we shall have no alternative but to divide the Committee.
    Mr. Birch: The right hon. Member for Smethwick (Mr. Gordon Walker) asks about cost. In fact, as one of his hon. Friends pointed out, this Amendment would actually save a little money. It takes out of the benefit quite a large slice of people under Schedule D, Case I. It is not very easy to estimate, but the saving would be about£1 million. That assumes that all the Schedule E people go over, and that half of those coming under Schedule D, Case II, would opt for this proposal.
    Mr. Mitchison: Am I right in supposing that this audacious proposal would save the Revenue about £1 million, as compared with the tentative approach of the Chancellor?
    Mr. Birch: It would save that by redistributing it away from those with the lower incomes to those with higher incomes.
    Question put, That.the words proposed to be left out stand part of the Clause:—
    The Committee divided;Ayes 239, Noes 192.

    Division No. 124.]

    AYES

    [7.34 p.m.

    Agnew, Sir Peter

    Graham, Sir Fergus

    Mawby, R. L.

    Aitken, W. T.

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

    Medlicott, Sir Frank

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

    Green, A.

    Milligan, Rt. Hon. W. R.

    Alport, C. J. M.

    Gresham Cooke, R.

    Molson, Rt. Hon. Hugh

    Amery, Julian (Preston, N.)

    Grimond, J.

    Morrison, John (Salisbury)

    Anstruther-Gray, Major Sir William

    Grimston, Hon. John (St. Albans)

    Nabarro, G. D. N.

    Arbuthnot, John

    Grimston, Sir Robert (Westbury)

    Nairn, D. L. S.

    Armstrong, C. W.

    Grosvenor, Lt.-Col. R. G.

    Neave, Airey

    Ashton, H.

    Gurden, Harold

    Nicholson, Godfrey (Farnham)

    Atkins, H. E.

    Harris, Reader (Heston)

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

    Baldock, Lt.-Cmdr. J. M.

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

    Oakshott, H. D.

    Baldwin, A. E.

    Harvey, John (Walthamstow, E.)

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

    Balniel, Lord

    Harvie-Watt, Sir George

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

    Barber, Anthony

    Hay, John

    Orr, Capt. L. P. S.

    Barlow, Sir John

    Heald, Rt. Hon. Sir Lionel

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

    Barter, John

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

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

    Baxter, Sir Beverley

    Henderson, John (Cathcart)

    Osborne, C.

    Beamish, Maj. Tufton

    Hesketh, R. F.

    Page, R. G.

    Bell, Philip (Bolton, E.)

    Hill, Rt. Hon. Charles (Luton)

    Pannell, N. A. (Kirkdale)

    Bell, Ronald (Bucks, S.)

    Hill, Mrs. E. (Wythenshawe)

    Partridge, E.

    Bennett, Dr. Reginald

    Hill, John (S. Norfolk)

    Peyton, J. W. W.

    Bevins, J. R. (Toxteth)

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

    Plckthorn, K. W. M.

    Bidgood, J. C.

    Holland-Martin, C. J.

    Pike, Miss Mervyn

    Birch, Rt. Hon. Nigel

    Holt, A. F.

    Pitman, I. J.

    Black, C. W.

    Hornby, R. P.

    Pitt, Miss E. M.

    Body, R. F.

    Hornsby-Smith, Miss M. P.

    Powell, J. Enoch

    Bowen, E. R. (Cardigan)

    Horobin, Sir Ian

    Price, Henry (Lewisham, W.)

    Boyle, Sir Edward

    Howard, Hon. Greville (St. Ives)

    Prior-Palmer, Brig. O. L.

    Braine, B. R.

    Howard, John (Test)

    Raikes, Sir Victor

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

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

    Ramsden, J. E.

    Brooman-White, R. C.

    Hughes-Young, M. H. C.

    Rawlinson, Peter

    Browne, J. Nixon (Craigton)

    Hurd, A. R.

    Rees-Davies, W. R.

    Bryan, P.

    Hutchison, Sir James (Scotstoun)

    Remnant, Hon. P.

    Bullus, Wing Commander E. E.

    Hyde, Montgomery

    Renton, D. L. M.

    Burden, F. F. A.

    Hylton-Foster, Rt. Hon. Sir Harry

    Ridsdale, J. E.

    Butcher, Sir Herbert

    Iremonger, T. L.

    Rippon, A. G. F.

    Campbell, Sir David

    Irvine, Bryant Godman (Rye)

    Rodgers, John (Sevenoaks)

    Chichester-Clark, R.

    Jennings, J. C. (Burton)

    Roper, Sir Harold

    Clarke, Brig. Terence (Portsmth, W.)

    Johnson, Dr. Donald (Carlisle)

    Ropner, Col. Sir Leonard

    Cole, Norman

    Johnson, Eric (Blaokley)

    Schofield, Lt.-Col. W.

    Conant, Maj. Sir Roger

    Joseph, Sir Keith

    Scott-Miller, Cmdr. R.

    Cooke, Robert C.

    Joynson-Hicks, Hon. Sir Lancelot

    Sharples, R. C.

    Cooper, A. E.

    Keegan, D.

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

    Cordeaux, Lt.-Col. J. K.

    Kerby, Capt. H. B.

    Smithers, Peter (Winchester)

    Corfield, Capt. F. V.

    Kerr, H. W,

    Smyth, Brig. Sir John (Norwood)

    Craddook, Beresford (Spelthorne)

    Kimball, M.

    Spearman, Sir Alexander

    Crosthwaite-Eyre, Col. O. E.

    Kirk, P. M.

    Speir, R. M.

    Crowder, Sir John (Finchley)

    Lagden, G. W.

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

    Cunningham, Knox

    Leather, E. H. C.

    Stevens, Geoffrey

    Currie, G. B. H.

    Leavey, J. A.

    Steward, Harold (Stockport, S.)

    Dance, J. C. G.

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

    Steward, Sir William (Woolwich, W.)

    Davies, Rt. Hon. Clement(Montgomery)

    Legh, Hon. Peter (Petersfield)

    Stoddart-Scott, Col. M.

    D' Avigdor-Goldsmid, Sir Henry

    Lindsay, Hon. James (Devon, N.)

    Storey, S.

    Deedes, W. F.

    Linstead, Sir H. N.

    Studholme, Sir Henry

    Digby, Simon Wingfield

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

    Summers, Sir Spencer

    Dodds-Parker, A. D.

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Sumner, W. D. M. (Orpington)

    Donaldson, Cmdr. C. E. McA.

    Longden, Gilbert

    Taylor, William (Bradford, N.)

    Doughty, C. J. A.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Teeling, W.

    Drayson, G. B.

    Lucas, P. B. (Brentford & Chiswick)

    Temple, John M.

    du Cann, E. D. L.

    Lucas-Tooth, Sir Hugh

    Thomas, Leslie (Canterbury)

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

    McAdden, S. J.

    Thomas, P. J. M. (Conway)

    Duthie, W. S.

    Macdonald, Sir Peter

    Thompson, Kenneth (Walton)

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

    McKibbin, A. J.

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

    Errington, Sir Eric

    Mackie, J. H. (Galloway)

    Thorneycroft, Rt. Hon. P.

    Farey-Jones, F. W.

    McLaughlin, Mrs. P.

    Thornton-Kemsley, C. N.

    Fell, A.

    Maclean, Fitzroy (Lancaster)

    Tiley, A. (Bradford, W.)

    Fisher, Nigel

    MacLeod, John (Ross & Cromarty)

    Turton, Rt. Hon. R. H.

    Fletcher-Cooke, C.

    Macmillan, Rt. Hn. Harold(Bromley)

    Vane, W. M. F.

    Fort, R.

    Macmillan, Maurice (Halifax)

    Vaughan-Morgan, J. K.

    Garner-Evans, E. H.

    Macpherson, Niall (Dumfries)

    Vickers, Miss Joan

    George, J. C. (Pollok)

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

    Wade, D. W.

    Gibson-Watt, D.

    Maitland, Hon. Patrick (Lanark)

    Wakefield, Edward (Derbyshire, W.)

    Glover, D.

    Manningham-Buller, Rt. Hn. Sir R.

    Wakefield, Sir Wavell (St. M'lebone)

    Godber, J. B.

    Markham, Major Sir Frank

    Walker-Smith, Rt. Hon. Derek

    Gomme-Duncan, Col. Sir Alan

    Mathew, R.

    Wall, Major Patrick

    Goodhart, Philip

    Maude, Angus

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

    Cower, H. R.

    Maudling, Rt. Hon. R.

    Ward, Dame Irene (Tynemouth)

    Watkinson, Rt. Hon. Harold

    Wills, G. (Bridgwater)

    TELLERS FOR THE AYES:

    Webbe, Sir H.

    Wood, Hon. R.

    Colonel J. H. Harrison and

    Whitelaw, W. S. I.

    Woollam, John Victor

    Mr. Finlay

    Williams, Paul (Sunderland, S.)

    Yates, William (The Wrekin)

    NOES

    Ainsley, J. W.

    Hannan, W.

    Padley, W. E.

    Albu, A. H.

    Harrison, J. (Nottingham, N.)

    Paget, R. T.

    Allaun, Frank (Salford, E.)

    Hastings, S.

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

    Allen, Scholefield (Crewe)

    Hayman, F. H.

    Paling, Will T. (Dewsbury)

    Awbery, S. S.

    Healey, Denis

    Palmer, A. M, F.

    Baird, J.

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

    Pannell, Charles (Leeds, W.)

    Balfour, A.

    Herbison, Miss M.

    Parker, J.

    Bellenger, Rt. Hon. F. J.

    Hewitson, Capt. M.

    Parkin, B. T.

    Benn, Hn. Wedgwood (Bristol, S.E.)

    Houghton, Douglas

    Paton, John

    Benson, G.

    Howell, Charles (Perry Barr)

    Pearson, A.

    Beswick, Frank

    Howell, Denis (All Saints)

    Pentland, N.

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

    Hubbard, T. F.

    Probert, A. R.

    Blackburn, F.

    Hughes, Cledwyn (Anglesey)

    Proctor, W. T.

    Blenkinsop, A.

    Hughes, Emrys (S. Ayrshire)

    Randall, H. E.

    Blyton, W. R.

    Hughes, Hector (Aberdeen, N.)

    Rankin, John

    Boardman, H.

    Hunter, A. E.

    Redhead, E. C.

    Boyd, T. C.

    Hynd, J. B. (Attercliffe)

    Reeves, J.

    Brockway, A. F.

    Irvine, A. J. (Edge Hill)

    Reid, William

    Brown, Thomas (Ince)

    Irving, Sydney (Dartford)

    Roberts, Goronwy (Caernarvon)

    Burke, W. A.

    Isaacs, Rt. Hon. G. A.

    Robinson, Kenneth (St. Pancras, N.)

    Burton, Miss F. E.

    Janner, B.

    Rogers, George (Kensington, N.)

    Butler, Herbert (Hackney, C.)

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

    Ross, William

    Butler, Mrs. Joyce (Wood Green)

    Jeger, George (Goole)

    Royle, C.

    Carmichael, J.

    Jenkins, Roy (Stechford)

    Shinwell, Rt. Hon. E.

    Champion, A. J.

    Johnson, James (Rugby)

    Silverman, Julius (Aston)

    Chapman, W. D.

    Jones, David (The Hartlepools)

    Silverman, Sydney (Nelson)

    Chetwynd, G. R.

    Jones, Elwyn (W. Ham, S.)

    Simmons, C. J. (Brierley Hill)

    Clunie, J.

    Kenyon, C.

    Skeffington, A. M.

    Collick, P. H. (Birkenhead)

    Key, Rt. Hon. C. W.

    Slater, J. (Sedgefield)

    Collins, V. J. (Shoreditch & Finsbury)

    King, Dr. H. M.

    Smith, Ellis (Stoke, S.)

    Craddock, George (Bradford, S.)

    Lawson, G. M.

    Sorensen, R. W.

    Cronin, J. D.

    Ledger, R. J.

    Steele, T.

    Crossman, R, H. S.

    Lee, Frederick (Newton)

    Stones, W. (Consett)

    Cullen, Mrs. A.

    Lee, Miss Jennie (Cannock)

    Strauss, Rt. Hon, George (Vauxhail)

    Dalton, Rt. Hon. H.

    Lewis, Arthur

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

    Darling, George (Hillsborough)

    Lindgren, G. S.

    Swingler, S. T.

    Davies, Ernest (Enfield, E.)

    Logan, D. G.

    Sylvester, G. O.

    Davies, Stephen (Merthyr)

    Mabon, Dr. J. Dickson

    Taylor, Bernard (Mansfield)

    Deer, G.

    MacDermot, Niall

    Taylor, John (West Lothian)

    Dodds, N. N.

    McGhee, H. G.

    Thomas, George (Cardiff)

    Donnelly, D. L.

    McInnes, J.

    Thomas, Iorwerth (Rhondda, W.)

    Dugdale, Rt. Hn. John (W. Brmwch)

    McKay, John (Wallsend)

    Thomson, George (Dundee, E.)

    Dye, S.

    MacMillan, M. K. (Western Isles)

    Tomney, F.

    Ede, Rt. Hon. J. C.

    Marion, Simon

    Ungoed-Thomas, Sir Lynn

    Edwards, Rt. Hon. John (Brighouse)

    Mainwaring, W. H.

    Viant, S. P.

    Edwards, Rt. Hon. Ness (Caerphilly)

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

    Weitzman, D.

    Edwards, Robert (Bilston)

    Mann, Mrs. Jean

    Wells Percy (Faversham)

    Edwards, W. J. (Stepney)

    Marquand, Rt. Hon. H. A.

    West, D. G.

    Evans, Albert (Islington, S.W.)

    Mason, Roy

    Wheeldon, W. E.

    Evans, Edward (Lowestoft)

    Mayhew, C. P.

    Wilcook, Group Capt. C. A. B.

    Fernyhough, E.

    Mellish, R. J.

    Wilkins, W. A.

    Fienburgh, W.

    Messer, Sir F.

    Willey, Frederick

    Finch, H. J.

    Mikardo, Ian

    Williams, David (Neath)

    Fletcher, Eric

    Mitchison, G. R.

    Williams, Rev. Llywelyn (Ab'tillery)

    Forman, J. C.

    Monslow, W.

    Williams, Ronald (Wigan)

    Fraser, Thomas (Hamilton)

    Moody, A. S.

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

    George, Lady Megan Lloyd (Car'then)

    Morris, Percy (Swansea, W.)

    Williams, W. R. (Openshaw)

    Gibson, C. W.

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

    Williams, W. T. (Barons Court)

    Gooch, E. G.

    Mort, D. L.

    Winterbottom, Richard

    Gordon Walker, Rt. Hon. P. C.

    Moyle, A.

    Woodburn, Rt. Hon. A.

    Grenfell, Rt. Hon. D. R.

    Mulley, F. W.

    Yates, V. (Ladywood)

    Grey, C. F.

    Neal, Harold (Bolsover)

    Zilliacus, K.

    Griffiths, David (Rother Valley)

    Oliver, G. H.

    Hale, Leslie

    Orbach, M.

    TELLERS FOR THE NOES:

    Hamilton, W. W.

    Owen, W. J.

    Mr. Holmes and Mr. J. T. Price.

    Mr. Houghton: I beg to move, in page 7, line 39, at the end to insert:
    "and there shall be added after the reference to age sixty-five years and upwards in subsection (2) the words (or, in the case of a woman who would be entitled to the lower relief under subsection (1) of section two hundred and ten of the Income Tax Act, 1952, sixty years or upwards)'".
    The Chairman: It might be convenient if at the same time the hon. Member dealt with the Amendment to Clause 11, page 8, line 26, at the end to insert:
    "(or, in the case of a woman who would he entitled to the lower relief under subsection (1) of section two hundred and ten of the Income Tax Act, 1952, sixty years or upwards)".
    Mr. Houghton: As you say, Sir Charles, I think that associated with the Amendment which I am moving is the Amendment to Clause 11 to which you have just referred.
    This is a simple Amendment, and I need only briefly outline its purpose. At the present time age relief is granted to a person who is over 65 in the year of assessment, and in the case of a married couple where either spouse is over 65 in the year of assessment. As the Committee is aware, if the age qualification is satisfied and total income is within the limits prescribed, then earned income relief is given even on unearned income.
    The principle behind this was acknowledged years ago when pensions were treated as earned income, being deferred pay, whereas those who had probably been in business or in a profession and had saved for their retirement were penalised by having their investment income taxed as unearned income, when in their view it was as much their pension as that received by one who had been in pensionable employment.
    7.45 p.m.
    Age relief was first started in the Income Tax year 1925–26. At that time the retirement age for women was the same as for men. In fact, it was, I think, on 4th January, 1926, that the Widows and Orphans and Old-age Pensions Contributory Scheme began. Then the pension age for both men and women was 65. It was not surprising, therefore, that when age relief was introduced into the Income Tax code what was the pensionable age for men and women under that scheme should be taken for the purpose of this relief.
    During the war the pension age for women was reduced to 60 but no corresponding adjustment has ever been made in the age relief, and now in Clause 11 the Chancellor is proposing a new form of relief to old people called age exemption; and there, total exemption from tax up to a certain limit of income is to be conceded on the same age conditions which applied to age relief.
    This Amendment seeks to lower the qualifying age for a single woman or a widow from 65 to 60. It does not propose to interfere with the present arrangement whereby age relief or, under the new proposal of Clause 11, age exemption may be granted where either husband
    492
    or wife reaches the age of 65. I think it would complicate matters greatly if we were to try to distinguish between husband and wife for the granting of age relief or age exemption. It would mean complicated questions of allocation of income, and it would be extremely difficult to know how the relief could be equitably given. Therefore, I think that rough justice will be done if the qualifying age for the single woman or widow is reduced to 60, and I sincerely hope that the right hon. Gentleman will be able to meet the purpose of this Amendment.
    This is a small matter. It is fully in line with the right hon. Gentleman's own desires to give additional tax reliefs to older people especially who are living on small or moderate incomes, and especially those who have been thrifty in their working years and have saved for their old age. That is really all I need say about the purpose of this Amendment. I hope that the Chancellor is now going to begin on a series of minor concessions, because surely this is one with which he must sympathise. If there is any alternative or better way of dealing with it than the one proposed in the Amendment, clearly we shall be very glad if he will consider the matter, but we hope that he will be able to give a favourable response to this Amendment.
    The Financial Secretary to the Treasury (Mr. J. Enoch Powell): As the hon. Member for Sowerby (Mr. Houghton) has said, we are here considering both the existing old-age relief and also the new exemption for elderly taxpayers which is contained in the next Clause. For both of those reliefs the qualification is the age either of the individual or, in the case of married persons, of the older of the spouses. Under the present law the qualifying age is 65 for both sexes.
    The great difficulty about the proposed change is that it would create a discrimination in the application of that qualification between the woman who is a single woman and the woman who is a spouse. Of two women of the same age and of the same income, one would attract the relief if single or widowed and the other would not, if it were a question of considering her as one of a married couple.
    When this matter was last raised on an earlier Finance Bill, I think by the same hon. Member four years ago, the

    493
    right hon. Gentleman the Leader of the Opposition suggested that this would be a proper matter for the Royal Commission to direct its attention to, and expressed the hope that it would give its opinion on it in its Report. This in fact it did.
    Paragraph 204 of the Second Report of the Royal Commission said:
    "We see no reason that would require an alteration in the measure of relief—
    this was directed only to old-age relief—
    "or in the conditions of qualification. In particular, we should not approve of the suggestion that discrimination should be introduced by permitting a single woman or widow to qualify for the relief at the lower age of 60."
    The hon. Gentleman, therefore, has appealed unto Caesar and from Caesar he has had that reply. It may perhaps appear an anomaly that the qualification for the payment of post-war credits, for instance, or the qualification, as the hon. Gentleman mentioned, for the National Insurance retirement pension is on a different basis, the basis of age of 60 for a woman and 65 for a man; but those two cases are quite different from this one. The qualification for payment of post-war credits does not create the discrimination that this proposal would do, for a woman age 60 can claim her post-war credits whether a single person, a widow or a married woman.
    Looking at the arrangements for retirement pensions, which I suggest to the Committee are really an entirely separate matter, there the question is the qualification of the contributor who has earned and qualified for a pension by his contributions. There, of course, it is the woman, if she is the contributor, and the retirement pensioner, who earns the pension at the age of 60, whereas in the case of a married couple, unless the woman has been contributing in her own right, it is the man who qualifies for pension at the age of 65. There is, therefore. no true analogy between the existing arrangement which prescribes 60 for a woman and 65 for a man. On the contrary, by introducing the age of 60 for a spinster or a widow in this case we should he introducing a discrimination which does not exist, and I think that we should arouse considerable ill-feeling and resentment on the part of married women at
    494
    the age of 60 who, and whose spouses, would otherwise qualify.
    Mr. Houghton: I am sorry that the Financial Secretary has not given a more favourable reply. I was, of course, aware of what the Royal Commission said. I did not appeal to Caesar and I do not personally feel bound by the verdict of the Royal Commission on a matter of this kind. I think that we are all free to look at the Royal Commission's recommendations in the light of current opinion or of conditions. The Chancellor claims that right. He said in his Budget statement that he proposed to go a great deal further than the Royal Commission, and no one will hold him to what the Royal Commission said in paragraph 204.
    The Financial Secretary has not commented on a possible way of removing the anomaly between single and married women There is, of course, a way, difficult administratively, no doubt, but a married woman reaching the age of 60 could be taxed on her own income and given the benefit of proportionate relief on that. It is not beyond the powers of the Inland Revenue to do the mathematics of a problem like that, although I agree that it would be rather difficult.
    It seems anomalous that a relief given to correspond with retirement pensions of all kinds should still be retained at this higher level when for other purposes women have been given a lower retirement age. As the hon. Gentleman has just said, repayment of post-war credits is related to pensionable age and these things run together somewhat. It is a small matter, although, in our view, an important one. We are sorry that we apparently have not yet begun the constructive Committee stage of this Bill. If we do not begin it soon, we shall not have it, because there will not be enough left upon which the Chancellor will be able to do his constructive work. So, as a mark of our disapprobation and of the unforthcoming attitude of the Front Bench opposite, I must advise my hon. and right hon. Friends to divide the Committee on this Amendment.
    Question put,That those words be there inserted:—
    The Committee divided:Ayes 187, Noes 229.

    Division No. 125.]

    AYES

    [7.56 p.m.

    Ainsley, J. W.

    Hale, Leslie

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

    Albu, A. H.

    Hamilton, W. W.

    Paling, Will T. (Dewsbury)

    Allaun, Frank (Salford, E.)

    Hannan, W.

    Palmer, A. M. F.

    Allen, Scholefield (Crewe)

    Harrison, J. (Nottingham, N.)

    Panned, Charles (Leeds, W.)

    Awbery, S. S.

    Hastings, S.

    Pargiter, G. A.

    Baird, J.

    Hayman, F. H.

    Parker, J.

    Balfour, A.

    Healey, Denis

    Parkin, B. T.

    Bellenger, Rt. Hon. F. J.

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

    Paton, John

    Benton, G.

    Hewltson, Capt. M.

    Pearson, A.

    Beswiek, Frank

    Holt, A. F.

    Pentland, N.

    Blackburn, F.

    Houghton, Douglas

    Probert, A. R.

    Blenkintop, A.

    Howell, Charles (Perry Barr)

    Proetor, W. T.

    Blyton, W. R.

    Hubbard, T. F.

    Randall, H. E.

    Boardman, H.

    Hughes, Cledwyn (Anglesey)

    Rankin, John

    Bowen, E. R. (Cardigan)

    Hughes, Emrys (S. Ayrshire)

    Redhead, E. C.

    Boyd, T. C.

    Hughes, Hector (Aberdeen, N.)

    Reeves, J.

    Brookway, A. F.

    Hunter, A. E.

    Reid, William

    Broughton, Dr. A. D. D.

    Hynd, J. B. (Attercliffe)

    Roberts, Goronwy (Caernarvon)

    Brown, Thomas (Ince)

    Irvine, A. J. (Edge Hill)

    Robinson, Kenneth (St. Pancras, N.)

    Burke, W. A.

    Irving, Sydney (Dartford)

    Rogers, George (Kensington, N.)

    Burton, Miss F. E.

    Isaacs, Rt. Hon. G. A.

    Ross, William

    Butler, Herbert (Hackney, C.)

    Janner, B.

    Royle, C.

    Butler, Mrs. Joyce (Wood Green)

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

    Shinwell, Rt. Hon. E.

    Carmichael, J.

    Johnson, James (Rugby)

    Silverman, Julius (Aston)

    Champion, A. J.

    Jones, David (The Hartlepools)

    Silverman, Sydney (Nelson)

    Chapman, W. D.

    Jones, Elwyn (W. Ham, S.)

    Simmons, C. J. (Brierley Hill)

    Chetwynd, G. R.

    Kenyon, C.

    Skeffington, A. M.

    Clunie, J.

    Key, Rt. Hon. C. W.

    Slater, J. (Sedgefield)

    Colllok, P. H. (Birkenhead)

    King, Dr. H. M.

    Smlth, Ellis (Stoke, S.)

    Collins, V. J. (Shoreditch & Finsbury)

    Lawson, G. M.

    Sorensen, R. W.

    Craddook, George (Bradford, 8.)

    Ledger, R. J.

    Steele, T.

    Cronin, J. D.

    Lee, Frederiok (Newton)

    Stones, W. (Consett)

    Cullen, Mrs. A.

    Lewis, Arthur

    Strauss, Rt. Hon. George (Vauxhall)

    Dalton, Rt. Hon. H.

    Lindgren, G. S.

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

    Darling, George (Hillsborough)

    Logan, D. G.

    Swingler, S. T.

    Davies, Rt. Hon. Clement(Montgomery)

    Mabon, Dr. J. Dickson

    Sylvester, G. O.

    Daviet, Ernest (Enfield, E.)

    MacDermot, Niall

    Taylor, Bernard (Mansfield)

    Davies, Stephen (Merthyr)

    McGhee, H. G.

    Taylor, John (West Lothian)

    Deer, G.

    McKay, John (Wallsend)

    Thomas, Iorwerth (Rhondda, W.)

    Dodds, N. N.

    MacMillan, M. K. (Western Isles)

    Thomson, George (Dundee, E.)

    Donnelly, D. L.

    Mahon, Simon

    Tomney, F.

    Dugdale, Rt. Hn. John (W. Brmwch)

    Mainwaring, W. H.

    Ungoed-Thomas, Sir Lynn

    Dye, S.

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

    Viant, S. P.

    Ede, Rt. Hon. J. C.

    Mann, Mrs. Jean

    Wade, D. W.

    Edwards, Rt. Hon. John (Brighouse)

    Mason, Roy

    Weitzman, D.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Mayhew, C. P.

    Wells, Percy (Faversham)

    Edwards, Robert (Bilston)

    Mellish, R. J.

    West, D. G.

    Edwards, W.J. (Stepney)

    Messer, Sir F.

    Wheeldon, W. E.

    Evans, Albert (Islington, S.W.)

    Mikardo, Ian

    Wiloock, Group Capt. C. A. B.

    Evans, Edward (Lowestoft)

    Mitchison, G. R.

    Wilkins, W. A.

    Fernyhough, E.

    Monalow, W.

    Willey, Frederick

    Fienburgh, W.

    Moody, A. S.

    Williams, David (Neath)

    Finch, H. J.

    Morris, Percy (Swansea, W.)

    Williams, Rev. Llywelyn (Ab'tlllery)

    Fletcher, Eric

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

    Williams, Ronald (Wigan)

    Forman, J. C.

    Mort, D. L.

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

    George, Lady Megan Lloyd(Car'then)

    Moyle, A.

    Williams, W. R. (Openshaw)

    Gibson, C. W.

    Mulley, F. W.

    Williams, W. T. (Barons Court)

    Gooch, E. G.

    Neal, Harold (Bolsover)

    Winterbottom, Richard

    Gordon Walker, Rt. Hon. P. C.

    Oliver, G. H.

    Woodburn, Rt. Hon. A.

    Grenfell, Rt. Hon. D. R.

    Orbach, M.

    Yates, V. (Ladywood)

    Grey, C. F.

    Owen, W. J.

    Zilliacus, K.

    Griffiths, David (Rother Valley)

    Padley, W. E.

    Grimond, J.

    Paget, R. T.

    TELLERS FOR THE AYES:

    Mr. Holmes and Mr. J. T. Price.

    NOES

    Agnew, Sir Peter

    Barter, John

    Brooman-White, R. C.

    Aitken, W. T.

    Baxter, Sir Beverley

    Browne, J. Nixon (Craigton)

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

    Beamish, Maj. Tufton

    Bryan, P.

    Alport, C. J. M.

    Bell, Philip (Bolton, E.)

    Bullus, Wing Commander E. E.

    Anstruther-Gray, Major Sir William

    Bell, Ronald (Buoks, S.)

    Burden, F. F. A.

    Arbuthnot, John

    Bennett, Dr. Reginald

    Butcher, Sir Herbert

    Armstrong, C. W.

    Bevins, J. R. (Toxteth)

    Campbell, Sir David

    Ashton, H.

    Bidgood, J. C.

    Chichester-Clark, R.

    Atkins, H. E.

    Birch, Rt. Hon. Nigel

    Clarke, Brig. Terence (Portsmth, W.)

    Baldook, Lt.-Cmdr. J. M.

    Black, C. W.

    Cole, Norman

    Baldwin, A. E.

    Body, R. F.

    Conant, Maj. Sir Roger

    Balniel, Lord

    Boyle, Sir Edward

    Cooke, Robert C.

    Barber, Anthony

    Braine, B. R.

    Cordeaux, Lt.-Col. J. K.

    Barlow, Sir John

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

    Corfield, Capt. F. V.

    496

    497

    Craddock, Beresford (Spelthorne)

    Iremonger, T. L.

    Pitt, Miss E. M.

    Crosthwaite-Eyre, Col. O. E.

    Irvine, Bryant Godman (Rye)

    Powell, J. Enoch

    Crowder, Sir John (Flnchley)

    Jennings, J. C. (Burton)

    Price, Henry (Lewisham, W.)

    Cunningham, Knox

    Johnson, Dr. Donald (Carlisle)

    Prior-Palmer, Brig. O. L.

    Currie, G. B. H.

    Johnson, Eric (Blackley)

    Ralkes, Sir Victor

    Danoe, J. C. G.

    Joseph, Sir Keith

    Ramsden, J. E.

    D'Avigdor-Goldsmld, Sir Henry

    Joynson-Hicks, Hon. Sir Lancelot

    Rawlinson, Peter

    Deedes, W. F.

    Keegan, D.

    Rees-Davies, W. R.

    Digby, Simon Wingfield

    Kerby, Capt. H. B.

    Remnant, Hon. P.

    Dodds-Parker, A. D.

    Kerr, H. W.

    Renton, D. L. M.

    Donaldson, Cmdr. C. E. McA.

    Kimball, M.

    Ridsdale, J. E.

    Doughty, C, J. A.

    Kirk, P. M.

    Rippon, A. G. F

    Drayson, G. B.

    Lagden, G. W.

    Rodgers, John (Sevenoaks)

    du Cann, E. D. L.

    Leather, E. H. C.

    Roper, Sir Harold

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

    Leavey, J. A.

    Ropner, Col, Sir Leonard

    Duthie, W. S.

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

    Schofleld, Lt.-Col. W.

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

    Legh, Hon. Peter (Petersfield)

    Scott-Miller, Cmdr. R.

    Errington, Sir Eric

    Lindsay, Hon. James (Devon, N.)

    Sharples, R. C.

    Farey-Jones, F. W,

    Linstead, Sir H. N.

    Shepherd, William

    Fintay, Graeme

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

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

    Fisher, Nigel

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Smithers, Peter (Winchester)

    Fort, R.

    Longden, Gilbert

    Smyth, Brig. Sir John (Norwood)

    Garner-Evans, E. H.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Spearman, Sir Alexander

    George, J. C. (Pollok)

    Lucas, P. B. (Brentford & Chiswick)

    Speir, R. M.

    Gibson-Watt, D.

    Lucas-Tooth, Sir Hugh

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

    Glover, D.

    McAdden, S. J.

    Stevens, Geoffrey

    Godber, J. B.

    Macdonald, Sir Peter

    Steward, Harold (Stockport, S.)

    Gomme-Duncan, Col. Sir Alan

    McKibbin, A. J.

    Steward, Sir William (Woolwich, W.)

    Goodhart, Philip

    Mackie, J. H. (Calloway)

    Stoddart-Scott, Col. M.

    Gower, H. R.

    McLaughlin, Mrs. P.

    Storey, S.

    Graham, Sir Fergus

    Maclean, Fitzroy (Lancaster)

    Studholme, Sir Henry

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

    MacLeod, John (Ross & Cromarty)

    Summers, Sir Spencer

    Green, A,

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

    Sumner, W. D. M. (Orpington)

    Gresham Cooke, R.

    Maitland, Hon. Patrick (Lanark)

    Taylor, William (Bradford, H.)

    Grimston, Hon. John (St. Albans)

    Manningham-Buller, Rt. Hn. Sir R.

    Temple, John M.

    Grimston, Sir Robert (Westbury)

    Markham, Major Sir Frank

    Thomas, Leslie (Canterbury)

    Grosvenor, Lt.-Col. R. G.

    Mathew, R.

    Thomas, P. J. M. (Conway)

    Gurden, Harold

    Maude, Angus

    Thompson, Kenneth (Walton)

    Harris, Reader (Heston)

    Maudling, Rt. Hon. R.

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

    Harrison, A. B. C. (Maldon)

    Mawby, R. L.

    Thorneycroft, Rt. Hon. P.

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

    Medlicott, Sir Frank

    Thornton-Kemsley, C. N.

    Harvey, John (Walthamttow, E.)

    Milligan, Rt. Hon. W. R.

    Tiley, A. (Bradford, W.)

    Harvie-Watt, Sir George

    Molson, Rt. Hon. Hugh

    Turton, Rt. Hon. R. H.

    Hay, John

    Morrison, John (Salisbury)

    Vane, W. M. F.

    Heald, Rt. Hon. Sir Lionel

    Nabarro, G. D. N.

    Vaughan-Morgan, J. K.

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

    Nairn, D. L. S.

    Vickers, Miss Joan

    Henderson, John (Cathcart)

    Neave, Alrey

    Wakefield, Edward (Derbyshire, W.)

    Hesketh, R. F.

    Nicholson, Godfrey (Farnham)

    Wakefield, Sir Wavell (St. M'lebone)

    Hill, Rt. Hon. Charles (Luton)

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

    Wall, Major Patrick

    Hill, Mrs. E. (Wythenshawe)

    Oakshott, H. D.

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

    Hill, John (S. Norfolk)

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

    Ward, Dame Irene (Tynemouth)

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

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

    Watkinson, Rt. Hon. Harold

    Holland-Martin, C. J.

    Orr, Capt. L. P. S.

    Webbe, Sir H.

    Hornby, R. P.

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

    Whitelaw, W. S. I.

    Hornsby-Smith, Miss M. P.

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

    Williams, Paul (Sunderland, S.)

    Horobin, Sir Ian

    Osborne, C.

    Wills, G. (Bridgwater)

    Horsbrugh, Rt. Hon. Dame Florence

    Page, R. G.

    Wood, Hon. R.

    Howard, Hon. Greville (St. Ives)

    Pannell, N. A. (Kirkdale)

    Woollam, John Victor

    Howard, John (Test)

    Partridge, E.

    Yates, William (The Wrekin)

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

    Peyton, J. W. W.

    Hurd, A. R.

    Pickthorn, K. W. M.

    TELLERS FOR THE NOES:

    Hutchison, Sir James (Scotstoun)

    Pike, Miss Mervyn

    Colonel J. H. Harrison and

    Hyde, Montgomery

    Pilkington, Capt. R. A.

    Mr. Hughes-Young.

    Hylton-Foster, Rt. Hon. Sir Harry

    Pitman, I. J.

    Mr. Cronin: I beg to move, in page 8, line 5, to leave out from "child" to "and" in line 6.
    The Chairman: It seems to me that this Amendment and the next two Amendments, in page 8, lines 7 and 11, might be discussed together.
    Mr. Cronin: Yes, Sir Charles. Clause 10 (3), if it is not amended, leaves the amount of relief at £100 for a child until the age of 11, and then it becomes
    498
    £125 provided that the child is aged 11 at the commencement of the year of assessment. If the child is aged 11 a few days or weeks after the commencement of the year of assessment, the relief is still only £100 during the whole of that year. A large proportion of children, therefore, will be aged nearly 12 before the parents receive the allowance appropriate to children aged 11.
    If the subsection is unamended, £125 will be the amount of relief until the

    499
    child reaches the age of 16, when, provided that the child is receiving full-time instruction, the relief will become £150, again provided also that the child is 16 at the commencement of the year of assessment. If the child reaches the age of 16 within a few days or weeks after the commencement of the year of assessment, the benefit is lost.
    The effect of Clause 10 (3), if unamended, is to retard the time for receiving child relief. This puts a burden on those who are, probably, the most deserving of the tax-paying class, those who have children over 11 and who have to maintain them without any income coming in for the child. As we all know, a child over 11 costs quite as much to maintain as a fully grown adult. Also, the subsection puts a burden on those who have children over 16 and who are struggling to maintain them at universities or technical colleges or in full-time apprenticeship. These also are particularly deserving people. We are all familiar with the desperate need for trained technicians and technologists, yet this Subsection as it stands tends to discourage people from arranging for their children to undergo such training.
    Another unfortunate consequence of the subsection, if it is left unamended, is that it produces a lack of conformity with other sections of Income Tax law. For instance, a married man's personal relief and the commencement of child relief take effect, provided that the event occurs at any time during the year of assessment, in that year. It is only in this instance that the event must take place before the commencement of the year of assessment.
    Originally, one must concede, child relief began only if the child was living at the commencement of the year of assessment. That was laid down in Section 21 of the Finance Act, 1920, but the qualification was removed in the Finance Act, 1928, so that child relief could begin during the year of assessment provided that the child was living at any time during the year.
    The Financial Secretary probably knows that that change was initiated by his right hon. Friend the Member for Woodford (Sir W. Churchill) when Chancellor of the Exchequer. It is noteworthy that there was no debate and no
    500
    comment whatsoever during the Committee stage of the Finance Bill of 1928. It was so obviously a piece of elementary equity for taxpayers that no comment was made, so one cannot feel that there could be a strong case against introducing this change in the Clause.
    Most hon. Members will agree that the Board of Inland Revenue is rather unfortunate in its public relations. Most people speak of tax officials as persons to whom they feel decidedly inimical. The Treasury should do everything it can to avoid this feeling of irritation between the taxpayers and the tax assessors or collectors.
    Sir Frederick Messer: And make them painless extractors.
    Mr. Cronin: We should, indeed, try to turn them into painless extractors. The extraction is far from painless when a parent finds that an allowance he expected to receive when his child reached the age of 11 or 16 is not really due at the time he thought but has to conform with the commencement of the year of assessment. That is a very powerful source of annoyance to taxpayers, and it would be very agreeable if the Inland Revenue could establish happier relations with the taxpayers by avoiding such a source of irritation.
    A substantial section of the population tends to plan the arrival of its children. Such plans are not affected by the commencement of child relief. So long as the child is living at any time during the year of assessment, the full relief is obtained. However, it is possible, and probable, that the more far-seeing and intelligent of the people who plan their families will think ahead and say, "It will be a great disadvantage if our child reaches the age of 11 shortly after the commencement of the year of assessment." There may well be a tendency on the part of such people to have their children arrive somewhat after the commencement of the year of assessment rather than before. Obviously, on biological grounds and on the grounds of eugenics that is most undesirable.
    The Financial Secretary is screwing up his face in profound thought, and is probably thinking up some objections. I will attempt some minor clairvoyance and suggest some of them. First of all, it must be conceded that a parent, although

    501
    the child's birthday falls shortly after beginning of the year of assessment and provided that the child does not receive full-time instruction, obtains the benefit of child relief for the whole year of assessment even when the child is over 16. He thus obtains with the Amendment an advantage in both the year of birth and the year of the sixteenth birthday. This applies, however, only to taxpayers in the lower income groups, and they can hardly control the circumstances, and there is no reason at all why they should be penalised.
    The Financial Secretary may well point out a minor drafting objection. Section 212 (1) of the Income Tax Act, 1952. specifies that a child must be over 16 at the commencement of the year of assessment. It might be necessary for perfect clarity to alter the drafting of that Section. I have no doubt that the Financial Secretary has in mind the small additional cost to the Treasury, but I am sure he would not put that forward as a serious argument in respect of a Finance Bill which gives away £35 million to Surtax payers.
    Subsection (3), as it stands, is a very enlightened piece of fiscal policy but, it lacks the small addition which the Amendment will supply. The Amendment will certainly make it a much more attractive Clause. If the Amendment is accepted, it will not only be a rather more generous Clause but it will obviously be a more generous one. If the Financial Secretary will give this matter some careful attention, I am sure that subsection (3) will become a masterpiece of enlightened fiscal policy and the object of universal parental gratitude.
    8.15 p.m.
    Mr. Frederick Mulley: I support the Amendment moved by my hon. Friend the Member for Loughborough (Mr. Cronin). I have not done anything like the research into the matter that he has evidently done, and, as a layman venturing into a field which is unfamiliar, I would question his observations about the possible planning of the arrival of children in order to take the maximum advantage of the concession. I imagine there would be biological difficulties. I would point out that my experience has been that the medical profession, of which he is a distinguished member, is by no
    502
    means precise in its forecasts of the necessary time between the beginning and the end of the events necessary to qualify for this allowance. I cancelled engagements for three weeks in anticipation of celebrating the birth of my first child, only to find that the engagements which I had rearranged coinicided with the birth. The consequence was that I had three weeks of planned idleness, which was a very bad piece of planning indeed.
    The Amendment is both just and necessary. The Clause as it stands will give rise to another complication to those arising in respect of the ages by which children are judged when they are at school. For example, a child born in March and another born in April may pursue the same educational course and leave school together at the age of 16, but one might get the benefit of the £150 allowance and the other might not. Yet we expect children born a mere month or a couple of months apart to begin and finish school at the same time.
    The arbitrarily fixed date in April is quite different from the dates fixed by local authorities and the education administration generally for the purposes of the 11-plus examination and so on. There is no arbitrary rule in a school to the effect that children born before the beginning of the financial year are in one class and those born after the beginning of the financial year are in another. The provision introduces another arbitrary distinction into a sphere which is already complicated.
    Like many other hon. Members, I have had deputations from parents, particularly about this time of the year, arguing that their children have been prejudiced in the 11-plus examination because they were born at the beginning rather than the end of the period arbitrarily chosen by the education authorities. I have very grave doubts about this method of selection on the basis of age, and it is wholly wrong to introduce another artificial barrier in a child's development.
    It is spoiling the ship for a ha'p'orth of tar, because we congratulate the Chancellor upon the conception of the Clause and the additional allowances. I hope the Chancellor will not spoil what he is doing by going against the precedents and not following the usual practice in these matters of allowing the parent to benefit if the child reaches the necessary

    503
    age during the year. I hope we shall have an assurance from the Financial Secretary, if he cannot, for technical reasons, accept the Amendment, that he will look into the matter before Report and devise words to give effect to our intention.
    Mr. Powell: As the Clause stands, the effect, as the Committee well knows, is to increase the child allowance from £100 to £125 at age 11-plus, and to £150 at age 16-plus. When I use those expressions, I mean that the average age of a child whose parents gain the advantage of the increased allowance will in the one case be 11½ and in the other 16½.
    In the first of those two age barriers, there is conformity with the transition in our education system from the primary to the secondary school. That is the rough logic behind the selection of 11½ for this purpose, and the Amendment does not propose to alter the 11½ point of time. The Amendment seeks to reduce the second qualifying age from 16-plus to 15-plus. The hon. Member for Loughborough (Mr. Cronin) accused the Clause of lacking conformity with other Sections of the Income Tax law, but the age of 16-plus in this context is in complete conformity with the most relevant point of Income Tax law, because under Section 212 (1) of the Income Tax Act, 1952, a child allowance is payable in respect of a child who, if over the age of sixteen years at the commencement of the year of assessment, is either receiving full-time education, or fulfils the other qualifications set out in the Section.
    At present, there is a dividing line in the qualification for child allowance at the point of 16-plus, because it is after 16-plus that it becomes, for the first time, a condition of receipt of the child allowance that the child shall be receiving full-time education, or the equivalent.
    Mr. Cronin: I thought I had made it clear that it would be necessary also to modify the subsection to which the Financial Secretary has referred. That is the only part of the Income Tax Act which is not in conformity with the Clause.
    Mr. Powell: But it happens to be the only relevant part, namely the point at which full-time education becomes a qualification for the child allowance. The
    504
    hon. Member is first claiming to make an Amendment to secure conformity with the existing Income Tax law and then, when the Income Tax law is found not to suit his purpose, he says that there will have to be a consequential Amendment to alter the principal Act to give him something with which to be in conformity.
    The age 16½ was selected because under Income Tax law it has been the age after which full-time education, or the equivalent, became an essential condition of qualification for the child allowance. It is in order to provide an assistance and an inducement to parents for their children to continue in these types of full-time education that the second higher grade of child allowance has been introduced. I therefore suggest to the Committee that it would be in conformity with the present lay-out of the child allowance and with the educational system for these two steps to be at 11½ and 16½, as they are under the Clause as it now stands.
    Mr. Houghton: This is most disappointing. Does not the Financial Secretary realise that for the first time we are bringing into the child allowance an age point which has not the same educational significance as that long-standing relief in Section 212 of the Income Tax Act, 1952, to which he has referred? It refers to a child
    "who is either under the age of sixteen years or who, if over the age of sixteen at the commencement of that year, is receiving full-time instruction at any university, college, school or other educational establishment."
    There has been a recognised change at sixteen in.the course of education. If one is over sixteen and is receiving full-time instruction at a school, college or university, then one is obviously undergoing further or higher education. One has passed the normal school-leaving age.
    So long as that was the only dividing point for child relief based on age, it probably had some logical justification. Now, the age of eleven comes into it, and although we know that there may be a change in the type of education which a child will receive at 11-plus, that will not be so in all cases.
    Another factor is that there will be much trouble over this phrase "over the age of sixteen"—or" over the age of eleven"—"at the commencement of the

    505
    year of assessment." A short time ago, I had to broadcast on the Budget changes, and the proposal which gave me most trouble and upon which I had to have much consultation with the Inland Revenue authorities was what was meant by "over the age of eleven at the commencement of the year of assessment." Many newspapers assumed that it meant a child had to be twelve. In the end, we decided that the child must have actually passed its eleventh birthday. That had to be repeated half-a-dozen times in a broadcast lasting a quarter of an hour so that there should be no doubt about it. That is the sort of problem which will be widely encountered now that the change is at the age of eleven.
    In introducing this change, the Chancellor might well have altered the requirement of age at the commencement of the year of assessment in all cases. It is no criticism of the Amendment that my hon. Friend the Member for Loughborough (Mr. Cronin) has not tidied the reference in Section 212 of the Income Tax Act. 1952.
    8.30 p.m.
    In the past, a number of these personal reliefs were conditional upon the state of affairs at the commencement of the financial year. I remember the time when a person could not get wife allowance unless he had a wife living with him at the commencement of the year of assessment. Further, he could not get child allowance unless the child was living at the commencement of the year of assessment. There was one famous case where a taxpayer claimed that the child was actually living when the mother was in an advanced state of pregnancy but had not actually been born. He said that it was living within the meaning of the Income Tax Act, but the court decided that it was not. That is the sort of contest that we can get when a condition of this kind is imposed.
    I do not know about family planning in relation to child allowance for Income Tax purposes, but we all know the number of people who try to arrange their marriages to best advantage for Income Tax relief, and I am sure that in the early days of April, and especially in the closing hours of the last day of the Income Tax year, many an anxious husband must be wondering whether his
    506
    child will be born before or after midnight. If it arrives at a minute before midnight, it is in; if it arrives a minute after, it is out. To have this sort of marginal problem repeated at a different age point is most undesirable.
    I am not sure about the housekeeper. Section 214 says that a person must have a housekeeper for the year of assessment, which rather suggests that he must have her for the whole year of assessment. In any case, that is a somewhat different relief; but the other personal reliefs are related to any time in the year of assessment, and in the age relief and age exemption which we have just been discussing, if the person reaches the qualifying age during the year of assessment. he gets the allowance. It seems to me that the Financial Secretary is basin; everything upon the changes in the course of education. I doubt whether the relief was justified wholly upon that ground. There are other factors besides education which affect the expense of children.
    The Chancellor deliberately and rightly rejected the Royal Commission's proposal that child relief should be based upon total income, and in the course of my speech during the Second Reading debate I mentioned how inconvenient it would be, in connection with Pay-As-You-Earn, not to be able to decide the coding finally for the year until the total income for that year had been ascertained. The Chancellor chose the alternative of a graduated allowance based upon age, and we approve of that, but we are sorry that he has introduced this arbitrary condition regarding the age qualification.
    Unless the Financial Secretary has something more favourable to say upon the Amendment, I am afraid that once more I shall have to advise my hon. and right hon. Friends to divide upon it, because the way we are going the Chancellor is giving absolutely nothing away —and we are getting extremely annoyed about it.
    Mr. Mulley: I am sorry to trouble the Committee again, but I hope that the Financial Secretary will say a further word. In his previous reply he did not answer the point which I raised, and perhaps I did not make it clearly enough. As I see the matter, it is possible for two children, one born in March and the

    507
    other in April, to follow through the same educational career, both starting school at the end of the Easter holiday, when they are five years old; taking the 11-plus examination at the same time, and finishing at the same time their grammar school education at the age of sixteen, to qualify for different allowances. The parents of the child born in April might, as my hon. Friend said, celebrate the fact of that immediate benefit, but the total allowances which they later receive for that child, upon the basis of this subsection, will be £25 less than is received by the parents of the child born in the previous month. Why, if they both
    follow a normal educational pattern, should there be this distinction between two children born only a few weeks apart?
    Mr. Powell: I rise not to make a more favourable reply but simply to point out, in case hon. Members have been alarmed by the obstetric difficulty, that the obstetric difficulty arises identically in the Amendment and in the Clause, except that it happens a year earlier under the terms of the Amendment.
    Question put,That the words proposed to be left out stand part of the Clause:—
    The Committee divided:Ayes 235, Noes 187.

    Division No. 126.]

    AYES

    [8.35 p.m.

    Agnew, Sir Peter

    Drayson, G. B.

    Irvine, Bryant Godman (Rye)

    Aitken, W. T.

    du Cann, E. D. L.

    Jennings, J. C. (Burton)

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

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

    Johnson, Dr. Donald (Carlisle)

    Alport, C. J. M.

    Duthie, W. S.

    Johnson, Eric (Blackley)

    Anstruthcr-Gray, Major Sir William

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

    Joseph, Sir Keith

    Arbuthnot, John

    Errington, Sir Erie

    Joynson-Hicks, Hon. Sir Lancelot

    Armstrong, C. W.

    Farey-Jones, F. W.

    Keegan, D.

    Ashton, H.

    Fisher, Nigel

    Kerby, Capt. H, B.

    Atkins, H. E.

    Fletcher-Cooke, C.

    Kerr, H. W.

    Baldock, Lt.-Cmdr. J. M.

    Fort, R.

    Kimball, M.

    Baldwin, A. E.

    Garner-Evans, E. H.

    Kirk, P. M.

    Balniel, Lord

    George, J. C. (Pollok)

    Lagden, G. W.

    Barber, Anthony

    Gibson-Watt, D.

    Leather, E. H. C.

    Barlow, Sir John

    Glover, D.

    Leavey, J. A.

    Barter, John

    Godber, J. B.

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

    Batter, Sir Beverley

    Gomme-Duncan, Col. Sir Alan

    Legh, Hon. Peter (Petersfield)

    Beamish, Maj. Tufton

    Goodhart, Philip

    Lindsay, Hon. James (Devon, N.)

    Bell, Philip (Bolton, E.)

    Gower, H. R.

    Linstead, Sir H. N.

    Bell, Ronald (Bucks, S.)

    Graham, Sir Fergus

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

    Bennett, F. M. (Torquay)

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

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Bennett, Dr. Reginald

    Green, A.

    Longden, Gilbert

    Bevins, J. R. (Toxteth)

    Gresham Cooke, R.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Bidgood, J. C.

    Grimston, Hon. John (St. Albans)

    Lucas, P. B. (Brentford & Chiswick)

    Biggs-Davison, J. A.

    Grimston, Sir Robert (Westbury)

    Lucas-Tooth, Sir Hugh

    Birch, Rt. Hon. Nigel

    Grosvenor, Lt.-Col. R. G.

    McAdden, S. J.

    Black, C. W.

    Gurden, Harold

    Macdonald, Sir Peter

    Body, R. F.

    Hall, John (Wycombe)

    McKibbin, A. J.

    Boyle, Sir Edward

    Harris, Reader (Heston)

    Mackie, J. H. (Galloway)

    Braine, B. R.

    Harrison, A. B. C. (Maldon)

    McLaughlin, Mrs. P.

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

    Harrison, Col. J. H. (Eye)

    Maclean, Fitzroy (Lancaster)

    Brooman-White, R. C.

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

    MacLeod, John (Ross & Cromarty)

    Browne, J. Nixon (Craigton)

    Harvey, John (Walthamstow, E.)

    Macmillan, Maurice (Halifax)

    Bryan, P.

    Harvie-Watt, Sir George

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

    Bullus, Wing Commander E. E.

    Hay, John

    Maitland, Hon, Patrick (Lanark)

    Burden, F. F. A.

    Heald, Rt. Hon. Sir Lionel

    Manningham-Buller, Rt. Hn, Sir R.

    Butcher, Sir Herbert

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

    Markham, Major Sir Frank

    Campbell, Sir David

    Henderson, John (Cathcart)

    Marlowe, A. A. H.

    Chichester-Clark, R.

    Hesketh, R. F.

    Mathew, R.

    Clarke, Brig. Terence (Portsmth, W.)

    Hill, Rt. Hon. Charles (Luton)

    Maude, Angus

    Cole, Norman

    Hill, Mrs. E. (Wythenshawe)

    Mawby, R. L.

    Conant, Maj. Sir Roger

    Hill, John (S. Norfolk)

    Medlicott, Sir Frank

    Cooke, Robert C.

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

    Milligan, Rt. Hon. W. R.

    Cordeaux, Lt.-Col. J. K.

    Holland-Martin, C. J.

    Molson, Rt. Hon. Hugh

    Corfield, Capt. F. V.

    Hornby, R. P.

    Morrison, John (Salisbury)

    Craddook, Beresford (Spelthorne)

    Hornsby-Smith, Miss M. P.

    Nabarro, G. D. N.

    Crosthwaite-Eyre, Col. O. E.

    Horobin, Sir Ian

    Nairn, D. L. S.

    Crowder, Sir John (Finchley)

    Horsbrugh, Rt. Hon. Dame Florence

    Neave, Airey

    Cunningham, Knox

    Howard, Hon. Greville (St. Ives)

    Nicholson, Godfrey (Farnham)

    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.)

    Oakshott, H. D.

    D'Avigdor-Goldsmid, Sir Henry

    Hughes-Young, M. H. C.

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

    Deedes, W. F.

    Hurd, A. R.

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

    Digby, Simon Wingfield

    Hutchison, Sir James (Scotstoun)

    Orr, Capt. L. P. S.

    Dodds-Parker, A. D.

    Hyde, Montgomery

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

    Donaldson, Cmdr. C. E. McA.

    Hylton-Foster, Rt. Hon. Sir Harry

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

    Doughty, C. J. A.

    Iremonger, T. L.

    Osborne, C.

    Page, R. G.

    Ropner, Col, Sir Leonard

    Thompson, Kenneth (Walton)

    Pannell, N. A. (Kirkdale)

    Schofield, Lt.-Col. W.

    Thorneycroft, Rt. Hon. P.

    Partridge, E.

    Scott-Miller, Cmdr. R.

    Thornton-Kemsley, C. N.

    Peyton, J. W.W.

    Sharpies, R. C.

    Tiley, A. (Bradford, W.)

    Pickthorn, K. W. M.

    Shepherd, William

    Turton, Rt. Hon. R. H.

    Pike, Miss Mervyn

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

    Vane, W. M. F.

    Pilkington, Capt. R. A.

    Smithers, Peter (Winchester)

    Vickers, Miss Joan

    Pitman, I, J,

    Smyth, Brig. Sir John (Norwood)

    Wakefield, Edward (Derbyshire, W.)

    Pitt, Miss E. M.

    Spearman, Sir Alexander

    Wakefield, Sir Wavell (St. M'lebone)

    Powell, J. Enoch

    Speir, R. M.

    Wall, Major Patrick

    Price, Henry (Lewisham, W.)

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

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

    Prior-Palmer, Brig. O. L.

    Stevens, Geoffrey

    Ward, Dame Irene (Tynemouth)

    Raikes, Sir Victor

    Steward, Harold (Stockport, S.)

    Watkinson, Rt. Hon. Harold

    Ramsden, J. E.

    Steward, Sir William (Woolwich, W.)

    Webbe, Sir H.

    Rawlinson, Peter

    Stoddart-Scott, Col. M.

    Whitelaw, W. S. I.

    Rees-Davies, W. R.

    Storey, S.

    Williams, Paul (Sunderland, S.)

    Remnant, Hon. P.

    Studholme, Sir Henry

    Wills, G. (Bridgwater)

    Renton, D. L. M.

    Summers, Sir Spencer

    Wood, Hon. R.

    Ridsdale, J. E.

    Sumner, W. D. M. (Orpington)

    Woollam, John Victor

    Rippon, A. G. F.

    Taylor, William (Bradford, N.)

    Yates, William (The Wrekin)

    Robinson, Sir Roland (Blackpool, S.)

    Temple, John M.

    Rodgers, John (Sevenoaks)

    Thomas, Leslie (Canterbury)

    TELLERS FOR THE AYES:

    Roper, Sir Harold

    Thomas, P. J. M. (Conway)

    Mr. Richard Thompson and

    Mr. Finlay.

    NOES

    Ainsley, J. W.

    Gibson, C. W.

    Mikardo, Ian

    Albu, A. H.

    Gooch, E. G.

    Mitchison, G. R.

    Allaun, Frank (Salford, E.)

    Gordon Walker, Rt. Hon. P. C.

    Monslow, W.

    Allen, Scholefield (Crewe)

    Grenfell, Rt. Hon. D. R.

    Moody, A. S.

    Awbery, S. S.

    Grey, C. F.

    Morris, Percy (Swansea, W.)

    Baird, J.

    Griffiths, David (Rother Valley)

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

    Balfour, A.

    Hale, Leslie

    Mort, D. L.

    Bellenger, Rt. Hon. F. J.

    Hamilton, W. W.

    Moyle, A.

    Benn, Hn. Wedgwood (Bristol, S.E.)

    Hannan, W.

    Mulley, F. W.

    Benson, G.

    Harrison, J. (Nottingham, N.)

    Neal, Harold (Bolsover)

    Beswick, Frank

    Hastings, S.

    Oliver, G. H.

    Blackburn, F.

    Hayman, F. H.

    Orbach, M.

    Blenkinsop, A.

    Healey, Denis

    Owen, W. J.

    Blyton, W. R.

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

    Padley, W. E.

    Boardman, H.

    Herbison, Miss M.

    Paget, R. T.

    Bowen, E. R. (Cardigan)

    Hewitson, Capt. M.

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

    Boyd, T. C.

    Hobson, C. R. (Keighley)

    Paling, Will T. (Dewsbury)

    Brockway, A. F.

    Holmes, Horace

    Palmer, A. M. F.

    Broughton, Dr. A. D. D.

    Holt, A. F.

    Pannell, Charles (Leeds, W.)

    Brown, Thomas (Ince)

    Houghton, Douglas

    Pargiter, G. A.

    Burke, W. A.

    Howell Charles (Perry Barr)

    Parker, J.

    Burton, Miss F. E.

    Howell, Denis (All saints)

    Paton, John

    Butler, Herbert (Hackney, C.)

    Hubbard, T. F.

    Pearson, A.

    Butler, Mrs. Joyce (Wood Green)

    Hughes, Cledwyn (Anglesey)

    Pentland, N.

    Carmichael, J.

    Hughes, Emrys (S. Ayrshire)

    Probert, A. R.

    Champion, A. J.

    Hughes, Hector (Aberdeen, N.)

    Proctor, W. T.

    Chapman, W. D.

    Hynd, J. B. (Attercliffe)

    Randall, H. E.

    Chetwynd, G. R.

    Irvine, A. J. (Edge Hill)

    Rankin, John

    Clunie, J.

    Irving, Sydney (Dartford)

    Redhead, E. C.

    Coldrick, W.

    Isaacs, Rt. Hon. G. A.

    Reeves, J.

    Collick, P. H. (Birkenhead)

    Janner, B.

    Reid, William

    Collins, V. J. (Shoreditch & Finsbury)

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

    Roberts, Goronwy (Caernarvon)

    Craddock, George (Bradford, S.)

    Johnson, James (Rugby)

    Robinson, Kenneth (St. Pancras, N.)

    Cronin, J. D.

    Jones, David (The Hartlepools)

    Rogers, George (Kensington, N.)

    Crossman, R. H. S.

    Kenyon, C.

    Ross, William

    Cullen, Mrs. A.

    Key, Rt. Hon. C. W.

    Royle, C.

    Dalton, Rt. Hon. H.

    King, Dr. H. M.

    Silverman, Julius (Aston)

    Darling, George (Hillsborough)

    Lawson, G. M.

    Silverman, Sydney (Nelson)

    Davies, Ernest (Enfield, E.)

    Ledger, R. J.

    Skeffington, A. M.

    Davies, Stephen (Merthyr)

    Lee, Frederick (Newton)

    Slater, J. (Sedgefield)

    Deer, G.

    Lewis, Arthur

    Smith, Ellis (Stoke, S.)

    Dodds, N. N.

    Lindgren, G. S.

    Sorensen, R. W.

    Dugdale, Rt. Hn. John (W. Brmwch)

    Logan, D. G.

    Steele, T.

    Dye, S.

    Mabon, Dr. J. Dickson

    Stokes, Rt. Hon. R. R. (Ipswich)

    Ede, Rt. Hon. J. C.

    MacDermot, Niall

    Stones, W. (Consett)

    Edwards, Rt. Hon. John (Brighouse)

    McGhee, H. G.

    Strauss, Rt. Hon. George (Vauxhall)

    Edwards, Rt. Hon. Ness (Caerphilly)

    McKay, John (Wallsend)

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

    Edwards, Robert (Bilston)

    MacMillan, M. K. (Western Isles)

    Swingler, S. T.

    Edwards, W. J. (Stepney)

    Mahon, Simon

    Sylvester, G. O.

    Evans, Albert (Islington, S.W.)

    Mainwaring, W. H.

    Taylor, Bernard (Mansfield)

    Evans, Edward (Lowestoft)

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

    Taylor, John (West Lothian)

    Fernyhough, E.

    Mann, Mrs. Jean

    Thomas, George (Cardiff)

    Fienburgh, W.

    Marquand, Rt. Hon. H. A.

    Thomas, Iorwerth (Rhondda, W.)

    Finch, H. J.

    Mason, Roy

    Thomson, George (Dundee, E.)

    Fletcher, Eric

    Mayhew, C. P.

    Tomney, F.

    Forman, J. C.

    Mellish, R. J.

    Ungoed-Thomas, Sir Lynn

    George, Lady Megan Lloyd(Car'then)

    Mester, Sir F.

    Viant, S. P.

    510

    511

    Wade, D. W.

    Willey, Frederick

    Williams, W. T. (Barons Court)

    Weitzman, D.

    Williams, David (Neath)

    Winterbottom, Richard

    Wells, Percy (Faveraham)

    Williams, Rev. Llywelyn (Ab'tlllery)

    Woodburn, Rt. Hon. A.

    West, D. G.

    Williams, Ronald (Wigan)

    Yates, V. (Ladywood)

    Wheeldon, W. E.

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

    Wilkins, W. A.

    Williams, W. R. (Openshaw)

    TELLERS FOR THE NOES:

    Mr. J. T. Price and Mr. Simmons.

    Mr. Houghton: I beg to move, in page 8, line 18, at the end to insert:
    (4) Section two hundred and twelve of the Income Tax Act, 1952, shall be amended by inserting the following subsection after subsection (4):—
    "(4A) Notwithstanding subsection (4) of this section relief shall be allowed under this section in respect of any child who is entitled in his own right to an income of between eighty-five pounds and one hundred and seventy pounds a year if no more than eighty-five pounds of his income is unearned:
    Provided that the amount of such relief under the preceding provisions of this section shall be diminished by the amount of tax at the standard rate on the excess of the earned income over eighty-five pounds".
    The Temporary Chairman (Mr. H. Hynd): I suggest that with this Amendment the Committee should discuss two proposed Amendments in the same line, namely, the Amendment in the name of the hon. Member for Orkney and Shetland (Mr. Grimond) and other hon. Members, at the end to insert:
    (4) In section two hundred and twelve of the Income Tax Act, 1952 (which relates to the allowances for children), paragraph (b) of subsection (3) (as originally enacted) shall be reinserted and shall be amended—

    (a) by substituting for the words "thirteen" the words "three hunderd"; and

    (b) by inserting at the end of the paragraph the words:—

    "Provided that where the emoluments exceed the sum of one hundred and fifty pounds, the deduction to which the claimant is entitled shall be reduced by an amount equal to income tax at the standard rate on one pound for every pound by which the said emoluments exceed one hundred and fifty pounds a year ".
    and the Amendment in the name of the hon. Member for Dover (Mr. Arbuthnot) and other hon. Members, at the end to insert:
    (4) In subsection (4) of section two hundred and twelve of the Income Tax Act, 1952, as amended, for the reference to eighty-five pounds there shall be substituted a reference to one hundred pounds.
    8.45 p.m.
    Mr. Houghton: This is a familiar Amendment in our Finance Bill discussions. It seeks to introduce a tapering
    512
    arrangement in connection with the application of child allowances where the child has an income in its own right. The Royal Commission dealt with this matter at some length in paragraphs 182 and 183 of its Report. It said:
    "The present rule is that the allowance is due in full so long as the child's own income does not exceed £85, but no allowance is due at all if the child's income exceeds £85 by however so little."
    We know that in the application of that rule a child with an income in its own right of £84 will not disqualify the parent from any part of the child allowance, but if that income is £86 the parent will get no child allowance at all. The Royal Commission's Report said:
    "There is no doubt an administrative advantage in a rule so simple as this which allows the parent £85 or nothing,"—
    £85 has, of course, been increased since to £100, and subject to certain conditions the allowance will now be higher still—
    " but, despite our preference for simplicity in all these rules, we think that the present one is so arbitrary as to be unfair. Some sort of tapering' provision is required which would have the effect of reducing the parent's allowance in proportion as the child's income exceeds £85, but not of depriving him of it altogether at one blow."
    Surely the Chancellor must feel that something should be done in this direction in this Finance Bill. Now that he proposes, under Clause 12, that personal reliefs, subject to certain conditions, shall be allowed as a set-off against Surtax, the penalty for disqualification for child allowance can become much heavier than ever before. There have been letters in some of the professional journals pointing out how unfair this arbitrary rule will now become, since the additional allowance for children will increase the penalty when children have income in their own right of over £85.
    Educational grants do not count as income and are clearly outside the scope of any penalty, which is right. There is no need for any Amendment of this kind to deal with them. The income of apprentices is also covered by the point, so long as the apprentice is not receiving wages over £85. Even so, in some cases,

    513
    apprentices who are being given a little more generous pocket money than others will disqualify their parents from relief. Then there is the case of the child who begins working towards the end of the Income Tax year and will disqualify the parent from receiving the allowance for that year, if the child's earnings exceed £85. These are all very harsh restrictions upon the granting of child allowance. Several Amendments on the Order Paper try to deal with the need for some tapering provision.
    Our Amendment provides a taper in the case of earned income exceeding £85 but no taper in the case of unearned income exceeding £85. This is an attempt to deal with the special case of young persons undergoing a course of training for a special craft or technique or who are beginning to work towards the end of the Income Tax year and can disqualify their parents from the child allowance, which may have already been granted. Under-payments of tax can be recovered in one sum or spread over the following year. We hope we have provided the Chancellor here with the basis of some remedy for the existing situation. It seems very reasonable that this provision should now be introduced.
    It was a considerable surprise to me, I confess, that the Chancellor did not make some provision of this kind when making such substantial changes in the child allowance. I hope, therefore, by persistent endeavour to improve this Bill we shall secure from the Chancellor an agreeable response to this Amendment, or a promise from him to consider the suggestions which are being made with a view to bringing forward some proposal of his own at a later stage of the Bill. I am quite sure that if things are left as they are, the existing grievances about the arbitrary limit to a child's income will grow. When in its Report the Royal Commission referred to an existing rule as being so arbitrary as to be unfair, I think that notice should be taken of that.
    Mr. Donald Chapman: I hope that something will he done this year on this issue. Many of us have spent so many weary years putting this subject forward that we feel that by now some impression must have been made on the Treasury. This is one of a number of comparatively small
    514
    reforms which the Royal Commission singled out and which many hon. Members on both sides of the Committee have been putting forward year after year. It is very similar to the Amendments about housekeepers, dependant relatives and so on—the sort of thing which is almost in the way of an administrative reform rather than any great concession in principle.
    I always thought that it was the idea of the Chancellor, a Chancellor who wants to be on good terms with the House in Committee on the Finance Bill, to have something up his sleeve which he always thought of giving away, but which would look so much better if given away during Committee stage in order to sweeten everyone. If he wants to contribute something like that to keep us happy, the Chancellor could not choose a better subject than this. and this would be the first occasion of the kind in Committee on this Finance Bill.
    One of the main problems arises because the educational year and the tax year do not coincide. That is why, as individual Members of Parliament, we receive so many protests from parents with children at universities. I have received a letter which illustrates this very well and shows a new respect in which the matter is most unjust. A parent has written to me saying that the time lag is particularly difficult when a student leaves a university in June or July and does not start work until October or November.
    The child starting work, possibly as a school teacher, in September, October or November, will earn, in the rest of the financial year, enough to penalise the parents by taking away any tax relief for that year as a whole. That not only covers the last three or four months when the child is at university, but also—what often is a very difficult period for parents—the interval of the university long vacation before the child begins to earn.
    It seems to me most unjust that on top of looking after them in the final months of the university, when the parents have to carry the responsibility because of the absence of coincidence in the two years and have to provide them with pocket money throughout July, August and part of September, they are allowed no tax relief at all because of the young person's earnings for the rest of that financial year.

    515
    This parent makes a new point which had not previously occurred to me. He writes:
    "But there is a further anomaly in which the Inland Revenue gets two bites at the cherry and the parent loses the equivalent of a full year's tax relief. When a boy does his National Service before going to university, the parent here again loses the equivalent of six months' tax relief, because his son will have earned more than £85 in, say, Army pay during the financial year applying to his first six months in the university."
    This is true. The parent makes the sacrifice to get a student through university when he has finished his National Service. Indeed, the first year is the most difficult year for many people who send their sons to university. Yet in that first year as well as in the last year the parent receives no tax relief, because in the first half of the financial year his son has been completing National Service and has earned more than £85 in Army pay. I confess that this is a completely new point to me, but I think it is one which should weigh in the scales with the Treasury and should impress upon the Ministers today the fact that something ought to be done about it.
    I sent this letter to the Financial Secretary on 30th January of this year. Many of us do such things in an effort to persuade the Chancellor before his Budget that these are the sort of points which he ought to keep in mind. I must protest at the treatment we get every year. It took the Treasury twenty-two days to reply to this letter, and when the reply came it did not answer any of the points in the letter. I believe that the Financial Secretary has just said that it is always also the case that he cannot really answer them just before the Budget, but if only the Treasury would be frank on these issues which We put forward year after year it would help. I do not expect the Treasury to be as blunt as to say, "We cannot answer all these points", but if the Treasury said, "There is something in this case and we accept the argument", we should then feel that the Treasury would begin to find a way round the problem. It would be an advance if we had a reply as helpful as that.
    Instead, all we get is three miserable paragraphs not answering the letter but referring to some unacceptable point which they managed to pick up in the middle of the letter, hoping to get away
    516
    with it by demolishing that point. This was the reply received three weeks after I had sent the letter to the Financial Secretary. I protest, because this goes on year after year, with each of us sending letters to the Treasury and making speeches in Committee on the Finance Bill, bringing forward the legitimate grievances of parents who are trying to keep their sons and daughters at university and who are being penalised tax-wise for doing so. In reply we get nonsensical letters which get us no further forward or barren replies at the Dispatch Box.
    If, as I hope. the Chancellor started out the Budget debate with the idea of keeping something up his sleeve to keep us sweet in Committee—I am sure those are the tactics; I have noticed that other Chancellors have done it in the past—this is the opportunity he should seize. I have noticed that in the past Chancellors have adopted the attitude, "We have not very much to give away in Committee. We will keep one thing back which we intended to give anyway and we will give it in Committee in order to keep them happy." if that is so this year, then I plead with the Chancellor that at last, after years and years of pressure upon this issue, he should listen to the voices of reason and justice which are speaking on behalf of these parents.
    9.0 p.m.
    Mr. John Arbuthnot: I should like to speak to the Amendment standing in the names of some of my hon. Friends and myself, in page 8, line 18.
    I have been particularly encouraged by some remarks made by the Chancellor earlier today, and two things which he said gave me hope that there may be a possibility of his acceptance of the ideas that we are putting forward. First, he said that taxes on families are far too high. With that I completely agree. He also said that tax relief is a duty to be earnestly pursued not only by Governments but by the House of Commons.
    This Amendment seeks specifically to raise from £85 to £100 the income which a child may have in its own right before the parent becomes disqualified from relief for the child whom he supports. I know that my right hon. Friend recognises the troubles which parents have when a child is in the later stages of its education, and also realises that as the

    517
    child grows older so the expense increases. He is therefore proposing to increase to £125 the relief in respect of a child over 11, and to £150 the relief when the child is over 16, but there is no provision in the Bill to give similar relief in respect of the child with an income in its own right.
    We believe it to be proper that the allowance to the parent should increase as the child advances in years, but we also believe that there is a great deal to be said for increasing the amount which the child may have in its awn right before the parent is deprived of the allowance. There are many ways in which that could be done. We might have put down an Amendment which would have increased the upper limit as the child grows older, in line with the provision made for education, but bearing in mind that the allowance of £100 a year would, in fact, yield to the parents the sum of £42 10s. we thought that the tidiest and most satisfactory way of dealing with this problem was to increase the amount that the child might have in its own right before its parent is deprived of relief. We think that the proper sum would be £100 a year, instead of the present £85 a year. I do most earnestly plead with my right hon. Friend, who has shown such sympathy and foresight in the way of dealing with child reliefs, also to deal with the child with an income in its own right in the way suggested by the Amendment.
    Mr. Wade: I do not wish to commit myself to the view that this is the only nice thing the Chancellor will produce from his sleeve. I hope there will be other nice things as well, but I certainly express the wish that at the close of this debate the Chancellor will not only be sympathetic but will promise a reform which is long overdue.
    The right hon. Gentleman has been firm on all other proposals which have been put forward today, and I think this is an occasion when he might very well give way to the representations which have been made to him. The principle is, I think, supported by Members in all parties. The Amendments which have been tabled differ somewhat, but the principle is the same. Furthermore, the idea underlining these Amendments has the backing of the Royal Commission, as the hon. Member for Sowerby (Mr. Houghton) pointed out.
    518
    I raised this subject on the Second Reading, and I took as an illustration the difference in circumstances of the parent with a child who obtains a scholarship at a university and a parent with a child who has become an apprentice. In the case of the child at a university, the scholarship may be worth as much as £300 or £350 and the parent does not lose any of his allowance. On the other hand, if the child becomes an apprentice and earns a very modest amount of pocket money the parent may lose the whole child allowance, and that is a discouragement to parents who may be considering whether or not they should advise their children to become apprentices, Today more than ever, perhaps, there is a need for encouraging boys and girls to go through that rather wearisome period of apprenticeship.
    There are some differences between the Liberal Amendment and the Amendment which has been moved by the hon. Member for Sowerby, but I do not propose to indicate the differences in detail. I think our Amendment is rather more generous, more liberal, in some respects, and I prefer the tapering provisions in our Amendment, but I do not want to criticise the other Amendment in case it might in any way deter the Chancellor from accepting the general principle which we all want accepted. I think we have here a reform which is long overdue, and I hope we shall have a satisfactory reply from the Chancellor.
    Mr. Powell: In these two Amendments the Committee is considering the amount of the disqualifying income for child allowance and the question whether that disqualifying income can be tapered. I think we should begin by recognising that the income limit is, always has been and must be, a quite arbitrary figure. It has no direct relationship to the amount of the child allowance.
    Indeed, when the child allowance was first introduced, I think in 1920, the amount of the allowance and the amount of the income limit were different and they remained different for quite a number of years. Thereafter they diverged again, as is well known to the Committee, following the Finance Bill, 1955. But evidently, merely from that history, there is no necessary equivalence between the income limit and the amount of a child allowance.

    519
    Indeed, there would be no logical reason why the two figures should be the same. The benefit of a child allowance, even when it is increased to £150 at age 16-plus under this Clause, will of course only be an increase in net income of about £64, even calculated at the standard rate of 8s. 6d. in the £ with no earned income relief. My hon. Friend the Member for Dover (Mr. Arbuthnot) made a similar calculation and arrived in different circumstances at a smaller figure.
    I suppose that in strict logic it could be argued that it is on considerations of that sort that the amount of the income limit should be determined. But, as I say, the figure has always been an arbitrary one, only related very roughly to the amount of the child allowance. Nor do I think it has ever been doubted that some income limit is necessary. After all, what we are doing by the child allowance is to relieve from tax part of the parental income and also the child's income. We shall, for example, under this Clause be leaving in some cases £150 in the hands of the parent plus a maximum of £85 in the hands of the child untaxed, a total of £235, and clearly there must be some limit upon the amount of total income to which relief is applied.
    Nevertheless, as the amount of the child allowance increases—it has parted company since 1955 with the income limit, and it has been increased further in the present Bill, which has been welcomed on all sides—the case for an upward adjustment of the income limit becomes stronger, and my right hon. Friend would advise the Committee to accept the Amendment in the name of my hon. Friend the Member for Dover and to amend the Bill accordingly.
    The hon. Member for Sowerby (Mr. Houghton)—coming now to the question of tapering—quoted the arguments in favour of tapering which are to be found in the Royal Commission's Report. Of course, it is now an accepted part of the game that we quote the Royal Commission's Report to one another as and when, but only as and when, it suits our particular purpose. I think that there is undeniably a theoretical case for tapering, although I am not sure that the theoretical case, if one looks at it coldly and carefully, would not be for tapering the
    520
    allowance out altogether at an income of £85 or £100. After all, that is a sum exceeding the sum which the child allowance is worth to the family income of the parent.
    But I am afraid that tapering in the form proposed by the Opposition in the Amendment would be quite indefensible. Any attempt to distinguish between unearned and earned income would, for example, have the effect, as between two children, each with an income of £169, that the whole allowance would be received if £84 were unearned but only a fraction would be received if the whole amount were earned. That would be one result of that Amendment, and without going into further difficulties which would arise, the attempt to distinguish for this purpose between earned and unearned income absolutely wrecks the equity of the attempt to taper.
    Nor does the attempt to taper solve the problem to which the hon. Member for Northfield (Mr. Chapman) referred. Of course, difficulty does arise in the year in which a child ends its full-time education that during the first half of that year the parents are responsible and bear a burden in the maintenance of the child, and in the second half of the year the income it earns may be sufficient to disqualify them for the whole of the year for child allowance.
    The very example which the hon. Member quoted illustrates that this Amendment would not solve the problem. He quoted the example of a university student entering into full-time employment as a teacher half way through the tax year. Of course, there the parent would still be disqualified by the amount of income which would be earned during the second half of the year. This is a difficulty inherent in any income limit applied for tax allowance purposes.
    9.15 p.m.
    Mr. Chapman: Does the Financial Secretary mean that they would earn too much because teaching is sufficiently highly paid to do that?
    Mr. Powell: In that example, the earnings in the second half of the year would have that effect. Of course, I appreciate that there are instances where the earnings are lower.
    Mr. Chapman: There is another point to this; I did not read the whole letter. The parents find, when a child leaves university at the long vacation. that they have to spend actual cash in order to establish their child in the town in which he goes to work. That example is quoted in this letter. There is often a net expenditure of cash at that point to set someone up in a job. These things are important.
    Mr. Powell: But this is a difficulty inherent in any income limit at all, unless it be fixed at a level which no hon. Member would be prepared to defend.
    As regards the problem mentioned by the hon. Member for Sowerby, about an under-payment of tax, arising particularly under P.A.Y.E., which has afterwards to be recovered in a subsequent year, every endeavour is made to avoid that by making allowance in advance for cessation of the child allowance where there is a reasonable probability that, during the tax year, the income limit will be exceeded and the qualification will be lost.
    That brings me to what is really the insurmountable difficulty in introducing any form of tapered income limit, the difficulty of knowing in advance whether the limit is to be exceeded or not and by how much. For the great mass of Income Tax collected by P.A.Y.E., the great virtue of the system is that it tends to eliminate, both for administrative reasons and for the convenience of the taxpayer, the necessity for subsequent adjustments of tax liability. It is very successful in that object, for I am told that in only one case out of seven under P.A.Y.E. does an adjustment after the end of the tax year have to be made.
    It would be impossible to bring within such a system of P.A.Y.E. a tapered income allowance because, instead of the qualification depending upon the prospect of the child earning £85 or £100 or more—instead of the question being whether the allowance was on or off—it would depend upon the exact amount which, at the end of the year, proved to have been earned during the year of assessment. No assessment, therefore, could be firm, and almost any P.A.Y.E. coding which was adopted would have to be adjusted. That would mean that about 300,000 codings a year would be affected.
    522
    I have been into this very carefully, and I understand that it would mean about 450 extra staff to cope with the reassessments which a tapered income limit alone would involve.
    This is, after all, quite a different matter from other cases in which tapering arises. I have particularly in mind the dependent relative allowance, where, in the vast majority of cases, the income is a static income and only in a minority does it prove, after the end of the tax year, that an adjustment has to be made. On the other hand, where a child or youth starts to earn, the amount of income which it will receive in the remainder of the tax year is quite speculative; the rate of increment is very considerable and, in the vast majority of cases, a reassessment would be necessary, with great inconvenience to the parents as well as immense and quite disproportionate administrative cost.
    Therefore, both because tapering would not solve many of the real difficulties which are inherent in an income limit at all, and because it would be administratively impracticable and, indeed, in the long run not to the convenience of taxpayers, I must advise the Committee to reject the Amendment moved 'by the hon. Member for Sowerby.
    Mr. Douglas Jay: We are gratified, though astonished, that the Chancellor has in this case to some extent listened to common sense. Hitherto his attitude in the Committee has been that he thinks that all taxes are too high and that he is in favour, in the abstract, of reducing them but he resists any concrete proposal from any part of the Committee to reduce them. In this case, I understand, he is accepting the Amendment put forward by his hon. Friend for Dover (Mr. Arbuthnot). We are thankful for that, but it does not seem to us that he has gone far enough.
    The Financial Secretary raised technical objections to our Amendment which might well be valid, and he attempted I thought, to blind the Committee with tax science in arguing that it was technically impossible to go a step further and introduce full tapering provisions. I hope that my hon. Friends will press our Amendment, if only to spur the Government to make another effort before Report to overcome the technical

    523
    difficulties. After all, the Royal Commission, which had a good deal of expert advice at its command, made a proposal very much on the lines of ours, and I can scarcely believe that it would have done so if there had been some insuperable objection.
    While discussing this issue, I should like to ask the Chancellor to have another look at the difficulties which are arising in the matter of child allowance for educational purposes. Like my hon. Friend the Member for Northfield (Mr. Chapman), I have had letters from constituents pointing out that anomalies are arising which I am sure that no Government Department intended. These arise because of the coincidence of three factors: first, National Service, and the abrupt end of National Service which is now occurring; secondly, the absence of any tapering provision hitherto for child allowance; and, thirdly, the fact of the means test for university grants.
    I would confess an interest in this matter if I were able to understand it clearly enough to say whether or not I should benefit from the Amendment. I am one of those unfortunate people who may have two sons at the university at the same time as the result of the Government's manipulations of National Service. However, I prefer to rest my case on a letter from a constituent which is similar to that received by my hon. Friend the Member for Loughborough (Mr. Cronin).
    Under the present law, a situation of the following kind can arise. First, one loses the child allowance because one's son has an income of rather over £85 a year as he was doing a certain amount of National Service in the year before he went to the university or undertook whatever the training was. Secondly, one loses the grant from the State for university purposes because one's income, after all sorts of calculations, happens to be above the means test level, whatever it may be. Thirdly, although a certain proportion of ones' income is assumed to be spent in lieu of the grant for maintaining the son at the university, one pays full Income Tax and Surtax on that part of the income.
    If we take those three considerations together, there really are some anomalies and injustices which ought to be looked at. I feel inclined to say—I hope that the
    524
    Chancellor and the Government will think about this—that there is a case for abolishing altogether the means test in respect of those grants. If that is not done, somebody might argue that the logical step would be to abolish the means test and apply Income Tax to the grants for educational purposes. I would not recommend that for various reasons, but that would be more logical than remaining in our present position in which we have the means test and under which, if we are not eligible for a grant, we have to pay Income Tax and Surtax.
    I want to ask the Chancellor seriously and apart from the party argument, and even apart from the technicalities of the Amendment, to study the difficulties created by the coincidence of these three problems which are creating hardships and anomalies. Meanwhile, I thank him for having gone as far as he has done, but, in order to spur on the Financial Secretary's ingenious brain to apply itself to overcoming the further technical problems, I hope that my hon. Friends will divide in favour of our Amendment.
    Mr. Holt: Can the Financial Secretary give the Committee any idea how much the concession which he has so graciously given will cost? It would be of some passing interest to those who still have further interest in Amendments, because he has given some indication that the Chancellor has £6 million to give away and we would have an idea of what to expect of future Amendments. Is this a very expensive concession, and has he been able to make any estimate of what our Amendments would have cost, or what the Labour Party Amendment would have cost, as it has been beyond our ability to assess that?
    This is the first time that the Government Front Bench has argued that it is administratively impossible, very difficult, or very expensive to accept the principle of tapering. Many of us will want carefully to study what the Financial Secretary has said on the subject. We cannot feel that this is necessarily the end of the argument on tapering charges on this kind of thing. Although it might be very expensive to make adjustments during the tax year, I cannot see why an arbitrary adjustment should not be made for the current year, and any necessary minor adjustment carried into the next year on the basis of the assessment

    525
    for the next year. No doubt that is raising a new principle, or is a new development. However, we want to study the Financial Secretary's arguments and will no doubt return to this matter on a future occasion.
    Mr. Mulley: In considering the cost of the concession, will the Financial Secretary also consider how much the concession will add to the loss to the Treasury by the tax avoidance device of seven-year covenants? As the Financial Secretary knows, it is not unusual for fond grandparents to make a generous gesture and endow grandchildren with an amount which, when added to the tax reclaimed on behalf of the child, amounts to £85. I am sure that as a result of the new concession many such covenants will now be made up to £100.
    The general range of the device should be considered. I do not complain about it, because as the law stands anybody can take advantage of any loopholes. but in assessing what the concession will cost, the Financial Secretary should bear in mind not only the increase in the existing kind of covenants, but the possibility of the concession stimulating larger covenants.
    What would be the legal position if two brothers decided to make cross covenants in respect of each other's children? There are infinite possibilities, because the Chancellor has chosen unearned income for a concession. If he had accepted the Amendment of my hon. Friend the Member for Sowerby (Mr. Houghton), that would have helped the kind of case which has been mentioned, National Service and the beginning of careers, apprenticeships, university study and so on. The main contention that he is now making is going to assist those who make covenants as a means of tax avoidance. I would like to know, in relation to the question of cost, what consideration has been given to this point.
    9.30 p.m.
    Mr. Chapman: I want to say a word of thanks to the Financial Secretary. What came out of his speech was that he certainly had the will to do something on these grounds, the evidence being that he had even gone to the length of calculating that it would cost 450 staff in order to do it. There must have been some effort, right
    526
    the way down the line, to follow through the possibility of making this concession. lf, as it seems, it is really only a question of the administrative difficulty, I hope that he will reply to the suggestion of my right hon. Friend that the Government should keep on trying.
    He did not reply to my point about National Service. I am wondering if I made it clear. In this case the parents lose a full year of tax relief which they should have by any standard of justice. They lose the first year of the boy's entry to the university after completing National Service, and, at the other end, they also lose because of the completion of the university course in June or July and the boy's subsequent earnings. In a four-year university course, however, the months involved are spread, the parent ends by receiving financial relief for one year less than the boy actually does at the university. It is not merely a question of some injustice for the last few months of the course. As far as I can reckon, the parents lose a full year's tax relief which they would receive but for the boy's doing National Service.
    Mr. Arbuthnot: I thank the Financial Secretary and also the Chancellor for having seen fit to accede to the pleas that we have made and accept the Amendment. In doing so they will have done a great deal to satisfy those people who feel rather out on a limb as compared with those parents who are in receipt of child allowance. I thank them for what they have done.
    Mr. Powell: In response to the question raised by the hon. Member for Bolton. West (Mr. Holt), the cost of the Opposition Amendment is entirely speculative, because we cannot know in advance what would be the incomes and the taperings which would occur in any particular case; so I would rather not risk an estimate of the cost.
    The Amendment of my hon. Friend the Member for Dover (Mr. Arbuthnot) is estimated to cost about £100,000 in a full year. though I do not know what deduction, one way or the other, the hon. Member for Bolton, West will draw from that. In reply to the right hon. Member for Battersea, North (Mr. Jay), I will certainly look at the particular types of case to which he has referred because, as the

    527
    hon. Member for Northfield (Mr. Chapman) implied, my right hon. Friend is by no means unconscious of the difficulties which arise here. I think that the case mentioned by the hon. Member for Northfield was partly covered by one of those
    mentioned by the right hon. Member for Battersea, North.
    Question put, That those words be there inserted:—
    The Committee divided: Ayes 191 Noes 238.

    Division No. 127.

    AYES

    [9.40 p.m.

    Ainsley, J. W.

    Hannan, W.

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

    Albu, A. H.

    Harrison, J. (Nottingham, N.)

    Paling, Will T. (Dewsbury)

    Allaun, Frank (Salford, E.)

    Hastings S.

    Palmer, A. M. F.

    Allen, Scholefleld (Crewe)

    Hayman, F. H.

    Pannell, Charles (Leeds, W.)

    Awbery, S. S.

    Healey, Denis

    Pargiter, G. A.

    Baird, J.

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

    Parker, J.

    Balfour, A.

    Herbison, Miss M.

    Paton, John

    Bellenger, Rt. Hon. F. J.

    Hewitson, Capt. M.

    Pearson, A.

    Benn, Hn. Wedgwood (Bristol, S.E.)

    Hobson, C. R. (Keighley)

    Pentland, N.

    Benson, G.

    Holmes, Horace

    Price, J. T. (Westhoughton)

    Beswick, Frank

    Holt, A. F.

    Price, Philips (Gloucestershire, W.)

    Blackburn, F.

    Houghton, Douglas

    Probert, A. R.

    Blenklntop, A.

    Howell, Charles (Perry Barr)

    Proctor, W. T.

    Blyton, W. R.

    Howell, Denis (All Saints)

    Randall, H. E.

    Boardman, H.

    Hubbard, T. F.

    Rankin, John

    Bowen, E. R. (Cardigan)

    Hughes, Cledwyn (Anglesey)

    Redhead, E. C.

    Boyd, T. C.

    Hughes, Emrys (S. Ayrshire)

    Reeves, J.

    Brockway, A. F.

    Hughes, Hector (Aberdeen, N.)

    Roberts, Goronwy (Caernarvon)

    Broughton, Dr. A. D. D.

    Hunter, A. E.

    Robinson, Kenneth (St. Pancras, N.)

    Brown, Thomas (Ince)

    Hynd, J. B. (Attercliffe)

    Rogers, George (Kensington, N.)

    Burke, W. A.

    Irvine, A. J. (Edge Hill)

    Ross, William

    Burton, Miss F. E.

    Irving, Sydney (Dartford)

    Royle, C.

    Butler, Herbert (Hackney, C.)

    Isaacs, Rt. Hon. G. A.

    Silverman, Julius (Aston)

    Butler, Mrs. Joyce (Wood Green)

    Janner, B.

    Silverman, Sydney (Nelson)

    Carmichael, J.

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

    Skeffington, A. M.

    Champion, A. J.

    Jeger, George (Goole)

    Slater, J. (Sedgefield)

    Chapman, W. D.

    Johnson, James (Rugby)

    Smith, Ellis (Stoke, N.)

    Chetwynd, G. R.

    Jones, David (The Hartlepools)

    Sorensen, R. W.

    Clunie, J.

    Kenyon, C.

    Sparks, J. A.

    Coldrick, W.

    Key, Rt. Hon. C. W,

    Steele, T.

    Collick, P. H. (Birkenhead)

    King, Dr. H. M.

    Stokes, Rt. Hon. R. R. (Ipswich)

    Collins, V. J. (Shoreditch & Finsbury)

    Lawson, G. M.

    Stones, W. (Consett)

    Craddock, George (Bradford, S.)

    Ledger, R. J.

    Strauss, Rt. Hon. George (Vauxhall)

    Cronin, J. D.

    Lee, Frederick (Newton)

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

    Crossman, R. H. S.

    Lewis, Arthur

    Swingler, S. T.

    Cullen, Mrs. A.

    Lindgren, G. S.

    Sylvester, G. O.

    Dalton, Rt. Hon. H.

    Logan, D. G.

    Taylor, Bernard (Mansfield)

    Darling, George (Hillsborough)

    Mabon, Dr. J. Dickson

    Thomas, George (Cardiff)

    Davies, Ernest (Enfield, E.)

    MacDermot, Niall

    Thomas, Iorwerth (Rhondda, W.)

    Davies, Stephen (Merthyr)

    McGhee, H. G.

    Thomson, George (Dundee, E.)

    Deer, G.

    McKay, John (Wallsend)

    Tomney, F.

    Dodds. N. N.

    MacMillan, M. K. (Western Isles)

    Ungoed-Thomas, Sir Lynn

    Dugdale, Rt. Hn. John (W. Brmwch)

    Marion, Simon

    Usborne, H. C.

    Dye, S.

    Mainwaring, W. H.

    Viant, S. P.

    Ede, Rt. Hon. J. C.

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

    Wade, D. W.

    Edwards, Rt. Hon. John (Brighouse)

    Mann, Mrs. Jean

    Weitzman, D.

    Edwards, Rt. Hon. Ness (Caerphilly)

    Marquand, Rt. Hon. H. A.

    Wells, Percy (Faversham)

    Edwards, Robert (Bilston)

    Mason, Roy

    West, D. G.

    Edwards, W. J. (Stepney)

    Mayhew, C. P.

    Wheeldon, W. E.

    Evans, Albert (Islington, S.W.)

    Mellish, R. J.

    Wilkins, W. A.

    Evans, Edward (Lowestoft)

    Mikardo, Ian

    Willey, Frederick

    Fernyhough, E.

    Mitchison, G. R.

    Williams, David (Neath)

    Fienburgh, W.

    Monslow, W.

    Williams, Rev. Llywelyn (Ab'tlllery)

    Finch, H. J.

    Moody, A. S.

    Williams, Ronald (Wigan)

    Fletcher, Eric

    Morris, Percy (Swansea, W.)

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

    Forman, J. C.

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

    Williams, W. R. (Openshaw)

    George, Lady Megan Lloyd(Car' then)

    Mort, D. L.

    Williams, W. T. (Barons Court)

    Gibson, C. W.

    Moyle, A.

    Wilson, Rt. Hon. Harold (Huyton)

    Gooch, E. G.

    Mulley, F. W.

    Winterbottom, Richard

    Gordon Walker, Rt. Hon. P. C.

    Neal, Harold (Bolsover)

    Woodburn, Rt. Hon. A.

    Grenfell, Rt. Hon. D. R.

    Oliver, G. H.

    Yates, V. (Ladywood)

    Grey, C. F.

    Orbach, M.

    Griffiths, David (Rother Valley)

    Owen, W. J.

    TELLERS FOR THE AYES:

    Hale, Leslie

    Padley, W. E.

    Mr. John Taylor and

    Hamilton, W. W.

    Paget, R. T.

    Mr. Simmons.

    NOES

    Agnew, Sir Peter

    Grosvenor, Lt.-Col. R. G.

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

    Aitken, W. T.

    Gurden, Harold

    Nugent, G. R. H.

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

    Hall, John (Wycombe)

    Oakshott, H. D.

    Alport, C. J. M.

    Harris, Reader (Heston)

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

    Anstruther-Gray, Major Sir William

    Harrison, A. B. C. (Maldon)

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

    Arbuthnot, John

    Harrison, Col. J. H. (Eye)

    Orr, Capt. L. P. S.

    Armstrong, C. W.

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

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

    Ashton, H.

    Harvey, John (Walthamstow, E.)

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

    Atkins, H. E.

    Harvie-Watt, Sir George

    Osborne, C.

    Baldoek, Lt. Cmdr. J. M.

    Hay, John

    Page, R. G.

    Baldwin, A. E.

    Heald, Rt. Hon. Sir Lionel

    Pannell, N. A. (Kirkdale)

    Balnlel, Lord

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

    Partridge, E.

    Barber, Anthony

    Henderson, John (Cathcart)

    Peyton, J. W. W.

    Barlow, Sir John

    Hesketh, R. F.

    Pickthorn, K. W. M.

    Barter, John

    Hill, Rt. Hon. Charles (Luton)

    Pike, Miss Mervyn

    Baxter, Sir Beverley

    Hill, Mrs. E. (Wythenshawe)

    Pllkington, Capt. R. A.

    Beamish, Mai. Tufton

    Hill, John (S. Norfolk)

    Pitman, I. J.

    Bell, Philip (Bolton, E.)

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

    Pitt, Miss E. M.

    Bell, Ronald (Bucks, S.)

    Holland-Martin, C. J.

    Powell, J. Enoch

    Bennett, F. M. (Torquay)

    Hornby, R. P.

    Price, Henry (Lewisham, W.)

    Bennett, Dr. Reginald

    Hornsby-Smith, Miss M. P.

    Prior-Palmer, Brig. O. L.

    Bevins, J. R. (Toxteth)

    Horobin, Sir Ian

    Raikes, Sir Victor

    Bidgood, J. C.

    Horsbrugh, Rt. Hon. Dame Florence

    Ramsden, J. E.

    Biggs-Davison, J. A.

    Howard, Hon. Greville (St. Ives)

    Rawlinson, Peter

    Birch, Rt. Hon. Nigel

    Howard, John (Test)

    Rees-Davies, W. R.

    Black, C. W.

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

    Remnant, Hon. P.

    Body, R. F.

    Hurd, A. R.

    Renton, D. L. M.

    Boyle, Sir Edward

    Hutchison, Sir James (Scotstoun)

    Ridsdale, J. E.

    Braine, B. R.

    Hyde, Montgomery

    Rippon, A. G. F.

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

    Hylton-Foster, Rt. Hon. Sir Harry

    Robinson, Sir Roland (Blackpool, S.)

    Brooman-White, R. C.

    Iremonger, T. L.

    Rodgers, John (Sevenoaks)

    Browne, J. Nixon (Craigton)

    Irvine, Bryant Godman (Rye)

    Roper, Sir Harold

    Bullus, Wing Commander E. E.

    Jennings, J. C. (Burton)

    Ropner, Col. Sir Leonard

    Burden, F. F. A.

    Johnson, Dr. Donald (Carlisle)

    Schofield, Lt.-Col. W.

    Butoher, Sir Herbert

    Johnson, Eric (Blackley)

    Scott-Miller, Cmdr. R.

    Chichester-Clark, R.

    Joseph, Sir Keith

    Sharples, R. C.

    Clarke, Brig. Terence (Portsmth, W.)

    Johnson-Hicks, Hon. Sir Lancelot

    Shepherd, William

    Cole, Norman

    Keegan, D.

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

    Conant, Maj. Sir Roger

    Kerby, Capt. H. B.

    Smithers, Peter (Winchester)

    Cooke, Robert C.

    Kerr, H. W.

    Spearman, Sir Alexander

    Cooper, A. E.

    Kimball, M.

    Speir, R. M.

    Cordeaux, Lt.-Col. J. K.

    Kirk, P. M.

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

    Corfield, Capt. F. V.

    Lagden, G. W.

    Stevens, Geoffrey

    Craddook, Beresford (Spelthorne)

    Langford-Holt, J. A.

    Steward, Harold (Stockport, S.)

    Crosthwalte-Eyre, Col. O. E.

    Luather, E. H. C.

    Steward, Sir William (Woolwich, W.)

    Crowder, Sir John (Finchiey)

    Loavey, J. A.

    Stoddart-Scott, Col. M.

    Cunningham, Knox

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

    Storey, S.

    Currie, G. B. H.

    Legh, Hon. Peter (Petersfield)

    Studholme, Sir Henry

    Dance, J. C. G.

    Lindsay, Hon. James (Devon, N.)

    Summers, Sir Spencer

    D'Avigdor-Goldstnid, Sir Henry

    Linstead, Sir H. N.

    Sumner, W. D. M. (Orpington)

    Deedes, W. F.

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

    Taylor, William (Bradford, N.)

    Digby, Simon Wingfield

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Teeling, W.

    Dodds-Parker, A. D.

    Longden, Gilbert

    Temple, John M.

    Donaldson, Cmdr. C. E. McA

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Thomas, Leslie (Canterbury)

    Doughty, C. J. A.

    Lucas, P. B. (Brentford & Chiswick)

    Thomas, P. J. M. (Conway)

    Drayson, G. B.

    Lucas-Tooth, Sir Hugh

    Thompson, Kenneth (Walton)

    du Cann, E. D. L.

    McAdden, S. J.

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

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

    Macdonald, Sir Peter

    Thorneycroft, Rt. Hon. P.

    Duthie, W. S.

    McKibbin, A. J.

    Thornton-Kemsley, C. N.

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

    Mackie, J. H. (Galloway)

    Tiley, A. (Bradford, W.)

    Errington, Sir Eric

    McLaughlin, Mrs, P.

    Turton, Rt. Hon. R. H.

    Farey-Jones, F. W.

    Maclean, Fitzroy (Lancaster)

    Vane, W. M. F.

    Finlay, Graeme

    MacLeod, John (Ross & Cromarty)

    Vaughan-Morgan, J. K.

    Fisher, Nigel

    Macmillan, Maurice (Halifax)

    Vickers, Miss Joan

    Fletcher-Cooke, C.

    Maddan, Martin

    Wakefield, Edward (Derbyshire, W.)

    Fort, R.

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

    Wakefield, Sir Wavell (St. M'lebone)

    Garner-Evans, E. H.

    Maitland, Hon. Patrick (Lanark)

    Wall, Major Patrick

    George, J. C. (Pollok)

    Manningham-Buller, Rt. Hn. Sir R.

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

    Gibson-Watt, D.

    Markham, Major Sir Frank

    Ward, Dame Irene (Tynemouth)

    Glover, D.

    Marlowe, A. A. H.

    Waterhouse, Capt. Rt. Hon. C.

    Godber, J. B.

    Mathew, R.

    Webbe, Sir H.

    Maude, Angus

    Gomme-Duncan, Col. Sir Alan

    Mawby, R. L.

    Whitelaw, W. S. I.

    Goodhart, Philip

    Medlicott, Sir Frank

    Williams, Paul (Sunderland, S.)

    Gower, H. R.

    Milligan, Rt. Hon. W. R.

    Wills, G. (Bridgwater)

    Graham, Sir Fergus

    Molson, Rt. Hon. Hugh

    Wood, Hon. R.

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

    Morrison, John (Salisbury)

    Woollam, John Victor

    Green, A.

    Nabarro, G. D. N.

    Yates, William (The Wrekin)

    Gresham Cooke, R.

    Nairn, D. L. S.

    Grimston, Hon. John (St. Albans)

    Neave, Airey

    TELLERS FOR THE NOES:

    Grimston, Sir Robert (Westbury)

    Nicholson, Godfrey (Farnham)

    Mr. Hughes-Young and Mr. Bryan.

    Amendment made:In page 8, line 18, at end insert:
    (4) In subsection (4) of section two hundred and twelve of the Income Tax Act, 1952, as amended, for the reference to eighty-five pounds there shall be substituted a reference to one hundred pounds.—[Mr. Arbuthnot.]
    Motion made, and Question proposed,That the Clause, as amended, stand part of the Bill.
    Mr. Jay: Before we part with the Clause, which gives large Surtax reliefs in the name of incentives to greater effort, we might have one more look at this theory of incentives, which has been discussed in the course of the afternoon. I would invite the Chancellor, or at any rate his assistants, to lay aside all political slogans on the matter and to look at the truth about incentives. I use "truth" in this case in an un-Parliamentary sense.
    When we apply our minds impartially to the question we find that there is remarkably little evidence that direct taxation, at any rate at the levels prevailing in this country, is a marked disincentive, on balance, to productive effort. Of course, it is unpopular, and of course. we do not like paying the tax; but it does not necessarily follow from that that there is a disincentive.
    The hon. Member for Langstone (Mr. Stevens) referred earlier today to the social survey which was carried out under the auspices of the Royal Commission and which was the first effort by actual observation and experiment—as distinct from mere theorising—to discover how income earners react to the effects of direct taxation. We ought to pay rather more attention than we normally do to the conclusions of that investigation which are set out in the Royal Commission's Report. In the survey 4,000 Income Tax payers were closely questioned—they were Income Tax payers rather than Surtax payers. The investigators reached three conclusions.
    The first was that most of the people whom they questioned were not very much affected one way or another by income Tax in respect of the amount of work they did. The second was that some of them, mainly wage earners, probably did, as a result of the tax on their marginal earnings, work rather less hard, at any rate on some occasions. The third conclusion was that others, for
    532
    family reasons or to maintain a net income in order to cover weekly or monthly commitments—a position in which many of us find ourselves—were compelled by the tax to work harder and to earn more in order to cover those commitments.
    If we want seriously to consider the effect of direct taxation on the amount of work, we have to consider whether the one group which works less hard because of taxation is outweighed, on balance, by the group which works harder. That was the task of this inquiry. The hon. Member for Langstone was rather misleading because he read out partial quotations and bits of the inquiry but did not give the Committee the substantial sentence in the summary of the conclusions which are in page 92 of the Royal Commission's Report. which is:
    "There was no evidence from this inquiry of productive effort being inhibited by the Income Tax structure within its present limits."
    That is not just my comment but is the conclusion of the social survey, and it was a conclusion accepted by the Royal Commission which, after all, included not just a lot of Socialists, but Lord Radcliffe, Lord Heyworth, Mr. Millard Tucker and other experts of that kind.
    Mr. Stevens: The right hon. Gentleman has just accused me of misleading the Committee by giving a partial quotation. He himself does precisely the same thing because he reads one of three conclusions of this survey. The final conclusion is:
    "Those having strong anti-Income Tax views tended slightly more often than others to work less than average hours, but this attitude was not associated with facts."
    Maybe it was not associated with facts. but they did work less and they produced less.
    Mr. Jay: The report does not say that they worked less because of the tax. However, I invite any hon. Member to read the full conclusions and to judge for themselves. All I am doing now is to invite the Chancellor, the Government and the rest of the Committee to look at the evidence and to form their own conclusions.
    This social survey which the Commission quoted, referred, I understand, almost entirely to wage earners and Income Tax payers rather than to Surtax payers. It would be open to the Chancellor to argue,

    533
    as I think he was inclined to argue in his Budget statement, that in his view a very severe disincentive effect applied at the higher levels of income because of the higher ranges of progressive taxation which fall on those levels. Of course that was not the view which the Royal Commission took.
    The Royal Commission, in paragraph 149, to which the hon. Member for Lang-stone referred, although naturally he did not read the whole paragraph, took quite a clear view of that issue. It said:
    "if we arc asked to infer from this that the heavy rates have any special disincentive effect upon the receivers of the higher levels of income, so as to justify a shifting of the existing weight of taxation from these lower levels of income, we are bound to reply that we see no evidence that the higher income earners are specially affected by disincentive."
    That was a quite clear conclusion of the Royal Commission. Nevertheless, to be fair to the hon. Member for Langstone and anyone who takes the other view, I agree that that conclusion of the Royal Commission was not based on evidence so far as Surtax payers were concerned, but merely based on the sort of general judgment that we are all asked to make.
    This is what I wish to draw to the attention of the Chancellor. I have been interested to see the conclusion of an inquiry recently undertaken by a very excellent paper, the British Tax Review,with which I expect the hon. Member for Langstone is familiar, with the same kind of questionnaire into the reaction of Surtax payers to direct taxation. The results of that inquiry are being published in the June number of the British Tax Review.The investigator in this case made inquiries among 300 Surtax paying accountants and solicitors and conducted his questions in ways, fully explained in the report, which to me seemed fair, convincing, impartial and objective. I shall not go into them in detail. The Editor of the Review sums up the conclusions in this way:
    "His conclusions are very similar to those of the social survey, and certainly offer little support for the theory that a reduction in taxation of earned incomes leads to a large increase in productivity."
    Mr. Stevens: This is on Surtax?
    Mr. Jay: Yes, on Surtax.
    What the investigator found was very similar to what the social survey found
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    in the case of the lower Income Tax payers. Most of the people questioned. so long as it did not arise from their political prejudice on the whole subject of taxation, as it were, did not really react differently one way or the other according to changes in tax. Some of them, a minority, did appear to work less hard because of the marginal impact of the tax on additional earnings, but others, as in the case of people on lower incomes, were, in the words of the Report, "forced … to work harder" in order to maintain their net incomes and standard of living.
    The investigator said that when he first put about among some of the people with whom he was conversing the idea that some people worked harder because of tax, he was looked on almost like someone in the sixteenth century who argued that the earth went round the sun and not the sun round the earth. Curiously enough, according to this Report—which I invite hon. Members to study; and I am not giving my views to the Committee but merely trying to bring to their attention some impartial evidence—one of the most pronounced reactions he had from these accountants and solicitors paying Surtax was that as a result of taxation they intended to retire later and to go on working rather longer than they would otherwise have done.
    Mr. Stevens: They had to.
    Mr. Jay: Exactly; as the hon. Member said, the effect of direct taxation was an incentive to extra years of work. In some cases they informed this investigator that apparently the main response to the reduction of Surtax in the present Budget was that they might retire a little earlier.
    Finally, may I read the conclusion of this investigator? This is not a statement of my opinion but is a result of the evidence collected.
    "A country experiencing economic tribulations may encounter certain scarcities but she is sure to be blessed with an abundance of economic diagnosticians ready to point out the trouble spots. A favourite conclusion for present-day Britain is that penal 'taxation is killing of incentives to work. Both the survey described in this paper and the one carried out for the Royal Commission provide evidence that casts considerable doubt on this judgment. It is significant that although the two

    535
    studies dealt with widely different segments of the population, each found the influence of taxation on incentives to work to be remarkably small. Some people do indeed react to high Income Tax rates by working less than they otherwise would, but others behave in exactly the opposite way, being more or less forced by taxation to work harder. These opposing groups are not only small but of approximately the same size, being separated in our own study by only a few percentage points, and significantly (depending on the interpretation given to the evidence) the incentive group is frequently the larger of the two."
    That means the group who respond by working harder. I do not rest any special significance on that, but that is what the investigator says. To continue my quotation:
    "Whatever may be the important causes behind Britain's post-war economic difficulties, a lack of incentives to work because of high income taxation does not appear to be one of hem."
    I am simply reading this in order to express the hope that the Chancellor and his colleagues will look at this evidence for what it is worth when they are considering any further changes of taxation on the ground of incentive.
    Quite apart from the prejudices which any of us may have or the sweeping judgments that we may be inclined to make from time to time, in my view the objective evidence does not justify the sweeping reductions in Surtax which are made in the Clause. I think that is also the view of most of my hon. Friends.
    Mr. Godfrey Nicholson: I was very much interested in the speech of the right hon. Member for Battersea. North (Mr. Jay). I am sure he did his best to approach the subject in an impartial spirit. I was interested not only in what he said but also in the fact that it disclosed the fundamental difference in philosophy between the two sides of the Committee. The view of hon. Members opposite apparently is that we should apply taxation, extort taxation, to the very greatest degree possible until we see an actual falling off in production. They believe that that can be measured and judged by statistics. I do not believe that we can assess by statistical methods the important question at issue, and that is this—not only are we getting more production, which incidentally can be measured only in concrete terms, but are
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    we getting the very best people in the places where they are most needed?
    Take, for instance, the professions. One of the results of the modern system of penal taxation is that people going into the professions cannot save. The right hon. Gentleman himself said that the more highly-paid solicitors, chartered accountants and other professional men concluded that they must retire later, and indeed continue work until they drop in their tracks, because they cannot save. Can anybody claim that a young man today whose parents are considering his future has the same inducement to enter into a learned or any other profession as he would have had if there had been a possibility of saving?
    10.0 p.m.
    Take the medical profession. Can any doctor save? Is the differential in earning capacity between that profession and some mercantile calling such as to encourage a young man to enter or his parents to encourage him to enter the medical profession? There is the Bar. What inducements are there for a man to be called to the Bar? The same applies to the solicitor or to the chartered accountant. It is virtually impossible for any professional man to accumulate capital.
    The philosophy on this side is different. We believe in paying for the job the rate which will get the best men for the job. and that it is right and proper that people with fine intelligences. character and great industry should be allowed to accumulate capital and to leave it to their children. We do not hold that it is right or just for the State to view taxation in this exceedingly penal and extortionate way. That is the fundamental difference in our philosophies. We do not believe that the best men will be found for the best places in the professions or in industry unless they have sufficient inducement to struggle to those places.
    The question is not whether people in those places work harder or less hard because of the present system of taxation, but whether there is sufficient inducement for those men to want those positions. It is a fundamental difference, and I very much hope that the Conservative Party, to which I am proud to belong, and the present Conservative Government will move in the direction

    537
    of seeing that people in the professions and in industry have sufficient inducement to reach the highest posts and to accumulate and to leave capital.
    Mr. E. Fernyhough: The hon. Member for Farnham (Mr. Nicholson) said that the speech of my right hon. Friend the Member for Battersea, North (Mr. Jay) indicated the difference in the philosophy of the two sides of the Committee. I quite agree. This Clause itself indicates that difference, because in essence it says:
    "For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath."
    We all know that the relief being given to the higher taxpayers was filched from the general mass of the people by liquidating the bread subsidy and by substantially reducing the subsidy on milk. The hon. Member said that the party opposite believes in paying the rate for the job. Had he lived where I do in the inter-war years he would have thought it a very low rate for the job, when one got it—and very often one did not get the job at all. The rate for the job has not always been the Tory philosophy, or, if they have believed in it, they have believed that thousands of working men in the past were worth next to nothing, because that is what those men were paid when they could be hired and fired at will.
    I readily agree with the hon. Member for Farnham. It is very natural that professional people should want to save. It is very desirable that a doctor should want his son to follow him in that profession, but I do not know that, at the moment, there is any shortage of applicants. In fact, there are more people wanting to be doctors today than ever before, and I presume that they must be undertaking this vocation, not only because it will be rewarding in the spiritual, the healing, sense, but also in a material sense.
    When the Chancellor introduced his Budget he said that if the theme was to he opportunity and incentive, then concessions had to be made of the kind which we are now discussing. But what does this country want at present? More than anything else it needs a substantial increase in production in coal mining, in engineering, and in every one of our basic and important export industries. That is
    538
    what we want. That would solve the economic problems facing the country.
    This is supposed to be an incentive Budget. How many miners will benefit from this Clause? We have heard of miners getting£20, £25 and £30 a week, but those of us who have lived among miners all our lives have seldom met such people, though apparently they exist according to the newspapers. But not one miner will benefit from this Clause. In other words, the Conservative Party philosophy says, "We believe it is more important to give incentives to millionaires than to miners."
    We are very short of labour. There is a demand in most parts of the country for unskilled labour. But there is no incentive to the unskilled labourer. The incentive is for the high income lawyer. Therefore, the Conservative Party appears to regard the lawyer as far more important than the labourer. Yet these people who are doing the hard, dirty, dangerous work are basic. If we are to get out of our difficulties we shall need all the drive, vigour and enthusiasm of the men in the mines, factories and fields. Yet it is obvious that this Budget made no appeal to them.
    I should like to illustrate who really does matter and to whom, therefore, the incentives should be given. We recently had a strike in the engineering and shipbuilding industries. Every Surtax payer employed in those industries went to work while the strike was on. Yet not a ship was repaired or constructed because the men to whom the hon. Member for Farnham did not refer did not go to work. In other words, ships are produced and repaired only if those men go to work. Production goes on in our engineering and electrical industries only if those men work.
    Mr. A. E. Cooper: Will the hon. Gentleman tell me who got the orders in the first place?
    Mr. Fernyhough: I very much doubt whether the orders were obtained by the shareholders who get the main benefit from the profits which result from the labour of these men. The orders were probably obtained by men who are not in the supertax class and who, therefore, would not benefit from this Budget. I hope that when the party to which I belong is returned to power—and that will

    539
    not be very long—we shall look after our friends as well as hon. Members opposite are looking after their friends in supporting this Clause.
    Sir Charles Mott-Radclyffe: I did not really intend to intervene in this debate. It is a good many years since I have spoken in a debate on the Finance Bill, and I do so only because of one or two words' which fell from the lips of the right hon. Member for Huyton (Mr. H. Wilson) and from the right hon. Member for Battersea, North (Mr. Jay).
    I take it that both sides of the Committee will agree that Britain's economy, and with it our standard of living, including the standard of living of the shipyard workers, of the old-age pensioners to which the party opposite pay such lip service, and of everybody in this country, depends upon our capacity to sell our goods in a highly competitive world.
    I do not think there will be any difference of opinion between the two sides of the Committee upon that point. Where, I think, the two sides of the Committee disagree is on how far it is wise or equitable or right to discourage success. There obviously is a point beyond which it is very unwise to discourage success. The party opposite put the point a good deal lower than we would. That is really what the difference of opinion is about on the Surtax concessions in this Clause. In other words, how far, with Britain fighting for her life-blood in a highly competitive world, it is wise to go along on the principle that the more one earns the less one keeps.
    I should have thought that of all the countries in the world in Britain it would be the most dangerous to discourage incentives. The party opposite—and I do not think this is an unfair paraphrase, broadly speaking say that anyone who earns up to about £3,500 is a very good citizen and ought to be encouraged, and anyone who earns above £3,500 is a progressively less good citizen and the more he earns above £3,500 the more he should be discouraged.
    Mr. H. Wilson: That is not at all what we are saying. If that is a fair deduction from what we are saying, I am sure that the hon. Member will be the first
    540
    to agree that it is a fair deduction from the Chancellor's own proposals to say that anyone who earns up to £10,000 a year is a good citizen and that anyone who earns more than £10,000 a year is not such a good citizen and ought not to be encouraged. If his argument is a fair representation of what we said in support of £3,500, the same argument must surely apply to the Chancellor's £10,000 limit.
    Sir C. Mott-Radclyffe: The right hon. Gentleman is much too intelligent to misunderstand to that extent. There is nothing clear-cut about this. It is a sliding scale, as the right hon. Gentleman knows perfectly well. The party opposite wish to have the scale of tax above £3,500 raised very high. They bitterly accuse us of favouring the higher salary earner by giving him concessions on up to £10,000.
    I wonder whether those who take the big decisions which make all the difference between success or failure in the various walks of life, whether it be in commerce, engineering or in any of the medical or scientific professions—the key men—are really in the category of those who are earning less than £3,500 a year. I do not believe that it is so. At any rate, let me say this to the right hon. Gentleman opposite. He talked about high taxation being no disincentive and quoted a rather carefully extracted paragraph from the Royal Commission's Report.
    When the party opposite nationalised a number of industries, including the coal mines to which reference has been made, they had to find men who were capable of becoming chairmen of the National and regional coal boards. One would have thought that if the principle applied that really high taxation was not much of a disincentive, that people were quite prepared to work for not very much in the way of salary—it was not the salary that counted; it was the job and the glory and so on—the right hon. Gentleman and his colleagues when setting up these Boards, could have found men willing and able to run the great nationalised industries of this country for much lower salaries than £10,000 a year. But they did not. Not only were they unable to get people to do it for less—
    10.15 p.m.
    Mr. Frank Beswick: Which chairmen were paid £10,000 a year?
    Sir C. Mott-Radclyffe: I am told that the Chairman of the National Coal Board was offered£8,500 a year.
    Mr. Beswick: No, he was not.
    Sir C. Mott-Radclyffe: In addition to that, the party opposite was unable to persuade anybody to take those big jobs involving great responsibility without a substantial expense allowance also. I have always regarded the expense allowance as a highly undesirable feature, but necessary, perhaps, in post-war Britain when taxation is so high. If we could reduce taxation we should not need such high expense allowances with all the abuse and anomalies they create. The party opposite, when sitting on these benches, was bound to give to key men in the nationalised industries a very large expense allowance so that they could carry out their functions. I am not complaining about that; I am merely stating the fact.
    The hon. Member for Orkney and Shetland (Mr. Grimond) referred to the distinction between earned and unearned income. I am not sure whether we can continue to have a completely clear-cut division, a kind of gulf fixed, between earned and unearned income, as a result of which the one is, so to speak, regarded as highly moral by the party opposite, up to £3,500 a year, at any rate, and the other is regarded as thoroughly immoral. Unearned income cannot be put in one category and earned income in another.
    The real urge for a man to use his wits so that he can command a high salary is not fundamentally immoral; it is not always entirely selfish by any means. It is an urge to put something by, if he can—heaven knows, it is difficult enough, even with the reliefs proposed by my right hon. Friend—either for his retirement or old age or for his wife and children. That is not a bad urge, and there is nothing unworthy about it. If he can put something by from the salary he earns during his working life, that goes into savings, as we call it. Interest from savings, in the view of the inspector of taxes, becomes unearned income. The interest on all the savings that a man may accumulate
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    during his working life, whether he exercises great skill with his hands and brain or whatever his ability may be, is unearned income when he comes to retire. It is not, therefore, wise or right that any hon. Member of this Committee should try to draw a rigid dividing line between earned and unearned income. If we wish to encourage saving, it is not right to call all earned income white and all unearned income black.
    Britain is in a position when it is not wise or safe. to discourage success. After all, our competitors are tough competitors in a highly competitive world: They do not make that mistake.
    Mr. Stevens: The Financial Secretary was probably right when he said that hon. Members on either side of the Committee quote from the Report of the Royal Commission whenever it happens to suit their book. I am sure that we could keep a considerable rally going by making selective quotations from the Report.
    The right hon. Member for Battersea, North (Mr. Jay) made a long attack upon me, accusing me of making selective quotations from the Report, and then he proceeded to make highly selective quotations. I want to give another quotation from a paragraph which he quoted, paragraph 149, which seems adequately to sum up the whole thing. It says:
    "These effects …"
    That is, disincentive effects:
    "… can only be studied properly when a generation has grown to maturity which has never known a régime in which high earnings are not largely absorbed in tax."
    That is very true.
    I also think it is true that on this side of the Committee we are rather inclined to over-emphasise the disincentive effect of high tax rates, and I am certain that it is also true that hon. Gentlemen opposite are inclined to underemphasise the disincentive effect of high tax rates. However, it is certainly the case that wherever one looks in the Report or the social survey which was carried out at the request of the Royal Commission, one finds all the way through references to a disincentive effect of some kind. It may be remarkably small, but it is there.
    The difference between success and failure in our economic life is also remarkably small. Earlier today the hon.

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    Member for Nelson and Colne (Mr. S. Silverman) referred to Mr. Micawber's sixpence and the difference between spending 19s. 6d. and spending 20s. 6d., a difference of about 2½ per cent. The difference between success and failure in our economic life is of much the same order, 2½–3 per cent. of the gross national product. The dividing line is very finely drawn. If the disincentive effect of high tax rates on all income groups is remarkably small but there none the less, it seems to me that it is the duty of the Government to do what they can to get rid of that disincentive effect and restore productivity to the maximum of which we are capable.
    Much of the discussion about the Clause has centred around the Surtax payers and the larger income groups as though they were the only ones for whom the Clause provided. That is not so. Subsection (2) provides further relief for old people with modest incomes. It raises the earned income relief for old people from £600 to £700. That has not been referred to in any of the discussions on Clause 10. On behalf of the older people with small incomes, I thank my right hon. Friend for the concession, which shows that he pays attention to income groups of all kinds.
    Mr. A. Blenkinsop: I had not intended to intervene, but in view of the turn that the discussion has taken I think it right that before the Clause is disposed of we should consider rather seriously the effect which the proposals in it are undoubtedly likely to have upon very large numbers of people upon whose effort the country very much depends.
    A few moments ago my hon. Friend the Member for Jarrow (Mr. Fernyhough) appeared to be laughed at by hon. Members opposite when he pointed out the simple fact of our complete dependence in, for example, the shipbuilding and engineering industries upon the efforts of the men in those industries. My hon. Friend was referring to the recent disputes. He comes from an area where these industries are paramount. One is bound to be concerned about the effect of a Clause like this upon the efforts of the men in those industries.
    What I find difficult to understand is that hon. Members opposite apparently
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    regard it as right and proper to make concessions which will result in very considerable spending power being made available to a relatively small group of people when, on the other hand, they hold up their hands in horror at proposals for wage advances because they say that these will put purchasing power in the hands of the people concerned. Of course, it will be said that one of the objects of the concession is to enable those who are already very rich to provide more for savings. Indeed, the point made by the hon. Member for Farnham (Mr. Nicholson) was that many professional groups were not able to save. I do not know whether that is borne out by the reports of insurance companies and other bodies. One thing which is rather striking is the amount of savings which are being provided.
    In any case, what sort of guarantee is there that an effective proportion of this extra sum which is being made available as purchasing power will be saved? Hon. Members opposite have not attempted to make clear how they will achieve a guarantee of saving, and the Committee ought to have such a guarantee before this sum is made available. Why do hon. Members opposite insist on regarding wage advances which are claimed by shipyard workers and others as reprehensible? Why should we not welcome wage advances, if this is the attitude of hon. Members opposite, on the ground that they also will make more savings available?
    Surely, on this argument, there is an urgent need to raise the general level of incomes in order that high savings can be made. Apparently, the higher one goes the better in this process. The more one can make available, The more one can reduce tax at the higher levels and the better the economy will be because savings will be relatively greater. Just as hon. Members opposite have not provided any proper evidence of disincentive from high taxation, so they are incapable of providing evidence that people in professional ranks are unable to make savings, or that it would be wrong for large sections of the working population to have bigger incomes out of which they in their turn could save and help the economy.
    It is a healthy thing that hon. Members opposite have so clearly and obviously

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    declared their special interest in this matter and their concern for those whom they no doubt claim to represent, because that also clarifies the matter for the workers in the shipyards and in the engineering plants who undoubtedly take note of the arguments developed here.
    There should be some word of warning about the effect of action of this kind directed so specifically to a small minority. This is bound to have an effect—whether it is fully justified or not—upon very large numbers of ordinary working people who are the people who make it possible or not for ships to go out, who make it possible or not for power stations to be built, who make it possible or not for the atomic energy programme to be developed.
    Mr. Birch: The subject matter of Clause 10 has been very well chewed over since 9th April and almost all the matters which it contains have been keenly debated although, as my hon. Friend the Member for Langstone (Mr. Stevens) pointed out, rather less has been said about reliefs for the old. The right hon. Member for Battresea, North (Mr. Jay) devoted his attention to incentives and to whether incentives were obtained by these Income Tax reliefs. He made a very interesting speech. In respect of his main point, my right hon. Friend the Chancellor gave a fairly robust answer this afternoon.
    10.30 p.m.
    I should like to make one comment. It is perfectly true that many of those with higher incomes have extremely interesting jobs, jobs to which they are determined to give their best, whatever happens. However, I think it is wrong and foolish to suppose that people's psychology is any different, whether they are paid by the week, by the month or by the year: they are all exactly the same people. Nobody has ever doubted that tax on overtime is a disincentive. If taxation is a disincentive to some people I cannot see any reason to suppose it is not a disincentive to other people. It is certainly a disincentive to risk taking. If one makes a profit the Chancellor takes 18s. 6d. of it. If one sustains a loss it is all one's own.
    There is some reason to suppose that hon. and right hon. Gentlemen opposite see some force at all events in my right
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    hon. Friend's argument because they did, by their first Amendment, come part of the way with us in the matter, and by their second Amendment, in some ways, they went further. However, I shall not go into that again. I would say, on this question of incentive, which has been the main one in this short debate on this Motion, that both sides agree that some incentive will be produced. We may disagree about how much the incentive will be, and about how far up the scale the relief ought to have gone, but that this Clause will be good not only as an incentive to those in the higher income groups but because of the provision for the children's allowance and the old people etc. we are all agreed.
    Mr. Mitchison: This Clause, of course, contains some useful provisions. It does, however, also contain a concession to Surtax payers which will cost rather less than £30 million this year and rather more than £30 million in succeeding years. That is a very large sum indeed. We have heard this concession justified on some very peculiar grounds. I quote first the hon. Member for Windsor (Sir C. Mott-Radclyffe), who explained that Britain was fighting for its lifeblood in a highly competitive world and that, according to him, was a reason for remitting £30 million to the Surtax payers. He further explained, if I understood him aright, that the Surtax payers sold the goods. Perhaps I am wrong.
    I should like to point out to him and to other hon. and right hon. Gentlemen opposite that those who manage businesses and those who sell goods depend in the last resort on having goods made in this country to sell, and that those goods are made by a number of honest people none of whom pays any Surtax at all and none of whom will get any benefit whatever out of this very remarkable concession. I should like further to point out to them that this concession comes in a Budget which, while recognising the criminal folly of trying to save the country by imposing Purchase Tax on pots and pans, meets the criticism that that remarkable measure proceeds not by removing the tax but merely by cutting half of it; that it comes at the moment when the country will be able to remit £30 million a year to its Surtax payers but is unfortunately unable to concede to the housewife the full relief,

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    and her reversion to the state of affairs which she enjoyed before Purchase Tax was put on her pots, pans, blankets, and so on.
    That is one aspect of the matter, but there is another. It is explained to us with great clarity by one Chancellor of the Exchequer after another that the remission of tax is not the same as paying money. It is perfectly true, of course, that it is different, but I would point out that a remission is made to Surtax payers or others only because the Chancellor of the Exchequer at the moment thinks he can afford to make that concession, and that is, of course, the reason why this concession is made. It is made at the moment when, as everybody knows, the rates upon which old folk have to live, and the whole scale of National Assistance rates, are scandalously inadequate to their needs in face of the rising cost of living. I confess that I was annoyed beyond words by the hon. Member for Windsor talking about lip service paid by hon. Members on this side of the Committee to the needs of those people. I can assure the hon. Gentleman that so far as I and my right hon. and hon. Friends are concerned we go to our constituencies and meet those people and we know full well the amount of hardship and suffering which the insane cruelty of keeping rates at that level necessitates.
    We ask hon. Members opposite what motives can induce them at this moment to remit £30 million to the Surtax payers of the country when, at the same time, they refuse to raise the standard of living of these people to anything like a tolerable standard. What possible philosophy and what possible sense of justice can inspire hon. Members opposite to do that sort of thing?
    We are told that this shows the difference between the philosophy on the two sides of the Committee. I am inclined to think that it does not show the difference between the philosophy. It shows the difference between the sources of the income of the Tory Party and the honest views held by us on this side of the Committee. I cannot see on any moral or philosophical grounds any possible reason or right for a concession of this sort while that wrong, among others, remains unremitted.
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    I will go even further. We know perfectly well that in one way after another the Chancellor has in recent months and years cut every possible social service in the country. [Laughter.] Is any one of the hon. Gentlemen opposite who are laughing prepared to say that at the moment the expenditure on hospitals in the country is sufficient? Are they prepared to say that the Guillebaud Report ought not to be implemented?
    I would point out to right hon. and hon. Members opposite that the concession that is being made in this Finance Bill to Surtax payers means that the Chancellor has not got the money at the moment with which to provide the country with an adequate hospital service that it so urgently needs. That is only one of millions of cases. The housing subsidies have been cut because the Chancellor did not think it right to spend the money. Yet that money is conceded by way of a remission of tax to Surtax payers.
    I wish to say one last thing about the Budget, and it is the worst that I can say about it. I entirely agree with the right hon. Gentleman. This is a Tory Budget, and this Clause dealing with Surtax payers is the most Tory part of it.
    Question put and agreed to.
    Clause, as amended, ordered to stand part of the Bill.
    Clause 11 ordered to stand part of the Bill.

    Clause 12.—(ALLOWANCE OF PERSONAL RELIEFS FOR PURPOSES OF SURTAX.)
    10.40 p.m.
    Mr. Mitchison: I beg to move, in page 9, line 7, after "assessment," to insert
    "and subject to the provisions of the next following subsection."
    The Deputy-Chairman (Sir Gordon Touche): It would be convenient to discuss with this Amendment the next Amendment: in line 27, at end, insert:
    (2) The liability of an individual to tax shall not by virtue of the last foregoing subsection be reduced further than it would have been reduced, if the excess of the income of the individual over the stated amount referred to in subsection (1) of section two of the said Act (being for the years 1956–57 and 1957–58 the amount of two thousand pounds) had, instead of being assessed at the appropriate rates of tax, been all assessed at the lowest of the higher rates applicable for the year of assessment.
    Mr. Mitchison: The question we have to consider—
    Mr. Nicholson: Before he starts his speech, will the hon. and learned Gentleman say whether it is to be more genuine than his last one?
    Mr. Mitchison: The hon. Member shows a remarkable pride in his integrity to suppose that what others say is not genuine.
    Mr. Nicholson: I naturally believed that after such a fervant oration there would be some effort to display the opinion expressed in the Division Lobby.
    Mr. Mitchison: If the hon. Gentleman is inquiring why we did not vote on Clause 10, he is as out of order as I should be in replying to him, but if it were not out of order I should reply that we do not vote against benefits.
    In moving the Amendment, I shall, of course, refer to the Amendment in line 27 and the proposed subsection. The proposal we make is a simple one. The Bill proposes that certain reductions shall be made from the income of Surtax payers for the purpose of ultimate assessment. Those reductions will be made in the ordinary course of things and in the absence of any provision to the contrary, so that their income is reduced and they will, therefore, come off the top scale upon which they pay tax.
    If, for instance, a taxpayer pays tax on an income of, say, £8,000 and the deductions, for the sake of argument, amount to £400, they will reduce the taxable income to £8,100 and he will benefit by a reduction at the rate applicable to between £8,000 and £8,500. The consequence is that this concession will help quite disproportionately those who get the larger incomes, for they will be relieved of tax at the highest rate at which they pay. The man who pays tax on an income of between £2,000 and £3,000 will get from these concessions a far smaller amount of relief than the man who pays tax on an income of £7,000 a year. I concede that, if we make a concession in this form, that is the obvious result of it and if we want it to have any other result we must make provision for the purpose. The Amendment proposes to make that provision.
    We suggest that in dealing with these concessions to Surtax payers we should
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    not give to any particular Surtax payer a higher concession on account of these personal reliefs than he would get if he were taxed at the lowest of the higher rates applicable to Surtax. The result, therefore, will be that in practically all cases the person concerned will get these consessions and he will get exactly the same amount as would, for instance, someone in receipt of a taxable income of £2,500 a year. That, in itself, is simple. Is there good reason for giving the higher Surtax payer bigger relief than the man in the £2,000–£4,000 range? The number of people paying Surtax between £2,000 and £2,500 is about two-sevenths of the whole, from £2,500 to £4,000 there is three-sevenths, and above £4,000 is another two-sevenths. The actual number of Surtax payers is quite small. We are not dealing with Surtax payers at the lowest rate but at the higher rates.
    10.45 p.m.
    So far as the considerable majority is concerned, this would not be a large deprivation, if it is to be so regarded at all. Assuming that the concession is to be made, is there any reason why personal reliefs should be allowed in this form, with the effect of giving by far the largest reliefs to the higher range of Surtax payers? I doubt whether much administrative difficulty can be involved in this, or any financial principle. It raises a very simple, ordinary moral principle.
    We have been dealing with personal reliefs on the standard rate of tax, and they have had the same effects for one person as for another. As soon as they are extended, as proposed by the Chancellor, the inequitable result was bound to follow. We could not have a clearer instance of giving the larger concession to the better off by way of the concession relating to personal reliefs. I fail to understand the reason for it. I cannot see any moral justification for allowing people to benefit by personal reliefs increasing in proportion to the amount of their income. It may be the philosophy of Government supporters that the bigger relief should go to the wealthier man, but it should not be put in quite that form. Even if it were, I should think personal reliefs the most inappropriate vehicle for the purpose.
    I fail to see how Government supporters can justify that the man who pays the higher rate of Surtax should get the

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    larger amount out of this concession on personal reliefs. The proper thing to do is to allow the concession in every case at the lowest rate applicable for Surtax, that is to say, to deduct it from the lowest Surtaxed income rather than from the highest. We cannot quite put it in that form because there might, I suppose, be cases—I remember the millionaire with 20 children who cropped up last year—where we might get an amount of personal reliefs in excess of the £500 that represents the range over which the lowest rate is charged.
    But the principle is clear enough. Allow it on the assumption that the whole of the Surtax income is taxed at the lowest rate, and by so doing we will equalise the relief given as between the marginal man, who is just paying Surtax, and the privileged few who pay Surtax at the very highest rate. Surely, if what right hon. and hon. Gentlemen opposite want to do is to benefit the pushing young man who is to make a success of things, or even the man who is beginning to make a success—and sometimes, perhaps, the rather older man who has made a moderate success—they should at least be as kind to that type of taxpayer who will be paying Surtax, if he pays it at all, at one of the low rates, as they propose to be to those fortunate 1,200 or so who pay Surtax on incomes of over £25,000 a year, and who will get out of this a benefit far greater than their humbler brothers, the lower range of Surtax payers.
    Mr. Powell: The hon. and learned Gentleman said that this is a simple proposal. It is certainly a most peculiar one. I do not know how many hon. Members opposite have taken the trouble to read the Amendment, but those who take that trouble will soon find that its effect is to deny this relief altogether to persons earning between £2,000 and £2,500. That is the simple and sole effect of the Amendment—to deny the value of these allowances only and exclusively to the lowest incomes amongst Surtax payers—
    Mr. Mitchison: I am sure the Financial Secretary will explain his somewhat mysterious comment.
    Mr. Powell:—because it restricts the relief to the difference between what the Surtax payer is paying and what he would be paying if paying on the lowest Surtax
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    rate. Of course, a person earning between £2,000 and £2,500 is paying only at the lowest Surtax rate, and therefore for him the limit of relief by virtue of the Clause is precisely nil.
    Mr. Mitchison: I am sorry to differ from the hon. Gentleman—I am sure that he has had very good advice—but I do not understand it to be so. What is proposed is that the liability of a person to tax is not to be reduced further than it would have been if the whole of the income had been taxed at the highest of the Surtax rates. I find it wholly impossible to find how he has succeeded in so misunderstanding the Clause.
    Mr. Powell: Possibly the hon. and learned Gentleman intended to put the Amendment in that form. Of course, he has not read it out as it stands in the Order Paper—
    Mr. Mitchison Mr. Mitchison rose—
    Mr. Powell: If the hon. and learned Gentleman will sit quiet for a minute and read the Amendment he will find that the effect is exactly as I have said; that it denies all relief by virtue of the Clause to anyone taxable on an income of between £2,000 and £2,500—
    Mr. Mitchison: No.
    Mr. Powell: I will not waste the time of the Committee further by dissecting what hon. Members opposite obviously did not intend to achieve, and I will take the proposition which they intended to put; that these reliefs should run only against the lowest rate of Surtax.
    What we are trying to do in the Clause, and I think that it is something on which both sides of the Committee are agreed, is to secure that as between two taxpayers of the same income, the taxpayer with the family responsibility, if I may so briefly describe it, shall be relieved as compared with the bachelor. The way in which he is relieved is by graduating his tax more favourably. The effect of these allowances is that of the two taxpayers, the family man pays at his highest rate on a narrower band of income.
    That is how the personal allowances work at present for Income Tax. Unless we apply the same principle in extending them to Surtax, unless we allow the allowances to have the effect of diminishing the

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    band of income on which a family man pays at the highest rate, the effect will be that we shall leave the bachelor on the higher salary in an advantageous position compared with the family man, because we shall leave the bachelor paying Income Tax at a reduced rate upon a narrower band of income than that on which the family man pays it. Therefore, any attempt to restrict these allowances in their operation to less than the marginal rate of tax of the taxpayer concerned is self-defeating.
    If we really want to secure, as I believe both sides of the Committee do want to secure, that as between two taxpayers having the same income the bachelor is more heavily taxed than the family man, it must be done in the way that the Clause proposes and not in the way that the Opposition have proposed or in the way that they intended to propose.
    Mr. H. Wilson: I am very disappointed at the speech of the Financial Secretary, not merely because he said "No", as he has been doing steadily for five days, with the one exception of a nicely arranged Amendment from his back benches, but because I had hoped that we could dispose of this Clause very quickly indeed. It had been my hope that a brief debate on this Amendment could have been settled either by the Government accepting it, or accepting it in principle, or, failing that, by a Division, and then we could have had an extremely brief debate on the Question that Clause 12 stand part of the Bill.
    However, after the speech of the Financial Secretary I should like, through you, Sir Gordon, to ask the Chancellor to think again about this matter and to consider whether he would not do better now to move to report Progress. In the first place, we have had a categorical statement of his conception of the law as applied to this Amendment by the Financial Secretary, and although we would all pay tribute to the great grip which he has got on the intricacies of Income Tax problems in the short time that he has been at the Treasury, we still do not regard him as one of the most highly qualified lawyers in the House.
    I am not suggesting that the hon. Gentleman knows less than the Attorney-General or would be less useful to the Committee in that context, but I do suggest that the Chancellor ought now to
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    bring along some reputable Law Officer; I might suggest the Solicitor-General who was a great help to the Committee last year and whose intervention we appreciated. While I am very doubtful about what the Attorney-General could bring except additional obscurity, the Solicitor-General at any rate could help us.
    Failing that, I am bound to say that this debate might degenerate into a legal wrangle between the two sides of the Committee. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) who moved the Amendment does not in any way accept the strictures of the Financial Secretary as to the legal interpretation. He does not even understand what the Financial Secretary is talking about. But since it is clear that the Financial Secretary does not know what he is talking about, that is perfectly understandable. He has worked very hard today, and we know how tired he must be. That state of affairs cannot be at all surprising.
    I suggest it would save time and would speed up the proceedings if the Chancellor would move to report Progress and if we could have a Law Officer to give us an authoritative ruling in the morning. I now see the Attorney-General himself.
    11.0 p.m.
    Even apart from the legal aspects of the question, the Financial Secretary, at any rate, understands what we are setting out to achieve. There may be a disagreement about the actual interpretation of our proposal, though we cannot follow his arguments. But apart from that. having admitted that he knows what we are trying to achieve, he then puts up, I should have thought, quite the worst performance of his short Finance Bill career in the reply he has just given. In the first place, he based a great part of his argument on the anomalies which would be created as between family man and bachelor. I am surprised that he has dropped his guard to that extent, because he must realise that we pointed out to the Chancellor, even in the Budget debate a few hours after his Budget speech, that the Chancellor's proposals on this Clause departed in a very important particular from the recommendation of the Royal Commission.
    The Royal Commission recommendation proposed that these personal reliefs should be brought into relation, and said

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    that the cost should be self-balanced within the Surtax range by reducing the Surtax starting-point for bachelors. Therefore, for the Financial Secretary to say that the bachelor will get away with it, when the Chancellor has rejected that part of the Royal Commission's recommendation which would have made part of the cost fall on the bachelors, is quite astonishing. If he will now say that his concern about the bachelors is such—particularly since he, to our great satisfaction, himself ceased to be one—that he will look again at this matter between now and Report stage, we should be happy to bring the debate to an early conclusion now.
    The Financial Secretary did, of course, draw attention to something which must be in the minds of all hon. Members when considering this kind of problem. There are bound to be anomalies one way or another, whatever one does. Either one will create an anomaly as between the family man and the bachelor at particular levels of tax—the Royal Commission's Report was full of references to such anomalies as compared with prewar—or one will create an anomaly vertically as between different ranges of income. The Financial Secretary was quite correct in talking about different widths of bands of income which carry a particular rate. The Royal Commission pointed out that as between bachelor and family man, in the range of taxation below Surtax, they are paying at the full rate on a much shorter band of income; and, of course, the Chancellor by this Clause, which, on the whole, we welcome, as we said, is making the band of income the same as between bachelor and family man before additional tax starts. That is fair enough.
    What we object to is the new anomaly which this creates. As the Committee knows, the marginal rate for Surtax, as agreed in Clause 9, is 2s. in the £ for Surtax payers between £2,000 and £2,500. If we take Surtax payers between £6,000 and £8,000, the marginal rate is 6s. 6d., and between £10,000 and £12,000, the marginal rate is 8s. 6d. When I refer to the marginal rate, I mean the top rate, the rate they would pay on any additional £ of income earned. If we take incomes at £15,000, the marginal rate, the rate on any additional £ of income earned, is 10s.
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    The result is that the Surtax payer over the £2,000 limit, the kind of man the Chancellor claims he wants to encourage, namely, the young designer, executive or scientist—we have given our reasons for saying that they are probably not in that range of income anyway—if he is a family man will gain in respect of his newly admitted personal reliefs only at the rate of 2s. in the £, whereas the much richer man at £15,000 a year, who is not. one imagines, one of the young executives, will get 10s. in the £ for every £ of relief he gets in respect of his children. We regard that as highly anomalous and, indeed, indefensible. It does not do what the right hon. Gentleman set out to do, namely, to give a special incentive to these key people above £2,000, and it means that the richer a man is not only does he get more from the Chancellor's other concessions in Clause 10, but he is allowed more in respect of each child for every £ of income allowed in respect of each child. I do not want to weary the Committee with details in respect of one, two or three children, but it will be clear that in respect of each child there will be a tax remission of three, four, or five times as much for the rich man as there will be for the lowest Surtax payer.
    I am sorry to say that the Financial Secretary has not answered the point, quite apart from his legal arguments which we cannot accept. Now, the Attorney-General has had plenty of time to study the issue I hope that we shall hear from him before we come to a conclusion—for what good that may do us. But I hope that the Financial Secretary, or the Chancellor himself, will have a second go and will explain how, when he cannot accept this Amendment, he will deal with it on Report.
    Mr. P. Thorneycroft: I agree entirely with one thing which the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) said, and that is that one cannot achieve perfection in these matters; that is to say, if one avoids one difficulty in adjusting the rate of Surtax, one probably runs into other factors which would displease some other section of people seeking a different reform.
    Regarding this Amendment, I do not think we need argue the precise interpretation. It is not couched in terms—nor is the Clause—in which the result

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    leaps immediately to the eye. On the interpretation put forward by the Financial Secretary, on our advice it has the meaning which he attributed to it, but it does not seem to be necessary for the purpose of this debate to argue that point, because if the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) has put forward with absolute clarity what he seeks to achieve, and if that be right, it is after all quite simple—if we arc going to do so—to accept it in principle and then to move an appropriate Amendment. My argument goes not to the interpretation of the words he has on the Order Paper but to the fact that what he intends is something which we do not desire.
    Mr. Mitchison: I am grateful for the line which the Chancellor has taken, and I hope he will point out to the Financial Secretary that the substance of this matter is what is intended and not what is written. Having said that, arid without wishing either to overrate the intelligence of the Financial Secretary or to underrate the intelligence of those who advised him, I simply add that I have not the faintest idea what he meant by his comment.
    Mr. Thorneycroft: I think that feeling was mutual on both sides. But I do not really feel it is necessary to debate that at this stage. The point which the Opposition wish to make here is that under the Clause as drafted, if one moves the starting point for Surtax on any basis one likes, one is giving rather greater benefits at the top than one does lower down. Indeed, that was axiomatic in the Royal Commission's own proposals, because they faced this particular problem and had a suggestion which the Committee will remember I did not adopt. Nevertheless, it contains what, in the eyes of the Opposition, would be a flaw, for they suggested that one should reduce the starting point for Surtax for bachelors to £1,500. We may have said some harsh things about bachelors in this Committee, but I do not think anyone would be so harsh as to wish to reduce the starting point of Surtax in these matters for anyone, and I was not prepared to do so.
    However, the Royal Commission went on to propose that one should raise the starting-point for Surtax by adding certain children's allowances, which it put up at £160. It said in its Report—it had to face the same problem as the
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    right hon. Gentleman was discussing—the following:
    "We do not envisage altering the width of the surtax bands: we envisage the same width of band and the same steps in rate, but applying to different ranges of income according to the difference of starting point."
    That was its proposal, and I think it was a sensible proposal. It was put forward for the same reason as was clearly put before the Committee by the Financial Secretary, that it is the only way one can give a benefit to the family man in a case of this kind. I realise that it has the effect that the higher up the Surtax range one goes the greater are the benefits drawn, but that is inherent in any raising of the Surtax starting point.
    Hon. Members may argue that it ought not to be raised. A great deal of discussion could take place on a matter of that kind. It has not been changed for a long time, and there were those who urged that it ought to have been changed much more dramatically than this. I did not hold that view, not in the context of this Budget. I take the view that the starting-point ought to be changed not for everybody concerned but for those with certain special family responsibilities. Having taken that view, I proposed to the Committee that it should be changed with exactly the same consequences as envisaged by the Royal Commission when it reported. and on those grounds I ask the Committee to accept this recommendation.
    Mr. H. Wilson: The right hon. Gentleman's answer is really no more satisfactory than that of the Financial Secretary. We regard this as so important a matter that we should feel thoroughly justified in starting what might turn out to be a lengthy debate. But as we have been discussing the Bill for so long and as we shall be dealing with it again tomorrow, perhaps the best thing I can recommend to the Committee is that we should now come quickly to a decision about the matter.
    It is clear that the Chancellor, to quote one of the Liberal hon. Members, is remaining firm, obdurate and stubborn about this, as he has been about everything else brought before the Committee, except the Amendment moved by the hon. Member for Dover (Mr.

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    Arbuthnot). We cannot accept or understand the right hon. Gentleman's arguments. We think that his proposals create new and most serious anomalies. We shall have to consider our position about the Amendment, to which we attach a great deal of importance, and see whether we can find an opportunity of raising it again at a later stage of the Bill.
    We must give that warning to the Chancellor, because he has completely
    failed to deal with the arguments put forward. We hope that he will brief himself more thoroughly next time and approach the matter with a more open mind. My hon. Friends must be as tempted as I am to carry on the debate for another three or four hours, but I advise them now to enable the Committee to come to a decision.
    Question put,That those words be there inserted:—
    The Committee divided:Ayes 171, Noes 220.

    Division No. 128.]

    AYES

    [11.15 p.m.

    Ainsley, J. W.

    Hale, Leslie

    Padley, W. E.

    Albu, A. H.

    Hannan, W.

    Paget, R. T.

    Allaun, Frank (Salford, E.)

    Hayman, F. H.

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

    Allen, Scholefield (Crewe)

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

    Paling, Will T. (Dewsbury)

    Awbery, S. S.

    Herbison, Miss M.

    Palmer, A. M. F.

    Bacon, Miss Alice

    Hewitson, Capt. M.

    Panned, Charles (Leeds, W.)

    Baird, J.

    Hobson, C. R. (Keighley)

    Pargiter, G. A.

    Balfour, A.

    Holmes, Horace

    Parker, J.

    Bellenger, Bt. Hon. F. J.

    Houghton, Douglas

    Parkin, B. T.

    Benn, Hn. Wedgwood (Bristol, S. E.)

    Howell, Charles (Perry Barr)

    Pearson, A.

    Benson, G.

    Howell, Denis (All Saints)

    Pentland, N.

    Beswick, Frank

    Hubbard, T. F.

    Price, Philips (Gloucestershire, W.)

    Blackburn, F.

    Hughes, Emrys (S. Ayrshire)

    Probert, A. R.

    Blenkinsop, A.

    Hughes, Hector (Aberdeen, N.)

    Proctor, W. T.

    Blyton, W. R.

    Hunter, A. E.

    Randall, H. E.

    Boardman, H.

    Hynd, J. B. (Attercliffe)

    Redhead, E. C.

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

    Irvine, A. J. (Edge Hill)

    Robens, Rt. Hon. A.

    Boyd, T. C.

    Irving, Sydney (Dartford)

    Roberts, Goronwy (Caernarvon)

    Braddook, Mrs. Elizabeth

    Isaacs, Rt. Hon. G. A.

    Rogers, George (Kensington, N.)

    Brookway, A. F.

    Janner, B.

    Ross William

    Broughton, Dr. A. D. D.

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

    Royle, C.

    Brown, Thomas (Ince)

    Jeger, George (Goole)

    Silverman, Julius (Aston)

    Burke, W. A.

    Johnson, James (Rugby)

    Simmons, C. J. (Brierley Hill)

    Butler, Herbert (Hackney, C.)

    Jones, David (The Hartlepools)

    Skeffington, A. M.

    Butler, Mrs. Joyce (Wood Green)

    King, Dr. H. M.

    Slater, J. (Sedgefield)

    Carmichael, J.

    Lawson, G. M.

    Smith, Ellis (Stoke, S.)

    Champion, A. J.

    Ledger, R. J.

    Sorensen, R. W.

    Chetwynd, G. R.

    Lee, Frederick (Newton)

    Soskice, Rt. Hon. Sir Frank

    Clunie, J.

    Lewis, Arthur

    Sparks, J. A.

    Coldrick, W.

    Logan, D. G.

    Stokes, Rt. Hon. R. R. (Ipswich)

    Colliok, P. H. (Birkenhead)

    Mabon, Dr. J. Dickson

    Stonehouse, John

    Collins, V. J. (Shoreditch & Finsbury)

    MacDermot, Niall

    Stones, W. (Contett)

    Craddock, George (Bradford, S.)

    McGhee, H. G.

    Strauss, Rt. Hon. George (Vauxhall)

    Cronin. J. D.

    McInnes, J.

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

    Crossman, R. H. S.

    Mckay, John (Wallsend)

    Sylvester, G. O.

    Cullen, Mrs. A.

    MacMillan, M. K. (Western Isles)

    Taylor, Bernard (Mansfield)

    Dalton, Rt. Hon. H.

    Mahon, Simon

    Thomas, George (Cardiff)

    Davies, Ernest (Enfield, E.)

    Mainwaring, W. H.

    Thomas, Iorwerth (Rhondda, W.)

    Deer, G.

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

    Thomson, George (Dundee, E.)

    Dodds, N. N.

    Mann, Mrs. Jean

    Ungoed-Thomas, Sir Lynn

    Dugdale, Rt. Hn. John (W. Brmwch)

    Marquand, Rt. Hon. H. A.

    Usborne, H. C.

    Dye, S.

    Mason, Roy

    Weitzman, D.

    Ede, Rt. Hon. J. C.

    Mayhew, C. P.

    West, D. G.

    Edwards, Rt. Hon. John (Brighouse)

    Mellish, R. J.

    Wheeldon, W. E.

    Edwards, Robert (Bilston)

    Mikardo, Ian

    Willey, Frederick

    Edwards, W. J. (Stepney)

    Mitchlson, G. R.

    Williams, David (Neath)

    Evans, Albert (Islington, S.W.)

    Monslow, W.

    Williams, Rev. Llywelyn (Ab'tillery)

    Ferny hough, E.

    Moody, A. S.

    Williams, Ronald (Wigan)

    Finch, H. J.

    Morris, Peroy (Swansea, W.)

    Williams, W. R. (Openshaw)

    Fletcher, Eric

    Mort, D. L.

    Williams, W. T. (Barons Court)

    Forman, J. C.

    Moyle, A.

    Wilson, Rt. Hon. Harold (Huyton)

    Fraser, Thomas (Hamilton)

    Mulley, F. W.

    Winterbottom, Richard

    Caitskell, Rt. Hon. H. T. N.

    Neal, Harold (Bolsover)

    Woodburn, Rt. Hon. A.

    Gibson, C W.

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

    Yates, V, (Ladywood)

    Gordon Walker, Rt. Hon. P. C.

    Oliver, G. H.

    Younger, Rt. Hon. K.

    Grenfell, Rt. Hon. D. R.

    Oram, A. E.

    Grey, C. F.

    Orbaoh, M.

    TELLERS FOR THE AYES:

    Griffiths, David (Rother Valley)

    Owen, W. J.

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

    NOES

    Agnew, Sir Peter

    Hall, John (Wycombe)

    Nairn, D. L. S.

    Aitken, W. T.

    Harrison, A. B. C. (Maldon)

    Neave, Airey

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

    Harrison, Col. J. H. (Eye)

    Nicholson, Godfrey (Farnham)

    Alport, C. J. M.

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

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

    Amory, Bt. Hn. Heathcoat (Tiverton)

    Harvey, John (Walthamstow, E.)

    Nugent, G. R. H.

    Anstruther-Gray, Major Sir William

    Harvie-Watt, Sir George

    Oakshott, H. D.

    Arbuthnot, John

    Heald, Rt. Hon. Sir Lionel

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

    Armstrong, C. W.

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

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

    Ashton, H.

    Hesketh, R. F.

    Orr, Capt. L. P. S.

    Atkins, H. E.

    Hill, Rt. Hon. Charles (Luton)

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

    Baldock, Lt.-Cmdr. J. M.

    Hill, Mrs. E. (Wythenshawe)

    Osborne, C.

    Baldwin, A. E.

    Hill, John (S. Norfolk)

    Page, R. G.

    Balniel, Lord

    Hinohingbrooke, Viscount

    Pannell, N. A. (Kirkdale)

    Barber, Anthony

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

    Partridge, E.

    Barter, John

    Holland-Martin, C. J.

    Pike, Miss Mervyn

    Baxter, Sir Beverley

    Holt, A. F.

    Pilkington, Capt. R. A.

    Bell, Philip (Bolton, E.)

    Hornby, R. P.

    Pitman, I. J.

    Bennett F. M. (Torquay)

    Hornsby-Smith, Miss M. P.

    Pitt, Miss E. M.

    Bennett, Dr. Reginald

    Horobin, Sir Ian

    Powell, J. Enoch

    Bevins, J. R. (Toxteth)

    Horsbrugh, Rt. Hon. Dame Florence

    Price, Henry (Lewisham, W)

    Bidgood, J. C.

    Howard, John (Test)

    Prior-Palmer, Brig. O. L.

    Biggs-Davison, J. A.

    Hughes Hallett, Vice-Admiral J.

    Profumo, J. D.

    Birch, Rt. Hon. Nigel

    Hurd, A. R.

    Ramsden, J. E.

    Black, C. W.

    Hyde, Montgomery

    Rawlinson, Peter

    Body, R. F.

    Hylton-Foster, Rt. Hon. Sir Harry

    Renton, D. L. M.

    Bowen, E. R. (Cardigan)

    Iremonger, T. L.

    Ridsdale, J. E.

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

    Irvine, Bryant Godman (Rye)

    Rippon, A. G. F.

    Brooman-White, R. C.

    Jenkins, Robert (Dulwich)

    Robinson, Sir Roland (Blackpool, S.)

    Bullus, Wing Commander E. E.

    Jennings, J. C. (Burton)

    Rodgers, John (Sevenoaks)

    Butcher, Sir Herbert

    Johnson, Dr. Donald (Carlisle)

    Roper, Sir Harold

    Chichester-Clark, R.

    Johnson, Eric (Blackley)

    Ropner, Col. Sir Leonard

    Clarke, Brig. Terence (Portsmth, W.)

    Joseph, Sir Keith

    Schofield, Lt.-Col. W.

    Cole, Norman

    Joynson-Hicks, Hon. Sir Lancelot

    Sharpies, R. C.

    Conant, Maj. Sir Roger

    Keegan, D.

    Shepherd, William

    Cooke, Robert C.

    Kerby, Capt. H. B.

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

    Cooper, A. E.

    Kerr, H. W.

    Smithers, Peter (Winchester)

    Cordeaux, Lt.-Col. J. K.

    Kershaw, J. A.

    Spearman, Sir Alexander

    Corfield, Capt. F. V.

    Kimball, M.

    Speir, R. M.

    Craddock, Beresford (Spelthorne)

    Kirk, P. M.

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

    Crosthwaite-Eyre, Col. O. E.

    Lagden, G. W.

    Stevens, Geoffrey

    Cunningham, Knox

    Langford-Holt, J. A.

    Steward, Harold (Stockport, S.)

    Currie, G. B. H.

    Leather, E. H. C.

    Steward, Sir William (Woolwich. W.)

    Dance, J. C G.

    Leavey, J. A.

    Stoddart-Scott, Col. M.

    D'Avigdor-Goldsmid, Sir Henry

    Leburn, W. G.

    Studholme, Sir Henry

    Deedes, W. F.

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

    Summers, Sir Spencer

    Digby, Simon Wingfield

    Legh, Hon. Peter (Petersfield)

    Sumner, W. D. M. (Orpington)

    Donaldson, Cmdr. C. E. McA.

    Lindsay, Hon. James (Devon, N.)

    Taylor, William (Bradford, N.)

    Doughty, C. J. A.

    Linstead, Sir H. N.

    Teeling, W.

    Drayson, G. B.

    Lloyd, Maj Sir Guy (Renfrew, E.)

    Temple, John M.

    du Cann, E. D. L.

    Lloyd, Rt. Hon. Selwyn (Wirral)

    Thomas, Leslie (Canterbury)

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

    Longden, Gilbert

    Thomas, P. J. M. (Conway)

    Duthie, W. S.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Thompson, Kenneth (Walton)

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

    Lucas-Tooth, Sir Hugh

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

    Errington, Sir Eric

    Macdonald, Sir Peter

    Thorneycroft, Rt. Hon. P.

    Farey-Jones, F. W.

    McKibbin, A. J.

    Thornton-Kemsley, C. N.

    Finlay, Graeme

    Mackie, J. H. (Galloway)

    Tiley, A. (Bradford, W.)

    Fisher, Nigel

    McLaughlin, Mrs. P.

    Turton, Rt. Hon. R. H.

    Fletoher-Cooke, C.

    McLean, Nell (Inverness)

    Vane, W. M. F.

    Freeth, Denzil

    MacLeod, John (Ross & Cromarty)

    Vaughan-Morgan, J. K.

    Garner-Evans, E. H.

    Macmillan, Maurice (Halifax)

    Vickers, Miss Joan

    George, J. C (Pollok)

    Macpherson, Niall (Dumfries)

    Wakefield, Edward (Derbyshire, W.)

    Gibson-Watt, D.

    Maddan, Martin

    Wakefield, Sir Wavell (St. M'lebone)

    Glover, D.

    Maitland, Hon. Patrick (Lanark)

    Wall, Major Patrick

    Godber, J. B.

    Manningham-Buller, Rt. Hn. Sir R.

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

    Goodhart Philip

    Markham, Major Sir Frank

    Ward, Dame Irene (Tynemouth)

    Gough, C. F. H.

    Marlowe, A. A. H.

    Waterhouse, Capt. Rt. Hon. C.

    Gower, H. R.

    Mathew, R.

    Whitelaw, W. S. I.

    Graham, Sir Fergus

    Maude, Angus

    Williams, Paul (Sunderland, S.)

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

    Mawby, R. L.

    Wills, G. (Bridgwater)

    Green, A.

    Medlicott, Sir Frank

    Wood, Hon. R.

    Gresham Cooke, R.

    Milligan, Rt. Hon. W. R.

    Woollam, John Victor

    Grimston, Hon. John (St. Albans)

    Molson, Rt. Hon. Hugh

    Grimston, Sir Robert (Westbury)

    Morrison, John (Salisbury)

    TELLERS FOR THE NOES:

    Grosvenor, Lt.-Col. R. G.

    Mott-Radclyffe, Sir Charles

    Mr. Bryan and Mr. Hughes-Young.

    Curdon, Harold

    Nabarro, G. D. N.

    Clause ordered to stand part of the Bill.
    Motion made, and Question proposed,That the Chairman do report Progress and ask leave to sit again.—[Mr. P. Thorneycroft.]
    Mr. H. Wilson: I think that this is the least controversial thing the Chancellor has suggested all day, and I would say at once that we support the Motion. We have had a series of very good debates

    563
    today. I missed one or two because I went to East Ham, where I was on work of national importance.
    I hope that the Chancellor will have noticed how once again this side of the Committee has facilitated the work of the Government in getting through this Bill, especially as today we have been dealing with some of the most controversial parts of the Bill. We have been in some difficulty because certain of the Clauses, Clauses 10 and 12 for instance, contain something very good and at the same time something very bad. While we have moved some Amendments and argued energetically we have, for reasons which hon. and right hon. Gentlemen opposite, who have had experience of being in opposition, will understand, not voted against the Clauses as a whole. I hope that this Motion will be agreed to, and I am sure it will, and I ask my hon. Friends once again to restrain themselves, so that it may.
    I wish to ask the Chancellor to say a word about the arrangements for tomorrow. I understand that, unfortunately, the Patronage Secretary has put down a Government Measure for the start of business in the House tomorrow. Most hon. Members are not clear whether it relates to a piece of deserted countryside or to some suffering damsel, but we shall, I gather, be debating it for some little time, even though, no doubt, the members of this Committee would like, without prejudicing the rights of hon. Members of the House, to get on with this Bill. Assuming that we reach it by a reasonable hour, I understand that it is the desire of the Chancellor that we should get to the end of Part III of the Bill and that we should then leave the very arduous task which we have on Part IV for the period when we all hope to be a little more refreshed, namely, after the Whitsun Recess.
    If that is the desire of the Chancellor, I can certainly say that we shall do our best to facilitate it, provided that we can start consideration of the Finance Bill at a reasonable hour tomorrow. I am sure that the Chancellor will be the first to realise that there are some very important Amendments down to Clause 16 by a number of my hon. Friends from north of the Border, and I am equally
    564
    sure that it will be the desire of the whole Committee, though all hon. Members may not wish to be present throughout those arduous debates, to ensure that the debate begins at a reasonable time.
    I hope the right hon. Gentleman will understand that although it is our desire to facilitate this Part of the Bill, if the resumption of our consideration of the Bill starts too late tomorrow owing to the length of the debate on the Winfrith Heath Bill we should in that case want to start the Scottish Amendments after the Whitsun Recess, although we hope it will be possible to dispose of them, after adequate debate, tomorrow night.
    Mr. P. Thorneycroft: I think that what the right hon. Gentleman has said is absolutely fair. We have managed, I think, to debate the various Amendments and Clauses quite thoroughly and, so far, at a reasonable hour. So far as tomorrow is concerned, we must, of course, be somewhat in the hands of what the House does about the earlier business. But on the assumption that it is concluded in a reasonable time, it would, I think, be our desire to complete Part III of the Finance Bill so that we could make a fresh start later on the Clauses dealing with the Overseas Trade Corporations. Therefore, I am in entire agreement with what the right hon. Gentleman says.
    Question put and agreed to.
    Committee report Progress; to sir again Tomorrow.

  PARISH COUNCILS (MISCELLANEOUS PROVISIONS) [MONEY]
  Resolution reported,
  That, for the purposes of any Act of the present Session to make further provision as to the constitution of parish councils, and as to the powers of parish councils and parish meetings, in rural parishes in England and Wales, it is expedient to authorise the payment out of moneys provided by Parliament of any increase in the sums so payable under Part I of the Local Government Act, 1948, or under the Local Government (Financial Provisions) (Scotland) Act, 1954, as amended by the Valuation and Rating (Scotland) Act, 1956, which may be attributable to provisions of the said Act of the present Session.
  Resolution agreed to.

POLICE (HOME SECRETARY'S POWERS)
Motion made, and Question proposed,That this House do now adjourn.—[Mr. Hughes-Young.]
11.29 p.m.
Mr. Godfrey Lagden: Having been fortunate enough in the Ballot to be able to initiate this Adjournment debate tonight, I propose to call the attention of the House to the use of existing powers of the Home Secretary in connection with police forces and, in particular, to the lack of such powers in some cases.
I am not advocating a State police force, and I wish to make absolutely clear at the outset that I do not in any way wish anything that I say tonight to be construed as an attack on the police of our country, who are, in my opinion, a very fine body of men doing a very difficult task—very often having to use such method as lies ready at hand—which they do with tact and, in my opinion, with great understanding.
There is a wide belief that the Home Secretary and Parliament, in whose name he acts, have ultimate power in connection with almost all police matters. That is not so in relation to the county forces. The Home Secretary is responsible only for administration and for such questions as terms of service and so on. He is not really responsible for the discipline of any of the officers of those county forces. That is the responsibility of the chief constable.
The existing police forces are, first, the Metropolitan Police force, which has its Commissioner, and the Home Secretary and Parliament have their responsibility for that force. Then there are the city and borough police forces which have their chief officers and watch committees with certain responsibilities. There are also the county forces which have their chief constables and standing joint committees, which have nothing like the powers of the watch committees. In fact, they have no powers over the discipline of the officers in the forces. but only certain powers over the chief constables if they should in any way personally misbehave or require removal from office. Then, of course, there is the City of London Police force.
566
Let us examine the position of the Metropolitan Police force, which covers London and Greater London. Few complaints are received about this force, which behaves and acts in a most commendable manner. The force covers about one hundred constituencies of hon. Members of this House, and it has a disciplinary board which can be reviewed from time to time by the Home Secretary. The city and borough forces have their chief officers, and in disciplinary matters their decisions can be reviewed by the watch committees, but not by the Home Secretary and Parliament. However, the watch committees are bodies of duly elected persons, and they would, if necessary, curb a chief officer in any of his decisions.
I come to the question of the county forces. In charge of a county force there is a chief constable and a standing joint committee. Here the powers of the Home Secretary are considerably limited. What can he do if he wishes? He can withhold the police grant. That is not very satisfactory because it could happen—I think that possibly it has happened—that the withholding of the grant merely means that the county pays the amount of the grant itself. That is only punishing the ratepayers of the county concerned.
Then there are the visits of Her Majesty's Inspectors of Constabulary. With the deepest possible respect to those inspectors, I would point out that they go to the areas only to make sure that the administration is being properly carried out. If my hon. and learned Friend the Joint Under-Secretary of State for the Home Department would make the necessary inquiries at first hand, he would find that, as a general rule, the visit of Her Majesty's inspector is known prior to his arrival at any police station, and a great deal of scrubbing and polishing takes place in the two or three hours before his visit. It is not surprising that when he arrives everything is in perfect order and he is able to report that he found everything in admirable condition.
The chief constable of the county force is all-powerful. In matters of discipline he is answerable to no one but himself—I repeat—to no one but himself, not even to his standing joint committee.
Let us consider the 100 fortunate Members of this House whose constituencies are within the Metropolitan

567
area. If any one of them has a complaint made to him by a constituent he can ask a question of the Commissioner and ask him for a report. He can ask a Question in this House, and if he is not satisfied with the answer he gets from the Home Secretary he can apply to raise the matter in an Adjournment debate. He is carrying out the task for which he was elected, to be the watchdog of his constituents. That is extremely important.
Not so with the other Members whose constituencies are not within the Metropolitan area but are within a county. Such a Member cannot ask a Question in this House. He will be told. as I have been told, that there is no one to answer the Question because no one is responsible. He cannot claim an Adjournment debate, for the same reason. He is unable to protect his constituents by raising the matter in this House. It seems reasonable that every hon. Member should have the same facilities for protecting his constituents, whether he represents a Metropolitan constituency or one in a county.
Mr. Speaker: If the hon. Member is complaining about the present state of the law he must realise that that can only be altered by legislation, and that debate entailing that is out of order on the Motion for the Adjournment.
Mr. Lagden: Thank you, Mr. Speaker. I am not complaining; I am merely pointing out what in point of fact exists. Every hon. Member should have the same facilities and, more important still, all the persons whom he represents should be able to expect the same protection from him as that which any other Member of this House gives to his constituents.
Let me give an example. If, say, a police-sergeant in the Metropolitan area were seen in the act of seduction by one or more witnesses and the witnesses lodged a complaint with the hon. Member who represents them here, that hon. Member should, of course, look very deeply into the matter. As their Member of Parliament he should, and probably would, report the matter to the Commissioner of the Metropolitan Police. If he were of the opinion that the Commissioner—I think this is unlikely—was attempting to whitewash the conduct of the officer he could and should bring the matter to the House, where it could be discussed. If precisely the same thing
568
happened in a county, say in Essex. the hon. Member could not refer the matter to this House.
Mr. Speaker: Surely the hon. Member is, by inference, complaining of the existing state of the law with regard to responsibility for the Essex Constabulary, and that cannot be altered without legislation. The hon. Member has gone into this matter very thoroughly. I admit that he is doing his best, but the matter is out of order.
Mr. Lagden: I will not continue on those lines, but will conclude that part of my argument by saying that the people of Essex would in that respect be indeed badly served.
If such a state of affairs exists as that to which I have previously referred, great public disquiet must be raised. The public will feel, and do feel in some cases, I have no doubt, that by reason of existing law their Member—I do not want to transgress your Ruling, Mr. Speaker, and I am trying very hard not to—is unable to protect them. They may also feel that the shadow of suspicion is being cast upon officers where it should not be cast—
Mr. Speaker: Surely, these are all reasons why the existing law should be altered by means of legislation. I can see no drift to the hon. Member's argument other than one which is contrary to our practice with regard to debates on the Motion for the Adjournment of the House.
Mr. Lagden: I thank you very much. Mr. Speaker.
In that case I should like to refer, if I may, to what was said by an eminent Home Secretary, none other than Sir William Joynson-Hicks. I understand that these are the actual words he used in this House on 20th July, 1928, and I take it that if he used them I am in order in quoting them. He said:
"I am the servant of the House of Commons, and every action I take, every decision I come to in regard to the police, can be brought up and discussed here."—[OFFICIAL REPORT, 20th July, 1928; Vol. 220, c. 840.]
The author of the book in which those words are quoted goes on to say:
"Any act of the Commissioner, or of his subordinates, down to the latest joined constable, can similarly be brought under the scrutiny of the House of Commons. In the case of other police forces in England and Wales,

569
the Home Secretary can be challenged in Parliament, with regard to the matters of general principle for which he is responsible, but he is not answerable to the House of Commons for their administration or conduct, as he is for those of the Metropolitan police.
It is fitting that the police force which protects Parliament, the Government and the capital of the Empire, and may be said to exemplify the British police system to the world, should be readily amenable to national criticism through the channel of Parliament. As an arena for the public discussion of police questions, the County Hall (or other meeting place of a local authority) can hardly stand comparison with the chamber of the House of Commons."
What wise words the then Home Secretary used, and this evening I am trying only to suggest that in 1928, he was saying, within the rules of order, what I am trying to say tonight—
Mr. Speaker: I do not know whether Sir William Joynson-Hicks was making that speech on the Adjournment, or what comment the Speaker of the day made upon it, but the hon. Member is in this difficulty. Either he is complaining about the Essex police force, for which the Home Secretary has no responsibility,—and on that assumption, of course, the debate on the matter is out of order on the Adjournment because of lack of Ministerial responsibility; or, on the other hand, he is suggesting that the Home Secretary should have responsibility for it, in which case the hon. Member is out of order, because he is suggesting legislation. These are the rules of the House.
Mr. Lagden: In that case I will conclude and, with the deepest possible respect, will ask my hon. and learned Friend to convey to the Home Secretary what he thinks I have been trying to say this evening. I thank you for your assistance in this matter, Mr. Speaker, and I am perfectly certain that our united efforts will lead my hon. and learned Friend to see that the Home Secretary knows your opinion and mine.
11.44 p.m.
Dr. Donald Johnson: I thank my hon. Friend the Member for Horn-church (Mr. Lagden) for allowing me two minutes of the time allottted to this debate. It was my intention, Mr. Speaker, to endorse his plea, but if I do so at any length I shall be equally out of order. I think, however, that it will be in order for me to express fears similar to those of my hon. Friends, and at the same
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time to bestow a word of praise in a positive manner on the Chief Constable of Carlisle for the rapidity with which he called in an outside force in our recent murder case in Carlisle, which led to a quick and satisfactory solution—
Mr. Speaker: I am afraid that praise, equally with blame, is out of order in a matter connected with a police force for which the Home Secretary is not responsible.
Dr. Johnson: I think that I have used up my available time, Mr. Speaker.
11.46 p.m.
The Joint Under-Secretary of State for the Home Department (Mr. J. E. S. Simon): My hon. Friend the Member for Hornchurch (Mr. Lagden) made it quite plain with, if I may say so with respect, assistance from you, Mr. Speaker, that the responsibility of the Home Secretary and of Parliament for a county police force is quite different from that which my right hon. Friend has for the Metropolitan Police force. In spite of that, I think that one can, whilst still remaining within the rules of order, accept with gratitude, at any rate as a fellow citizen, his tribute to the police forces in general of this country.
I do not propose to advert to the points where my hon. Friends seemed to be running into danger of transgressing the rules of order, but I propose merely to deal with what is the direct subject matter of the Adjournment debate—the use of the existing powers of the Home Secretary. My right hon. Friend's statutory powers in relation to police forces are quite clearly defined and they fall broadly into four categories.
First, there are the powers under the Police Act, 1919, and the Police Pensions Act, 1948, to make statutory regulations governing pay, pensions, allowances, and other conditions of service such as discipline procedure.
Secondly, in the more serious cases where a police officer has been punished for indiscipline—that is to say, cases resulting in punishment of dismissal, requirement to resign as an alternative to dismissal, or reduction in rank or reduction in pay—the Secretary of State has power to adjudicate on appeals made to him under the Police (Appeals) Acts, 1927

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and 1943. The procedure in the case of such appeals is prescribed by statutory regulations and it is, in fact, the same in the Metropolitan Police area as in the counties. I think my hon. Friend was not quite right in that respect. The decision of the disciplinary board in the Metropolitan Police cannot be reviewed by my right hon. Friend, except on appeal by the officer. It is in the same position in that respect as in any other force.
Mr. Lagden: I fully agree with that. The point that I was trying to make was that the chief officer can, if he so wishes, decide not to hold an inquiry which would lead to the dismissal of the guilty officer.
Mr. Simon: As will appear, that is, of course, entirely a matter for the chief constables in the counties.
Thirdly, under the Police Act, 1946, my right hon. Friend may make a scheme for the amalgamation of police forces in certain circumstances prescribed in that Act; and finally he is responsible for authorising the payment of the 50 per cent. Exchequer grant in aid of local police expenditure. For that purpose he has authority to inspect police forces, through Her Majesty's Inspectors of Constabulary, to ensure that local police authorities are discharging their statutory duties to maintain efficient police forces.
In particular, the Police (Grant) Order, 1951, provides that payment of Exchequer grant to any police authority
"shall be conditional upon the Secretary of State being satisfied that the police area in question is efficiently policed, that adequate co-operation is afforded by the police force to other police forces, that the police service is efficiently and properly maintained, equipped, and administered, and that the rates of pay and allowances of the force are as prescribed or approved by him; and if he is not satisfied on any of these matters he may withhold the grant in whole or in part, permanently or for such time as he may determine."
In preparing the statutory regulations to which I have referred, the Secretary of State is required to consult the Statutory Police Council for England and Wales; and that contains representatives of local police authorities and of all ranks of the police service. In addition, the regulations on pensions are subject to the approval of Parliament. In practice, since 1953, most of these matters of
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general administration, and especially those relating to pay, pensions, and conditions of service, have first been referred to a non-statutory body, namely, the Police Council for Great Britain, which is representative of all ranks of the service and of local authorities.
The object of that system of consultation is to ensure that the fullest weight is given to the views of local police authorities who have the direct statutory responsibility for maintaining the forces, and meet half of the expenditure, and to the views of the service itself. My right hon. Friend's statutory function in relation to police discipline appeals is appellate and quasi judicial and, in the present context of my hon. Friend's speech, it is important to note that as he is an appellate authority, he has to avoid any appearance of partiality in instituting any inquiries into alleged indiscipline which might eventually lead to formal proceedings.
The power to withhold the Exchequer grant has been regarded by successive Home Secretaries as one to be used in the very last resort. In the ordinary way, the advice of Inspectors of Constabulary and, if necessary, discussion and correspondence between my right hon. Friend and the police authority concerned, afford sufficient means for clearing up difficulties. It is only where these have been exhausted that the question of suspending the Exchequer grant is seriously considered. It is, as I have said, a power which is most sparingly used. It has been suggested that this power to withhold the grant might be used where there is dissatisfaction about the manner in which the local disciplinary authority has dealt with complaints against officers of the force.
It may help if I explain that the Inspectors of Constabulary make the most careful inquiries into the state of discipline in each force during the course of their inspections and, with respect, my hon. Friend's description of the procedure of an inspection is, if I may say so, a caricature of what really happens. When any complaint is made against a police officer it must be formally recorded in the records of the force, and it is the duty of the disciplinary authority to consider whether it calls for disciplinary action and, if so, to take

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the necessary formal steps. The procedure in these matters was examined with great care by the Committee on Police Conditions of Service—that is the Committee presided over by Lord Oaksey in 1949—and by the Home Secretary's predecessors in office from 1950 to 1952, in consultation with the Police Council.
The system now in force is in accordance with the recommendations of the Police Council, and places clear responsibility for decisions in individual cases of alleged indiscipline on the local disciplinary authority. In the case of a borough, that is the watch committee, and in the case of a county, the chief constable. The Inspectors of Constabulary examine the discipline record of each force regularly and report upon it to the Home Secretary. There is, however, no question of that examination being used to usurp the functions of the local authority.
The inspectors and the Home Secretary concern themselves with the general state of a force, including its discipline. Special notice might be taken if there were a number of cases tending to show that discipline needed more attention, but the odd case in which a complainant is dissatisfied would certainly not justify interference with the proper discharge of local functions or the suggestion that it reflects a general lack of efficiency in the force. The investigation of complaints against police officers is bound up with the day-to-day control of the force.
The essential feature of our police service is that it is organised and controlled on a local basis: any tendency to centralise that control would be greatly resented by the responsible local authorities, and could not be contemplated without a radical change in our ideas about the functions of the British police. We must always bear in mind—and my hon. Friend has quoted a former Home Secretary who is now, unfortunately, deceased—as a former Home Secretary who is in this House, the right hon. the Member for South Shields (Mr. Ede), reminded us the other day, the great danger to liberty that has occurred through the establishment of State police forces.
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The position is different in the Metropolitan Police force, because the Home Secretary is the police authority for that force. In the course of a debate in Parliament in 1888, the then Home Secretary, Mr. Matthews, stated that "it was plain that it was the intention of the Legislature to put the [Metropolitan] police force under the authority of the Secretary of State, and to hold him responsible, not for every detail of the management of the force, but in regard to the general policy in the discharge of their duties".
For the Metropolitan Police, it is a matter for the discretion of the Secretary of State as to how far, in discharging the duties placed on him by Parliament, he should himself, through the Home Office, interfere with the executive action which is the responsibility of the Commissioner. In practice, in respect of administration and the maintenance of discipline, it is the Secretary of State's sphere to prescribe and enforce general principles, and the Commissioner's sphere to apply them to individual cases, subject only to his general accountability to the Secretary of State as the police authority. In matters of discipline it is also subject to the right of appeal to the Secretary of State provided by the Police (Appeals) Acts.
Although I know well that what I have said will not altogether satisfy my hon. Friend about the question which he had at the back of his mind, and which he was precluded from bringing to the front of his tongue, nevertheless I have described what in fact is the use of the existing powers of the Home Secretary.
Mr. Harold Gurden: May I ask my hon. and learned Friend if he would explain one point that is not absolutely clear to me. He stressed the point of efficiency of the force, and discipline, as the guiding factors. What would happen in the case—
The Question having been proposed after Ten o'clock and the debate having continued for half an hour,Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at one minute to Twelve o'clock.

TRANSPORT
  Admiralty Compass Observatory, Ditton Park
  Admiralty Compass Observatory, Ditton Park
  Merchant Shipping (Certificates)
  Merchant Shipping (Certificates)
ROADS
  Eastern Avenue Extension, Leyton
  Eastern Avenue Extension, Leyton
  Byram-cum-Sutton (Bus Shelter)
  Byram-cum-Sutton (Bus Shelter)
  Highway Repairs
  Highway Repairs
  Overseas Countries (Members' Visits)
  Overseas Countries (Members' Visits)
MINISTRY OF DEFENCE
  Gibraltar
  Gibraltar
  Middle East Command (Organisation)
  Middle East Command (Organisation)
  O.E.E.C. (FERTILISERS)
  O.E.E.C. (FERTILISERS)
THE SEYCHELLES
  Chief Inland Revenue Officer (Income Tax)
  Chief Inland Revenue Officer (Income Tax)
  Employment
  Employment
AFRICAN TERRITORIES
  Medical Attention (Charges to Africans)
  Medical Attention (Charges to Africans)
KENYA
  Landless and Unemployed Africans
  Landless and Unemployed Africans
  Constitution (Discussions)
  Constitution (Discussions)
  African Political Meetings (Government Policy)
  African Political Meetings (Government Policy)
  Land Consolidation
  Land Consolidation
FIJI
  Military Forces (Service in Malaya)
  Military Forces (Service in Malaya)
MALAYA
  Constitutional Changes (Parliamentary Consideration)
  Constitutional Changes (Parliamentary Consideration)
  Malays, Chinese and Indians
  Malays, Chinese and Indians
  Rubber Cultivation (New Planting)
  Rubber Cultivation (New Planting)
MALTA
  Oil (B.P. Exploration Co. Ltd.)
  Oil (B.P. Exploration Co. Ltd.)
SINGAPORE
  Legislative Assembly (Elections)
  Legislative Assembly (Elections)
  Detention and Restriction of Movement Orders
  Detention and Restriction of Movement Orders
POST OFFICE
  Surplus Stores
  Surplus Stores
  Public Record Office (Estimate)
  Public Record Office (Estimate)
  Tate Gallery Service (Estimates)
  Tate Gallery Service (Estimates)
  Telephone Service, Barry
  Telephone Service, Barry
  Air Parcel Service
  Air Parcel Service
EDUCATION
  Movement of Pupils (Information)
  Movement of Pupils (Information)
  Child Guidance Clinics
  Child Guidance Clinics
SHIPBUILDING
  Steel Supplies
  Steel Supplies
AGRICULTURE
  Potato Marketing Board
  Potato Marketing Board
MINISTRY OF HEALTH
  National Health Service (Nurses and Midwives)
  National Health Service (Nurses and Midwives)
PENSIONS AND NATIONAL INSURANCE
  Widows' Benefits
  Widows' Benefits
TRADE AND COMMERCE
  United Kingdom—New Zealand Agreement
  United Kingdom—New Zealand Agreement
  AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM AND THE GOVERNMENT OF NEW ZEALAND.
  AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM AND THE GOVERNMENT OF NEW ZEALAND.
  Article 1.
  Article 1.
  Article 2.
  Article 2.
  Article 3.
  Article 3.
  Article 4.
  Article 4.
  Article 5.
  Article 5.

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

DURHAM COUNTY COUNCIL (BAR MSTON-COXGREEN FOOT- BRIDGE) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

ALL-PARTY PENSION SCHEME
2.35 p.m.
LORD BLACKFORD: 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 will invite Her Majesty's Opposition to join them in devising an agreed scheme for the improvement of pensions with a view to the settlement of this important subject on sound economic lines, and to avoidance of its use as bait in competitive Party politics.]
LORD CHESHAM: My Lords, while attaching great importance to the considerations which my noble friend has in mind, Her Majesty's Government do not think that in all the circumstances his suggestion could usefully be followed.
LORD BLACKFORD: My Lords, I thank the noble Lord for his Answer.

UNIVERSITY TEACHERS AND SECURITY
2.36 p.m.
LORD CHORLEY: My Lords, with the permission of the House, I should like to make a personal statement. As some of your Lordships will remember, I spoke last week in the debate on the universities, and in my speech I drew attention to what I regarded as objectionable aspects of the methods used by the security services in collecting information as to happenings in the universities. I have been widely reported in the Press as having stated that a teacher had been asked
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to find out what documents a colleague had in his room. I wish to correct this I did not intend to convey that this had actually happened—that a teacher had in fact been asked to do that. I have no evidence that that is so. I was simply arguing that that was the sort of thing that would be likely to happen if this type of method were used. I do not want to make any accusation of misreporting. I have no doubt that I was not speaking as accurately as I should have liked to do. But as this is a matter of importance, I should like to make it quite clear that I did not intend to make any imputation of this kind.
THE MINISTER OF EDUCATION (VISCOUNT HAILSHAM): My Lords, I am sure the House accepts what the noble Lord has said. I myself should like to say this—I think I owe it to the House to say it. In the debate to which the noble Lord referred, I was, of course, answering outside my own Department, and I have made it plain to the noble Lord that it would have been of some assistance to me, and I think it would have been in accordance with the custom of the House, had I been given some notice of these general allegations which were being made. I was in fact given none, with the result that I did not have an opportunity to reply to them. I have invited the noble Lord to give some evidence of the allegations that were made on that occasion, and so far he has given only one instance.
LORD CHORLEY: My Lords, if I may just add a word, I received the information on which the gravamen of my charge was based only a few hours before the debate took place, and I had not really the opportunity of bringing it to the knowledge of the noble Viscount, although it had not, in fact, struck me that it was necessary that I should do so. There would not have been time in which to investigate the point, because, as I say, it was only a few hours beforehand that I received it. But, in the meantime I have sent him the name of my informant on the more serious of the charges I made. This gentleman is a lecturer in the University of London, and he has offered to come and explain to the Minister everything that happened. I do not think that more than that can be expected.
VISCOUNT HAILSHAM: My Lords, I am perfectly sure that the noble Lord did not mean any harm at all, but the fact remains that very serious allegations were made about a Government Department, and the only Government Minister who was responsible for answering the debate had not at his disposal the means to answer them. That seems to me to be very unfair on the Department and on the officials concerned. The last thing I would do is to say to the noble Lord that he should in any way restrict himself in regard to the absolute freedom which all Members of either House of Parliament enjoy. I feel myself that, in justice to the Department concerned, when it is known that a Minister is answering outside his own Department, as I was, some opportunity should be given in order to find out whether there is any truth in the allegations or not. I must say that I have in front of me the Hansard containing what the noble Lord said, and I venture to say that nobody would have dreamed, reading that Hansard, that he was going on one specific incident related by one specific informant alone.
LORD CHORLEY: My Lords, this is a very wide subject. If it will help the Minister I will put down a Motion so that we can go into the question, which is obviously a matter of some importance. He will then have an opportunity of making the Government's case.

MOTOR VEHICLES (INTER NATIONAL CIRCULATION) ORDER, 1957
THE PARLIAMENTARY SECRETARY, MINISTRY OF DEFENCE (LORD MANCROFT)THE PARLIAMENTARY SECRETARY, MINISTRY OF DEFENCE (LORD MANCROFT) rose to move, That the Draft Motor Vehicles (International Circulation) Order, 1957, reported from the Special Orders Committee on the 22nd of May, be approved. The noble Lord said: My Lords, this Order is laid under the Motor Vehicles (International Circulation) Act, 1952, and requires an Affirmative Resolution of each House. The making of this Order is necessary before the United Kingdom can ratify the International Convention of 1949 on Road Traffic. The Order will also enable us to give effect to Article 4 of the Agreement regarding the Status of Armed Forces of Parties to the North
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Atlantic Treaty. Ratification has become a matter of urgency.
The most important provisions of the Order relate to the recognition of foreign national and international driving permits held by temporary visitors to Great Britain, and to foreign national and military driving permits held by members of visiting Forces in this country. Under our existing law, no one may drive a motor vehicle in Great Britain unless he holds a British driving licence. As a result, we have been forced, up to now, to issue British driving licences, without test or fee, to visitors holding international driving permits issued under the 1926 Convention on Motor Traffic. This was nothing more than a tiresome formality. The Order now before your Lordships accordingly provides that a visitor from abroad who holds a national or international driving permit, need not obtain a British driving licence. This concession holds good for twelve months.
A similar provision, but without a time limit, is made for members of visiting Forces and for civilian components of such Forces holding foreign or military driving permits. Visiting drivers of buses and coaches and heavy goods vehicles, provided they hold foreign national or international driving permits for those classes of vehicles, will further not he required to have additional vocational licences to drive these classes of vehicles. They will not be subject to the minimum age limit of twenty-one years prescribed for drivers of these classes. These two concessions are, however, to be confined to the driving of vehicles brought temporarily into Great Britain, and drivers must be at least eighteen years of age.
The remaining provisions of the Order are a little complicated, rather technical and of a procedural nature. They do not, I think, give rise to any points of controversy, but I shall be happy to try and explain them to your Lordships if you should so wish. I think this Order is obviously a sensible and necessary Order, not least from the point of view of the tourist industry. I beg to move.
Moved, That the Draft Motor Vehicles (International Circulation) Order, 1957, reported from the Special Orders Committee on the 22nd of May, be approved.—(Lord Mancroft.)
2.40 p.m.
LORD LUCAS OF CHILWORTH: My Lords, we on this side of the House agree with the noble Lord, Lord Mancroft, that this is a wise and sensible thing to do and we shall not oppose it; but there is one question that I should like to ask the noble Lord, and one suggestion I should like to make. Could the noble Lord tell us how many drivers this is going to affect in the course of twelve months? Then—though I am afraid that this is an awkward question to ask on the spur of the moment—can he tell us the number of nationals who come in and who will be affected by this? The reason I ask is that we in this country have put great store upon driving tests. Many drivers who come here come from countries which do not have driving tests. To help that position, would the noble Lord consider it a wise suggestion that Her Majesty's Government should present each of these drivers with a copy of the Highway Code, printed, I would suggest, not in every suitable language but, say, in the two languages which would cover the majority of drivers, which probably would be French and German? I do not suggest that there should be any other language for the Americans, who would form the bulk of the numbers. That might help us and assist the Ministry of Transport in their laudable effort to decrease road accidents in this country.
LORD KERSHAW: My Lords, on the Committee stage of the Act I raised the question whether these people would be fully covered for third party insurance. I received from the Department information to the effect that they are covered. Perhaps the noble Lord would assure the House that such is the case, especially with regard to members of foreign Forces in this land.
LORD BRABAZON OF TARA: My Lords, although I do not in any way complain about this Order I should like to take advantage of the rather kind Rules of this House to raise a question which is really a little outside this Order but which, as the Order seems to deal with international circulation, I feel should be raised: that is, the question of the rule of the road—keeping to the left and keeping to the right. Apparently soon, if we are to have free trade in Europe and also a Channel tunnel, there will be a much bigger circulation of
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vehicles than at present, and to chop and change from left to right is bound to introduce a certain amount of danger. I remember that years ago in Austria they had the rule of the road as the left in one part of that country and the right in another; and one had to change by virtue of a notice in the middle of the road. In future, this notice will be in the middle of the Channel. There is here a certain aspect affecting safety. But I should like also to draw attention to the fact that British manufacturers are considerably handicapped in that, if they are to export motor vehicles, they must make a left-hand drive model, whereas for home consumption a right-hand model is required. Foreign countries, on the other hand, unless they are going to export to this country, have not that disability.
I have always been under the impression, to be thoroughly Irish, that left is right and right is wrong, but I will not adumbrate arguments upon that there are advantages and disadvantages. I do not think there is much disadvantage for the private motor car, but from the point of view of public transport, where now we catch a bus from the kerb, if we reverse the rule of the road we shall have to load public transport vehicles in the middle of the road, which would be a matter of considerable danger I would ask the Minister, when replying, if he would refer the matter to the Department to see what is their view; because a pronouncement upon it would be valuable to everybody, so that we may know whether we are to continue indefinitely and for ever to keep to the left or whether, one day, we shall adopt the general, but I believe erroneous, practice of keeping to the right. That would be an advantage, because if such a change is to be made we shall certainly want at least fifteen years' notice of it.
LORD GIFFORD: My Lords, in regard to the sound suggestion of the noble Lord, Lord Lucas of Chilworth, I believe I am right in thinking that something of this sort is already done by motoring organisations in that they hand out to people coming here instructions, in most cases in the appropriate language, on the rule of the road and so on.
LORD MANCROFT: My Lords, I will certainly refer to my right honourable friend the Minister of Transport and Civil

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Aviation the observations of my noble friend Lord Brabazon of Tara about the desirability of changing the rule of the road. I suspect, though, that he may already have heard of it at some time in his professional career. I am glad that the noble Lord gives us fifteen years' notice. I suspect that we shall probably get the change about the same time as we get the Channel tunnel, the decimal system and a fixed Easter.
The noble Lord, Lord Lucas of Chilworth, asked me how many people this Order affects. I do not know whether any firm figures are kept, but the approximate figure is estimated to be of the order of 50,000; and obviously we hope that it is rising; so that an increasing number will be affected. If we have a Channel tunnel more will be affected. My noble friend Lord Gifford is quite right. The Highway Code, in English, is given to most, if not all, visitors to this country. To print it in other languages would be very expensive. Most visitors to this country seem to understand English fairly well, and judging by the high standard of safety they observe on our roads during their visit they pay a good deal more attention to the Highway Code than some of the natives themselves who drive on the roads. In conclusion, I can assure the noble Lord, Lord Kershaw, that the point he has made has been taken care of, and that the necessity for third party insurance—the old green card system—being held by all visitors to this country is in no way affected by these Orders.
LORD LUCAS OF CHILWORTH: My Lords, may I ask the noble Lord a question? I do not know whether he had an opportunity of seeing a television performance the other night on the difficulty of foreign pedestrians finding their way about London. If the foreigner drives a motor car, unless he has the Highway Code printed in his own language I should think it would be confusion worse confounded.
LORD MANCROFT: My Lords, the noble Lord's desire to help the foreigner should perhaps he extended to the natives, as many of us find it difficult enough to find our way about London. I will draw the attention of both motoring authorities and the police to the point which the noble Lord has made.

WATER RESOURCES
2.49 p.m.
THE EARL OF ALBEMARLE THE EARL OF ALBEMARLE rose to call the attention of Her Majesty's Government to the fact that the abstraction of surface and of underground water for purposes of drinking, washing, industrial use and farming is increasing at such a rate as should cause serious concern to Parliament; and to move for Papers. The noble Earl said: My Lords, last summer certain figures came before me which, being new, seemed to me disquieting. If, when I give them to your Lordships a little later on, you agree with that view. I feel it will be justification for the fact that I have dared to put this Motion on the Paper. Whatever we may be doing in fifteen years' time, I certainly propose to walk down the "middle of the road" in my remarks, rather than keep to the I left or right hand. Having been given many months in which to study every kind of publication and many experts, and to read reams of evidence from proceedings of the Water Resources Committee, I shall have to cut what is a very large subject. It has proved such a wide subject, however, that I find it somewhat difficult to do the cutting, for one must have a little background.
There were, of course, the two great Committees, the Snell Committee of 1920 and the Water Resources Joint Parliamentary Committee of 1945–46, summoned because of concern over the drought which had occurred. Then in 1944, when we had got on with the war, a White Paper came out; then the Water Act of 1945, followed three years Eater by an Amending Act, and finally, the Rivers (Prevention of Pollution) Act, 1951. The 1920 Committee had a great part to play in the 1945 Act, but in the 1945 Act no provision was made for the setting up of a Commission which had previously been recommended by various water authorities. The Ministry summoned the Joint Parliamentary Committee in order to calm public opinion which was excited about drought, particularly in the rural districts. Although that Committee sat for a very long time, the first year was confined to finding out if it was necessary to call the Committee together, and a resolution was passed to the effect that the Committee were quite sure the Ministry had sufficient information to enable them to draft the necessary legislation. They adjourned sine die. However, next year

67
they got down to questioning various authorities, and certain recommendations were made in the Report.
Then the question arose, during the period when evidence was being taken: to whom does water belong? The answer was given that it did not belong to anyone, except to the person who took the trouble to go and get it. If that rather brief description (I have not time to go into these matters further) is true; if it is correct that water does not belong to anyone; and as over-pumping is going on (we have had to have scheduled areas underneath the ground), and as many complaints are being made of rivers drying up above the ground, it seems to me that we need an explanation on the subject of surface water. Beyond all that, I am sure it would be a sound idea, if water does not belong to anyone, to state that it belongs to the country, and to vest it, together with water rights and sites for dams, in a vesting committee. After all, in 1932—or perhaps it was 1937 or 1938—ex-Prime Minister Baldwin astonished everyone by saying that un-revealed and untapped coal mines would henceforth belong to the country. If it is going to help us, I suggest that we might well consider whether the water should belong to the country.
Then there is the difficult question of the Common Law. The Common Law has grown up over the centuries in this country, and as it affects common land and the rights connected therewith it is rather different from that affecting rights in such a matter as digging a well and also of taking what water you want from a passing stream or other flow of water. During the sittings of the Joint Parliamentary Committee many questions were put to various witnesses by the late Lord Mancroft, who was a most notable member of the Committee. He took the greatest trouble in preparing his questions beforehand, and he had copies typed and issued in advance to those who were going to be questioned. And he received all sorts of answers. The thing that sticks in my mind was that, as regards underground wells, no one can say you "Nay". You may sink a well. A person next door may sink a well. If those wells dry up, then the richer person can go on sinking until he has outsunk the other. That state of affairs cannot be right. That cannot he equitable.
Moreover, in regard to riparian owners' rights, it is quite impossible that those rights should be exercisable to the detriment of others. Many streams in this country, particularly in Eastern areas, are now dry, or in process of drying out, particularly in the drier months of the year when the farmers most need irrigation. Though the 1945 Act says that river boards are to exercise powers it forgot to give them powers. Therefore, I would say that many people in this country are hoping that powers will be given to the river boards to enable them to aid in the task of conservation, the chief conservator, under Section 1 of the Act of 1945, being the Minister. I am certainly not anxious to criticise that Act—who am I to criticise an Act? I can only put before your Lordships what has occurred to me in the course of my reading. This Act went through hard times. It was a Coalition effort, but I believe that the actual Act of 1945 was not passed during the lifetime of the Coalition Government.
THE EARL OF LISTOWEL: The Labour Government.
THE EARL OF ALBEMARLE: As I was saying, the Act went through hard times. Its work and its efforts were always being held up. In the first instance, Ministers were always changing. In this House a few years ago, I remember a tremendous point being made of the fact that the Minister was always changing and that people outside did not like it. That is what has happened with regard to this set-up.
The water division was, first of all, someone's child, and then it was someone else's child. Ministers came and Ministers went. Almost every year there was a different Minister. And these were Ministers of a major Department who were concerned with every sort of major measure, which surely could hardly allow the time necessary for personal attention to be given to formulating policy in between whiles. And the Minister was supposed to be the formulator of policy. It was laid down in Section 1 of the Act that the Minister's duty should be
" to promote the conservation and proper use of water resources and the provision of water supplies in England and Wales and to secure the effective execution by water undertakers, under his control and direction, of a national policy relating to water."

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The water undertakers were to be under his control and direction. The makers of the 1945 Act clearly imagined that the Minister would formulate a positive policy for our water supplies. The whole tenor of the Act is to place the responsibility for a policy upon the shoulders of the Minister and the responsibility for execution of that policy in producing those supplies upon the local water authorities.
What actually happened? The Minister has used his powers negatively. He has made ad hoc decisions. He has said that the greatest thing they are out to do now is to bring about the amalgamation or grouping of water undertakers. Well, this Act was passed twelve years ago, and here we are in 1957 and comparatively few amalgamations have taken place. I believe that there were 1,200 separate undertakings, which have now been reduced to about 1,000. Of that 1,000, I am told, about 150 produce water for half the country, so that there are 850 producing water for the rest. I said that the Minister was negative in his actions. It is true that he is being content to approve or to withhold his powers, and it has been left to undertakers to take the initiative and prepare schemes. To use a homely phrase, it is as if the rider has rested his bridle hand on the withers of his steed and trusted the animal to make his way home. It may be said that it is not fair to say that, but I have that feeling.
The 1944 White Paper denounced a rigid master plan, but I do not think that anybody ever suggested such a rigid master plan. On the subject of planning, I think that the White Paper contains rather conflicting verbiage, which has confused me. In one place it says that undertakings should be chary of embarking on work where the population is changing and demand may decline. On the other hand, somewhere further on it says that if they do plan, they should plan for twenty years ahead, because any big scheme will take twenty years to implement. But I think that one could say that the Act has produced two solid achievements. I am told that in the provision of rural water supplies, the development has been such that only about 5 per cent. of the population are not near a water supply. Of course, this is an achievement. But those of us who
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have sat on district councils remember that in 1926 we were told to get on with these water schemes, otherwise it would be done for us and we should have to pay the bill. Many of us said then that the district councils were too poor to do it, and we doubted whether the people would come in. It was perfectly true that we were too poor to do it, but the Government helped generously. We were right in thinking that people would show a short-term enthusiasm for piped water supply. They welcomed it, but they did not come in. The odd thing is that there are many cottage homes in England where they remembered the Scriptural saying that
"He sendeth rain on the just and unjust".
And there are many rural dwellers, I suppose, among the old people, who think that there is something sacrilegious in expecting anybody to be paid for producing water.
My Lords, I apologise: I am afraid that this is extremely dry, but I am trying to get through the subject, and I hope that I shall have your indulgence. The other achievement is that the water industry knows what it wants and goes to get it; but it proceeds by the Private Bill procedure, which has many enemies. I know perfectly well that it is for the convenience of Parliament, and that probably Parliament will never give it up but it must be recorded that many people do not like this procedure. We had an instance recently. Important people like the Federation of British Industries testified against it to the 1935 Committee.
The present Minister, in saying that he was pleased with the evidence of the British Waterworks Association, stated of these big water undertakings that "Looking ahead is their normal practice". I understand, however, that the water industry, like everybody else, is suffering from insufficient capital, and that insufficient capital is allowed to local authorities for combating pollution and for improving the arrangements for the outfall of their sewerage works, compared with the amount of capital available to the electricity and gas services. The amount of capital expenditure in electricity, taking 1931 as 100, went up to 281 in 1956, in twenty-five years; and the figures for gas went up 50 per cent. But for the water industry, which started in 1939 with £20 million, the figure in

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1955 (the last year for which I have details), was £37 million. Having regard to the extra water supplies required, which mean more sewerage and drainage, and remembering the drop in the price of money, it seems to me that we are putting the water industry at the bottom of the class and making it the "bad boy" of the class. I think that everybody would ask the Government to be more generous.
Water being a primary need for man, as for trade, the position of our water supply is rather disgusting. We know that pollution is rife. Clear water resources become fewer. In fact, we are engaged in cleaning up one another's messes. Water is often cleaned three times over to make it potable. Industry, however, has a use for raw or polluted water, and the emergent feature is this increase in the industrial use of water. Industry needs three kinds of water. It needs water for cooling—and here, quality matters little: it is the temperature that is all-important. Other trades need either natural or treated water, while others require water for boilers. This last has to be the finest kind, because the high-pressure boilers of to-day need cleaned, demineralised water.
May I proceed to some of the things that are happening in industry? The chemical industry is likely in the next ten years to raise its demands for water by 50 per cent., which is a quite phenomenal increase. Largely increased amounts of water are also required for the iron industry, for textiles, for leather and for paper—and the demand for the last-named is likely to rise by 25 per cent. in the next ten years. Supplies for industry must include potable water under the Public Health Act, 1937, and this good water has to be brought in from water undertakers. But the really important need for industry is quantity, and it is in this respect that matters are getting serious. For certain things, such as cooling towers, the water need not be potable; surprisingly enough, anything will do.
But it is not easy to arrange supply for industry. When industry wants to find a place to put up a factory, the first thing it does is to find out the kind of water available. Different industries need different kinds of water—one kind for
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brewing; another for chemical factories, and so on. That is where it is difficult for them to get—I will not say willing co-operation, but the possible co-operation of water undertakers, because it may not suit those water undertakers. I would suggest that in order to make a whole water policy, various things need to be done. One is the arranging of a standing conference between water undertakers and their would-be clients, industry. There is no provision, so far as I know, to bring those two parties together. I think that should be done, either by the appointment by the Minister of such a standing conference to hold quarterly meetings, or, if necessary, by legislation and the setting up of a statutory committee.
There is no doubt that industry is getting restive. The important fact that I have discovered, in regard to metered supplies—that is, to businesses—is that between 1931 and 1955 they rose from 156 million to 286 million gallons per day. That is a dreadful rise, representing an increase of 82 per cent. There, I think, we have the important fact: it shows that industry is emergent and expanding—and thank goodness! it is, because that is the only way we can live—and needs more help from the Government. While I am on the subject of increased consumption by big water undertakers I have to give your Lordships these figures, because these, among others, have led me to think that something ought to be done about this question. The quantity for the great Metropolitan Water Board, between 1926 and 1956—that is, thirty years—rose from 70 million to 109 million gallons per day; for Leeds it rose from 5 million to 8 million gallons per day; for Birmingham from 8 million to 25 million gallons per day (they get their water from Wales); for Liverpool from 10 million to 22 million gallons per day, and from Manchester from 16 million to 41 million gallons per day. I am sure your Lordships agree that those figures must make one think. Is industry to forage for itself? Are all the initiating forces to come from individuals?
May I continue with what has been achieved? The central advisory committee has been enlarged to include representatives of business, river boards and other bodies. Scheduled areas have been

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set up. Over-pumping of underground water has been clamped down upon by the refusal to issue new licences, although chat has by no means stopped over-pumping or the water totals from falling. I do not know how the Minister can stop that, though, being the chief conservator, it is surely within his duty to bring to an end this great waste of our internal reserves of water—what might be called our water bank.
I find it almost impossible to condense he many other things that I wanted to wine before your Lordships, but I will try to bang my speech to an end in five minutes. I have said that although the Minister is empowered to set up regional joint water hoards (and, indeed, the Ministry took credit for a list of eight that were, or were said to be, set up) they certainly do not function now, nor have they been revived, although they are provided for in the Act. I do not believe that the Minister can do without that real experience, knowledge and good will of the countryside. Men already prominent in their spheres of influence, with innumerable public work problems already on their shoulders, are the only people to deal with water matters in a regional sense. It is true that the Minister has had to promise to appoint a regional water committee in Wales, but I should have thought that he could not have done that without bringing in local help.
I suppose the Minister must have thought that a vast network of regional consultatives would be unmanageable, and that a central general staff to advise him, backed by all the stores of fact, maps, knowledge and experience in the Ministry, and in the other establishments which I will not go through now, would have been sufficient to enable him to get out a forward plan. Everybody is unexpectedly bogged down by lack of accurate statistics. The information will not be ready for another year from either of the two sub-committees, nor from the investigating team of engineers for Wales. Nor is there sufficient information which can be gathered for the inland water survey. That is the position. It is everywhere complained of that there is such a lack of detailed information.
That, to my mind, is incomprehensible, because over and over again I came upon evidence in those two Committees, and in the White Paper of 1944, that the Ministry had great experience and plenty
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of maps and information. The Inland Water Survey has been neglected in the past. I believe that at the time of the flood there were only three or four water gauges. Last year they managed to increase the number to 80, and this year to 117. Bat they will not have the necessary information until they have, they tell me, 400 water gauges. These water gauges are the concern of the river boards. They have been told to get on with it, and each gauge costs between £400 and £4,000. Plan-making is being held up because people cannot get accurate information. So much is water used and re-used, that when you send out a questionnaire to find out people's consumption, you discover that twice as much water has been used as exists in the country. However, another effort is going to be made to try to size up the position.
Plainly, rainfall occurs mainly where population is least. Water is not where it is most wanted. It is extremely expensive to build dams for water, and very expensive to lay pipelines and build aqueducts. Water is expensive to purify and re-clean, but processes now are so improved that it is thought that, rather than bring water from long distances, sources can be used in the middle and lower reaches of rivers which a few years ago would not have been attempted.
Finally, let water rights, as I have said before, be vested in Crown Commissioners, like the Coal Commission and the Crown Lands Commissioners. Let the vesting Commissioners also sit judicially to allocate from this reserve to new applicants as the years go by. Let the various advisory water committees advise the allocating Commission. Let the Minister, as I have said, summon a standing quarterly conference. We should do what has been so often asked for, and treat every river basin as a unit. To do that, some measures have to be taken to compose differences among the five or six Ministries which, on certain occasions, hold sway by legislation over a given length of river. The 1920 Snell Commission suggested an inter-departmental statutory committee to meet two or three times a year and there to compose their differences—because, of course, differences do occur. A water engineer's aim is often opposed to that of a land drainage engineer, and, as we know,

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navigational matters have precedence over agricultural.
I know that these sovereign departments do not like that idea at all, because they always reply, "If we have any difficulties we just go and have a chat, and it is all easily put right." I am not convinced by that. There is a priority and a difference in prestige between Departments. What happens when the "under-dog" has to put up with what has been said to him by the overriding Department? He has to "take it," and he may not have been able to have his excellent arguments threshed out in a sort of Committee.
I urge the scheduling of surface water areas where needed. I ask that the actions of the Common Law, where they do not seem at all equitable as between subjects, should be investigated. There is one final suggestion that I should like to make, and it is this. For over a dozen years I have served under an Enabling Act in a certain place where the three parties to the matter in hand assemble and thresh out a measure, to their mutual interest. The measure comes to Parliament, and Parliament is not burdened—although it is over-burdened with work—with that particular matter. It either approves or rejects it. I suggest that it might be valuable to have an Enabling Act to empower all branches of water authorities to come together and thresh out their differences, and so save the Minister and Parliament a good deal of labour.
I am very much obliged to your Lordships for the attention you have given me. The 1945 Act is like a suit that has been worn in hard times and passed on; for, owing to the shortage of materials, Ministers have their elder brothers' clothes passed on to them. If only they had looked in the pockets, they could have pulled out something to their advantage; but unfortunately that was not done. I beg to move for Papers.
3.32 p.m.
THE EARL OF LISTOWEL: My Lords, I apologise to the noble Earl for having missed the first five minutes of his remarks. I did not realise that we were not having Prayers this afternoon. We are all extremely grateful to the noble Earl for raising this important subject for debate this afternoon and for making
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a speech in which he certainly touched on most of the really important problems connected with water supply. I think the position from which the noble Earl spoke was perhaps symbolic of our approach to water. As a rule, the noble Earl sits, and sits most assiduously, on the Benches opposite, but to-day—and I am sure that it is no reflection on his Party loyalty—he chose to speak from the Independent Benches. Water is a non-Party matter and has a common approach.
I think it is fair to say that water is the most neglected of our important public utilities. Compare and contrast the improvements that have been made in the organisation and distribution of gas and electricity with the improvements that have been made in the organisation and distribution of water. Taking an obvious example, one finds that there is disproportionate capital expenditure. The figures I have for 1955 are: £247 million invested in electricity, £57 million invested in gas and £56 million invested in water. Of course, more money must obviously be spent on gas and electricity but it is the disproportion which is so striking. I should be obliged to the noble Lord if he could give the figure for investment in water for 1956. I have not given notice of that question, but if, when he comes to reply, he could give that figure, it would be useful for the House to have it to see whether, in fact, investment is going up or down or is on a level.
I agree with the noble Earl that we cannot really grasp this problem without going back to the end of the war when the policy was started which we are trying to carry out and which—and here again I agree with the noble Earl—we have failed to carry out. It was in the general desire for social reconstruction after the war by the Coalition Government, who responded to public opinion at the time, that the White Paper of 1944 was produced. That White Paper laid down a national water policy. I think it is important to remember that the White Paper was the product of a Coalition Government of all three political Parties, because, in fact, the 1945 Act was the child of the White Paper. And so we see the continuity of water policy.
This White Paper still remains to-day the classic statement of what water policy

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should be. It called for the allocation of our resources according to a planned water economy. The object of this planned economy—I am quoting the words of the White Paper—was:
" to ensure that all available resources are used to the best advantage and to secure proper distribution."
I do not think anyone could quarrel with those principles of policy. If only they had been applied, if only they had been carried out by the successive Governments that we have had since 1944, then we should really not be confronted with the water problem with which vie are dealing to-day.
But the fact is that there has been almost a complete stagnation for the past twelve years, in spite of the provisions of the 1945 Act. The grave defects emphasised again and again in the White Paper—the lack of central authority control, the multiplicity of water undertakers, the inadequacy of water supply in the countryside for both farmers and domestic users—these three cardinal defects are almost as serious to-day as they were when the White Paper was published. This, surely, is an urgent national problem, particularly the continuation of the excessive number of water authorities and the inadequacy of the supply of water to people living in the countryside. These are really the elements of an urgent national problem.
But I think the noble Earl was mainly concerned in his speech, if I understood him rightly, with the problem of conservation. I think he was right to emphasise this matter. He pointed out that our rainfall in fact gives us in ordinary circumstances a plentiful supply of underground and surface water. According to the White Paper, when the White Paper was published we had sufficient reserves to cover fifteen times our then consumption of water. The noble Earl has rightly asked the, Government—and I hope the noble Lord can reply to this question—whether the position to-day is anything like as satisfactory as it was when the White Paper was published. I do not think anyone will dispute the fact that both industrial and domestic demands have enormously increased in the last ten years and will continue to increase in the future. We have to cater for the future, obviously, as well as to have enough in hand for the present time and to give us
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enough to fall back on in the event of a very severe drought.
It would be interesting to know—and I hope the noble Lord can reply to this point—whether the Government are satisfied that our reserves of water are in fact sufficient for all the likely demands of expanding industry and the larger number of domestic consumers in the next few years. I believe there are three matters which are of even greater and more urgent importance than conservation. Everything depends on conservation, obviously, but I am not quite as anxious about the position as is the noble Earl, and I daresay that that will be the view of the Government.
It seems to me that, if we are to have a water supply to meet our primary national requirements, there are three problems that we have to face. The first is the provision of the organisation or machinery required for the conservation and allocation of water and the Financing and control of water undertakings by a central authority. The second is the provision of an efficient and up-to-date system for the distribution of water to both industrial and domestic consumers. The third is the provision of a piped water supply for houses throughout the countryside. These are, I think, the three essential problems that have to be solved and the three main defects in our present organisation for the supply of water.
Let me deal with these three matters in sequence: first of all, the problem of organisation at the centre. The noble Earl, I think, spoke about a central water authority. He certainly referred to the transfer of water rights to a vesting commission. I am glad that that suggestion came from him, because nobody could accuse the noble Earl of being a Socialist. He obviously regarded this matter, as we all do, on its merits and saw the need in a particular case of this kind, supply of water, for a form of national central authority. My Lords, of course, this authority should exist, and it should have the necessary powers. Some of these powers, of course, are already vested in the Minister, and we are, I think, perfectly entitled to complain that they have not been used.
I should like to mention what seem to me to be the essential powers. If they exist, they should be used; and if they do not exist, then the Minister should

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be given the powers forthwith. First of all, there must be a power to decide on allocations of water resources between the different users. This would prevent the present scramble for water, which we experience year after year in Parliament—local authorities each promoting a Private Bill to grab all the water it wants, regardless of the requirements of industry or agriculture in adjoining areas. It is perfectly proper that each local authority should think of its own interests—that is absolutely right; but it is the duty of Parliament to look at the interests of the country as a whole, to see that users get what they want according to some rational system of priorities. There should also be power for compulsory mergers when small and inefficient water authorities refuse to effect a merger by agreement. Again, I think that this is a power which already exists, although it is not used.
LORD MANCROFT: It does exist.
THE EARL OF LISTOWEL: I am grateful to the noble Lord for confirming my quite "amateurish" view of the law. It seems to be all the more regrettable, if this power has existed since 1945, that it should not have been used. I think we are entitled to urge that it should be used in future.
Another power that is needed is the power to make grants towards development and to decide on priorities as between different applicants for financial aid. Again, of course, grants are made—I shall come to that matter in a moment. But what I think should be done is to alter the amount and the distribution of these grants. At the present moment the central authority is a Government Department. The central authority, could, in theory, be either a Government Department or some form of public corporation like the Central Electricity Authority. But I personally am in favour of a Government Department, partly because it is the authority at the moment, and has something like the powers that we think it should have, and partly because, since water is so dependent on public expenditure and on grants from public money, it is necessary that sanction and authority for such grants should be given by a Government Department.
My Lords, I think that these financial difficulties have been at the root of all
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the trouble since 1945. It is, after all, a plain fact that the supply of water for domestic users is an expensive and uneconomic matter. The ratepayers cannot cover the whole cost of reservoirs, of impounding water, of laying water mains and of providing pipes from the water mains to people's homes: there must be substantial grants from public funds towards the capital works needed by these rural authorities. I quite understand that this financial factor has been the retarding factor ever since the end of the last war. But I cannot see any way round this difficulty unless this retarding factor is frankly faced, and unless we are prepared not only to provide the necessary money but to provide it more generously than has been the case hitherto.
We must take the view that domestic users require water just as urgently, for health and ordinary domestic purposes, as they require education or the ordinary public health services; and water for domestic purposes in the home should therefore be regarded as a social service, financed to the necessary degree out of public funds in the same way as education or housing or public health. I am perfectly aware—we often discuss the economic situation in this House—that this is not a good moment to ask for more capital expenditure on unremunerative public works. I have no doubt that that is a point the noble Lord opposite will make in his reply. But this is surely a form of capital expenditure that should be sanctioned just as soon as we can afford it; and it should be given the highest possible priority.
May I come now to the second of these problems? We still urgently need a really efficient and up-to-date system of distribution of water. As the noble Earl, Lord Albemarle, has pointed out, there are still over 1,000 water undertakers, many of them far too small to be economic units and to be able to afford the technicians and to borrow the money needed for the work they should do. It is extraordinary (I looked up these figures only a day or two ago) that as many as 460 out of the 1,035 water authorities supply a population of under 10,000 persons; that is to say, only half the total amount. As the noble Earl has also pointed out, the reduction since 1944 has been only from about 1,200 to a little over 1,000. That is all that has happened in the last

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twelve years. Of course, some amalgamations have taken place, after a great deal of discussion and persuasion. That is the way we should all desire these amalgamations to happen. But since the total number of undertakers has fallen so little in the last twelve years, surely something more drastic should be done. We have to face the fact that, desirable as it is in many ways—and none of us working on local authorities would wish to underestimate the value of it—local patriotism is bound to be an obstacle to voluntary action in this field. I hope that the Minister, armed with these compulsory powers, will not hesitate to use them when his powers of persuasion have failed to secure agreement, and that the procedure will not be unnecessarily dilatory. There is no other way to weed out the small and inefficient undertakers and to put this business of distributing water on an efficient and economic basis.
My Lords, let me come finally to the third of what seem to me the three main problems of water. The worst blot on our system of water supply is its inadequacy in the rural areas. The White Paper stated that 30 per cent. of our rural population is without a piped water supply. I have not any recent figures. Perhaps the noble Lord could give us the present percentage, or the percentage at the latest calculation.
LORD MANCROFT: It is about 10 per cent. now.
THE EARL OF LISTOWEL: I am glad that there has been such a substantial reduction. But I think that even 10 per cent. is a much larger percentage than we can possibly afford to tolerate in a country that prides itself on up-to-date social conditions. If I work it out in relation to the figures I have for 1944, it means that several hundred thousand persons are without a piped water supply. The noble Lord agrees with that figure which I have worked out in my head from some figures I have in front of me
LORD BLACKFORD: May I interrupt the noble Earl for a moment? Is it not the case that piped water is carried to 97 per cent. of the population of the country?
THE EARL OF LISTOWEL: Well, the noble Lord, Lord Mancroft, has just said that 10 per cent. of the population is without a piped water supply.
LORD BLACKFORD: I am asking in relation to the whole country.
THE EARL OF LISTOWEL: I think I had better leave the two noble Lords to fight it out.
LORD MANCROFT: Perhaps I might referee. Both figures are perfectly correct. The figures that the noble Earl, Lord Listowel, and I were discussing are purely rural figures. The figure of the noble Lord, Lord Blackford, is that for the whole country.
THE EARL OF LISTOWEL: I am obliged to the noble Lord for that explanation; I think that satisfies everybody. To resume, I think we have to look at these figures for water supplies in the rural areas in a very broad setting, because we all want people to go on living in the country. That is one of the problems of agriculture at the present day. If we are to stop them drifting away to neighbouring towns, as they are still doing in large numbers, we must make their conditions of life at least comparable to urban conditions. A very high priority should therefore he given, to making the life of the housewife in the village, or in the cottage at some distance front a village, as convenient as the life of the housewife in the town. We cannot accept social conditions which deprive so many households of what we regard as one of the essentials of a civilised life. I cannot visualise what it would be like if I had to carry in all my water for washing up, washing, and so on, in addition to the ordinary chores that I should have to do if I were a housewife.
What is the answer to all this? It is difficult for anyone who is not speaking From the Government Benches to know, but I suggest that amending legislation is required and that we should have a Bill co amend the 1945 Act, If Her Majesty's Government complain that there is insufficient evidence on which to base such a Bill, I would suggest that we should have an immediate Committee of Inquiry. I would rather have a Committee of Inquiry than a Royal Commission, because a Royal Commission takes such a long time; and I am sure your Lordships will agree that what is needed is an end to the inertia and drift which we have experienced over

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the last twelve years. We need action, and we ask Her Majesty's Government, as the responsible authority, to take the action that public opinion requires We very much hope that the noble Lord will have some comfort for us in being able to say that Her Majesty's Government have in view some form of constructive action.
3.52 p.m.
LORD AMULREE: My Lords, before I address to your Lordships the few remarks on this subject which I propose to make, I must disclose a certain interest in the water industry, because I am one of the directors of a stautory water company working in the Home Counties. I should like to thank the noble Earl who has put down this Motion for initiating what is going to be a most interesting and important debate, because one of the things with which we are bound to be confronted is an increasing demand for water in the country, both from the industrial and domestic side and for farming, a demand which is bound to increase quite considerably. One is really, not shocked, but surprised when one sees the enormous amount of water now demanded by some of the industrial undertakings for steelworks, nuclear power stations, various textile factories and places of that kind.
I should like to see every attempt made to ensure that industrial concerns obtain their water from the most economical source possible, and, at the same time, that they are careful not to take more water than they require. It is simple for a concern to put forward to a water undertaker a big demand for water, on the assumption that it is easy to meet that demand, but if that water is then used in an uneconomical way, it inevitably leads to a certain amount of waste. I was wondering whether big industrial undertakings should not be more encouraged than they are to take water from rivers, to which, after appropriate treatment, a certain amount of water can be returned, rather than take large quantities of water from underground sources when river sources might possibly be available. In ways of that kind some economy in water consumption might be effected.
A second direction in which a certain amount of economy—though not very
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much—could be effected by water undertakings in the amount of water used for domestic purposes is by taking proper steps to see that as little wastage of water as possible occurs. In the undertaking with which I am connected, by carrying out a number of waste tests and by taking great precautions against waste, we have managed to save about 10 per cent. of our daily consumption—water which otherwise would go to waste. I do not think it is possible to cut wastage down to a very small figure, but some reduction can he achieved in that way; and, if the reduction applied to the country as a whole—it would serve a good purpose in the conservation of water supplies.
The Water Act, 1945, which has been referred to to-day by noble Lords, makes it possible for water undertakings to combine and, as the noble Lord, Lord Mancroft, has said, gives the Minister power to compel them to do so. One of the things about which we feel a great deal of disappointment is that so little has taken place in the way of amalgamation since the Act came into force. I believe that there are one or two particular reasons for that around London. When the 1946 Act was passed, there was a departmental inquiry into the London Water supply, but the Report was not published until 1948. Nothing much was done about the Report and that made water undertakers about London move rather carefully, as they wondered what was to occur. At the same time a rather big scheme was prepared by the Metropolitan Water Board under which it was planned to absorb most of the undertakings near London. That again caused undertakings around London to delay discussions on amalgamation. So far as I am aware, however, these have begun again, and one hopes that, following the Minister's circular last year, we shall now see more speed. Nevertheless, I trust that if amalgamations do not occur voluntarily, the Minister will not hesitate, in a fairly short time, to use what pressure he can to bring about some amalgamation.
I do not necessarily want to see any particular kind of undertaking coming out of this discussion, for if there is a goad statutory water company it provides one of the best forms of water supply we can possibly have. Similarly, a good local authority is a very satisfactory form of

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supply. But both must be big enough to employ a regular engineer and chemist, and to have the money necessary to carry out essential works. What one hopes will occur is not that very good local authority undertakings will be amalgamated with statutory companies, but that some should amalgamate with statutory companies and some with statutory authorities. Statutory authorities should not take everything under their wing if there is a good statutory company prepared to take one or two local authority undertakings under their wing.
I should like Her Majesty's Government to give us, at the end of this debate some indication, in the first place, as the noble Earl, Lord Listowel, has suggested, of the amount of capital which can be invested in the water industry during the next year, five years or whatever is a convenient period; and also to know whether the Minister can tell us whether progress has been made towards amalgamation of these authorities and whether the Minister proposes to take further steps than he has taken up to the present to encourage such amalgamation.
3.58 p.m.
THE EARL OF SWINTON: My Lords, I think we all agree that the subject introduced by the noble Earl, Lord Albemarle, is well worthy of debate in this House. There are a large number of facts which it is desirable, for purposes of debate and action by Her Majesty's Government, should be fully marshalled. There are a good many more facts, as one has heard from speeches which have been delivered, which apparently we ought to know but which we do not know; and both those points raise quite a number of practical problems.
The one predominant and certain fact is that the consumption of water has increased enormously and will certainly go on increasing. I remember that a good many years ago a distinguished doctor—I it was Sir Almroth Wright—warned us of the great danger of washing too much. At a later stage, during one of those crises in which the noble Earl, Lord Attlee, told us that his Party was always united, Mr. Gaitskell brought Sir Almroth Wright up to date by warning us of the great danger of taking too many baths. The House may remember the observation of Sir Winston Churchill that
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he wondered whether it was that which had brought him into such bad odour in the country. I do not think that any modern Canute, scientific or political, is likely to stay the tide of ablution.
Although consumption will go on progressively increasing, this is the one industry in which we cannot increase production. We can conserve to greater advantage, but we cannot make more water fall. Even the atomic scientists cannot do that—at least they say that their operations have no effect on the atmosphere. Even scientists cannot make more water fall than a merciful Providence sends us. I gather that the noble Lord, Lord Mancroft, has heard something to suggest that possibly they can. There has been mention of something which has happened in Arizona, and I know they have been trying. The noble Lord, I hope, is going to speak and he may say something upon this matter. I doubt whether this factor is going to affect us materially in the amount of water which is brought down.
I would certainly agree with the last speaker that large undertakings, whether municipalities or companies, are extremely efficient. I would also agree that there are a lot of small undertakings which, by reason of their size, cannot be efficient and which, no doubt, ought to be amalgamated. But even when you have done that you have not solved the problem of conservation; you have only made the production, the management and the distribution more efficient. You have not dealt with the problem of national resources. It is really rather an odd thing that water is, I suppose, the only great national asset which is not considered nationally. We have a Ministry of Power, now expanded and very active, covering efficiently the whole field of power; bat to-day we have no effective Ministry of Water. The 1945 Act, with the foundations for which my noble friend had something to do, intended that there should be. The first section of the Act, I think, lays down that the Minister shall be responsible for securing the execution of a national policy. Then there is to be established—and there has been established, I believe—a Central Advisory Committee. But certainly no one has suggested that either the Minister or the Committee, under any Government, have devised a national policy, much less secured the execution of it.

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The noble Earl, Lord Listowel, I thought, was very fair when he said in effect: "We cannot make any Party capital out of this; we do not want to; we have both been equally negligent." The Government of which the noble Earl was such an ornament for many years did nothing. And I am afraid that successive Governments, of which I was a less perfect ornament, did, if possible, even less. Certainly, neither of us did much good at it. What happens to-day? New projects come forward under Private Bills and all sorts of local objections and interests are heard—and quite rightly. I think that very often some people object rather unnecessarily to the construction of reservoirs on their property. At my home I happen to enjoy two large reservoirs, owned by two great municipalities, and I must say that I find them a very agreeable feature of the landscape. In addition, they make a substantial and very welcome contribution to our local rates.
But one may find not only local bodies but possibly also two great corporations competing for some source of power, seeking a ruling at to which of them is to use it—it may be who is to have possession or user of a watershed. The odd thing is that though this comes before Parliament and may occupy this House or another place or Joint Parliamentary Committees for days and days, so far as I know there is no one to advise Parliament what is in the national interest or what (if my noble friend Lord Salisbury will forgive me for saying it) is best in the long run. I am sure that nationalisation is no answer to that. There is no justification in expropriating efficient undertakings. It certainly would arouse great opposition and it would be an unnecessary expenditure of public money. Moreover, you would get much less local efficiency of administration, I believe, under a nationalisation scheme. And I do not think you would have done anything to solve the main problem.
Therefore, what I would suggest is that there should be a small body of National Commissioners and that they should survey all the unused resources; and when a water company or a municipality wanted to tap a new source they would consult the Commission, who would advise the undertaker and also advise Parliament (when the matter came before
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Parliament on a Private Bill or some Provisional Order, or whatever it might be) whether the plan was in the national interest. A scheme of that kind would not hold up plans which were coming forward. These would have to be—and would rightly be—considered ad hoc, and the Commission would give its advice upon them as it got into its stride.
I may be told that we already have the Central Advisory Committee. I daresay that may be a good body; but is it doing what is required? I do not think it is. A matter comes before Parliament; different municipalities—it might be Manchester or Liverpool—have schemes to put forward. Do they go straight to this Committee and get advice? I know one has to get leave before one can carry out some particular boring or other work, and that is quite right; but those are comparatively small matters. If the Central Committee is the right body to do this task, then let us see that it is efficient, that it has the time, that it is not bound by red tape and that it can advise both Parliament and the Minister.
I make that suggestion because I do not like speaking in a debate like this merely in order to criticise. I hope the Government will welcome any suggestions that are put forward. It may be that they have a great plan, and policy of their own. If so, this will be a very convenient occasion on which the Minister—who always explains things so clearly—can explain to us what the Government's plan is. If they have not got a plan, I hope that they will receive with an open mind—and by an open mind, I do not mean a vacant mind—any suggestions and modest contributions, made in this spirit, from different quarters of the House.
4.10 p.m.
THE EARL OF RADNOR: My Lords, until my noble friend Lord Swinton rose I was a little afraid that nobody was going to pay any attention to the noble Earl's Motion, which desires Parliament to express concern at the continued and increasing extraction of surface and underground water for various purposes. Much of the discussion we have had so far has been aimed partly at increasing the consumption of water and partly at organising so that we should be enabled to get more water.

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The plain fact of the matter, to which my noble friend Lord Swinton referred, is that the domestic consumption of water per head of the population is still going up, and also the population; while the increase in the industrial uses of water continues at a pretty rapid rate. Moreover we are to have a chain of atomic power stations throughout the country, which I understand use enormous quantities of water. The table available is still adequate, so far as I can make out, but it is not fifteen times what we require, as the noble Earl, Lord Listowel, said.
THE EARL OF LISTOWEL: My Lords, I think the noble Earl has misunderstood what I said, because my reference was to a statement in the White Paper on the position in 1944. I was not referring to the present situation.
THE EARL OF RADNOR: I thank the noble Earl. From a paper given to me, I understand that the table to-day is only somewhere between four and five times what we require. I will not give your Lordships the figures because they are hedged about by so many reservations that I think the authors of the paper would rather that they were not made too public. That is not a very wide margin when it comes to such an essential commodity as water. Of the water which we use in such large quantities, a proportion comes from underground, and the larger proportion from overground sources. So far as underground water is concerned, I think that we are all aware that the water table in large areas of the country has lowered very materially. One calls to mind particularly the Thames Basin, where I believe it has dropped by from 20 to 40 feet.
We need to think a little about what is happening on the surface in relation to what is happening underground, because the reservoirs of water which are underground can be filled only by what falls on the surface and percolates to the lower areas. We need to remember, too, that we are increasingly covering the country with impermeable areas—it may be roofs, roads or aerodromes. Those who are concerned with these activities have only one object, so far as the water which falls on them is concerned—that is, to get it away as quickly as possible; to shoot it off somewhere into a river,
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We must also remember in this connection that, on the average, rather more than half of the total water that falls on this county disappears in the form of evaporation and transpiration. It seems to me that we are gradually and steadily decreasing our reserves of water through the methods we are adopting to-day. I might also add, of course, that agricultural drainage, drainage boards and rivers all add to the getting away of water as quickly as possible. We are continually drawing increasing quantities of water away from below and increasingly preventing the percolation which would restore the supplies.
I do not want to expand that point, because my interest in this was aroused more particularly from a much narrower point of view—from the forestry aspect. Last year, at the British Association meetings at Leeds, an eminent water engineer read a paper describing an experiment he had done, in which he purported to prove that growing trees in a water catchment area was highly detrimental to the supply of water to the reservoirs which the catchment area was supposed to feed. I think that he would be the first to admit that his experiment was of a limited nature, and I am inclined to think that he put forward that paper more to provoke discussion than as a serious contribution to the water problem. Unfortanately, his paper received wide publicity in the Press, and subsequent papers, many of which offered a different point of view received no such publicity.
From the forestry point of view, what he said has frightened a number of water engineers, and we feel a little concerned about the matter. That is a domestic matter to the Forestry Commission, but I raised the matter with a body which kindly helps us in our scientific activities, our Research Advisory Committee, which consists of a number of eminent scientists in various walks of life, not necessarily in water—botanists, soil scientists and the like. With the aim of starting something to counter the paper which had been read at Leeds, I suggested that we might do our own research into the effect of trees on the flow of water to reservoirs. I found the unanimous opinion, however, that the subject was far too wide for a body like the Forestry Commission to deal with, and that there was a real necessity for a national review at the scientific

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level of the whole situation. With that I had to be content. I was not allowed to take any action myself, and therefore I would suggest that a committee be set up.
The noble Earl, Lord Listowel, and my noble friend Lord Swinton both suggested some kind of inquiry. I should like to make it more particular and suggest that it should be a scientific inquiry, which could lead to further research into the whole problem of water supplies. I think your Lordships will better understand my suggestion if I quote from one of my correspondents, who happens also to be a member of the Research Advisory Committee of the Forestry Commission. He wrote:
" A critical assessment of the state of our knowledge is needed to correct the widespread misconceptions that prevail among the general public, and to a considerable extent in many scientific and technical circles also, and to provide the basis for further action."
I am certain that, by "basis for further action," he meant further research out of which action could come, and in order to ensure our water supplies in future years, it is necessary that we should have as complete knowledge as possible. This must be a long-term policy. We cannot afford, even now, to let it slide, for fear that in twenty-five years' time we may easily find ourselves running short of water, even in this moist climate.
4.20 p.m.
LORD MACPHERSON OF DRUMOCHTER: My Lords, I, too, am glad that my noble friend Lord Albemarle has raised this question of water extraction, because from my experience as a member of the Essex River Board and of the Port of London Authority, I can testify to the urgency of the problem. The consumption and use of water is going up by leaps and bounds. It is estimated that by 1970 the demand for water for all purposes will be double what it was in 1938. I think this debate has already established the fact that the abstraction of both surface and underground water is increasing at such a rate as to make the position in relation to an adequate supply for all purposes an urgent problem in large areas of the country; and particularly is that so in the Eastern and South-Eastern counties of England, where the rainfall is low. I recently heard an authority on the subject,
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speaking at a meeting, describe the situation in these words:
" We are down to the bone in water supplies."
That is true.
As has been said by one or two noble Lords, it is the increasing demand for water by industry that is causing the greatest concern. In London alone meter supplies to industry have been increasing on an average each year by about 2 million gallons a day. Our rivers are the chief source of supply of raw water required for industrial purposes. Many of your Lordships must have noticed how the banks of our principal rivers are becoming studded with electric power stations, chemical works, oil refineries and other similar undertakings. The reason for this is that they all require enormous quantities of water; they cannot work without them. For example, it has been said that the oil industry would die of thirst in a matter of minutes if its supply of water ran out As the noble Earl, Lord Radnor, pointed out, we are now faced with a building programme for atomic energy plants, which also require masses of water for their processes. It is not domestic consumption which is the main problem, but the demands of modern industry and the many new processes which are attendant upon it.
I see that my noble friend Lord Waverley. Chairman of the Port of London Authority, is to speak after me, and I am sure he will confirm that one of the great headaches of the Port of London Authority is the continual and increasing abstraction of water from the Thames by large power plants and others, and the de-oxygenated condition in which it is returned to the river. I would also remind your Lordships that nearly all sewage and trade effluents are discharged into rivers and streams. What an important point this is when we are thinking about this problem of water abstraction!It is only by retention of a sufficient flow of fresh natural water that these sewage and trade effluents can be absorbed without causing conditions harmful and dangerous to river water for human consumption, fisheries and public health.
In the last two or three years a new demand for water has arisen which shows

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signs of expanding rapidly; that is, the use of river and stream waters for irrigation of farm crops by spraying. On the Essex River Board, the information that we have about the extent of purchases of pumps and spraying equipment is causing much concern as to the effect all this is going to have on our already attenuated stream and river water supplies. There is no doubt that spraying greatly accelerates maturity and increases crop yields both of farm produce and fruit, and we cannot but admire the enterprise of our farmer friends in this development. We members of river boards do not suggest that this development should be stopped. It is most desirable, in the national interest, that all demands for water should be met to the fullest extent possible, including the spraying of farm fields; but unless there is proper planning and reasonable conservation of the water in our streams and rivers, the present situation will develop into chaos.
Like other bounties of nature, there is water in plenty, but it must be conserved and not misused. Water has been used for irrigation in agriculture ever since the days of the Garden of Eden. Problems of water conservation affecting our English streams and rivers also existed when watermills were the vogue, in days gone by. Until modern engines driven by steam and oil came into use, the watermill was a feature of every stream and river in the land. But the old problem of the sufficiency of water to keep the watermills going is now no longer with us. Now we have a new and much more serious water problem confronting us, affecting not only agriculture, but also industry and public health; that is, the extent to which water abstraction is exceeding the natural processes of water replacement.
In my view, the time has arrived when we should have a national water policy embracing all sources of fresh water supplies. The White Paper, A National Water Policy, issued in 1944, to which the noble Earl, Lord Albemarle, referred, recognised that action on these lines was necessary; but as has been pointed out in this debate, unfortunately in many important respects the proposals contained in that White Paper have never been implemented. Planning at present is restricted to the control of underground supplies and abstractions by statutory
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water undertakers. But the supply of water from all sources, and its use for all purposes, should be dealt with as a single problem. I agree with much of what the noble Earl, Lord Swinton said; I would say that we should have some central authority of some kind or another. But in the administration of this central authority, I suggest that, so far as surface water is concerned, it is essentially a matter for local administration. I think the obvious authorities to be charged with this duty are the river boards, constituted under the River Boards Act, 1948.
THU EARL OF SWINTON: Perhaps I may interrupt the noble Lord. I want the central authority or commission to be the policy-making or policy-approving body. I do not want them to have executive powers. I want the executive powers to be in the hands of the water authorities, the undertakers.
LORD MACPHERSON OF DRUMOCHTER: That would probably perpetuate the trouble that we are in just now. Under the 1948 Act river boards are charged with the authority of conserving surface water supplies. But Parliament has never given the river boards any authority or power to carry out the object. I should say that, whatever central authority we have to deal with the overall water policy in the country, they must have power of some kind or another to carry it out. I am glad that the noble Earl agrees with me that much of this work, particularly dealing with surface water, streams and rivers, could well be made a matter of local administration.
May I turn to my point about the growth of abstraction of water for agricultural irrigation? That is undoubtedly causing great concern in the river boards up and down the country. Here, again, we are completely powerless to deal with this situation, but I believe it can be dealt with. I believe that ways and means can be found to conserve water for irrigation by impounding streams which carry ample water in the winter and are dry in summer, by constructing reservoirs alongside streams with an overflow weir to the reservoir to enable the stream flow to be maintained in times of dry weather and drought.
In conclusion, I assure your Lordships that the aims of my friends and myself

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on river boards are not to limit the use of stream water unnecessarily, but rather to regulate the use of streams and rivers to allow the maximum use and benefit. I submit that industrial and agricultural progress, building development, public health and other interests, all demand an effective national water policy, and I hope that action to that end will not be further delayed.
4.32 p.m.
VISCOUNT WAVERLEY: My Lords, I have no intention of claiming your Lordships' attention for very long, but, as my noble friend and colleague said a few moments ago, the Port of London Authority, of which I have the honour to be Chairman, have for some years past been greatly exercised in regard to the position that has been developing, primarily, of course, in the Thames basin, in this matter of water supply. No-one who has listened to the speakers in this debate can have any doubt as to the importance and urgency of the matter that we have been discussing.
I want now to emphasise only a few special aspects of the problem. As has been truly said, and as was emphasised by several speakers, the demands on the available water supplies of the country have been increasing at a rapid and rather disquieting rate. As my noble friend Lord Macpherson of Drumochter has said, not only have the demands of industry been increasing very rapidly, but the demands on water for private consumption, owing to the natural increase of the population, changing habits of the people, development of modern housing and so on, have also increased to a great extent. Not only has there been this progressively increasing demand but, as I think was said by my noble friend Lord Radnor, the availability for the needs of the community of water—and it all comes from one source, the "gentle rain" falling from Heaven—is diminished for several reasons, in several ways.
First of all, there has been a great development of land drainage and, at the same time, the extent of the areas which are impermeable to water falling from the skies has been progressively increasing. The results of those two causes operating together have been that, in time of heavy rainfall, the proportion of water (which formerly used to be held in the
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soil, acting rather as a sponge, to be given up gradually) which makes its way straight away into the rivers and streams, is much greater than it used to be; and there are no means available of capturing to a sufficient extent the water that escapes into the main rivers and waterways of the country in time to make it available for the general use of the community.
In the London area, various devices have been resorted to in order to mitigate the risks inherent in the existing situation. Storage reservoirs are being developed at great expense, and measures are taken to ensure that they shall be kept topped up at times when the flow in the rivers, and particularly in the Thames, is adequate. In time of reduced rainfall, when the natural flow in the rivers shows signs of falling away, then the reservoirs can be drawn upon, and in the London area there is a useful formula which is applied which relates the amount of water drawn from the storage reservoirs directly to the level of flow for the time being over Teddington Weir. Also, the Metropolitan Water Board have taken measures, at considerable expense, to make available water falling in the Thames Valley to supplement the waters of the Lea Valley. The water is pumped underground, and the reservoirs in the Lea Valley are kept at a high level, thus ensuring that they shall be available to make good any deficiency in the Thames area.
There are other aspects of this matter which, in my view, require further investigation. I will say a word in a moment on the organisational aspects which have already been touched upon. But first of all I want to say a word about underground water supplies. One can easily paint in one's mind an attractive picture of vast basins of water undergound, available to be drawn upon by simple processes so as to supplement the supplies of water above-ground. But, for some reason or other, it does not work quite like that, and I think there is something of a mystery there. I do not know why, when artesian water is being taken from these underground basins, the water table is so severely lowered and only so very slowly restored. You can apply statistical methods, and you can calculate quite easily the amount of rainfall on the great areas of the country where the surface strata are permeable, and you can make due allowance, as my noble friend Lord Radnor

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did, for loss by evaporation. You must assume that half of what falls goes away in evaporation and is no use to anybody. Nevertheless, statistically there is a vast source of supply available there, and what becomes of it? Where does it go? By what hydro-dynamic forces are the underground waters supplemented from the surface, which is the only way in which they can be supplemented?
I would urge strongly that there should be a further detailed scientific investigation of that particular limited problem. As I have said, the areas of the country which are covered by permeable strata—by the chalk, by the oolite further north, and by the triassic sandstones further north still—are of vast extent, and the sandstones and the limestones are, at any rate theoretically, capable of holding vast quantities of water. In many cases, those formations are overlaid by, for example, the London clay, which ensures that the water is held in situ, and one would think prima facie that it would be perfectly easy, by sinking boreholes in suitable situations, to draw upon underground sources of water to an extent wholly ample to make good any deficiency that is likely to occur even in the remote future. I would suggest that there is a strong ease for making a thorough investigation of that problem.
There is also the problem, to which my noble friend Lord Radnor referred, of the effect of afforestation on water supply. I will not vie with him in endeavouring to expound any theory in regard to that. I will just say this. In India, where I spent some years, we were encouraged to believe that afforestation had the effect of stimulating local precipitation at the expense, no doubt, of more remote areas; but, on the other hand, that the rain that fell in the afforested area was much slower in finding its way into the waterways and draining off than it otherwise would be. However that may he, it is part of a very large subject indeed. I am not surprised that the Advisory Committee of the Forestry Commission felt it was too big a problem for them to tackle. It is a large problem and I should like to see it tackled scientifically along with the other matters to which I have referred.
When one comes to the question of organisation, I think a very clear case has been made for a change in the orientation of the governmental mind in this matter.
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We have hundreds of small water authorities supplying perhaps, on the average, 10,000 or 20,000 people, and those authorities are not in the nature of things capable of dealing thoroughly or scientifically with the problems that present themselves all over the country. People have spoken of "the Minister", but there is not, in fact, any one Minister who is specifically charged with primary responsibility in this matter. It happens, I believe, to be the business of the Minister of Housing and Local Government—I believe that is now the name: it is constantly changing. That Minister and the Government have many other matters of more pressing urgency to attend to.
I think the attitude of the Government in this matter should be constructive and not merely regulatory. I think it was the noble Earl, Lord Albemarle, who spoke of the attitude of the Government as being negative. That, perhaps, is a strong word to use, but the function of the Government Department in question, as hitherto conceived, has been what I call regulatory and not constructive. I think it should be made constructive, and I entirely agree with my noble friend Lord Swinton that a very good purpose would be served by the establishment of an ad hoc body to keep this whole question under review and to be available to advise the Minister in regard to the line of policy which should be adopted.
I do not think that one needs to become unduly alarmist about this matter. There is plenty of time to set on Foot the necessary measures. But unless action is initiated n the fairly near future, we may find ourselves before long in the awkward position of having to resort to very unpleasant measures of restriction and control at the expense of the general population, whereas, taking time by the forelock, it should be possible to avoid any situation of that kind.
4.43 p.m.
LORD GLYN: My Lords, I rise to support, so far as I can, everything that has just fallen from the noble Viscount, Lord Waverley, because I think it is quite clear not only from this debate but from the history of the way in which Governments, in the plural, have treated the water problem that it has been unfair to Parliament to try to make decisions on local proposals presented in Local Bills without a national policy. That is why

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I so heartily agree with everything that the noble Earl, Lord Listowel, said about the matter being entirely non-Party. It is of tremendous importance.
I have been for over thirty years on the Thames Conservancy where we have responsibility for the purification of the River Thames above Teddington and for loosing down over Teddington Weir a sufficiency of water to flush the River Thames and keep it pure and sweet. I will not say anything about the history of the London County Council and what they have not done for the treatment of sewage; but if an analysis of the filthy water that drifts up and down outside this building were taken, it would make every noble Lord appreciate how important it is that we should always keep the Thames sufficiently topped up at Teddington by means of what is known to every noble Lord and everybody else as a good flushing closet, because that, in fact, is one of the functions that has to be performed by the Thames Conservancy.
I had the great honour and happiness of joining the Thames Conservancy at a time when the late Lord Desborough, who was so well known to most of your Lordships, was the Chairman. Lord Desborough was one of the great men of the Thames. He was a great man in every respect. I remember going with him to see a good friend of mine called Guthrie Allsebrook, who has been working in Berkshire, on the Berkshire Chalks. He was certain that the right thing was to sink trial boreholes and to do exactly what the noble Viscount, Lord Waverley, suggested should be done, to find out what, in fact, happens to the water that is brought up from down below. If it could be put back into the Thames at a suitable place and at a suitable time, it would help the Metropolitan Water Board by maintaining in times of drought the contents of the reservoir. It would certainly save the Treasury enormous sums of money, because to-day the cost of creating reservoirs like those we have just outside London is £15 million to £20 million apiece, to say nothing of the evaporation that takes place from such a reservoir. There is also the fact that those reservoirs, when created, may be inadequate. The problem that faces the Metropolitan Water Board to-day, so far as I understand it is that they must create more storage if they are going to supply
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what is necessary for London and elsewhere.
The noble Viscount, Lord Waverley, has mentioned the method of taking Thames water, pumping it underground and bringing it up to the surface again to supply the reservoirs of the River Lea. We at the Thames Conservancy are very glad that the water should be so used; but it is a curious thing that we have reached the stage where we have to pump water from the Thames Valley to fill the reservoirs of the River Lea. It is an example that can be cited as showing the urgency of this problem.
There is one thing I urge the Government to do and not turn down just light-heartedly. When I first went to another place many years ago, we had Joint Committees of both Houses. For some strange reason there are now no Joint Committees of both Houses. In the days when I first went into another place, in 1918, there were many such Committees and I think we did some good work, because the combination of Lords and Commons sitting together is undoubtedly very helpful when local legislation comes up. I think that we can make a contribution one to the other of our time and ability, and can join together for the improvement of whatever may be the subject under discussion. If ever there was a case far a Joint Committee to inquire into the present conditions of water supply, I think this debate has shown the need of it.
We all want to see domestic supplies improved. Some of us 'believe that there are good sources that can be tapped without any detriment to the water supply generally. Every winter, when some of the London newspapers come out with headlines about flooding of the Thames Valley, they never stop to say that we, as a river board, have no powers and, therefore, that the river boards should have more powers. If flooding in areas where jerry builders put up billets is to be stopped, I believe that the use of underground sources of water at the right time, will help. If it is put into the river by discharge in the ordinary way, it will have the effect that, in a rainy period, we shall not have floods to the same extent. I believe that if water is drawn subterranean, that will be the first thing to fill up, with the result that there will be less flow down the Thames

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May I say a word about the new towns? I do not think the noble Lord appreciates what happens in a thunderstorm in a new town. There is a downpour of rain, and what we call the runoff has to be accommodated in brooks which were quite unintended by nature to carry such a volume of water. Flooding is therefore inevitable. I have asked on many occasions that the Ministry of Housing and Local Government should consider, at any rate as one measure of delaying this run-off, the forming of lakes, both for amenity and other purposes, which would catch the water, hold it for a time and gradually release it so that it can be accommodated in the out-falls of the particular district. There are many problems now connected with housing and with industry. One noble Lord mentioned atomic energy. I know what volume of water Harwell and Winscales takes. It is obvious that those are subjects which ought to have the urgent attention of any Committee that is set up. I believe it is only by the setting up of such a Committeee, with wide terms of reference, that we can really deal with the matter.
In conclusion, may I draw the attention of the Minister to Section 14 of the Water Act, 1945? When that section, which is part of Part III, went through another place after a great deal of debate, it was not realised that an enormous loophole was left which enables anybody, without a licence, to overpump if he already possesses a borehole. Noble Lords will realise that there is not much difference between putting down a second borehole and taking water out of it and utilising an existing borehole and taking that additional amount of water from it. That kind of thing is going on to the detriment of the Metropolitan Water Board to-day.
I think that the whole question of who pays foe water, who gains money from water and how the matter should be controlled and regulated, is one that should command the urgent attention of any Committee that is set up. But the first step is for the Government to admit that the formulating of policy in the last few years has been disgracefully slow, entirely without proper research or understanding, and slipshod, and that river boards have had to contend with great difficulties and
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have had little or no help from the Government It is an intolerable position that river boards, which are statutory bodies, should not have firm support from the Government on the lines that my noble friend Lord Waverley has suggested, so that we can regularise this problem, find out what are our possessions, how valuable they are and what is the best use to which they can be put.
4.55 p.m.
EARL WALDEGRAVE: My Lords, I am sure that noble Lords on all sides of the House are extremely grateful to the noble Earl, Lord Albemarle, for bringing forward this Motion. When I first looked at it I was a little frightened that we might he going to use this concern, which is the word used, to suggest measures of economy, and to say that all this water was not necessary and that we ought not to use so much water. This has been suggested before. People have suggested that the solution to this whole problem is that the water charges should be put up; that there should be more restrictions and so on; and that water is wasted. For twenty years I have been proud to be associated with one of the big statutory water companies the Bristol company, and I could not "go along with" that suggestion. I am delighted, therefore, that in this debate that matter has not been raised. But what has been most valuably ventilated is the great problems that we are facing in regard to the vastly increasing amount of water that is required.
I do not propose at this late hour to try to follow noble Lords on what I might call the organisational or political problems that have been raised (I do not mean Party political problems at all, but the organisational problems), but perhaps it may be of interest if, for a moment, I try to take a constructive line on actual measures which might he of value from the point of view of the water industry itself. May we consider for a moment the traditional methods by which supply undertakings, great or small, make water available. There are, of course, three main methods. First, there is pumping. That was probably the first method: the spring and the well is probably the oldest method of obtaining water. Secondly, there is the impounding reservoir; and then, thinly, there is the use of rivers.

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At this late hour, I will leave pumping aside, though, in passing, I would say that there must be restrictions and control of pumping. But I think that the main method now, and likely to be in the future, is the use of reservoirs, and I propose to confine my attention largely to that question. What are the procedures, both Parliamentary and engineering, that take place when you want to make a reservoir? First of all, you have to get your catchment area, or your gathering ground as it is called; and in that catchment area or gathering ground you gauge over a number of years the yield for the area. Here, it should be noted that this yield is gauged on what is called the three dry-year period—the lowest possible minimum yield that you can count on from the area. There are streams, or even, it may be, great rivers running through this area. Then, when you have got your catchment area defined and your yield of the area set out, you plan to put a dam across the bottom of the valley, to make the reservoir and impound the water. The procedure then is that the matter comes to Parliament. One of the great things that Parliament has to do is to settle the amount of compensation water that is to be allowed to run over the dam and to go down to the streams and into the valley where it used to run before.
Just let us glance for a moment at the problem involved. First of all, we must remember, and must never forget, that this is a very small country and that we have many uses for every inch of land in this country. We must not squander or waste the land. So, after you have your gathering ground or catchment area, you must not operate on the old-fashioned and, in my contention, luxurious traditional pattern—because tradition can so soon become a tyrant—of restricting all access to this gathering ground. The liberalisation of the gathering grounds must therefore be the pattern of modern policy. We must allow the public to have access.
The company in which I am interested has allowed organised sailing even on one of its reservoirs, and the amount of land from which we exclude people is restricted to the minimum. We have fishing in our big lakes and we permit wading. It really is ludicrous to think
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that there are still in this country some gathering grounds where people are not allowed to have a picnic, yet in this great capital we are drinking water out of the Thames. Then we must remember that the yield of this catchment area is going to be based on the three dry-year period, and we must be careful not to over-insure. It is possible to over-insure in this matter. We ought to consider the question whether we are going to restrict the washing of our cars one year in seventy, or whether we are going permanently to flood some enormous area to make a reservoir.
Then, of course, there is the cost of this reservoir in land and in money. Let me take an example of the sort of figure we are talking about. The Chew Valley reservoir which my company promoted a Bill to build in 1939 and which was inaugurated by Her Majesty last year cost very nearly £2 million to build. It flooded 1,200 acres of good agricultural land and produces a dry-weather flow of 10 million gallons a day. Those figures make one think. The consumption in the whole statutory area of Bristol is about 25 million gallons a day—and rising; and whether, as industry increases, with atom stations, power stations and housing estates being built, we can go on producing 10 million gallons at the cost of £2 million and 1,200 acres of land I am not sure.
With this situation confronting all water authorities we cannot blame them for turning to the cheapest water source of all, which is to cut down the amount of compensation water. An authority came to Parliament with a Bill which it promoted—say in 1853, or perhaps in 1953—and which said that they must send a certain volume of water over the darn as compensation water. Subsequently, after the Bill has been passed, that authority or water company is sorely pressed; it has these vast sums of money to raise, and this enormous amount of water is needed. Can one blame that authority, in this free-for-all situation, if it comes to Parliament and says: "Let us have the cheapest water of all. Cut down the compensation water. What is a little trout fishing as compared with this great steel works?". That is a matter which Parliament has to be most careful to guard; because it is not a matter of a little trout fishing. There is much more

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in this compensation water than a little trout fishing, as I want to show your Lordships.
My Lords, that brings me to my third point, which is the proper utilisation of the rivers in all this matter. I want to be very careful in what I say, with the Thames Conservancy in front of me and the Port of London on my right, and I do not propose to put to your Lordships any ideas that are simply my own. But I suggest that it is extremely interesting and significant to read what was said at the annual meeting of the Institution of Water Engineers this year (one of these big gatherings that takes place each year, and which took place this year at Weston-Super-Mare: gatherings of gentlemen who are chief engineers of all these water undertakings and who read each other papers) by the president, who happened to be chief engineer and general manager of the company to which I belong.
He read a Paper, the main theme of which was the better utilisation of rivers—that is extremely significant, since the Bristol company has just built the biggest reservoir in England. He said—and this was an engineer, and not a politician, speaking:
" We must look to the greater use and reuse of the rivers, not only as sources, but as ' pipelines '. The water industry must if necessary develop new and more flexible techniques in river water purification in order to deal with rapid changes in the character of raw water."
He went on:
" Surely there must he cases throughout the country where water supply schemes for industrial and domestic use could be based on abstraction from rivers, without injury to other parties at times of low flows, without the need for expensive reservoirs, and often at points near centres of population."
I would go further and say that this is one of the reasons why we must be so careful not to slip into the easy mistake of reducing the compensation flows. For I believe that the future lies in the utilisation of rivers, and that if we find we have reduced compensation flows, or, in the case of pumping direct from river, reduced the dry weather or prescribed flow (and that is what one has to leave in when one is pumping out), we shall find that we have hamstrung our future development policy, which should be to use this water much lower down. We want to use water just before it becomes tidal. The water undertaking at Newcastle is at present doing just this. I
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understand that there has been for long a controversy whether they should build a big impounding reservoir in traditional style on be head waters of the Tyne. I am delighted to say that that project has, I believe, been overruled, and they will now extract water right down where it is nearly tidal, where there are no riparian owners below and where the least possible damage will be done.
Think for a moment, my Lords, what this could mean—if this development is not a day dream. This is a small country, but it is also an island; and if we let our-minds do a little geographical exercise, it is fascinating to note how many of our great cities are within reach of a tidal river. It may well be that Birmingham will still have to go to Wales; but if Birmingham alone is going to Wales, and not Liverpool also, there may he less public concern. Perhaps Bristol in future may use, the Avon, and other coastal towns their rivers.
How are we to bring it about? Is there anything constructive that we can do to bring it about. I believe there is. We have had this famous Circular 52 of 1956 from the Ministry of Health on regrouping of undertakings—and heaven knows!it is overdue and must be pressed forward: we must get these smaller organisations amalgamated, because one cannot deal with water except on a geographical basis. The rural district council with its political boundaries, to use the geographical term, is no area for a water undertaking, for it may be, and probably often is, on both sides of a watershed. These amalgamations must and will go forward. There is great impetus for them to go forward, at least in my part of the world, as a result of Circular 52. But the great need now is that we should have, as it were, a Circular 52 on the regrouping of interested planning parties, for there are so many of these bodies concerned: the newly constituted Central Advisory Water Committee, the British Waterworks Association, the Water Companies' Association, the Institution of Water Engineers, the River Boards' Association, the Salmon and Trout Association, the Anglers' Co-operative Association, the Ministry of Housing and Local Government, the Ministry of Agriculture, Fisheries and Food, the Central Council for Rivers Protection, the Geological

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Survey (Underground Water)—and so the list goes on.
When we try to get some kind of coordinated policy all or some of these people will want to have their oar in it. Surely we want to "do a Circular 52" on these bodies and try to get them amalgamated a bit. The three we want to pick out of this group are the Ministry of Housing and Local Government (that must be the Ministry charged with this business; we do not want two Ministries to be concerned); the Central Advisory Committee, to which we must give "teeth" and which we must allow to function; and the river hoards. In my view, the river boards are the key to the whole matter. I think that if river boards are to be built up simply to be leaders of the opposition against the water undertakings, we shall be in for a very bad time, because the battle will go to the strong. And who will the strong be? The battle is going to be decided by weight of artillery. When you get a great urban authority with an area containing one million inhabitants—which is the status of some of the water undertakings—or a great company like the company to which I belong, and the river board marshalling forces, which may consist of perhaps some half dozen rural districts in the mountains, and some gentlemen looking after trout fishing in the rivers, which side is going to win? We are going to have the river board doing nothing but raise a protest, while the great industrial juggernaut goes through.
What I feel we must do is to strengthen these river boards. I suggest that they should have on them representation from the water undertakings. My own company has representation on the Avon River Board in North Somerset, and that representation is most valuable. All sorts of things can be done by means of friendly negotiation which cannot be done in any other way. So I suggest that we have these three means of really tackling these problems. We must not let tradition be a tyrant. We must not go on saying that the only way to get water is by building big reservoirs: that may be one way, but it is not necessarily the only way. We have, therefore, to utilise the rivers and, I believe, utilise them near their mouths, not near their sources. This is, of course, a complete reversal of the old idea. I do not deny that when Mr. Melvin, the chief
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engineer of my company, read that paper it was not listened to in silence. The water industry is, if I may say so without offence, a rather conservative industry. Mr. Melvin's statement has caused a great deal of controversy. But, we must use these rivers near their mouths, and we must use the Central Advisory Committee. This Committee, I feel, might really act as the broker which brings the water industry and the river boards together.
5.15 p.m.
LORD DOUGLAS OF BARLOCH: My Lords, this is one of the most important topics which your Lordships' House has ever discussed, because there is no substitute for water, and it is clear that year after year increasing quantities are being required, not only for domestic purposes but also for numerous industrial purposes. New technological processes seem, in many cases, to require very large quantities of water. So the demand continues to increase, and larger and larger areas are used as reservoirs. And the water table in those cases where artesian wells are used, continues to fall. In the London area, the wells have been deepened time after time during the last fifty years as the underground resources become exhausted.
One of the questions which deserve most careful consideration is, what are the reasons for this? The noble Viscount, Lord Waverley, apparently thought that there was a paradox here; that ample supplies of water ought still to be found in the underground water tables, and he asked why was it still not there. It has been mentioned that large areas are becoming covered with buildings, with streets, with arterial roads, with aerodromes. The same amount of rain falls upon those as ever fell, but it rushes off very quickly. It is carried into the streams; it runs down the streams rapidly into the sea, and it is lost.
Not only that; there is the question, to which the noble Earl, Lord Radnor, referred, of afforestation. The amount of forest in this country has been considerably diminished as the result of two world wars. I know it has been argued that the transpiration from the leaves of forest trees is considerable and that forests do not help water supplies. But I think there is a great deal of evidence that, in a climate such as ours, and with the kind of trees which are grown in this country, the conservation of water supplies is helped by them. They reduce the rate at

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which the rain runs off the soil. A well-matured forest contains a great bed of decaying leaves and humus which soaks up rain; it accumulates there like a sponge and gradually trickles out afterwards and helps to keep the flow of water in the streams and rivers more constant.
Another matter which I think deserves a great deal of thought is whether the changes which have been made in our methods of agriculture, during the last half century particularly, have not also had a repercussion upon water supplies. Less land laid down to permanent grass to soak up the rain, more land cultivated as arable land, and cultivated by new methods of cultivation which do not conserve the humus in the soil in the same way as traditional methods of agriculture did, a greater use of artificial fertilisers, practically no horses on the land to provide manure, in many cases specialised farms which are devoted only to the production of grain and carry no stock—all those are leading to diminution in the humus content of the soil. Though people say that you can have a dust bowl in the United States or in Mesopotamia or somewhere but you cannot have it in this country, already there are signs that the soil is being denuded and is running off into the streams, and we are at one and the same moment losing both the fertility of our land and the water which is so urgently and so increasingly necessary. These are some suggestions which I hope will have most serious consideration.
Out of a long practical experience, the noble Earl, Lord Waldegrave, has suggested that more water ought to be obtained out of the lower reaches of rivers and so save the construction of reservoirs in the upper portions. There is a great deal to be said in favour of that as a general policy. But we must remember that we are busily engaged upon courses of action which are making it much more difficult to carry out that policy. Industrial processes carried on on the upper reaches of rivers, even if they return to the river approximately the amount of water which they take out of it, often return it in a very different condition, and it may be so polluted that it prevents the re-use of water at a lower point in the flow. There are a great many cases in which the effluents from sewage works are put into the upper
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reaches of rivers, and these effluents are becoming more polluted not only with industrial wastes but also with a new form of domestic waste, in the enormous masses of detergents which are interfering with a whole series of processes using water. They are interfering with the use of water for drinking purposes.
Reference has been made to-day to the action of the Metropolitan Water Board in transferring water front the Thames down to the Lea Valley. But what has been happening to the Lea Valley? The water in the river Lea, from which the Metropolitan Water Board used to feed their reservoirs, has become so polluted with detergents that they may be seen on occasion to the depth of five or six feet of foam, and oven where detergents are used which do not produce foam (and some of them do not), nobody can say that they are any better as an ingredient in the water which he is drinking.
The River Thames itself is also becoming polluted in the same way. Although a Committee which was set up to consider this question produced a Report in which they said that we must not be unduly alarmed, they also clearly stated that nobody knows very much about this subject yet, and certainly nobody knows what is likely to be the effect upon a human being of partaking of water which has detergents in it year after year during the course of his life. This is a serious problem, which interferes with the sensible suggestion which the noble Earl, Lord Waldegrave, made, that we ought to use rivers which could he sources of water supply nearer to their mouths instead of going to the enormous expense which is involved in the construction of reservoirs and pipelines in the mountainous or hilly districts in which they have their origin. I think that this matter deserves the attention of some body which can investigate the facts about our water supplies in the first place, how they are being used, why the gap between the amount theoretically available and the amount required is becoming narrowed, how to preserve the purity of our streams and rivers, and how to utilise all this to the best advantage.
May I refer again to what I said just now about the effluents from sewage works going into rivers? That happens

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in a great many cases. Towns which are situated at the seaside as a general rule discharge the effluents into the sea, with consequences which are locally unpleasant but which do not involve the question of public water supply. But in the case of inland towns it may well be that the problem will become more acute. I am told that already a number of commercial firms, such as hotels and restaurants, are disposing of the more solid part of their refuse by pulverising it and discharging it into the drains—a process which is well known in the United States and is done in a great many dwelling-houses there. All that will tend to make the problem of sewage purification even more difficult than it is at the present moment. It will help to aggravate the whole problem. So there is a field not only of water supplies but also of afforestry, agriculture and sewage disposal which requires to be considered in conjunction, in order that a rational and considered policy may be achieved.
5.23 p.m.
LORD HADEN-GUEST: My Lords, we have had an interesting and useful debate, which I think will help to dispel a good many illusions about the limit of the possibilities of water supplies in this country. Of course, this question has to be measured against the demands of a continually increasing population. It seems to me that one of our greatest problems in the near future will be that of supplying our big towns and cities and industrial organisations in various parts of the country with the amount of water they require to carry on their life and work.
In this matter we are in the same position as we are in with regard to many other things at the present time; we have a greater responsibility thrust upon us than has ever before been thrust on the people of this country, and we have to face new problems which, whatever we do, we cannot evade, because they are problems not only of money but also of organisation Looking at the big cities, let me take Manchester and Liverpool as typical of the development which is now taking place as part of the normal development of the organisation of our national life. The amount of change which is coming about by reason of this reorganisation is very great and it seems to me
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that in all probability it will become even greater in the near future. I hope that nobody in this House will feel unduly depressed by these conditions, but will consider how best we can meet the new conditions which are being forced upon us; how we can tackle them, conquer them and make them the means of a new and better life in this country.
I was struck by the fact that we are especially warned in the statement we have been discussing this afternoon in regard to water supplies that it is essential that we should have more control over the surroundings of our lives, and that we should take a keener interest than we have done before in maintaining a high standard of living and a high standard of civilisation. With regard to the actual water itself, it seems to me that we are likely to have need of all the water we can get. I do not entirely agree with some noble Lords who have said that we are near to a complete drying-up of water supplies. I think rather that we are coming to a point where we shall have to get larger supplies. I have been studying this question of water supply lately, and I believe that the amount of water which we can get from our own country is very great indeed, and that it will be increased by means which are under our control
I do not know how far the Members of the House I am now addressing will agree with me, but I feel that while, in one sense, we are taking part to-day in a very humdrum debate about one of the essential necessities of ordinary daily life, we are taking part also in the opening of a study of this question which will affect our future life in this country. I feel that we shall be in a very different position in ten or fifteen years' time and we shall find that what has been said today by noble Lords, who have made most valuable suggestions, has made its mark on the tablets of the House of Lords, and will mark a definite progress forward into a new state of organisation of life, when I believe we shall be in a far better position to conquer the difficulties which now face us.
5.34 p.m.
LORD SALTER: My Lords, I do not propose to trespass on your Lordships' time for more than a few minutes. Indeed, I have no excuse for doing so, for such experience as I have had in regard to the control, storage and distribution of

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water has been in other countries, where the geologic, climatic and economic conditions are very different from our own. However, I think it is perhaps worth while to make a few remarks in the light of experience in other countries, in order to help to put our own domestic problem into proper perspective and proportion.
The fact is that while we have an extremely elaborate water control and distribution system in this country, our task, by the standards of what confronts other countries, is a quite limited and easy one. In comparison with other countries, we never have very heavy rain, or rain that continues for a long time. What we call our droughts are of very short duration. We are not dependent for the whole of our life and economy, as, for example, Egypt is, upon one great river. Our rivers are not tumultuous and incalculable, like, for example, the rivers in Iraq, the Euphrates and Tigris, or the Mississippi. We never have the long periods of drought which have inflicted such terrible disasters upon the dust bowl of America. We have no great mountain ranges, with vast quantities of snow liable to be discharged in disastrous floods, as, for example, in North Italy. Our rivers are tameable and, for the most part, tamed. I suppose that there is hardly any country in the world which has at once so many rainy days and so small a total rainfall. Surely all this constitutes an intrinsically extremely easy problem; and, indeed, the White Paper of 1944 says, more than once, quite definitely that our resources of water are ample; it is just a matter of proper distribution.
Some noble Lords have, I think, differed as to whether the amount of water at our disposal is many times what we need, or only several times; but, at least, it is several times. In an international context, that seems to be an extraordinarily easy problem that ought to be tackled, and tackled successfully. Yet we sometimes have a disastrous flow of water, such as that which occurred at Lynton and Lynmouth a few years ago. It sometimes happens that if we have an absence of rain for even a fortnight, which we call a drought, considerable hardship and disadvantage arise. That does not reflect credit upon the administrative system we have in this country dealing with water.
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I do not want to exaggerate the defects, or minimise what has been done. I listened with great interest to the speeches of my noble friends Lord Waverley and Lord Glyn, both of whom have been closely concerned with the problems of the River Thames. Well, my Lords, I was born on the banks of the River Thames, and I was brought up in a family which was very much concerned with running pleasure steamers during the summer. I well remember, in my childhood, how frequent it was, if not normal, to find that in the winter, after just a little rain, people would have their ground floor rooms and basements flooded and have to get home by paddling about in punts and canoes. Again, I remember that, one summer after the other, either it would be so wet that people did not want to go on the river, or it would be so dry that after a few weeks the steamers could not run because they grounded. It is many years since either of those things have happened, and that is due to the greater efficiency of the Thames Conservancy.
When I think of what other countries have had to face, it would be discreditable if we could not have a system which does for other parts of the country what, on the whole, has been done for the Thames Valley. It is only about three years ago that I was in the great City of Baghdad. Mesopotamia, the Land of Noah's Flood. There we were in imminent danger for a long time of having the capital submerged, with panic and enforced evacuation of the people of that great city. Since then, there has been completed the Wadi Tharthar reservoir, and it is extremely unlikely, unless there should be such political instability or lack of administrative efficiency as to prevent the means of control being properly used, that any such danger or disaster will ever be threatened again to that area.
It has come out clearly, I think, from many speeches this afternoon that we have failed to put at the top of our dispersed, over-elaborate, over-decentralised system, a sufficient central guiding apparatus of research and control. When drainage, for example, which so often has been carried out very effectively in recent years in the interests of agriculture, is not accompanied by greater storage, what we have done is to destroy the natural protection that we had

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before. That is a danger for which we can and should find a remedy—and at once. I will not propose the exact machinery or method, but it is quite clear, I suggest, that we want more central research, planning and control; more co-ordination of the interrelated problems of drainage, storage and distribution than we have through our present machinery. The task is not a difficult one, but it is important and I suggest that it is becoming urgent.
5.42 p.m.
LORD MANCROFT: My Lords, may I begin by joining those of your Lordships who have thanked my noble friend Lord Albemarle for putting down this Motion to-day, and for enabling us to have a debate upon a subject which is rarely discussed? The noble Earl was good enough to refer in his interesting speech to my own father's interest in this matter. I well remember that the last occasion, I am afraid, on which I ever heard the subject of water discussed in your Lordships' House was upon a debate which he himself initiated, and to which I listened from the steps of the Throne with filial attention, slightly wondering what on earth it was which caused your Lordships to be so interested in what appeared to be to be so dull a subject. I now know better. The trouble is, as several noble Lords have pointed out, that we tend in this country to take our water supplies for granted. The question which your Lordships have asked this afternoon, and which it is now my duty to try and answer, is whether we are justified in taking our water supplies for granted, or whether we may not possibly be running into serious trouble.
As I say, we do not debate this subject nearly often enough. We take it for granted that we have the best water supply in the world (in point of fact, we have far and away the best), and we typify this when we go abroad by refusing to drink a foreigner's water which always makes him slightly irritated, unless he happens to be a manufacturer of mineral waters. I think the noble Lord, Lord Salter, in his interesting and unusual speech, was perfectly right to draw attention to our good fortune compared with some other countries who go through great extremes of flood or risk of drought far greater than we ever consider in this
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country. I must confess that it is only in this country that we could have had, as we had three years ago, the newspapers coming out four days running with news of serious drought in the Western part of the country, and serious flooding in another part at the same time.
Now we are faced with a new problem which has been vividly brought to us by the noble Lord, Lord Macpherson of Drumochter, of the vastly increased demands made upon our resources by domestic consumption, an increased standard of living, agriculture, industry and, finally, the uncalculated demands of atomic energy and such new industries. Can we keep up with the pace of the increase? That is the question your Lordships have asked this afternoon. The first thing I must state, then, is this. Do we know what is the increased demand put upon our water resources by all these increasing sources of demand? Quite frankly, we do not. Attempts have been made to gauge the rate of increase, but I am afraid that no authoritative figures exist. I must tell your Lordships at once, in reply to the numerous questions that have been put on this subject, that I believe that the need for a more precise assessment of our demands in the light of increases in recent years is now urgent.
Your Lordships know that in 1955 my right honourable friend the Minister of Housing and Local Government reconstituted the Central Advisory Water Committee. I think this Committee has been overlooked by one or two of your Lordships who have been asking for further authorities and for further powers for existing authorities. This Committee does many of the things your Lordships are expecting other bodies to do, and I think it has much greater influence and authority than some speakers in this afternoon's debate have been prepared to credit it with. May I give your Lordships its terms of reference, and remind you that the demand for water and the need to assess the size of foreseeable demands was one of the first subjects which the Committee was called upon to inquire into? The terms of reference are:
" To consider the extent to which the demand for water for domestic, industrial, agricultural and other purposes is increasing and is likely to increase; to consider the problems involved in meeting these demands, including, in broad terms the cost; to consider whether there are any substantial economies in the use or cost of water which could be

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made willow reduction in standards of hygiene or in industrial or agricultural efficiency; and to make recommendations."
Those are wide terms, and I think they cover a large number of the points which have obviously been worrying your Lordships this afternoon. It will take some little time for this work to be carried out. But in view of the debate which has occurred this afternoon, and the questions which the noble Earl, Lord Albemarle, has been putting to the Government in the last few weeks, the Committee will obviously now have to press on as a matter of urgency with their investigation into this matter, to which your Lordships have drawn so much attention this afternoon.
Several speakers have suggested that the existing organisation is not sufficient to cope with all the problems which we now have to face and may have to face. Of course, the problem is not the same as that of gas and electricity, and we shall fall into error if we try to link those problems in any way at all. Let me briefly remind your Lordships of the existing organisation. As you know, as part of the review of the whole social policy at the end of the war, the Coalition Government published in 1944 the White Paper which has been referred a frequently this afternoon and which contained proposals for shaping a national water policy. This aimed at ensuring:
" a planned and economical use of the water resource of the country and efficient administration of water supply services."
As your Lordships know, that was endorsed by all Parties.
The view was then expressed that ample supplies of water existed for all our needs as we then knew them, and the problem was not one of total resources but of organisation and distribution. I am still inclined to think that that may be the situation to-day. I should not like to be over-positive, because the question of atomic development, which was not in the minds of those who produced the White Paper, obviously puts a different complexion on it. But I think the noble Lord, Lord Haden Guest, was right to say that we do not want to over-exaggerate the problem, but to look at it a great deal more carefully and get it in proportion.
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The problem is really this. We have enough water all over the country, and our problem is to get it into the tap at the right place at the right time. The White Paper's proposals were embodied in the Water Act, 1945. The White Paper accepted that the existing powers of Ministers were vague and ill-defined. The Act placed on the Minister the duty:
" to promote the conservation and proper use of water resources and the provision of water supplies in England and Wales and to secure the effective execution by water undertakers, under his control and direction, of a national policy relating to water."
Those are pretty comprehensive and sweeping powers. Among the powers given to the Minister were powers to regulate the activities of public water undertakers, to control the exploitation of underground water, and to make orders For the voluntary or compulsory amalgamation of water undertakers so as to reduce the existing number of small undertakers and thereby increase the efficiency of the industry. The Act also required the Minister to appoint a Central Advisory Water Committee, to which I have just been referring and which he ha, now done. The purpose of that Committee is to advise him on all matters connected with the conservation and use of water resources and the administration of the relative enactments.
So we have this situation. The Minister is the central authority and is armed with the extensive and wide-sweeping powers of the 1945 Act. It was the noble Viscount, Lord Waverley, I think, who expressed the opinion that the Minister had used his powers in a regulatory rather than a constructive manner. I hope the noble Viscount is not right, but he has great experience in this matter and we have taken note of his opinion. I hope that in future the Minister, therefore, will know which way the noble Viscount, Lord Waverley, wishes him to act. And the noble Viscount, Lord Waverley, is perfectly right in that respect. That is the way, of course, in which the Minister should be using his powers.
In addition to these powers the Minister can seek advice from a large number of authorities, and he does take that advice. There is, first, the Central Advisory Water Committee which is a very powerful body reflecting all shades of opinion of the consumer, producer and everybody concerned. All aspects of

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supply, demand and information are covered in that Committee. Then there are the various interested departments. There is the Geological Survey of the Department of Scientific and Industrial Research who deal with underground water. They are, I believe, looking at one or two of the points raised by the noble Viscount, Lord Waverley. Then there is the Meteorological Office, concerned with rainfall; and there is the Water Pollution Research Board, again part of the Department of Scientific and Industrial Research. The noble Earl, Lord Waldegrave, in a very interesting and highly technical speech to which we listened with great attention, mentioned a number of people who are concerned with water, more than I have mentioned in this brief survey of the bodies from which my noble friend seeks advice.
Some people have suggested the setting up of yet another committee, yet another consultative council or central advisory body. I think we have quite enough. We want to keep this with the central authority, namely, the Minister, because, apart from all those authorities, he can consult his own Department, which has amassed a wide range of information and which is in daily contact, and has been for a long time, with the water industry and others concerned with the industry. That is where Parliament has put the authority, that is where it should best be and that is where I think it can be most efficiently carried for the benefit of the industry and for the country.
We have talked a great deal about the organisation of the industry. This industry, as we all know, is administered by over a thousand statutory undertakers in England and Wales. Is this too many? Frankly, I think it is; I believe everybody is agreed on that. I was glad to hear the noble Earl, Lord Swinton, put forward the argument that nationalisation is no answer to our problems. He is quite right there. If I may, with respect to those who have a warmer feeling for nationalisation and public ownership than noble Lords who sit here, I will console them by reminding them that three-quarters, at least, of these undertakings are already in public ownership. They are themselves public authorities.
THE EARL OF LISTOWEL: May I thank the noble Lord for that remark and
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say that I would have made it myself if I had thought there was any question of nationalisation or any other doctrine entering into this debate.
LORD MANCROFT: Perhaps, in view of a recent speech from Sir Hartley Shawcross, it was tactless of me to raise the matter at all. We agree that these bodies are of varying sizes and varying capabilities.
There are also the river boards, who have a general interest in the conservation of local resources, as well as their duties in regard to land drainage. There have been suggestions for establishing some new controlling or co-ordinating body with general jurisdiction over the water industry, with particular reference, if I have understood the debate correctly, to the planning and allocation of resources. The British Waterworks Association revived this proposal in 1951. It has been revived again more recently, and one or two of your Lordships this afternoon have lent their support. This suggestion has invariably been rejected in the past and I am afraid I must add my voice to its rejection to-day. I think that concentration of authority in the Minister is obviously the right solution. He should carry out a positive water policy, aided, when necessary, by fully representative advisory committees which can be put at his disposal. Your Lordships will remember that, following the White Paper review of 1944, Parliament again concluded that the proper course was to place the responsibility squarely on the Minister's shoulders.
THE EARL OF SWINTON: May I interrupt the noble Lord? I do not want to take away the Minister's power or to detract from the duty of the Minister to exercise this policy. What I want is that the Minister should have a policy to exercise.
LORD MANCROFT: Yes, I have grasped that point. I am glad that at least we are at one over that, and I am glad to think that the noble Earl, Lord Swinton, who speaks with such authority and knowledge in matters of administration and governmental control, agrees with me that we should think twice about changing these arrangements.
Water supply is mainly in the hands of local authorities or joint boards of local authorities. Those are the two main

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agents. I think that that is right. Traditionally, they are in close administrative and financial relationship with the Minister of Housing and Local Government. His day-to-day administration necessitates trained staff, and this has resulted in, and we have now at our disposal, a wide range of knowledge and contacts. That is invaluable. I am glad that we are agreed that these functions should not be removed from the Minister, because the setting up of any other body would lead to overlapping and duplication. The Minister is fully in the picture and he will be formally and informally in possession of all the information which any new body could have.
I am not suggesting for one moment that there is no room for improvement and that suggestions put forward in this debate might not well result in greater flexibility and greater concentration of policy. We are at the moment, for instance, studying the views of leading academic authorities about the organisation of the water industry with particular reference to hydrological research. I must remind your Lordships that the Central Advisory Water Committee is also tackling the problem of information which has been referred to several times this afternoon. A sub-committee was set up with the following terms of reference:
" (i) to review the current activities which contribute to our knowledge of the nation's water resources.
(ii) to define the additional work needed to make a balanced survey of the quantity and quality of surface and underground water available for domestic, industrial and agricultural use.
(iii) to advise on ways of collecting and interpreting the necessary information, correlating it with information from other sources and publishing it."
That work is well advanced. I emphasise it, and the only reason why I keep harping on it is to show your Lordships that it is something in which the Minister takes a practical z070
and businesslike interest—not a mere theoretical interest but a practical day-to-day interest.
My right honourable friend authorises me to say that observations and information on this subject are always welcome to him and particularly, of course, from your Lordships. The River Boards Association have also been invited to send a memorandum on this subject. This Report, when we see it in the, I hope,
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not too distant future, will help us to see what further steps are needed to put the whole question of research and supply on a sound basis. I hope your Lordships will forgive me, therefore, if this afternoon I do not try to reach any premature conclusions in advance of this most important Report on the subject. At the moment, for the reasons I have just given, I am not in a position to express views on the subject of vesting or curtailment of water rights, because, as the noble Earl, Lord Albemarle, appreciates, this would involve interference with the Common Law and it would certainly involve important legal issues. But the importance of it is fully appreciated.
My Lords, to sum up on this point, we are not yet clear, frankly, whether the strain on our resources is enough to make drastic new steps necessary. That is the first question which the debate poses. We are not yet in a position to answer it satisfactorily. We have, I think, taken all the necessary steps to put ourselves in that position. This applies equally to such suggestions as that of the River Boards' Association for powers of control to be given to river boards over the abstraction of water front rivers and streams. I suppose that this would be broadly similar to the control over the abstraction of underground water already exercised by the Minister. I do not know whether the Committee's findings will encourage the Minister to propose tighter control in areas to be defined. The noble Earl, Lord Albemarle, also made the point about according to river hoards, including the Thames Conservancy, some functions in this respect. That, again, is being studied carefully. I think my noble friend would appreciate that that involves legislation; a major point is raised.
Meantime, we are taking positive steps to overhaul the water industry itself. We have all agreed, I think, that some of the thousand undertakings are too small for modern requirements. Regrouping of undertakings into larger and stronger units is now in train. The circular which my right honourable friend issued last September has been referred to, and I hope that before long we shall see substantial progress. I hope it will be possible to do this on a voluntary basis. Any Government composed of members now sitting on this side of the House do not

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like using control, regulations and orders if they can possibly get the same effect by voluntary reorganisation and a voluntary answer to this request. That has met with some success. There are compulsory powers and in answer to various noble Lords—Lord Waldegrave and, I think, Lord Listowel, too—who asked this question, I may say that my right honourable friend will not hesitate to use the powers if he has to. They have been used in three cases, I think, since the circular was issued. But we hope that that will not be necessary as the need for regrouping and amalgamation becomes more generally appreciated. One cannot help noting, I suppose with a certain amount of cynicism, the interesting fact that breweries seem to amalgamate themselves a good deal more easily than water undertakings.
The main method of regrouping will be the formation of joint boards of local authorities. I think it is important to retain the local connections wherever we can; they are extremely valuable. I take as an extremely useful point the point which my noble friend Lord Albemarle made in that respect. They have enormous accumulated experience, and I think we must do something, if we can, to strengthen the use of that local experience and to make certain that local knowledge is available to the Minister and his officers as freely and as readily as possible. I think that this scheme of amalgamation will produce units with trained staff and resources to deal with present-day requirements. There are also cases where substantial local authority or water company undertakings absorb their neighbours. The British Waterworks Association and the Water Companies Association support this policy.
I have been asked why the Minister has not used his powers under Section 3 of the Act to set up joint advisory water committees to deal with local questions of water supply or conservation of water resources. I readily admit that no such statutory committees have yet been set up. I think, if I may return to this controversial topic, they were not set up at all under the Government of which the noble Lord opposite was a member, and there was always a doubt whether or not nationalisation was in the air at the time.
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I think that may have had some influence—but I am only guessing. However, there is no getting away from the fact that our attitude towards these committees has been modified since 1945.
The main duty, if I understood it aright, intended for them was the surveying of water resources and demands, and the framing of proposals to meet future requirements. As I think will now be self-evident, to a certain extent these duties have been overtaken by the Minister's own engineering staff. They have carried out comprehensive surveys of nearly all undertakings in the country. The Central Advisory Water Committee is now making more general inquiries in this field. The active policy of regrouping water undertakings is, as I have just told your Lordships, in train. This is aimed at producing a much smaller number of all-purpose bodies, planning for wider areas. I feel that the usefulness of joint advisory committees may thus be reduced. I think it is preferable to concentrate first on improving the basic organisation, which is what we are trying to do. We may have to consider later whether there is a need for additional bodies such as joint advisory committees. Their establishment would, of course, entail much work. There has been criticism of the functions and the probable make-up of these committees. But these can be considered in connection with the proposals to set up a committee in Kent, and if more general establishment of such committees is considered, then the whole function and composition may have to be revised. Here again, fundamental changes would involve legislation.
Let me now try to deal with one or two of the detailed points that have been made. The noble Earl, Lord Listowel, referred to rural water supplies. The correct figure is 10 per cent. We are now down to the real problem cases—the really difficult cases which are a long way from supplies, the provision of which will be expensive and will require a lot of work. Both Governments have done a great deal on this matter since the war, and work is going steadily ahead on rural water supplies within the limits of capital investment restrictions. A further large sum of money for grants was voted in the Rural Water Supplies and Sewerage Act, 1955. My noble friend Lord Glyn, talked about the problem of delaying

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run-off of drainage into rivers. This can be done, as the noble Lord said, by having regulating reservoirs. I understand that in some parts of the country it has in fact been done. I agree with my noble friend that it is a good thing, and I agree with him that it ought to be encouraged.
The noble Earl, Lord Radnor, is not in his place at the moment—he told me that he might not be able to stay until the end of the debate. He and the noble Lord, Lord Douglas of Barloch, made an interesting point about afforestation and the effect of afforestation on water resources and conservation. I am aware of the Paper to which my noble friend Lord Radnor referred, and we are considering the problem generally in consultation with the Forestry Commission, the Department of Scientific and Industrial Research and the Ministry of Agriculture. I am afraid that it is a little early yet to say much about it, but we are setting up an informal Working Party on the whole subject. The noble Earl, Lord Listowel, and other noble Lords asked me about capital investment. The figure for the calendar year 1956, which he particularly asked about, was nearly £24 million. There is no agreement at the moment about the right level of investment if we had no restrictions. In 1955, a year when restrictions were eased, the figure was about £27½ million. But the broad cost of meeting future demands is part of the terms of reference of the Demand Sub-Committee of the C.A.W.C.
My Lords, if I have not answered all the detailed points which your Lordships have put to me, I apologise; but I do not want to trespass too long upon your Lordships' time. I hope that I have not given any impression of complacency in this matter. Her Majesty's Government fully appreciate the urgency of the case, but I hope that I have described enough of the plans in detail to convince the House that Her Majesty's Government are roost earnestly and objectively going into this whole problem. We have not yet enough information to know how serious the problem may be. If it is as serious as some of your Lordships have suggested to-day, then, clearly, more drastic action will be required. We are, at the same time, making certain that we
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have enough information to go on in making our plans. As the noble Earl, Lord Swinton, said, we must have a firm policy. I think I have said enough to your Lordships to show that that policy is there. The Minister has requested the Central Advisory Water Committee to undertake inquiries to fill the present gap in our knowledge of demands and resources. These will tell us if anything is seriously wrong with out present organisation. If it is, we shall have to take the necessary action. We are now strengthening the industry generally to ensure that every unit will be capable of meeting likely demands.
To conclude, Her Majesty's Government will take very careful note of what has been said in this debate. The noble Lord, Earl Swinton, twitted us with the vacant mind, but I am sure that he would have been very upset had we come down with a closed mind and told him that Her Majesty's Government had made up their mind and were not amenable to persuasion in your Lordships' House.
THE EARL OF SWINTON: My Lords, I spoke of an open, but not a vacant mind.
LORD MANCROFT: My Lords, I am, of course, speaking fir my right honourable friend and not for myself. My right honourable friend will take careful note of what has been said in this extremely interesting debate. I said at the beginning of my remarks that we have the best water system in the world—of that I am certain. But just because we have the best water system in the world there is no reason at all why we should not make it still better.
LORD WOLVERTON: My Lords, did I understand the noble Lord, Lord Mancroft, to say that there is to be a slight easing-up in the matter of the capital required for these new reservoirs? It is very long-term policy, and because of the economic position the situation has been very tight.
LORD MANCROFT: My Lords, I did not go quite as far as that. I appreciate the noble Lord's point. I said that the broad cost of meeting future demands is part of the terms of reference of the Sub-Committee who are going into that matter very carefully.
6.12 p.m.
THE EARL OF ALBEMARLE: My Lords, we have had a long debate, and your Lordships will excuse me from adding very much. First of all, I am grateful to the large number of noble Lords who were so kind as to put in an appearance. Their contributions have greatly enriched the discussion, and I have no doubt that they will help Her Majesty's Government. I found some of the things said by the noble Lord, Lord Mancroft, very reassuring and was pleased about the joint regions. I must point out, however, that I thought we had it fixed in our mind all along that local help and enthusiasm, if it can be whipped up, is essential. The thirty-one maps which I have seen, usually coloured, which were sent out through various local authorities are prepared by engineering inspectors. Local democracy, I think I am right in saying, does not come into it yet I have understood that for several weeks past we have been talking of "bringing in the locals". I am disappointed about that.
I do not know whether I misheard the noble Lord, Lord Mancroft, but I do not think he has offered a body, time and
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place for periodic adjustments between industry and undertakers—at least I did not hear any reference to that question. It seems to me essential that we should get undertakers to explain why they cannot supply certain kinds and quantities of water to competing factories. It is difficult to see where such competing factories will go. How do they contact those who could possibly supply their industry? As time is late I will now beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

MILFORD DOCKS BILL [H.L.]
The Queen's consent signified, and Bill reported, with Amendments.

ESSO PETROLEUM COMPANY BILL [H.L.]
The Queen's consent signified, and Bill reported, with Amendments.
House adjourned at a quarter past six o'clock.